Image alt tag


There was a problem contacting the server. Please try after sometime.

Sorry, we are unable to process your request.


We're sorry, but the Insights and Intelligence Tool is temporarily unavailable

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.


We're sorry, but the Literature Center checkout function is temporarily unavailable.

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Tracked Funds

You have 0 funds on your mutual fund watch list.

Begin by selecting funds to create a personalized watch list.

(as of 12/05/2015)

Pending Orders

You have 0 items in your cart.

Subscribe and order forms, fact sheets, presentations, and other documents that can help advisers grow their business.

Reset Your Password

Financial Professionals*

Your password must be a minimum of characters.

Confirmation Message

Your password was successully updated. This page will be refreshed after 3 seconds.



Economic Insights

Investment leaders discuss the factors that moved financial markets this year.


Looking Back at a Challenging 2018

A Roundtable Discussion

ID: Joseph Graham, CFA

Investment Strategist

Joseph Graham: Welcome to the latest Lord Abbett investment roundtable. My name is Joseph Graham. I lead the investment strategists group here at Lord Abbett. Today I'm joined by a number of our senior investment professionals, portfolio managers who bring a wealth of expertise in the capital markets and in their individual domains of expertise, which we will talk about.

ID: Kewjin Yuoh

Partner and Portfolio Manager

Kewjin Yuoh: Kewjin Yuoh, partner and portfolio manager in taxable fixed income.

ID: Dan Solender, CFA

Partner and Director of Tax-Free Fixed income

Daniel Solender: Dan Solender, partner and director of tax free fixed income.

ID: Leah Traub, Ph.D.

Partner and Portfolio Manager

Leah Traub: Leah Traub, partner and portfolio manager in taxable fixed income.

ID: Giulio Martini

Partner, Director of Strategic Asset Allocation

Giulio Martini: Giulio Martini, partner and head of global asset allocation.

ID: Thomas O'Halloran, J.D., CFA

Partner and Portfolio Manager

Tom O'Halloran: Tom O'Halloran, partner and manager of growth equities.

Graham: So let's start with year-end review. It's certainly been an interesting year. We've seen a number of bouts of volatility. The latest [came] in the last six weeks, where we've had a number of [market] leaders over the year turn over. Giulio, we'll start with you, what's behind this latest market weakness? And do you think it's warranted?

Martini: Well, I feel like we've always had two strands in current politics with respect to how they affect growth and the economy and the markets. The first strand was the [U.S.] tax cut and tax reform package, along with deregulation. That was growth positive, and positive for corporate earnings. And then the second part of the agenda, which had to do with trade and immigration restrictions, was always clearly going to be negative for the market, and negative for growth and earnings.

And I think we've turned around to focus more on that second part right now. And looking forward, as we've seen a few signs of slowdown in the global economy, it's coincided with that uncertainty - about the negative part of these economic policies that I think have really started to worry investors about how this all could come together and develop over the next year or so.

Graham: And that would make sense. The turmoil seemed to start in emerging markets over the early summer [of 2018]. So it would make sense that it would be trade-related. It seems to have somewhat abated there and then spread into other sectors. Tom, growth stocks in particular, do you think-- do you think trade's behind a lot of the weakness there and a lot of the rotation? Or do you think it's something else?

O'Halloran: I don't know what the culprit is at this point. I think it's the Fed reducing the balance sheet, raising interest rates to a greater degree than it is the trade issues. But they're both at work here, in bringing about the corrective phase that we find ourselves in right now. The growth stocks were leaders for 21 months or so. Often when they go that long, [growth stocks] go through a corrective phase for some period of time. And that's clearly what's happening. The leadership of the equity markets has changed from the FAANG stocks to many of the defensive stocks [for example], utilities, and consumer staples.

So we are currently in a corrective phase. I think the Fed is the main culprit, but we really don't know the culprit yet. And all of problems and risk to the market [that] were discussed at the last time we got together? They finally came to matter [at yearend].

Graham: How about the locus of the problem, emerging markets? Do you think there a tough road ahead for them with the strengthening dollar? Do you think the volatility continues?

Traub: I definitely do agree that it started with the emerging markets. And I think it was a combination, echoing what Tom said, with the Fed raising rates, reducing liquidity. And then, also, some of the trade talk [moving] back into the forefront. We [also started] seeing some slowdown in China. And that was affecting the emerging markets. It also affected commodities, which [in turn] affected the emerging markets.

And then we saw the dollar really start strengthening; it was really about April [when we] started seeing that take off, [extending] into the summer. We've seen a little bit of a reprieve now. As things have moved away from emerging markets and broadened out.

I do think the volatility is still going to be with us. We don't have resolution on the trade front, especially as it relates to China. And that is really the key tension that we have. I don't think [we will] get a quick or a full resolution. We may get little deals here and there, but I think this [will] ebb and flow, and be with us for a while.

I think the emerging markets are going to be at the whim of the [U.S.] dollar in some respects. And therefore the pace of Fed hikes and what the Fed [ultimately] ends up doing. So I think volatility is definitely here to stay. But I do think valuations have moved to reflect that volatility, so that there may be chances for it to come back a little bit, as we've seen. That may continue. And then, we may see some reversal.

Graham: Surely there are other things that have contributed to some of the weakness. One I can think of is the amount of debt [the United States has] put on at a federal level, and probably at a state level as well. Dan, can you give us a picture of what the fiscal situation looks like?

Solender: The municipal bond market this year has had a few different parts. And in a year where it's been slightly negative, one component is Fed activity, economic growth, and the impact on interest rates. The other is the tax bill from last year. And all of it has had an impact on the fiscal situation. On the Fed side, obviously the Fed has raised rates. Rates have gone up.

That's gotten retail investors very concerned about rising rates, which has made them reduce demand for the longer end of the market [and move] into the shorter end of the market. That has meant a steepening yield curve on the municipal bond side, which has been surprising a lot of [people]. When you go out there and talk to people, they all think we're following the taxable market, where the yield curve's been flattening. But we've actually been steepening this year, primarily because of the supply and demand dynamics with retail investors being concerned about rates.

On the other side, the tax bill had a big impact because it pushed a lot of our supply into December of last year. So we've had a really slow first half of the year for supply. That's picked up a little bit in the in the second half, but [it's] still on the lighter side. Even though we've had a good fiscal situation, with revenues being strong and state economies doing well, the states and municipalities have been holding back a little bit on borrowing, which has been a positive so far.

But another impact from the tax bill [is the] steepening yield curve, because retail investors are not wanting to go out [to longer maturities]. And typically institutional investors - banks and insurance companies - have been investing in the longer end of the market. But the tax bill lowered the corporate tax rate, [and] lowered banks' and insurers' demand for longer bonds. And that's [resulted in] less demand on the longer side.

So fiscally, things are doing pretty well. States are performing well. Credit quality is doing well. But we've had a steepening yield curve that's led to the investment-grade market being slightly negative for the year. The lower quality market [has been] positive for the year.

Graham: Kew, from a taxable fixed income perspective, do you see any other contributors to the weakness this year?

Yuoh: Sitting here, there is a sense of deja vu from the last time we gathered. Then, things were weakening a little bit. And we were talking about the flattening yield curve. And the narrative in the markets at that time seemed to be the yield curve is flattening. If we [were to] get an inversion [of the curve, many believed that] recession happens and risk assets should be priced wider. And that's what everyone was concerned about.

When we were last here, we talked about [the notion that] “this time it's most likely different.” The yield curve is actually flatter now than it was when we last met. And that narrative is completely gone. So what's the narrative now? And does it make sense? Does it justify what's happened? We came into the third quarter believing that this time it was different, that the flat yield curve was okay. And in the third quarter, risk assets seemed to agree with us.

Risk assets did well. The fundamentals of the economy were the backdrop. And all of a sudden, we hit the fourth quarter and the narrative became “we can't handle rising rates. The Fed's going too fast. It's going to be too much. Higher rates are going to be a problem. And that seemed to be one of the main narratives for all the weakness that we had. But I would disagree with that.

How is that so different from what we've been experiencing the last few years in terms of the Fed raising rates 25 basis points every quarter and the expectation that they're going to continue to do so, especially with fundamentals so strong? And [with] inflation so tame, they have the room to do this. I would point to one thing.

When the Fed came out in their September meeting and removed [the word] "accommodative" from their [post-FOMC meeting] statement, they started to point towards data dependency mattering more. I think that should have signaled to the markets that we are due for higher volatility because of higher uncertainty. And when you have higher uncertainty, you should have higher risk premiums.

But I completely agree with Leah that the weakness that we've seen thus far has offset that correction that [came] from higher uncertainty. And the fundamentals of the economy—and I'm sure we'll get to it later—remain quite robust.

For more on the 2019 investment outlook, please visit


A basis point is one one-hundredth of a percentage point.

ECB refers to the European Central Bank.

FAANG is a popular acronym for five high-performing technology stocks: Facebook, Amazon, Apple, Netflix, and Google [now Alphabet, Inc.].)

Fed refers to the U.S. Federal Reserve.

Risk asset is describes any financial security or instrument that is not a risk-free asset (i.e. a high-quality government bond). Risk assets generally encompass equities, commodities, property, and all areas of fixed income apart from high-quality sovereign bonds.

Yield is the annual interest received from a bond and is typically expressed as a percentage of the bond's market price. Spread is the difference in yield between two different investments.

Yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares the three-month, two-year, five-year and 30-year U.S. Treasury debt. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates. The curve is also used to predict changes in economic output and growth.

No investing strategy can overcome all market volatility or guarantee future results. Statements concerning financial market trends are based on current market conditions, which will fluctuate. All investments carry a certain degree of risk, including the possible loss of principal, and there are specific risks that apply to each investment strategy.


The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. Lord Abbett has no obligation to update any or all of such information. All amounts, market value information, and estimates included herein have been obtained from outside sources where indicated or represent the good faith judgment of Lord Abbett. Where such information has been obtained from outside sources, Lord Abbett cannot guarantee the accuracy or completeness of such information.

References to specific securities and issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. The securities referenced may or may not be held in portfolios managed by Lord Abbett and, if such securities are held, no representation is being made that such securities will continue to be held.

Risks to Consider: The value of investments in fixed-income securities will change as interest rates fluctuate and in response to market movements. Generally, when interest rates rise, the prices of debt securities fall, and when interest rates fall, prices generally rise. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investments in high yield, lower-rated debt securities, sometimes called junk bonds, and may involve greater risks than higher-rated debt securities. Lower-rated securities are subject to greater credit risk, default risk, and liquidity risk. Credit risk is the risk that debt issuers will become unable to make timely interest payments, and at worst will fail to repay the principal amount. The municipal market can be affected by adverse tax, legislative, or political changes, and by the financial condition of the issuers of municipal securities. Income from municipal bonds may be subject to the alternative minimum tax. Federal, state and local taxes may apply. Investments in Puerto Rico and other U.S. territories, commonwealths, and possessions may be affected by local, state, and regional factors. These may include, for example, economic or political developments, erosion of the tax base, and the possibility of credit problems. Investments in foreign or emerging market securities, which may be adversely affected by economic, political, or regulatory factors and subject to currency volatility and greater liquidity risk.

The value of investments in equity securities will fluctuate in response to general economic conditions and to changes in the prospects of particular companies and/or sectors in the economy. Small and mid cap company stocks tend to be more volatile and may be less liquid than large cap company stocks. Mid cap companies typically experience a higher risk of failure than large cap companies. Small cap companies may also have more limited product lines, markets, or financial resources and typically experience a higher risk of failure than large cap companies.

Asset allocation or diversification does not guarantee a profit or protect against loss in declining markets.

No investing strategy can overcome all market volatility or guarantee future results.

Market forecasts and projections are based on current market conditions and are subject to change without notice. Projections should not be considered a guarantee.

This broadcast may contain assumptions that are "forward-looking statements," which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different from those described here.

This broadcast serves as reference material and is provided for general educational purposes only; does not constitute an offer to acquire, solicitation for an offer to acquire, an offer to sell or solicitation for an offer to buy, any securities, nor is intended to be relied upon as a forecast, research, or investment advice on any securities, and cannot be used for any of the foregoing.

The views and opinions expressed by the Lord Abbett speaker are those of the speaker as of the date of the broadcast, and do not necessarily represent the views of the firm as a whole. Any such views are subject to change at any time based upon market or other conditions and Lord Abbett disclaims any responsibility to update such views. Neither Lord Abbett nor the Lord Abbett speaker can be responsible for any direct or incidental loss incurred by applying any of the information offered.

The value of investments and any income from them is not guaranteed and may fall as well as rise, and an investor may not get back the amount originally invested. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon, and risk tolerance.

Please consult your investment professional for additional information concerning your specific situation.

The information provided is not directed at any investor or category of investors and is provided solely as general information about Lord Abbett's products and services and to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither Lord Abbett nor its affiliates are undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity. If you are an individual retirement investor, contact your financial advisor or other fiduciary about whether any given investment idea, strategy, product or service may be appropriate for your circumstances.

This broadcast is the copyright © 2018 of Lord, Abbett & Co. LLC. All Rights Reserved. This recording may not be reproduced in whole or in part or any form without the permission of Lord Abbett. Lord Abbett mutual funds are distributed by Lord Abbett Distributor LLC.


Webinar Replay: 2019 Outlook
Listen to a replay of our Jan. 2 discussion with our investment leaders about their 2019 outlook for the economy, fixed income, and equities markets.

*Financial professionals only.


Please confirm your literature shipping address

Please review the address information below and make any necessary changes.

All literature orders will be shipped to the address that you enter below. This information can be edited at any time.

Current Literature Shipping Address

* Required field