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The Fear Fund: Nancy Davis’ ETF Aims To Protect Investors From Scary Stuff, Like Recession And Inflation

Stocks have recovered from last fall’s crash, low interest rates stretch out to the horizon and the VIX volatility index is half what it was at Christmas. Sit back and coast to a comfortable retirement.

No, don’t, says Nancy Davis. This veteran derivatives trader runs Quadratic Capital Management, where her somewhat contrarian view is that investors, all too complacent, are in particular need of insurance against financial trouble.

The Quadratic Interest Rate Volatility & Inflation Hedge ETF, ticker IVOL, is designed to provide shelter from both inflation and recession. Its actively managed portfolio mixes inflation-protected Treasury bonds with bets, in the form of call options, on the steepness of the yield curve.

Those options are cheap, for two reasons. One is that, at the moment, there is no steepness: Yields on ten-year bonds are scarcely higher than yields on two-year bonds. The other is that the bond market is strangely quiet. Low volatility makes for low option prices.

                                   

“Volatility has been squashed by central bank money printing,” Davis says, before delving deep into the thicket of option mathematics. If volatility in interest rates rebounds to a normal level, her calls will become more valuable. Alternatively, she would get a payoff if the yield curve tilts upward, which it has a habit of doing when inflation surges, stocks crash or real estate is weak.

If IVOL is all about peace of mind for the investor, it’s all about risk for its inventor. Davis, 43, has poured her heart, soul and net worth into Quadratic, of which she is the founder and 60% owner. If the three-month-old exchange-traded fund takes off, she could become wealthy. If it doesn’t, Quadratic will struggle.

The fund showed its worth in the first week of August, climbing 2% as the stock market sank 3%. But it needs a much bigger shock to stock or bond prices in order to get big. It has gathered only $58 million so far. A crash had better arrive soon; IVOL’s call options expire next summer. Quadratic, moreover, needs to somehow scale up without inspiring knockoff products from ETF giants like BlackRock.

Davis was a precocious trader. As an undergraduate at George Washington University, she took grad courses in financial markets while earning money doing economic research for a consulting firm. She put some of her paychecks into a brokerage account. “Some women love to buy shoes,” she says. “I love to buy options.”

This was in the 1990s, a good time to indulge a taste for calls. Davis made out-of-the-money bets on technology stocks, which paid off well enough to cover the down payment, in 1999, on a New York City apartment. Nice timing.

There may be a sour grape, but there’s also truth in her current philosophy that hedge funds are not such a great deal for investors. ETFs, she says, are more liquid, more transparent and cheaper.

Davis spent a decade at Goldman Sachs, most of it on the firm’s proprietary trading desk, then did a stint at a hedge fund. At 31 she quit to actively manage two kids. Returning to Wall Street after a three-year hiatus, she worked for AllianceBernstein and then did what few women do, especially women with children: She started a hedge fund.

Quadratic, whose assets once topped $400 million, used a hedge fund platform at Cowen & Co. When Cowen ended the partnership last year, Davis set about reinventing her firm. There may be a sour grape, but there’s also truth in her current philosophy that hedge funds are not such a great deal for investors. ETFs, she says, are more liquid, more transparent and cheaper.

IVOL’s 1% annual fee is stiff, but Davis says it’s justified for a fund that is not only actively managed but also invested in things that ordinary folk cannot buy. If you want to duplicate her position in the Constant Maturity Swap 2-10 call due July 17, you’d need to know what banker to ring for a quote, because this beast is not traded on any exchange. Each of these calls, recently worth $7.71, gives the holder the right to collect a dollar for every 0.01% beyond 0.37% in the spread between ten-year interest rates and two-year interest rates. The spread has to move a long way up before the option is even in the money. But at various times in the past the spread has hit 2%. Could it do that again? Maybe, at which point the option pays $163.

Starting a firm like Quadratic is like buying an out-of-the-money call: long odds, big payoff. Davis is doing what she was doing in college. You can’t stop a trader from trading.

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Source: The Fear Fund: Nancy Davis’ ETF Aims To Protect Investors From Scary Stuff, Like Recession And Inflation

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Nancy Davis, founder and CIO of Quadratic Capital Management, introduces her new ETF that takes advantage of interest volatility and inflation expectations: IVOL. In this interview with Real Vision’s co-founder & CEO Raoul Pal, Davis deconstructs the structure of the ETF, highlights the cost of carry associated with the strategy, and discusses her macro outlook and where she thinks the yield curve is headed next. Filmed on May 29, 2019. Watch more Real Vision™ videos: http://po.st/RealVisionVideos Subscribe to Real Vision™ on YouTube: http://po.st/RealVisionSubscribe Watch more by starting your 14-day free trial here: https://rvtv.io/2KHDkoc About Trade Ideas: Top traders unveil their specific plans for cashing in on the market’s next move. In these short videos, our traders cut straight to the point and lay out their thoughts on the best risk-reward trades of the moment. Each episode concludes with a visual recap of trade details including profit-loss potential and trade duration. About Real Vision™: Real Vision™ is the destination for the world’s most successful investors to share their thoughts about what’s happening in today’s markets. Think: TED Talks for Finance. On Real Vision™ you get exclusive access to watch the most successful investors, hedge fund managers and traders who share their frank and in-depth investment insights with no agenda, hype or bias. Make smart investment decisions and grow your portfolio with original content brought to you by the biggest names in finance, who get to say what they really think on Real Vision™. Connect with Real Vision™ Online: Twitter: https://rvtv.io/2p5PrhJ Instagram: https://rvtv.io/2J7Ddlw Facebook: https://rvtv.io/2NNOlmu Linkedin: https://rvtv.io/2xbskqx The ETF Play on Interest Rate Volatility (w/ Nancy Davis) https://www.youtube.com/c/RealVisionT… Transcript: For the full transcript visit: https://rvtv.io/2KHDkoc NANCY DAVIS: So we invest with options with a directional bias on everything. So our new product that we recently launched, IVOL, is the first inflation expectations and interest rate volatility fund out there. It’s a exchange traded product. RAOUL PAL: Does anybody even know what that means? NANCY DAVIS: So what we do is for an investor, if you’re an equity investor, you want to have tail protection, for instance. It’s hard to own equity volatility as an asset allocation trade because it decays so aggressively. So it’s a more benign way to carry volatility as an asset class from the long side using fixed income vol. It’s not as sensitive as equity vol, but it’s a lot lower level. Like, the vol we’re buying is 2, 2 basis points a day in normal space. So it’s very, very cheap, in my opinion, and it gives you a way to have an asset allocation to the factor risk of volatility without having as much decay as you would in the equity space. And then for a fixed income investor, the big risk there is obviously Central Bank policy, fiscal spending, trade wars, as well as inflation expectations. And we saw a need to really give a fixed income investor a way to capitalize on the deflation that’s been priced into the market for the next decade. I mean, so current US inflation is around 2%. The five-year break-even is 1.59%. So that’s an opportunity in an option space. And so it’s long options with TIPS. And so that gives investors exposure. It gives you inflation-protected income, but also options that are sensitive to inflation expectations. And we think it’s pretty– you know, you’re never going to time these macro calls perfectly. But given the Central Bank in the US is so focused right now on increasing inflation expectations, and there’s been so much talk about the yield curve inverting– and that’s kind of crazy. If you step back and you’re like, all right, we have a $3.9 trillion balance sheet. We have a fiscal budget deficit. We have unclear or radically changing monetary policy. If you look where we are now with so many cuts priced into the interest rate markets in the US versus where we were four months ago, it’s wildly different. And at the same time, interest rate volatility is literally at generational lows. Equity, while people talk about equity vol, I think VIX today is 17. It’s low, I guess, in the context. But when you look at a percentile, like one-year vol over the last decade in equities, it’s about the 70th percentile. So it might be low, but it doesn’t mean it’s cheap. Interest rate volatility is literally at, like, 2, 1, you know, 0.

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Council Post: How To Prepare For The Recession As A Real Estate Investor

It seems like all the talk these days is centered around the inevitable recession. I see an article every day claiming that the end is near. Recently, the yield curve inverted, which many point to as a strong indicator of an oncoming recession. But, there are also many experts who claim the economy is strong. They cite strong growth, spending, development and other indicators to support their theory. No matter which way you lean, it is inevitable that there will be a market correction/recession at some point. It’s impossible to say for sure when or how bad it will be.

As a real estate investor, you want to be prepared for when it does happen. If you think back to the last crash in 2008, the best deals were the years after that. If you had capital, you made a lot of money. It almost didn’t even matter what you bought because prices were so insanely low. What I’ve heard most from investors looking back at it is, “I wish I would’ve bought more properties.”

Even though you can’t predict when it will happen, you can still take steps to get prepared. If you’re prepared, you’ll be able to capitalize. Let’s go over how people will be affected during the recession.

Sellers

In a recession, there will be many more distressed sellers than there are today. Since the last downturn, sellers have been able to refinance or sell if they got in a tight spot because of appreciation. Since prices will be going down, many will not have enough equity to refinance or sell. They’ll have to face foreclosure or a short sale. The sellers who do have equity will want to sell out of fear that they’ll lose their equity if they wait any longer.

Flippers

Many flippers will have exited the market. Prior to the recession actually happening, they’ll notice inventory rising, days on market increasing and their properties selling for less than anticipated. As a result, their margins will tighten. They may lose money or simply not make the return needed to justify the risk. Therefore, there will be far fewer flippers than you see today.

Wholesalers

Many wholesalers will leave the market. Even though there are more distressed sellers, there are fewer sellers with equity. They’ll notice that there aren’t as many flippers to sell to anymore either. The flippers who have weathered the storm will ask for significant discounts in order to do a deal. Wholesalers’ margins will begin to tighten to the point where it doesn’t make sense to spend marketing dollars anymore.

Contractors

Contractors will not have as many job opportunities since there will be fewer people buying and renovating homes. In order to get jobs, they will have to lower their prices to stay busy.

Real Estate Agents

With fewer buyers and sellers in the marketplace, there will be more competition to acquire clients. Real estate agents will have to spend more marketing dollars to attract them or take discounted commissions.

All these people play a vital role in real estate investing. You should ask yourself where you fit in with all of this. What’s the best position to be in?

The answer: become a cash investor.

In today’s market there are a lot of cash investors, but many will be wiped out or scared during the recession. So there will be far less competition in all aspects of real estate investing. The cash investors who do stay in it will own the market during a recession. With cash, you have many options. You can choose to flip homes with little competition. You can buy a bunch of discounted rentals and build your portfolio. Or you can lend the money to operators and have them do all the work for you.

Again, the No. 1 regret people told me they had after the last recession was that they didn’t buy enough homes. It wasn’t that they wish they would’ve wholesaled more homes or sold more homes as an agent. The person actually buying homes is the one who thrives in the recession.

The cash investor will be able to buy directly from all the motivated sellers with less competition. They’ll be able to buy from wholesalers at deeper discounts because there are more deals than money. They’ll be able to get cheaper labor from contractors because they’ll be one of the only sources of consistent work, and agents will work harder to find deals for cash investors because there will be fewer retail clients.

As you prepare for an oncoming recession, the most important thing you can do is become a cash investor. Here are a few ways how:

• If you have properties or assets, consider selling some so that you have more liquidity.

• If you’re a wholesaler or real estate agent, look into raising capital so that you can start buying the deals you find.

• If you’re a flipper, start building more relationships and using more lenders now so a trusting relationship is in place before the recession hits.

We don’t know when the next recession will be, but it doesn’t really matter. You should be preparing as if it could be tomorrow. Figure out how you can become a cash investor, and you will be ready for it.

Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?

Ryan Pineda is the CEO of Homerun Offer.

Source: Council Post: How To Prepare For The Recession As A Real Estate Investor

Lets talk about a potential recession, what might happen, and how you can best prepare – enjoy! Add me on Instagram: GPStephan – Avocado Toast Merch: https://bit.ly/2DhFyo3 GET $50 OFF FOR A LIMITED TIME WITH COUPON CODE: THANKYOU50 The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $125 million in sales: https://goo.gl/UFpi4c Join the private Real Estate Facebook Group: https://www.facebook.com/groups/there… So first, lets talk about what’s influencing the market and what factors we should be made aware of: The first is rising interest rates: This means that the cost of borrowing money is expected to INCREASE over the next few years. When borrowing gets more expensive, you either need to RAISE prices to keep the profit margins the same – which means things get more expensive to you as the customer. Second, we’ve begun seeing the warning signs of the INVERTED YEILD CURVE – which, according to just about every article out there, the inverted yield curve has historically been associated with a high likelihood of upcoming recession. Third, we have the tariffs and the uncertainty surrounding what may or may not happen. And when it comes to investments, the ONE thing all investors dislike is UNCERTAINTY. When people are UNCERTAIN, they don’t invest, they hold cash…and that causes stock prices to fall. And fourth…we’re seeing a slow down in nearly all markets. Here’s what I think is going to happen… First, I’ve noticed QUITE a lot of what I call “gamblers fallacy.” This is the expectation that the market will drop, JUST because we’ve been in the longest bull market in HISTORY and that means it’s “overdue” and more likely to happen. Second, I believe that a lot of our “Recession Talk” is already SOMEWHAT factored into the price. Think of all the people NOT investing right now because they want to wait for lower prices…that is, in itself, self fulfilling and lowering prices. And third…no one, including myself, knows whats going to happen. No ONE. And fourth, you have so many false news articles designed to APPEAR like credible new sources so they get pumped through Facebook and Blogs for the sole purpose of manipulating you into buying their products. Well here’s the reality: First, NO ONE can predict when a recession will happen. We’ve been seeing these articles since 2013 from people who claim the recession is coming any month now. It’s never ending. You’ll read about this one expert predicting something, then another expert predicting something else, and they keep repeating themselves until eventually, one of them is right. Then they use that credibility of being right ONCE to propel them into the next opportunity. Second, it’s important you PREPARE for a recession in ways you can CONTROL: First, you CAN control whether or not you keep a 3-6 month fund in the event you lose your job or something unexpected comes up. This is absolutely ESSENTIAL for you to do. Second, you CAN control whether or not to have too many outstanding debts that might need to be paid down. If you’re over leveraged, or if you have high interest debt, it’s in your best interest to pay those off to free up cashflow in the event of a downturn. Third, you CAN control how much you spend…if you’re spending is too high, it’s important to cut those back so that you can save more money to invest. And when you DO invest, invest long term. Ideally, these are investments you should plan to keep 10-20 years. For me, I see lower prices as an opportunity. And to alleviate some of these concerns, you don’t need to just drop ALL of your money in the market at once…buy a small amount each and every month. This way, if the price goes down..you’re buying in cheaper and cheaper over time. If it goes up, you’re buying in little bit little…and anytime when it comes to investing, slow and steady wins the race. This isn’t about making an immediate 10% profit in a month…this is about investing for your future in a slow, stable way where you don’t feel stressed whether the market goes up or down. For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com My ENTIRE Camera and Recording Equipment: https://www.amazon.com/shop/grahamste… Favorite Credit Cards: Chase Ink 80k Bonus Point Offer – https://www.referyourchasecard.com/21… American Express Platinum – http://refer.amex.us/GRAHASOxHd?XLINK…

3 Ways to Recession-Proof Your Company & Why Right Now Is the Best Time to Do It

David Barrett survived the Great Recession by making his business as boring as possible.In 2007, the founder and CEO of Expensify was trying to launch a prepaid debit card that would enable–and hopefully encourage–charitable giving to panhandlers in San Francisco. But, as forecasts of economic turmoil mounted, investors were interested only in ideas that sounded “sane and reasonable,” he says. So Barrett started pitching the safest related product he could imagine: an automated expense-report management system.

That worked; Barrett secured enough money to quit his full-time job in April 2008. He still intended to pursue the card idea, but soon hit a production snag–and with the economy in free fall, Barrett recalls thinking, “Shit, I really need to make a business out of this right now.” So he doubled down on business-expense management.

Almost 1.4 million small businesses with employees closed from 2008 through 2010, according to the U.S. Small Business Administration. Expensify, now with five offices and a staff of 120, wasn’t one of them–a feat Barrett attributes to those pre-recession pivots. They taught him to “build a product that is needed in a downturn,” he says. “Sell aspirin, not vitamins.”

Recession war stories may seem out of place during this prolonged period of economic growth, but there are signs that a slowdown is on the way. A June 2019 survey from the National Association for Business Economics put the risks of a recession beginning before the end of 2020 at 60 percent. A third of the 2019 Inc. 5000 CEOs expect a recession to begin this or next year, with another third bracing for one in 2021. Whenever the downturn hits, these steps can help your business weather it.

Fundraise.

Build your cash reserves while you can. Serial entrepreneur Mitch Grasso had a potential downturn in the back of his mind while raising capital for his latest venture, Beautiful.ai. The presentation software company raised $11 million in Series B funding in March 2018, just 17 months after a $5.25 million Series A round. “I chose to raise money earlier than I would have otherwise, even though it cost me probably a little more” in terms of valuation, says Grasso. “If there’s money on the table, take it sooner rather than later. You’ll always find a way to spend it.”

Conduct consumer research.

You might not be able to pivot your entire business model, so figure out what products and services your customers will need even in poor conditions, says Carlos Castelán, managing director of the Navio Group, a retail business consulting firm.

Ryan Iwamoto, co-founder of caregiving service 24 Hour Home Care, started asking his customers for their input when the federal government introduced sweeping rules for home health care agencies in 2016. He wanted to be “the first in market to educate them on all the regulations coming down in our industry,” Iwamoto says. “It allowed us to build better relationships”–and has helped boost his company’s revenue by more than 68 percent since the law changed, he reports.

Ink multiyear contracts with clients, not vendors.

Earlier this year, during a regular assessment of her company’s revenue targets, Sandi Lin considered the potential impact of an economic slowdown. The co-founder and CEO of Skilljar was happy to discover half of the customer training platform’s revenue was on multiyear contracts, meaning “at least theoretically, that even if all of our other customers went bankrupt,” Skilljar would have some runway–and less pressure to scramble for new business.

Lin applies the opposite approach for vendor contracts; while Skilljar is sponsoring a major customer conference this fall, she negotiated a minimal commitment on room nights and seats with the hotel and venue. Which is a smart business practice in good times, too; as Lin says, “the most important job of an entrepreneur is to survive.”

By: Jeanine Skowronski

Source: 3 Ways to Recession-Proof Your Company–and Why Right Now Is the Best Time to Do It

WATCH MY PREVIOUS VIDEO ► https://youtu.be/SCCMp_PVxz8 WATCH MY NEXT VIDEO ► https://youtu.be/9Pa7mAcKmXo ———————————————————– FINANCIAL STEWARDSHIP ACADEMY (USE DISCOUNT CODE: “FREEDOM” FOR 30% OFF) ► http://bit.ly/Buy-FSA-Webinar ———————————————————– ▼ 30 DAY GUIDE TO REDUCING STRESS AT WORK▼ ============== EBOOK FOR MOMS (30% OFF DISCOUNT CODE: STRESSFREE30) ► http://bit.ly/Reduce-Stress-eBook PAPERBACK (AMAZON) ► http://amzn.to/2yvaQaS KINDLE (AMAZON) ► http://amzn.to/2lUZ57W AUDIO (AUDIBLE) ► http://amzn.to/2oEp3sJ iBOOK (APPLE) ► http://bit.ly/StressiBook ———————————————————– FREE DETOX SYSTEM FOR MOMS ► http://bit.ly/10DayMBDS SMART MOM’S TRANSFORMATION SYSTEM ($100 OFF DISCOUNT CODE “TRANSFORM”) ► http://bit.ly/Buy-SMTS ———————————————————– Brief Overview: Small and Large businesses can get hit pretty hard during recessions so it’s important to choose a business that can withstand the ups and downs that come with the economy. There’s lots of different options and ideas to choose from if you are new to small business, but there’s also some ideas that you can choose to diversify your income streams if you already own a business or multiple businesses. The key is to pick a person, product, and/or company that you know, like, and trust to make sure you have the best chance of success during the ups and downs. ———————————————————– ▼ NEXT STEPS▼ ============== SUBSCRIBE ► http://bit.ly/LanceMcGowanYT SHARE ► This video with someone that would benefit from it COMMENT ► On what you liked most about this video! ———————————————————– ▼ SEARCH ▼ =========== #lancemcgowan #fsa #financial #financialstewardshipacademy #finances #finance #stewardship #biblical #bible youtube for more videos! ———————————————————– ▼ BUSINESS INQUIRIES▼ ===================== Email Lance at support@lancemcgowan.com with questions OR Email Tanner at frigaardtanner@gmail.com ———————————————————– ▼ SEND ME MAIL▼ ===================== Lance McGowan 11700 W Charleston Blvd #170-415 Las Vegas, NV 89135 ———————————————————– Disclaimer: The information contained on the Lance McGowan YouTube channel and videos are provided for general and educational purposes only and do not constitute any legal, medical or other professional advice on any subject matter. These statements have not been evaluated by the FDA and are not intended to diagnose, treat or cure any disease. Always seek the advice of your physician or other qualified health professional prior to starting any new diet or treatment and with any questions you may have regarding a medical condition. If you have or suspect that you have a medical problem, promptly contact your health care provider.

Wall Street Wants You To Sell Now. Buy This 7% Dividend Instead

The most reliable recession indicator in the world just flashed red—and it’s actually setting us up for 33%+ gains in the next two years.

A contradiction? Sure sounds like it.

But history tells us we can expect a fast return like this when the economy and stock market look exactly like they do right now.

I’ve got two ways for you to grab a piece of the action, one of which even hands us a growing 7% cash dividend.

And when I say “growing,” I mean it: this already-huge cash stream has grown 96% in the last 15 years, and it’s backed by the strongest stocks in America (I’m talking about the 30 names on the Dow Jones Industrial Average), so there’s plenty more to come.

More on this cash-rich fund shortly. First, we need to talk about the “recession signal” everyone’s panicking about.

Recession Alert: Red

That would be the yield curve, which just “inverted” for the first time since 2007. This means the 2-year Treasury was briefly yielding more than the 10-year Treasury.

That shift grabbed a lot of headlines because every time the 2-year has yielded more than the 10-year, a recession has followed (though there’s typically a long time lag).

However, there’s a hugely important detail the mainstream crowd is forgetting—and that’s where the 33% gain I mentioned off the top comes in. I’m talking about what happened in 1998, when, like today, the yield curve briefly inverted, then “uninverted.”

What happened then?

Stocks exploded 33% post-inversion before a recession did eventually arrive.

Why the big jump? Because 1998 was unlike most periods of an inverted yield curve: shortly after the yields flipped, the Federal Reserve started cutting interest rates—and that’s exactly the situation we’re in today.

This is the opposite of what happened when the yield curve inverted in 1989, 2000 and again in 2006. During those periods, the Fed kept raising rates, and economists say those hikes made recessions worse—or even started them in the first place.

Only in 1998 did the Fed respond to the inverted yield curve by starting to cut rates—and then, when the central bank went back to raising rates two years later, the recession followed in about a year.

Funny thing is, no one is talking about this right now, and it’s critical, because it tells us that the chances of a recession in the near term largely depend on what the Fed does. And with the Fed now cutting rates, a recession could be delayed for over two years. And that means letting fear get the better of you and moving to the sidelines now could cause you to miss out on a double-digit gain.

Here’s something else that tells us a recession is nowhere near: earnings blew out expectations in the second quarter, and analysts now expect profits to grow in the third quarter of 2019. Sales are still up about 4% across the board for S&P 500 companies, and US GDP growth is slated to come in above 2% this year.

This is where the two funds I want to show you today come in—they position you to profit if it’s 1998 all over again, but, just in case things do take a sudden downward turn, they build in a bit of protection, too.

The first (but not my favorite) fund is a plain-vanilla ETF, the Dow Jones Industrial Average ETF (DIA), which, as the name says, holds the 30 companies in the Dow Jones Industrial Average. Because of its large-cap focus, the Dow largely tends to track the SPDR S&P 500 ETF (SPY) when stocks rise, and it falls less in a declining market.

However, you’re missing a far more important piece of downside protection when you go with DIA: a strong income stream (DIA yields just 2.1% as I write this). And a serious dividend is critical when the next downturn hits, especially if you’re counting on your portfolio to fund your lifestyle. That’ s because a strong dividend reduces the need to sell your holdings in a crash—at fire-sale prices—to access cash.

This is where a closed-end fund (CEF) like the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX) really shines. DIAX also holds the “Dow 30”: household names like Home Depot (HD), McDonald’s (MCD) and Apple (AAPL), but with a big difference from DIA: a 7% dividend yield—over three times bigger than DIA’s payout.

Plus, it offers something few high-yield stocks and funds do: a dividend that’s growing.

Holding DIAX will get you exposure to stocks, no matter what happens, and an income stream you can depend on. That’s a lot better than letting yield-curve fears force you to the sidelines—where you’ll miss out on solid returns.

Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report “Indestructible Income: 5 Bargain Funds with Safe 8.5% Dividends.”

Disclosure: none

I have worked as an equity analyst for a decade, focusing on fundamental analysis of businesses and portfolio allocation strategies. My reports are widely read by analysts and portfolio managers at some of the largest hedge funds and investment banks in the world, with trillions of dollars in assets under management. Michael has been traveling the world since 1999 and has no plans to stop. So far, he’s lived in NYC, Hong Kong, London, Los Angeles, Seoul, Bangkok, Tokyo, and Kuala Lumpur. He received his Ph.D. in 2008 and continues to offer consulting services to institutional investors and ultra high net worth individuals.

Source: Wall Street Wants You To Sell Now. Buy This 7% Dividend Instead

The Week Recession Talk Grew Very Loud

Topline: Recession fears—which have gone up and down and back up just in the past nine months—suddenly seem here to stay for the foreseeable future, as global growth slows to a crawl amid trade war fears. Here’s what happened this week, along with key reactions:

  • Goldman Sachs issued a note Monday saying a trade deal between the U.S. and China is not expected to be made before the 2020 presidential election.
  • On Tuesday, Trump walked back planned tariffs on China, delaying some until after holiday shopping, his first acknowledgment that tariffs impact U.S. shoppers.
  • On Wednesday, Germany’s economy was reported to have shrunk as it contends with Trump’s tariffs and trade war with China.
  • Trump also blasted the Federal Reserve Wednesday on Twitter, as he blamed the central bank for dragging down the U.S. economy and returns on government bonds.
  • Then Wednesday’s close registered the worst stock performance of 2019, as investors were spooked by Germany, China and the much-discussed inverted yield curve.
  • China responded on Thursday by promising a retaliation, threatening “necessary countermeasures.”
  • Global markets responded, with the Nikkei and FTSE 100 closing down over 1% Thursday.
  • By Friday, the Dow rebounded 300 points before closing bell, while the S&P recovered 40 points and the tech-heavy NASDAQ bounced almost 130. But the Dow still lost 1.5% for the week, while the S&P edged slightly down at 0.3%.
  • Globally, the FTSE 100 regained 50 points, while the Nikkei recovered 13 Friday, but both indexes ended the week lower than where they started.
  • Analysts pegged the stock market’s slight Friday recovery to an increase in government bond yields.

Key background: The yield curve is the difference in interest rates (or returns) between short-term and long-term bonds. Usually, investors get more money when they invest in 10-year bonds over three-month short-term bonds. The yield curve is also a pretty accurate historical predictor of recessions, so when it happens, economists and investors alike get worried. This year, the yield curve inverted in March and May, and it happened again Wednesday, contributing to the stock market’s tumble.

Further reading:

Why Trade War Plus Yield Curve Equals Recession (John T. Harvey)

Markets Panic For The Second Week In A Row (Milton Ezrati)

Fed Poised To React Swiftly To Persistent Yield Curve Inversion, With More Rate Cuts (Pedro Nicolaci da Costa)

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I’m a New York-based journalist covering breaking news at Forbes. I hold a master’s degree from Columbia University’s Graduate School of Journalism. Previous bylines: Gotham Gazette, Bklyner, Thrillist, Task & Purpose, and xoJane.

Source: The Week Recession Talk Grew Very Loud

 

Three Reasons Recession Fears Have Suddenly Increased

Topline: Falling stocks, trade wars and an inverted Treasury yield curve are three signs that analysts say are predicting a U.S. recession—the only problem, however, is that no one can definitively tell when (or if) one will actually happen.

  • The White House announced Tuesday it would delay some China tariffs from September 1 until December 15, causing the Dow Jones Industrial Average to zoom up nearly 500 points by mid-morning.
  • Stocks fell Monday and were predicted to decline Tuesday, as uncertainty mounts for a China trade deal and global economic health.
  • After Trump surprised the world with more tariffs on Chinese goods, Goldman Sachs analysts estimate a new trade deal will not materialize before the 2020 election.
  • In the bond market, an inverted Treasury yield curve—long used by economists as a recession predictor—is nearing the same level it had reached before the 2007 recession.
  • Bank of America analysts said the odds of a recession happening in the next year are greater than 30%.
  • And Morgan Stanley analysts predict a recession in the next nine months if the trade war between the U.S. and China continues to escalate.
  • Overall, economists cannot accurately forecast recessions, but they suggest de-escalating the trade war with China could soothe fears—and help Trump’s reelection chances.

Surprising fact: Analysis by the New York Times found that recent economic downturns occur in late summer. August of 1989, 1998, 2007, 2011 and 2015 all saw slowdowns.

Key background: One of the Trump’s key platforms is a strong economy, and the stock market has reached historic highs since he assumed office. The President has often used Twitter to demand economic changes, like interest rate cuts and trade deals, and the markets tend to respond to the president’s Twitter proclamations, but it remains to be seen if the economy will continue to grow.

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I’m a New York-based journalist covering breaking news at Forbes. I hold a master’s degree from Columbia University’s Graduate School of Journalism. Previous bylines: Gotham Gazette, Bklyner, Thrillist, Task & Purpose, and xoJane

Source: Three Reasons Recession Fears Have Suddenly Increased

 

Is a Recession Coming – Brooke Crothers

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In December 2007, Larry Kudlow, then a talking head for the business network CNBC, proclaimed, “There’s no recession coming. It’s not going to happen.” That same month, the economy plunged into the worst economic downturn since the Great Depression. This week, Larry Kudlow, now the director of the National Economic Council, stood on the White House lawn and struck a familiar note: “I’m reading some of the weirdest stuff [about] how a recession is right around the corner. Nonsense,” he said. “Recession is so far in the distance, I can’t see it……….

 

 

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