Article by James Liu, CFA. Founder and Head of Research Clearnomics. The author F. Scott Fitzgerald once wrote that "the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function." This concept, often referred to as "cognitive dissonance," is something all investors must grapple with on a regular basis. This is because financial markets can swoon seemingly without...
Article by James Liu, CFA. Founder and Head of Research Clearnomics. At its September meeting, the Federal Open Markets Committee kept rates unchanged with a target range of 5.25% to 5.50%, in a decision that was widely anticipated by investors. Still, markets responded negatively with bond yields jumping to levels not seen since 2007, the S&P 500 falling a couple percentage points, and tech stocks retreating further from their recent peaks. This reaction may come...
Article by James Liu, CFA. Founder and Head of Research Clearnomics. While 2023 has been a better year for bonds after last year's bear market, rising interest rates over the past three months have acted as a headwind. The U.S. Aggregate bond index has gained 0.6% this year, down from a peak return of 4.2% in April. Similarly, corporate bond returns have receded to 1.8% from 5% prior to the banking crisis earlier this year...
Despite the economic uncertainty of the past year, everyday individuals and households have been resilient. Consumer spending has remained steady in the face of high inflation, rising interest rates, housing market challenges, and layoffs in sectors such as tech.
Article by James Liu, CFA. Founder and Head of Research Clearnomics. Investors have grappled with market and economic challenges this year ranging from Fed uncertainty, stubbornly high inflation, the possibility of a recession, a banking crisis, the debt ceiling, ongoing geopolitical tensions, and more. And yet, the stock market has made significant year-to-date gains with the S&P 500 returning 12.4% with dividends and the Nasdaq 27%. This is further evidence that markets often defy expectations...
Article by James Liu, CFA. Founder and Head of Research Clearnomics. The repercussions of inflation, Fed rate hikes, the ongoing banking crisis, and the approaching debt ceiling deadline are being felt throughout the financial system. One area directly impacted by these shocks is real estate, across both the residential and commercial sectors. Commercial real estate (CRE), in particular, is highly dependent on regional and smaller banks, including those that have struggled or failed since early...
The federal debt limit is once again in the news as the country rapidly approaches a critical deadline on June 1.
Article by James Liu, CFA. Founder and Head of Research Clearnomics. On the morning of May 1, it was announced that First Republic Bank had been taken over by the FDIC and sold to JPMorgan Chase. Eleven major banks had previously infused First Republic with $30 billion in deposits to stabilize the bank after the failures of Silicon Valley Bank, Signature Bank, and Credit Suisse. This process found new urgency over the past week when...
