Market Sound Bite: Uncharted Territory

My colleague Rafia Hasan wrote a nice piece on negative interest rates, what causes them and whether this all implies lower equity returns as well. We’ll be sharing her article with you on OneBite next week.

We concluded that we do see the weak economies and the inability of monetary policy to stimulate growth, but this does not imply that businesses will not manage through this environment and have success anyway. Equities can go up, even as the economy stays weak and interest rates remain at zero.

Good thing: today, we got more bad news, GDP growth as consistently poor as we have ever seen.1

“In a year when the Fed was supposed to be on an orderly rate-hike pace of one per quarter, Wall Street now is talking about an economy that’s not going anywhere and a central bank that will follow suit.” – Jeff Cox, CNBC

Sadly, we have been discussing this for almost a decade now, with no sign of any improvement. But equities are doing reasonably well.

As Rafia warns us, we should not be reaching for yield on the bond side in risky, illiquid securities; we need to accept reduced fixed-income returns for a while. But we are staying the course with equities and have good reason for some confidence, despite the bad news about the economy.

Last point: things change. And sometimes, they change quickly and unexpectedly. Things might actually improve! Stay tuned.


Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
OneBite Editorial Staff

OneBite® is a Top 50 Financial Advisor Blog powered by Wipfli Financial Advisors. Founded in 2011, the digital magazine is dedicated to providing intelligent, in-depth coverage and analysis of the top financial and economic issues facing investors today.

No Comments Yet

Comments are closed

Market Sound Bite: Uncharted Territory

time to read: 1 min