Under current law, the fiscal drag from the federal government falls from 1.2% in 2013 to 0.6% in 2014. Looking ahead fiscal drag moves to near neutral in 2015 and fiscal policy actually becomes accommodative in the years ahead.
Employment has been steady and we expect continued gains and Capex orders are picking up meaning shipments should follow.
Higher rates on the long-end are undoubtedly a troubling development for a market driven largely by multiple expansion. But to the extent to which inflation remains low and inflationary expectations remain well-anchored, we believe higher 10-year Treasury yields will either be ephemeral or foreshadow stronger real GDP growth. In either case, the sell-off in fixed income should not yet be feared.
Real Rates Rising: If the Fed Tapers, will something break? If the Fed does not taper in September, the Central Bank will hold more than 13 percent of outstanding Treasury debt by the December meeting.
Many of our clients are asking whether it's time to pick up some bargains among emerging markets stocks. We think it's too early for a few reasons - 1) there is an increasingly strong negative correlation between Emerging Markets and the US dollar and recent developments suggest to us that dollar strength will continue; 2) there are...