Yields: Stocks vs. Bonds

Dividend yields on stocks are typically lower than the yields on bonds. This relationship reflects the added upside associated with stock prices. However, for only the second time in the past 40 years, the dividend yields exceeded bond yields. This relationship suggests that stocks are cheap RELATIVE to bonds. It doesn't necessarily mean that stock prices are cheap in absolute terms. See article here, AAII.

German Yields Below Zero

In an unusual event, German bond yields across the entire yield curve are below zero. So, the government could borrow for ten years (or more) and pay back less than the original principal. Typically this is a sign of a "flight to quality." See article here, Marginal Revolution.

Rhino Bonds

Bonds can come with some unusual terms -- think catastrophe bonds. In a unique offering, newly offered rhino bonds pay out based on an increase in the population of African black rhinos. See article here, Marginal Revolution.

ETF Growth Continues

ETF assets reached a new milestone, passing the $4 trillion mark. Amazingly, the growth from $3 to $4 trillion took only two years. See article here, Investopedia.

Active Managers Underperform Again

Active managers are supposed to do better in volatile markets, such as in 2018. However, the results are in, and a lower percentage of active managers outperformed the market -- just 38%. Over the past ten years, this drops to 24%. See article here, WSJ.

Strengthening Dollar Hurts Profits

Exchange rates can impact the return that investors earn when investing abroad. However, even investors who focus domestically can be impacted by exchange rates. For example, the strengthening dollar will hurt earnings for firms that generate large amounts of revenue outside the US. See article here, WSJ.

Recession Coming?

From an economic perspective, leading indicators are designed to forecast the likelihood of a recession. Recent movements in the data, particularly the spread between 3-month and 10-year Treasury yields, suggest an increasing probability. See article here, WSJ.