Spectrum Management Blog

By Bob Phillips | November 17, 2015

Why Bond Yields May Be Bad for a Long Time

In my last post, I indicated that the Federal Reserve would likely raise interest rates this year. It passed on raising rates at its meeting in October, and the next chance will be at its meeting in mid-December. The main point of that post was that even though the Fed has not yet acted to raise rates, the market had started to react in anticipation of a monetary tightening cycle. This particular anticipation of Fed action seems to be short term in nature – hence the rebound of the stock market in October from the August and September corrections.

No matter what the Fed decides to do, the important question for investors is: "How likely is it that longer-term interest rates will go up?" There are two important aspects to this. First, 10-year Treasury rates have historically been the measuring stick for determining stock valuations. Second, if longer-term interest rates do not increase, what can savers do to generate cash flow?

It isn't likely that interest rates, beyond the overnight rate, will go up much, if at all. Why is this? First of all, the Fed is considering raising the federal funds rate (overnight bank lending rate) from 0.25 to 0.50 percent. Realistically, you can make the case it is still close to zero. We are in a world where interest rates across the globe can impact rates in every market as money flows to the areas of highest potential return. Currently, a sample of developed countries' 10-year government bond rates are as follows:

  • U.S.: 2.2 percent
  • U.K.: 1.9 percent
  • Germany: 0.56 percent
  • France: 0.94 percent
  • Japan: 0.31 percent
  • Switzerland: -0.30 percent
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Topics: Markets and Investing, Bob Phillips, Market Outlook

By Bob Phillips | October 13, 2015

Where to Find Opportunity When Monetary Policy Tightens

All indications show that the Federal Reserve will raise interest rates this year – Chairman Janet Yellen specified as much in a speech she gave at the University of Massachusetts Amherst on Sept. 24.

The historical purpose of raising interest rates is to cool down an overheated economy by raising the cost of money. This time we are not really faced with a robust economy, but the Fed does desire to bring rates back to a more "normal" level.

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Topics: Markets and Investing, Bob Phillips

By Bob Phillips | September 15, 2015

How Investors Should Play Oil's Decline

Oil_Chart_Fred

Oil is at the lowest price we have seen in more than 10 years and there is no evidence that the price has bottomed. We believe the price crash for oil is very similar to what occurred in 1986, and the overall reason is due to a great increase of supply.

In 1986, the increase come from Saudi Arabia; today it is from the U.S. So how can investors play oil's decline?

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Topics: Bob Phillips, Market Outlook

By Bob Phillips | July 31, 2015

An Interesting Rebuttal to Income Inequality Statistics in the United States

During our quarterly conference call last night the topic of income inequality was brought up. I wanted to highlight a great read for our audience. The link to the full article is below.

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Topics: Bob Phillips, Economy

By Bob Phillips | July 29, 2015

Portfolio Rebalancing: Why and How Often

Rebalancing a portfolio is done to reduce risk and increase the probability of achieving a desired return.  What should the strategy or strategies be around rebalancing?

The concept of rebalancing first assumes that an investor has an asset allocation strategy in place.  Without a proper asset allocation there is no structure to rebalance or make strategic decisions.  The first step in coming up with an asset allocation is for the investor to analyze their long term needs compared to their savings plans and current resources.  Taking this step allows a range of results to be determined in terms of time frames and return requirements.  Having a sense of these parameters should lead to an asset allocation decision.

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Topics: Markets and Investing, Bob Phillips

By Bob Phillips | July 8, 2015

Market Outlook: Greece!

By now you are all probably aware that on July 5, 2015 the Greeks voted “NO” to the Eurogroup nations’ bailout offer. This is all very strange drama, and now we question what consequence it will have for global investment markets. To start at the end, we do not think it will be significant. We do think the Greek people are suffering and it will get worse for them; however, from a cold economic perspective this episode should not cause an economic crisis. The debt structure of the European countries is not sound, but we do not think Greece will be the trigger point for a wider crisis.

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Topics: Markets and Investing, Bob Phillips, Market Outlook

By Editor | April 2, 2015

FOX BUSINESS "After the Bell" with Bob Phillips


Bob returned to Fox Business on Wednesday, April 1, to share his insight on the markets, interest rates and Europe.
 
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Topics: Bob Phillips

By Editor | December 30, 2014

2014 in the news: Spectrum Management Group

Our Managing Principals continue to be called on by some of the nation's top media outlets. Throughout this year, Bob Phillips and Leslie Thompson have shared their insights on a range of topics and issues impacting the markets and investors. Bob and Leslie are sought-after experts, connecting with countless reporters, journalists and broadcast personalities on financial topics affecting Americans.

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Topics: Company News, Bob Phillips, Leslie D. Thompson, Media Coverage

By Editor | December 9, 2014

Fox Business continues to call on Bob Phillips for his market insight

Bob Phillips returned to Fox Business "After the Bell" on Thursday to weigh in on the current economic climate and discuss the state of the markets. He joined hosts Liz Claman and David Asman to share his outlook on the global economy and the areas he sees opportunities for investors in the U.S. markets.
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Topics: Company News, Markets and Investing, Bob Phillips, Market Outlook, Stocks, Economy, Media Coverage

By Bob Phillips | November 5, 2014

4 areas impacting the market

As we enter the tail end of 2014, the economy is still doing better than practically any time in the last five years. The Philly Fed's general business activity index rose sharply in the third quarter, suggesting that fourth quarter growth should be solid. Below I list items that are moving the markets and are important factors for investors to continue to consider.

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Topics: Markets and Investing, Bob Phillips, Market Outlook, Economy, Federal Reserve

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