by Robert Huebscher
Most observers saw the recent troubles in the high-yield markets – the gating of the Third Avenue and Stone Lion funds – as a precursor to a junk-bond crisis. Instead, investors should be focusing on a potentially bigger problem, according to Russell Napier. Open-end mutual funds holding emerging-market debt are at risk.
by Laurence B. Siegel
In the two decades since his death, Hyman Minsky’s stature has grown enormously. He foresaw the great financial crisis of 2007-2009, and economists routinely refer to “Minsky moments” as the tipping point when seemingly stable financial markets collapse with catastrophic consequences. It’s instructive to speculate on how Minsky would view our post-crisis economic recovery, and a new book allows us to do just that.
by John Alberg and Michael Seckler
Now is a very attractive time to invest in value strategies. In similar times in the past, value investors achieved both strong absolute returns and robust relative performance versus the broad market indexes. Let’s explore what history can teach us about what is to come.
by Dan Richards
Today, I highlight an example of bad advice – focusing on how to engage people who aren’t clients in casual conversation and in particular on how to respond to the question “How’s business?”
by Dan Solin
If you organize initial meetings with prospects to leverage what you know about them, you are much more likely to convert them to clients.
by Robert Huebscher
James Montier is a member of Grantham Mayo van Otterloo’s (GMO’s) asset allocation team. In this interview, he discusses the effect of monetary policy on market valuations, and offers his opinion on smart-beta and liquid-alt investment products.
by Joe Tomlinson
The New Year brought us two new books on retirement planning written by well-known authors – Teresa Ghilarducci and Jane Bryant Quinn. Ghilarducci focuses on key steps to build retirement savings, while Quinn provides a much fuller analysis for both accumulation and de-accumulation. Both are books advisors should read themselves as candidates to recommend to clients.
by Niall H. O’Malley
To understand the role of short selling, one has to step back and see how it impacts price discovery in equity markets. We are familiar with terminology such as short squeeze, prime brokers and short interest, but what does it all mean?
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by Beverly Flaxington
With market movements being mostly negative, I’m riddled with anxiety and stress. I dread every phone call with a client. Is there anything I can do to alleviate this? I can’t ignore the markets; I have a job to do.
by John Mauldin of Mauldin Economics
The total value of all the world’s oil reserves is over $100 trillion less than it was just a year and a half ago.
by Liz Ann Sonders, Brad Sorensen and Jeffrey Kleintop of Charles Schwab
Don’t just do something, sit there! Not panicking can be tough to do in times of increased volatility, but often the best advice to avoid emotional decisions. We continue to expect severe bouts of volatility at least until the trajectory of the U.S. and global economy is more definitive. In the meantime, the Fed is likely to become more dovish in the near-term, which could stabilize the volatility. Recent results for global PMI readings are relatively encouraging and certainly argue against the apocalyptic forecasts so prevalent today.
by Frank Holmes of U.S. Global Investors
I’ve put together 10 figures to know as China enters a new year.
by Carl Tannenbaum of Northern Trust
Economic discussions in Washington this week centered on a series of puzzles that are confounding the outlook.
by Henry Zhang of Matthews Asia
China’s air pollution has made frequent headlines recently, and authorities have implemented various measures to try to alleviate the situation. This week Portfolio Manager Henry Zhang writes about China’s attempts to solve its environmental issues during this critical juncture in its economic development.
by Ben Inker, Jeremy Grantham of GMO
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines U.S. high yield corporate bonds, an "asset class that had a notably bad year," concluding, "at current spreads, high yield seems to be no worse than fair value and probably better than that... In today's environment, that makes it one of the best available risk assets for investors" ("Giving a Little Credit to High Yield").
by Nouriel Roubini of Project Syndicate
Since the beginning of the year, the world economy has faced a new bout of severe financial market volatility, marked by sharply falling prices for equities and other risky assets. A variety of factors are at work – and will remain so throughout 2016 and beyond.
by Joe Becker, Adam Schenck, Jeff Greco of Milliman Financial Risk Management
Markets tumbled out of the gate in early 2016 sending investors fleeing to quality. Rates around the globe plummeted in response, pushing some countries’ yield curves further into negative territory.
by Jeffrey Saut of Raymond James
Given the unmerciful “selling stampede” ushered in with the new year, I thought it would be appropriate to republish one of my strategy reports from a few years ago, because its advice is timeless. Indeed, after 45 years in this business, I have seen a number of cycles and developed a long-term perspective, much like Richard Russell wrote about in “Rich Man, Poor Man.”
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The week-over-week change in our aggregate world market watch list was a healthy 1.10% gain, up from 0.68% the previous week, which was preceded by harshly negative numbers the first two weeks of 2016. Appropriately enough, Japan's Nikkei was the top performer, up 3.30% for the week, with most of the gain triggered by the Bank of Japan's announced policy of negative interest rates. Global indexes surged following the announcement. China's Shanghai is the conspicuous outlier, plunging 6.14% for the week despite a 3.09% rally on the news from Japan.
Our benchmark S&P 500 ended the week with selloff in two waves. The index sank at the open and trended downward to a late morning low. It then traded sideways until a second wave of selling after the lunch hour sent the index to its -2.23% intraday low. A bit of buying in the final hour trimmed the loss to -1.85%. Technology stocks were particularly hard hit, as reflected in the -3.25% plunge in the NASDAQ. The 500 is now down 8.02% year-to-date and 11.77% off its record close on May 21st of last year.
Note: This commentary has been updated to include Nonfarm Employment for January. As the adjacent thumbnail of the past year illustrates, Nonfarm Employment remains in its upward trend. The January report of 151K new jobs was substantially below expectations (Investing.com was looking for 190K), and the December number was revised downward by 30K from 292K to 262K.
ECRI's latest weekly data point shows a fractional decrease from the previous week's number. The WLI annualized growth indicator (WLIg) is at -2.3, a decrease of 0.2 from the previous week, and well off its interim low of -4.7 in mid-January. The YoY is now at -0.77%, in negative territory for the majority of the last 52 weeks.
What does the ratio of unemployment claims tell us about where we are in the business cycle and our current recession risk? At present, the ratio for Continued Claims has been trending down. Excluding the 1981 recession, the Initial Claims trough lead time for a recession has ranged from 7 to 22 months with an average of 12 months if we include the 1981 recession and 14 months if we exclude it. Admittedly, the last recession is an extreme example, but the Initial Claims trough preceded its December 2007 onset by a whopping 22 months.
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services.
Today's report of 151K new nonfarm jobs in January was lower than the Investing.com forecast of 190K. December's nonfarm payrolls was revised downward by a 30K. Further downward revisions were made to 2015 numbers. The unemployment rate declined slightly to 4.9%.