Latest news with #Moody'sRatings'
Yahoo
4 days ago
- Business
- Yahoo
The End of the Easy US Stock Bet Has Been Good to Contrarians
(Bloomberg Markets) -- On Wall Street, it's been years since anyone had to think very hard to make money. Buy the largest US stocks, ignore everything else and watch your portfolio soar. Investing was reduced to one-click simplicity. NYC Congestion Toll Brings In $216 Million in First Four Months Now With Colorful Blocks, Tirana's Pyramid Represents a Changing Albania The Economic Benefits of Paying Workers to Move NY Wins Order Against US Funding Freeze in Congestion Fight Why Arid Cities Should Stick Together Then life got more complicated. President Donald Trump's sudden tariff escalation in April offered a glimpse of what a world without that certainty might look like. Confidence wavered—not just in megacap resilience, but in American economic exceptionalism and Trump's market-friendly reputation. But after a sharp market decline, some of the panic subsided. The president backed away from some of his most dramatic tariff plans, and major US equity indexes bounced back. On May 28, a US trade court said many of Trump's tariffs were illegal, with the administration appealing the decision. Yet for many, the market and political mayhem highlighted the increasing fragility of the one-way buy-America trade. You can still see the shadows of all that doubt in the lower value of the dollar, in Moody's Ratings' recent decision to downgrade America's debt, and in the steady drumbeat of money finding its way to anything that isn't just another bet on US stocks. A motley crew of finance professionals long dismissed as having complex and cautious strategies have been having their moment. With megacap valuations still looking stretched, these money managers are pitching a slew of allocation ideas to investors newly receptive to the age-old virtue of diversification. 'I am looking forward to this being a world again where prices matter,' says Ben Inker, the co-head of asset allocation at Grantham Mayo Van Otterloo, a money manager known for bull-market skepticism as well as its dedication to value investing. His GMO International Developed Equity Allocation Fund is up about 20% this year—its biggest outperformance over the S&P 500 since the strategy's 2006 inception. The fund has about half its assets in Europe and almost 30% in Japan. Meb Faber, too, has been waiting patiently for this. The founder of Cambria Investment Management LP has been calling the end of the US exceptionalism trade for years. Before 2025 his model, which spread money across regions and assets, had trailed the S&P 500 in 14 out of 16 years. Now people are seeing the virtues of contrarian strategies. 'Nobody is interested in talking about or wanting any of these investments, and all of a sudden you just blink, and the next thing you know, they're outperforming,' Faber says. Nothing lasts forever, Faber says. He points the 1980s, when international markets, Japan's in particular, left American equities in the dust. That episode foreshadowed the Nikkei 225's two decades of woe. Fund flows highlight the shift away from the go-long-US trade. International equities are attracting money in droves. Exchange-traded funds holding value stocks, which typically snub the top-heavy Magnificent Seven tech stocks, have already seen $30 billion in inflows this year. Hedge funds attracted about $14 billion in cash this year through April, according to data compiled by fund administrator Citco. And quantitatively driven diversification strategies—with names like risk parity and factor investing that seem designed to resist easy marketing—are gaining fresh attention. Also on the hot list: buffer funds, a breed of ETF that employs stock options to limit a portfolio's downside while capping the upside. And there's been a revival of once-dormant techniques such as portable alpha, a way of using borrowed money to try to sprinkle some idiosyncratic bets on top of exposure to the market index. 'There's not as big an opportunity cost in introducing diversification and having to sacrifice that core stock exposure,' says Corey Hoffstein, chief investment officer of quantitative money manager Newfound Research, speaking of portable alpha. This year 'has been about making diversification look great again,' says Dan Villalon, principal at AQR Capital Management LLC, a Greenwich, Connecticut-based manager of quant and hedge fund strategies. 'We see it in every dimension: We see in equity markets. We see it in asset classes. We see it in alternative strategies.' AQR has long warned that US dominance of equity markets is at risk and that investors are underdiversified. Of course, the push to spread out risks comes with big pitfalls. In an age of artificial intelligence advances, there's a constant fear of missing out on another Big Tech rally. Already, chipmaker Nvidia Corp.—a key member of the Mag 7—has roared back from its April depths, notching a near-30% return over the past month. Moreover, the leverage used in many market-defying strategies can easily backfire. And many of these techniques layer on cost and are poorly understood by clients. Villalon, for example, has been an outspoken critic of buffer funds. AQR has published research arguing that a simple mix of stocks and safe Treasury bills is a better bet for those seeking downside Benz, director of personal finance and retirement planning at the research firm Morningstar Inc., likewise argues that most individual investors can do just fine with a low-cost, do-it-yourself version of diversification. Just own a broad of mix of different assets. 'I would argue that the basic principles of asset allocation are delivering beautifully this year—the vanilla strategy of holding cash and bonds to cushion against equity losses has been a winning one. Diversifying equity exposure globally has also helped.'And there's still a large chorus warning against giving up on stocks in the world's most dynamic economy. 'With ever more complex investment products becoming available to retail investors, history keeps proving that a simple, diversified portfolio of large-cap stocks wins out,' says Liz Miller, president of Summit Place Financial Advisors LLC. 'Alternative and structured investments can appeal to investors' fears of market volatility, but long-term growth comes from investing appropriately in equities and staying committed throughout market turmoil.' Still, investors seem to have widened their view of the range of outcomes. For Vineer Bhansali, CIO and founder of LongTail Alpha LLC, it's been the busiest time since the onset of the pandemic. LongTail's name refers to the rare but extreme events that can occur at both ends of the bell curve of possible market outcomes; the firm sells strategies that hedge the really bad ones but often suffer losses in a bull market. Bhansali says clients are calling all day with concerns about high exposure to US stocks and market patterns breaking down. Recently, a $24 billion Australian pension fund allocated to the strategies. 'Everybody has a lot of US assets,' Bhansali says. 'Trade, the reason this whole thing is happening, is a global phenomenon. Everybody gets pulled into it. Everybody's concerned about what happens to their old global asset allocation.' YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Inside the First Stargate AI Data Center How Coach Handbags Became a Gen Z Status Symbol ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
Gold Heads for Weekly Surge as US Fiscal Concerns Cause Tremors
(Bloomberg) -- Gold headed for the biggest weekly gain in more than a month, as investor concern about the US fiscal deficit boosted the metal's appeal. Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt NYC's War on Trash Gets a Glam Squad NJ Transit Makes Deal With Engineers, Ending Three-Day Strike Bullion traded above $3,300 an ounce, on course for a weekly climb of about 3%. After Moody's Ratings' decision to strip the US of its top credit rating, investors are now concerned that President Donald Trump's signature tax bill — which passed the House and now goes to the Senate — will boost the already swelling deficit. Bullion has surged by more than a quarter this year, and is about $200 below the all-time-high reached last month. Its ascent has been underpinned by the fallout from the US-led trade war, which stoked haven demand, as well as more recently by the nation's fiscal concerns. Central banks have also been consistent gold buyers as they seek to diversify their reserves. 'Gold is likely to remain range-bound in the near term,' said Justin Lin, an analyst at Global X ETFs. 'However, ongoing geopolitical tensions and increasing concerns about the US fiscal outlook continue to provide underlying support.' In the US, the amount of outstanding Treasuries has skyrocketed from $4.5 trillion in 2007 to nearly $30 trillion today, while the ratio of total US public debt to the size of the economy has risen from about 35% in 2007 to 100% now, according to the Congressional Budget Office. Yields on 10-year US Treasuries have pushed higher this week, topping 4.5%. In earlier years, such a move would have been a major headwind for gold as it doesn't pay interest, with bullion prices and yields typically moving inversely. That correlation has now weakened. Gold traded 0.3% higher at $3,304.81 an ounce at 9:10 a.m. in Singapore, after closing 0.6% lower on Thursday. The Bloomberg Dollar Spot Index was flat, on course for a weekly loss. Silver, palladium, and platinum were all set for gains on the week, with platinum up by almost 10%, having rallied to the highest in a year. Why Apple Still Hasn't Cracked AI Inside the First Stargate AI Data Center How Coach Handbags Became a Gen Z Status Symbol Anthropic Is Trying to Win the AI Race Without Losing Its Soul Microsoft's CEO on How AI Will Remake Every Company, Including His ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-05-2025
- Business
- Yahoo
House Republican Slams Trump Bill As Titanic 'Debt Bomb' Based On 'Fantasy Math'
While other deficit hawks folded one by one Thursday morning and meekly voted for President Donald Trump's 'big, beautiful bill,' Rep. Thomas Massie stood firm. The Kentucky Republican, one of only two to vote against Trump's 1,000-page bill, took the floor to offer his GOP colleagues a 'dose of reality' about how the bill will saddle the U.S. with trillions in debt for decades to come. 'I would love to stand here and tell the American people 'we can cut your taxes, and we can increase spending, and everything is going to be just fine.' But I can't do that because I'm here to deliver a dose of reality,' Massie said. 'This bill dramatically increases deficits in the near-term, but promises our government will be fiscally responsible five years from now. Where have we heard that before? How do you bind a future Congress to these promises?' The senior Kentucky legislator then pointed to Moody's Ratings' decision to downgrade its U.S. credit rating earlier this week amid concerns about an unsustainable debt load. 'This bill is a debt bomb, ticking,' Massie warned. 'Congress can do funny math, fantasy math if it wants. But bond investors don't.' Thirty-year U.S. Treasury bond yields briefly hit 5.15% Thursday, the highest since 2007. The Treasury saw a surprisingly soft market Wednesday when it auctioned off $16 billion in 20-year bonds, with investors showing worry about the ballooning federal debt. 'Under the taxing and spending levels in this bill, we're going to rack up ― the authors say ― $20 trillion of new debt over the next 10 years. I'm telling you it's closer to $30 trillion of new debt in the next 10 years,' Massie warned. 'Mr. Speaker, we're not rearranging deck chairs on the Titanic tonight. We're putting coal in the boiler and setting a course for the iceberg,' he concluded, looking up in sharp surprise as Democrats began to cheer him on. 'If something is beautiful, you don't do it after midnight. I oppose this bill.' Trump's Big Tax Bill Has Passed The House. Here's What's Inside It. House Passes Trump's Tax And Spending Cuts Stocks, Bonds And The Dollar Drift After Latest Downgrade To U.S. Credit Rating Donald Trump Openly Selling Access To Those Who Put The Most Cash In His Pocket
Time of India
21-05-2025
- Business
- Time of India
Tariffs may not trouble India's economic growth, Moody's explains why
India is better equipped than many emerging markets to withstand the impact of US tariffs and global trade disruptions , thanks to strong domestic growth drivers and a low reliance on goods exports, a Moody's Ratings' report highlighted on Wednesday. The ratings agency highlighted that government initiatives—such as boosting private consumption, expanding manufacturing capacity, and increasing infrastructure investment—will help cushion the economy against weakening global demand. Easing inflation could also pave the way for interest rate cuts, further supporting growth. Meanwhile, ample banking sector liquidity continues to enable lending, the report noted. Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Shop Directly from Adidas Franchise Stores – Up to 50% OFF Original Adidas Shop Now Undo 'India's large domestic economy and limited exposure to global goods trade put it in a stronger position to absorb external shocks,' Moody's said. India-Pakistan tensions to impact economy? The note also touched upon geopolitical risks, stating that recent India-Pakistan tensions are more likely to weigh on Pakistan's economy than India's. The key economic hubs in India are far from the conflict zones, and bilateral economic ties remain limited. Live Events However, a prolonged escalation could lead to increased defence spending, which might slow fiscal consolidation efforts and weigh on government finances, as per the report. Moody's acknowledged that some sectors—like automobiles, which export to the US—may feel pressure from global trade headwinds, despite their diversified operations. But India's robust services sector and domestic-focused economy serve as strong buffers. Earlier this month, Moody's revised India's 2025 growth forecast down to 6.3% from 6.7%, though it remains the highest among G-20 nations. In April, the US announced a new round of targeted tariffs, which it later paused for 90 days. While base tariffs remain at 10%, some sectors—like steel and aluminium—continue to face higher duties.
Time of India
20-05-2025
- Business
- Time of India
Benefit for India: How Indian ports will gain from China+1 strategy
are positioned to gain advantages from the worldwide China+1 strategy, according to Moody's Ratings' latest report. As organisations establish manufacturing facilities in India, diversifying their production and supply networks beyond China, this could substantially enhance port activities across the country. Tired of too many ads? go ad free now Moody's analysis indicates that whilst Chinese ports might encounter immediate financial difficulties, ports in countries such as India and Indonesia could experience increased operations as international organisations seek to decrease their Chinese dependencies. "In Asia, Chinese ports' financials could weaken although most have the financial capacity to withstand near-term stresses. And ports in India and Indonesia could benefit from the China+1 strategy – companies' effort to diversify their manufacturing and supply chain operations by establishing facilities in countries outside China," the said. Also Read | Moody's additionally observed the pressure that disputes, including recent , could impose on developing markets. The analysis indicates that Indian and Indonesian ports primarily handle cargo destined for their respective domestic markets. India's diverse export portfolio and strong internal market have resulted in minimal impact from US tariffs, setting it apart from other economies in terms of trade vulnerability. Whilst maintaining a positive outlook, Moody's has adjusted India's growth projection for 2025 downwards to 6.3% from 6.7%, whilst predicting a 6.5% growth rate for 2026. The strategic positioning of Indian ports appears advantageous as patterns undergo significant changes, presenting opportunities for growth and development. Also Read |
