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Second Quarter 2019 Research Call Replay

Jul 18, 2019 / Federal Reserve, United States, Fixed-Income, Investment Commentary, Asset Class Research

Listen to a replay of our second quarter 2019 Litman Gregory research team webinar. Topics covered (among others): macroeconomic conditions, monetary policy, yield curve inversion, expected returns for U.S. and European stocks, alternatives, and fixed income positioning changes. The presentation slides are available at the bottom of the page under Resources.

 

Audio of the full call:
 
Second Quarter Recap and Market Overview with Peter Sousa, Director of Portfolio Strategies:
 
Can you speak about your thoughts on the inverted yield curve? You shared some NDR research about the historical recession indicator and timeframe from inversion to recession in your investment commentary, and Peter touched on it in his intro presentation, too.  Along those lines, how much of the yield curve inversion is due to the Fed increasing short term rates? 
 
Can you talk about the return expectations for U.S. stocks and how you get there?  And more generally, how do you talk about these estimates with clients when the reversion to the long-term mean just hasn’t happened? 
 
Alternatives continue to evolve in the retail space, and many institutional strategies are now accessible in a daily liquidity or interval fund structure. Your current allocation is to market-neutral and trend following.  Do you have plans to add long/short, global macro, private lending/credit, etc. to the alternatives allocation in your portfolios, especially given your outlook for returns in traditional asset classes?  
 
On the fixed income side of the models, we have been positioned for a rising rate environment for several years now. That is obviously changing with the 10 year now down to about 1.9% off a high of over 3.2% last fall. What’s the outlook and should we anticipate some changes on the fixed income side to reflect these changes.
 
Morningstar first announced changes to the investment grade bond space by splitting it into core and core plus, and more recently announced changes to their forward-looking analyst ratings by taking fees into account in much more significant and qualitative way. 
 
While BREXIT, Italian debt, immigration, politics, and the overall EU construct are unknowns, they seem to have been priced in and the equity market appears to be turning the corner.  Has your confidence increased with this recognition by market participants, and do you plan on increasing you tactical overweight there?  
 

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