More on Related Themes
2015-10-06 00:00:00 Equity Outlook Fourth Quarter 2015 by Neuberger Berman Asset Allocation Committee of Neuberger Berman
The Committee upgraded our view on U.S. large cap equities following the recent correction, and maintained a slightly overweight view on European equities. Our view on MLPs has also improved following a challenging year.
2015-10-03 00:00:00 The 10 Most Competitive Countries in the World by Frank Holmes of U.S. Global Investors
No new countries have entered or exited this exalted list, and there was very little rank-shuffling. For the seventh consecutive year, Switzerland is the most competitive country. For the fifth straight year, Singapore is number two. The U.S. comes in at number three for the second year. And so on.
2015-10-02 00:00:00 Designing a Dividend Growth Portfolio for a Specific Retirement Yield Objective: Part 1 by Chuck Carnevale of F.A.S.T. Graphs
Managing an investment portfolio is a very personal matter. Consequently, the most important consideration is to design a portfolio that meets your own unique goals, objectives and risk tolerances. Everyone is different, and consequently, every investment portfolio can and should be appropriately different as well. Stated more straightforwardly, I do not believe in cookie-cutter or one-size-fits-all approaches to portfolio design.
2015-09-30 00:00:00 Liquid Alternatives: Considerations for Portfolio Implementation by Justin Blesy, Ashish Tiwari of PIMCO
Since the financial crisis, investors have poured nearly half a trillion dollars into liquid alternative strategies – typically mutual funds and ETFs that deploy non-traditional strategies once reserved for large institutional investors.i These vehicles offer the potential for diversification, downside risk mitigation and attractive risk-adjusted returns with the transparency and daily liquidity many investors desire. Liquid alternatives have been a democratizing force for investors, and we believe today’s market environment arguably has only made them more attractive.
2015-09-29 00:00:00 The High Yield Market: A Look at Past Recessions by Heather Rupp of AdvisorShares
The Fed interest rate decision came and went with relatively little market reaction. They pushed out an increase in rates, citing concerns about global economic conditions. Like many, we do share their concerns about the global economy, as we expect that it will result in muted growth here at home (and as we have noted in prior writings over the past several months, we’d expect that muted growth to ultimately result in a very moderate move in rates). But some market participants are voicing concerns that this global weakness will lead to a U.S. recession.
2015-09-28 00:00:00 Nearing Normalization / Shutdown Shuffle – Part 2 by Scott Brown of Raymond James
Fed Chair Janet Yellen downplayed concerns about the rest of the world and indicated that she was among the majority of Fed officials expected to raise short-term interest rates this year. Meanwhile, while John Boehner’s resignation as House Speaker may signal an agreement on the budget, Congress has moved further away from future compromise.
2015-09-25 00:00:00 How Will These Leaders of 4 Billion People Change the World? by Frank Holmes of U.S. Global Investors
This week the U.S. played host to three prominent and illustrious leaders to billions of people: Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and Pope Francis. Among them, they lead—either politically or spiritually—nearly 4 billion people worldwide, more than half of everyone living on the planet right now.
2015-09-25 00:00:00 China, Commodities, and Crisis: What’s Next for Emerging Markets by Zachary Karabell of Envestnet
China’s growth story fueled global markets for years, and the recent market rout raises concerns that the spigot may be tapping out. But is it really? Emerging markets, currently out of favor with investors, are showing signs of domestic economic growth driven by an expanding middle class. Could these economies, along with China, re-emerge as bright spots in the global markets?
2015-09-23 00:00:00 Balancing Risks and Opportunities in the Multi-Speed World by Richard Clarida, Andrew Balls of PIMCO
Read our global economic outlook for the near term and implications for asset classes.
2015-09-22 00:00:00 The Unique Benefits of Mortgage-Backed Securities by Jason Mandinach of PIMCO
MBS have potential to outperform U.S. Treasuries with high liquidity and low correlation to risk assets.
2015-09-22 00:00:00 Are we About to see a Big Time Rally in the Long Bond? by Bryce Coward of GaveKal Capital
During this cycle the positioning of commercial traders (the smart money) has been a crystal ball for players in the treasury market. Every peak in long bond rates since 2010 has been associated with commercial traders net long options and futures contracts on said instrument. At a net long positioning of about 34,000 contracts, the commercials are the most long the long bond since the end of 2013 before the 30-year treasury bond yield fell from 4% to about 2.2% over the course of 13 months.
2015-09-19 00:00:00 Here Are Two Ways Investors Can Take Advantage of the Fed's Uncertainty by Frank Holmes of U.S. Global Investors
Although interest rates could still be hiked in one of the two remaining times the Federal Open Market Committee (FOMC) meets this year, I’m inclined to think they’ll stay near zero until at least 2016. The decision is a welcome one for both gold demand and new home purchases. When rates rise, gold becomes less attractive for some investors, who are encouraged to exchange their no-yielding gold for income-producing assets.
2015-09-18 00:00:00 Municipal High Yield: Do Outflows Indicate Increased Opportunity? by James Iselin, S. Blake Miller of Neuberger Berman
It may seem counterintuitive, but recent investment outflows may have contributed to return potential within the municipal high yield marketplace.
2015-09-17 00:00:00 More Volatility on U.S. Horizon Has Sights Turning to Asia by Russ Koesterich of BlackRock
After weeks of struggling, global equities stabilized last week. In the U.S., the S&P 500 Index rose 2.08% to 1,961, the Dow Jones Industrial Average climbed 2.05% to 16,433, and the tech-heavy Nasdaq Composite Index advanced an even stronger 2.97% to end the week at 4,822. Meanwhile, the yield on the 10-year Treasury rose from 2.13% to 2.19%, as its price correspondingly fell.
2015-09-12 00:00:00 Life Is Uncertain and So Are Interest Rates by Frank Holmes of U.S. Global Investors
Right now, a lot of investors are wondering about the uncertainty of rising interest rates—the causes, effects and possible ramifications. Many people have been saying for weeks and months now that a rate hike is imminent and that September is the anticipated takeoff. I’ve been skeptical of this, and now a chart from highly-respected market analyst Jeff deGraaf confirms my skepticism.
2015-09-04 00:00:00 Here’s Your Guide to What the Influencers Are Saying about Commodities by Frank Holmes of U.S. Global Investors
A few legendary influencers in investing are making huge bets right now on commodities, an area that’s faced—and continues to face—some pretty strong headwinds. What are we to make of this?
2015-09-03 00:00:00 Look Out Below? by Jim McDonald of Northern Trust
Are we experiencing a healthy correction or something more? After a long-period of relative calm, risk assets sold off meaningfully in response to global growth concerns. Our Chief Investment Strategist analyzes the fundamental picture in the wake of the recent downturn and what investors should do now.
2015-09-03 00:00:00 Remember This Isn’t 2008 by Russ Koesterich of BlackRock
After a seesaw week for stocks, Russ Koesterich explains why it's important to maintain perspective.
2015-09-02 00:00:00 Keeping Firm Perspective as Markets Gyrate by Russ Koesterich of BlackRock
BlackRock Global Chief Investment Strategist Russ Koesterich discusses why it is important to maintain perspective amidst the recent volatility, and how the selloff has created some areas of value.
2015-09-01 00:00:00 Understanding Fair Valuation: A Common Sense Approach To Long-Term Investing Success by Chuck Carnevale of F.A.S.T. Graphs
In order to understand what the intrinsic value or fair value of a common stock is, you must think like a long-term business owner and not like a stock trader. Additionally, you must think like a business owner that has no intention of selling their business. Put another way, your business generates your livelihood. Therefore, your primary focus and attention is on answering the question: how’s business?
2015-08-28 00:00:00 China’s Economy Is Undergoing a Huge Transformation That No One’s Talking About by Frank Holmes of U.S. Global Investors
Misconception and exaggeration are circling China’s economy right now like a flock of hungry buzzards. If you listen only to the popular media, you might believe that the Asian giant is teetering on the brink of economic disaster, with the Shanghai Composite Index’s recent correction and devaluation of the renminbi held up as “proof.”
2015-08-25 00:00:00 On My Radar: An Optimist Sees The Opportunity In Every Difficulty by Steve Blumenthal of CMG Capital Management Group
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” – Winston Churchill
2015-08-24 00:00:00 Equities: Enhancing Your Small Cap Allocation by Laura Schlockman, Steve Jones of PIMCO
Our New Neutral outlook is generally supportive of equities: Low discount rates, recovering but muted inflation and a drawn-out business cycle argue for positive equity performance. However, full valuations and uneven growth suggest returns may be significantly lower than long-term averages. This means that capturing equity alpha will be critical for investors to meet their return objectives.
2015-08-21 00:00:00 Gold Glimmers as Global Market Fear Grips Investors by Frank Holmes of U.S. Global Investors
Gold this week broke above its 50-day moving average as a fresh round of negative news from around the globe rekindled investors’ interest in the yellow metal as a safe haven. The Fear Trade, it seems, is in full force.
2015-08-20 00:00:00 Chasing Yield: Is Sustainable Income a Better Way? by Brian Meath of Russell Investments
Looking at the dangers and opportunities of yield-seeking investing, Brian Meath explains an alternative approach: sustainable income.
2015-08-19 00:00:00 Crossover Bonds: Catching the Rising Stars by Hozef Arif, Michael Brownell of PIMCO
Many investors seeking yield in the current low interest rate environment are reluctant to take on high risk. Corporate crossover bonds, which straddle the line between the investment grade and high yield bond markets, may offer a solution.
2015-08-14 00:00:00 China Not Immune to Contagious Quantitative Easing and Massive Printing of Cheap Money by Frank Holmes of U.S. Global Investors
First it was the U.S. Federal Reserve. Then, in 2013, Japan launched what became known as Abenomics. The European Central Bank (ECB) followed suit in 2014. And now the People’s Bank of China has joined the parade. All of them in some way stimulated economic growth by initiating monetary quantitative easing (QE) programs.
2015-08-14 00:00:00 The High Yield ETFs: Market Size, Money Flows, and Liquidity by Heather Rupp of AdvisorShares
The entire U.S. fixed income market (municipals, Treasuries, mortgages, corporates, federal agency bonds, money market, and asset back securities) totals $39.2 trillion. Of this, corporate credit is about $8 trillion. The high yield bond market is a growing piece of that corporate debt piece, now at $1.8 trillion, and accounts for over 20% of total corporate bonds outstanding. If you add in high yield floating rate loans, that total high yield debt number moves to over 30% of corporate debt.
2015-08-07 00:00:00 Gold Holds Its Own Against These Media Darlings by Frank Holmes of U.S. Global Investors
A recent Bloomberg article points out that the gold rout has cost China and Russia $5.4 billion, an amount that would sound colossal were it not for the fact that U.S. media companies such as Disney and Viacom collectively lost over $60 billion for shareholders in as little as two days this week. Below are the weekly losses for just a handful of those companies. Compared to many other asset classes, gold has held up well, even after factoring in its price decline.
2015-08-05 00:00:00 What, No More Bubble Wrap?! by Michael Kayes of Willingdon Wealth Management
I’ve been a bit troubled lately as I toil away researching and contemplating the state of and future prospects for the markets. For example, I recently learned that Charlotte-based manufacturer, Sealed Air Corporation, had developed a lighter, more economical packaging material to replace bubble wrap. While I applaud the technological advancement, I am saddened by the demise of such a fun product to handle.
2015-08-05 00:00:00 The Case for Hedge Fund Strategies in a Rising-Rate Environment by Dr. Sudhir Krishnamurthi, Ronald van der Wouden, Kenneth LaPlace of Wells Fargo Asset Management
Dr. Sudhir Krishnamurthi, Ronald van der Wouden, and Kenneth LaPlace from The Rock Creek Group, LP explain why hedge funds may outperform traditional fixed-income investments in a rising-rate environment.
2015-08-04 00:00:00 On My Radar: The Fed – Between a Rock and a Hard Place by Steve Blumenthal of CMG Capital Management Group
Now look at them yo-yo’s that’s the way you do it.You play the guitar on the M.T.V. That ain’t workin’ that’s the way you do it. Money for nothin’ and your chicks for free.” Money For Nothing – Dire Straits
2015-08-03 00:00:00 The End of U.S. Sovereign Debt as a Near Perfect Protection Asset by Michael Winchell of Larkin Point Investment Advisors LLC
For the past 30 years, the paradigm portfolio holding 60-percent stocks and 40-percent government debt seemed to exhibit a reasonable mix of both growth and protection, being a simple allocation the market beta of two very liquid asset classes with low (occasionally negative) correlation.
2015-08-01 00:00:00 Gold on Sale, Says the Rational Investor by Frank Holmes of U.S. Global Investors
The leveraged gold futures derivatives market is knocking down the precious metal, yet in massive contrast, this drop has ignited a shopping frenzy according to gold coin dealers. I spoke with several friends and industry experts this week who confirmed the record sales numbers for the month. In fact, American Gold Eagle sales reached 161,500 ounces in July, the highest monthly figure since April 2013. What gives?
2015-07-29 00:00:00 Equities, Dividends & Rising Interest Rates by Guinness Atkinson Investment Team of Guinness Atkinson Asset Management
With interest rates at generational lows and what is likely an improving US economy, it is natural to contemplate or even worry about the possibil- ity of rising interest rates. Common perception is that rising interest rate environments are generally not favorable to equities and income oriented in- vestments. This is certainly true for bonds1 whose prices move directly and inversely with changes in interest rates. But is it true for equities in general and for dividend paying stocks in particular?
2015-07-29 00:00:00 Price-Insensitive Sellers by Ben Inker of GMO
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines the impact on a range of global asset classes of "price-insensitive market participants" who may "buy assets for reasons other than the expected returns those assets may deliver."
2015-07-27 00:00:00 On My Radar: Grantham, HY and the Cyclical Bear in Gold by Steve Blumenthal of CMG Capital Management Group
If you’re young, take the whack [and] if you’re old, pray for the Fed to keep going.”– Jeremy Grantham
2015-07-25 00:00:00 3 Reasons Why Gold Isn’t Behaving Like Gold Right Now by Frank Holmes of U.S. Global Investors
The last time the metal descended this quickly was 18 months ago, on January 6, 2014, when someone brought a massive gold sell order on the market before retracting it in a high-frequency trading tactic called “quote stuffing.”
2015-07-24 00:00:00 Market Timing Is Not Appropriate for Retired Investors by Chuck Carnevale of F.A.S.T. Graphs
Any discussion on the appropriateness of any “investment” strategy should start with a discussion on the important differences between investing versus speculating. Although these are radically different concepts, it is all too common in finance jargon to ubiquitously reference all financial activity as investing, even when speculating would be the more precise term. I believe it is vitally important for people to understand the distinctions between investing and speculating, and it’s even more important to be cognizant of which you are engaging in.
2015-07-24 00:00:00 Don’t Let the Noise Keep You Up at Night by Carl Kaufman, Simon Lee, Bradley Kane of Osterweis Capital Management
Three subjects have concerned the markets recently: a Greek debt default and possible exit from the European Union (Grexit), the Federal Reserve’s (the Fed’s) normalization of interest rate policy and potential bond market illiquidity following a rise in interest rates. The first two are binary outcomes, which have been debated in the marketplace for years. While discussing these possible outcomes ad nauseam may be a palliative to some, in our view it doesn’t really provide much meaningful, incremental information until more definitive actions are taken.
2015-07-23 00:00:00 Are MLPs Waiting for Godot? by David Chiaro of Eagle Global Advisors
Like the absurdist play where two characters Vladimir and Estragon wait for a mysterious Godot who never shows up, investors in MLPs continue to wait for definitive answers to the "big questions" facing MLPs: when will interest rates rise and what will happen with future oil production and prices?
2015-07-23 00:00:00 Mid-Year Outlook: Global Economy Likely to Withstand China, Greece by John Calamos, Sr. of Calamos Investments
The global markets and economy should be able to move higher for the remainder of the year, with accommodative monetary policy and well-contained inflation providing tailwinds. The U.S. looks set to extend its not-too-hot, not-too-cold recovery, while Japan is benefiting from stimulus and pro-market reforms. Although economic conditions in Europe remain fragile and uneven, growth looks to be accelerating overall, and we believe the European Union has the tools to prevent a broader Europe contagion should the Greek bailout resolution fall apart.
2015-07-22 00:00:00 Quarterly Review and Outlook Second Quarter 2015 by Van Hoisington, Lacy Hunt of Hoisington Investment Management
From the cyclical monthly high in interest rates in the 1990-91 recession through June of this year, the 30-year Treasury bond yield has dropped from 9% to 3%. This massive decline in long rates was hardly smooth with nine significant backups.
2015-07-21 00:00:00 Secular Outlook: Implications for Asia-Pacific Investors? by Eric Mogelof, Alan Isenberg of PIMCO
We hope you have had the opportunity to review the summary from our secular forum in May: “The New Neutral Revisited,” written by PIMCO’s Group CIO Dan Ivascyn, Global Fixed Income CIO Andrew Balls an?d Global Strategic Advisor Rich Clarida. In this analysis, the authors identify the six key themes that emerged from our discussion, as well as six risks.
2015-07-17 00:00:00 How Much Bond Duration Could You Endure? by Chuck Carnevale of F.A.S.T. Graphs
In my most recent article titled “Designing a Retirement Portfolio That’s Just Right for You” I opined that a retirement portfolio should be designed to meet the individual investor’s specific goals, objectives and risk tolerances. I also suggested that the highest total return is not always the best approach because if the investor needs income to live off of, a focus on a consistent rising income stream makes more sense.
2015-07-17 00:00:00 Crude Oil Is the Best-Performing Commodity of 2015 So Far by Frank Holmes of U.S. Global Investors
The widest expansion this year was made by none other than crude oil, the worst-performing commodity of 2014. As of June 30, oil posted gains of over 11 percent, rising to $59.47 per barrel. After falling more than 50 percent since last summer, though, it had little else to go but up. That oil claimed the top spot just highlights the reality that commodities are in a depressed state right now.
2015-07-11 00:00:00 Global Investors: You Should Be Paying Attention to this Economic Indicator by Frank Holmes of U.S. Global Investors
In addition to our own macro models, BCA Research , a highly respected independent research company, pointed out that PMIs in developing economies have plunged to new lows. The International Monetary Fund also revised downward its global growth forecast for 2015. On this account, bad news is good news, as central bankers are scrambling to stimulate economic growth.
2015-07-09 00:00:00 Opportunity Set in Private Lending to Remain Robust by John Howe of Old Hill Partners
The U.S. economic environment continues to be ideal for asset-backed lending, according to a new research report from Old Hill Partners Inc.
2015-07-08 00:00:00 How We View the Big Picture by Team of Litman Gregory
We are regularly asked for our take on the broad macroeconomic topics of the day. Two of the more noteworthy big-picture subjects we have been asked about recently are the Greek debt crisis and the timing of the U.S. Federal Reserve rate hike. In most cases, we don’t believe we have new insights to add beyond the reams of commentary these topics typically inspire, and given the dynamic nature of these two topics, it is quite possible that new information will unfold as we publish this or shortly thereafter.
2015-07-07 00:00:00 On My Radar: Walking Into A Trap by Steve Blumenthal of CMG Capital Management Group
“If more respected investors had warned about the market in ’07, we might have avoided the crisis in ’08. I think the public is walking into a trap again…” -Carl Icahn via Twitter June 24, 2015
2015-07-07 00:00:00 Earning an Illiquidity Premium in Private Credit by Joshua Anderson, Tom Collier of PIMCO
With low yields and tight spreads prevalent in traditional liquid fixed income markets, many institutional investors are considering whether higher returns are available by assuming credit risk in private or illiquid form. We believe this type of alternative credit strategy may enhance portfolio returns, but investors should be extremely judicious when giving up liquidity, particularly today.
2015-07-02 00:00:00 Home of the Free, Land of the Entrepreneur by Frank Holmes of U.S. Global Investors
Where else but in America can a startup such as Uber be valued at $50 billion, higher than 80 percent of the companies in the S&P 500 Index, only six years after its founding? Where else but in America can someone reach billionaire status by inventing a new type of hosiery, as Sara Blakely did with Spanx? Before her now-ubiquitous undergarments were worn by women—and now men—all over the globe, Blakely was so broke that she had to write her own patent without the help of an attorney.
2015-07-01 00:00:00 Stuck in the Middle with You by Jerry Wagner of Flexible Plan Investments
I’ve always loved music and have tried to work it into my columns every once in a while. After writing an article centered on Passenger’s Let her go last week, I was not looking to do another one so soon. Still, when I saw the following chart on the State of the Markets blog this morning, the song title just popped into my head.
2015-07-01 00:00:00 Greek Contagion Fears Likely Overblown by Gary Black of Calamos Investments
We remain bullish on global equities despite the expected near-term volatility, as we believe the Greek situation will be resolved in a manner that the markets will view constructively. Although the Greek debt drama has veered off script over the past few days, we believe investors have overdiscounted the impact of Greece defaulting on its IMF loan. We expect volatility will stay high in the run up to the Greek austerity referendum scheduled for July 5.
2015-07-01 00:00:00 Greece and Puerto Rico Spark Global Volatility by K. Sean Clark of Clark Capital Management Group
More than five years after first entering investors’ view, the Greek drama has again hit center stage and has investors fretting about a market collapse.
2015-06-29 00:00:00 Don’t be Surprised - Speech to CFA Society of Chicago by Stephen Romick of FPA Funds
I’m reminded of a gentleman who discovers a genie in a bottle. Granted one wish only – apparently even genies have pricing power – the man asks for peace in the Middle East. The genie backs away and says, “That’s way too difficult. Give me something easier.” The man ponders his options and asks the genie instead, to help him pick a good mutual fund. The genie quickly responds, “Let me get to work on the Middle East.”
2015-06-27 00:00:00 $8 Trillion Alternative Energy Boom Is a Win for Copper by Frank Holmes of U.S. Global Investors
As the world’s population continues to grow, and as more people in developing and emerging countries gain access to electricity, the role alternative energy sources such as wind, solar and geothermal play should skyrocket. Between now and 2040, a massive $8 trillion will be spent globally on renewables, about two thirds of all energy spending, according to Bloomberg New Energy Finance. Solar power alone is expected to draw $3.7 trillion.
2015-06-22 00:00:00 On My Radar: Three-Way Asset Strategy by Steve Blumenthal of CMG Capital Management Group
“The probability of loss is no more measurable than the probability of rain. It can be modeled, and it can be estimated (and by experts pretty well), but it cannot be known.”– Howard Marks, Chairman, Oaktree Capital
2015-06-20 00:00:00 Public Pensions: Live and Let Die by John Mauldin of Mauldin Economics
I am not sure if my heart was ever that much of an open book, but I like to think I’m still relatively young. Nevertheless, I must admit that sometimes I want to “give in and cry.” This is especially so when I look at our nation’s public pension funds.
2015-06-19 00:00:00 Gold and Health Care Stocks Get a Clean Bill of Health by Frank Holmes of U.S. Global Investors
Even though the Federal Reserve announced this week that it would wait a little longer to raise rates, spooked investors fled to gold bullion, helping to drive prices above $1,200 an ounce. It was the greatest single-session surge by percentage in nearly a month and a half for the yellow metal, widely seen as a safe-haven investment. As I told MarketWatch yesterday, $1,200 is an important threshold for gold miners because it helps increase profitability and spur production.
2015-06-18 00:00:00 Concerned About Rising Interest Rates? Consider These Four Alternative Investments by Walter Davis of Invesco Blog
As I travel across the country meeting with financial advisors and their clients, a common concern I hear voiced is “how can I position my portfolio for when the inevitable happens and interest rates start to rise?” In response, I state that certain types of alternative investments are well suited to help prepare portfolios for rising interest rates in the future, while also potentially adding value in the present.
2015-06-16 00:00:00 One Step Closer to Normal by Russ Koesterich of BlackRock
The recent spike in interest rates, and corresponding drop in bond prices, has left longer-term U.S. bonds looking more reasonable. But will there be more rate volatility?
2015-06-16 00:00:00 High Yield Bonds: Rates and Returns by Heather Rupp of AdvisorShares
With a number of data points over the past month, including Friday’s better than expected jobs report, pushing the expectations for a September rate hike higher, concerns about the impact of interest rates on various asset classes is heating up. It is important to keep in mind that if and when “rates” do rise, we are talking about the Federal Funds Rate which we expect will primarily impact the short end of the yield curve, and less so those 5-year to 10-year maturities that relate more to the high yield market.
2015-06-16 00:00:00 Rate Hikes: Investor Risk Perceptions and Historical Context by Matthew Pasts of BTS Asset Management
During a recent quarterly webcast for financial advisors, we asked the audience about their clients’ biggest concerns for the remainder of 2015. The four options were: - Losing money on their equity allocations; - Not earning enough income; - Not keeping up with the stock market; - Losing money on their fixed income allocations. Of these, “losing money on their equity allocations” was by far the most popular response, at just under 40%. In our view, bond market risks are greater than many people realize.
2015-06-15 00:00:00 Bank Loans & High Yield: Conscious Uncoupling is Not Just for Celebrities by Cheryl Stober of Loomis Sayles
We have long believed that the bank loan market, as represented by the S&P/LSTA Leveraged Loan Index ("All Loans"), can be thought of as a true combination of high-quality loan risk and high yield bond risk.
2015-06-15 00:00:00 June Economic Update by John Richards of Bronfman E.L. Rothschild
A drop in exports, poor weather, and shipping yard difficulties led the U.S. economy back into negative territory after GDP was revised downward to -0.7%. Many economists believe this is a similar situation to what we saw in 2014 with a drop in GDP during the first quarter, and a subsequent rebound in the following quarters. However, the strong dollar effect has continued into April and May and will continue to provide a headwind for GDP. The preference by consumers to save additional earnings instead of spend is also putting downward pressure on growth.
2015-06-15 00:00:00 Bonds: Can’t Live With Them, but How Do You Live Without Them? by Joe Becker of Milliman Financial Risk Management
For generations of investors, conventional wisdom regarding managing portfolio risk relied on the cardinal rule of diversification. In its simplest form, this meant holding high quality bonds in an attempt to generate income, and offset volatility and drawdowns in the stock market.
2015-06-12 00:00:00 U.S. Economy Turns on the Afterburners-Is a Rate Hike Next? by Frank Holmes of U.S. Global Investors
So when will rates be raised again? Next Wednesday the world will tune in to see if Fed Chair Janet Yellen can answer that question. Though it's anyone's guess what she'll say, there's no denying that many of the economic indicators the Fed is keeping an eye on have sharply improved lately.
2015-06-10 00:00:00 U.S. Stands Out Amid Global Sluggishness by Scott Mather of PIMCO
A year ago, PIMCO said the world was in The New Neutral, as the path to recovery dragged on years after the financial crisis. Last month, at our annual Secular Forum in which our global investment professionals gathered to discuss our long-term outlook, we affirmed that thesis, and we recently published “The New Neutral Revisited” detailing and updating our views. Scott Mather, Chief Investment Officer U.S. Core Strategies, discusses how the outlook for the U.S. differs, to a degree, from other large economies.
2015-06-09 00:00:00 Precision in Your Retirement Short Game by Glenn Dial of Allianz Global Investors
Getting the asset allocation right as plan participants close in on retirement is critical, writes Glenn Dial, Head of US Retirement Strategy at Allianz Global Investors. And professional advice can help them find that pinpoint accuracy.
2015-06-08 00:00:00 On My Radar: “Shine Your Light Bright” by Steve Blumenthal of CMG Capital Management Group
Today, let’s take a look at the current state of inflation and the direction of interest rates and peek at a few processes that may help us better navigate the rough waters ahead. My gut says it will be the bond market that jerks the Fed’s chain. We’ll see.
2015-06-08 00:00:00 June is Out… But 2015 Lift-off Still On by Steven Vannelli of GaveKal Capital
Looking at Fed Funds futures contracts, it would appear that the fixed income market has ruled out a June rate hike but is coming back to the idea of a 2015 lift-off. Currently June fed funds future are spot on the current effective fed funds rate of 13bps. In the chart below, we plot the current effective fed funds rate, the rate implied by the June 2015 fed funds futures contract and the 10 year US Treasury Bond. Since the June contract rate and the current rate are the same, it suggests the markets have completely moved past a June rate increase.
2015-06-05 00:00:00 Billions and Billions Pour into India and China by Frank Holmes of U.S. Global Investors
It’s been a little over a year since Narendra Modi took office in India, and so far the results have been mostly positive for the South Asian country and the surrounding region. Among other achievements, Modi’s government has managed to enact important policy reforms, increase public investments in infrastructure, lower food inflation and generally open India up to business on a global scale.
2015-06-02 00:00:00 Where to Look for Yield in a Low-Yield World by Russ Koesterich of BlackRock
Russ Koesterich discusses where to look for yield in today's “low-for-long" interest rate environment.
2015-05-31 00:00:00 Behold the Power of Buybacks and Dividends by Frank Holmes of U.S. Global Investors
Buybacks and dividends. The mere mention of either one is often enough to make some investors’ hearts race with excitement and embolden them with confidence that company management is being a better steward of capital.
2015-05-27 00:00:00 Don’t Fear Rising Rates — Embrace Them by Scott Eldridge of Invesco Blog
Interest rates have been on the march since late January, thanks largely to global rate markets and a looming US Federal Reserve. In general, bonds are vulnerable to falling market prices as a result of higher rates, but there are income investments that can be used to take advantage of, rather than fall victim to, rising rates. They’re known as floating rate instruments.
2015-05-27 00:00:00 Mr. Bleu by Bill Gross of Janus Capital Group
“It’s a spectacle of excess at the highest level”, quoted an art consultant to the N.Y. Times. Perhaps it was. Christie’s, even not counting its archrival Sotheby’s, had bagged $1 billion in sales during its May auction week – rivaling even the frenzied bidding for Manhattan high rise condos. As with high flying stocks, the logic was that the money had to go somewhere and why not a wall instead of a monthly portfolio statement.
2015-05-23 00:00:00 Rate Hike Ahead? Here’s How to Get Your Portfolio Ready by Frank Holmes of U.S. Global Investors
Many experts and analysts believe a June rate hike seems very unlikely, but today, Federal Reserve Chairwoman Janet Yellen hinted that one might happen as soon as the end of this year.
2015-05-20 00:00:00 Reducing Inflation Risk During Retirement: The Compelling Case for Stocks by Joe Becker of Milliman Financial Risk Management
In April 2005, (when interest rates were arguably more normal than they’ve been during the low-rate, post-crisis economy, steered by the Federal Reserve) an investor could have purchased a 10-year Treasury bond with a yield to maturity of 4.4%. That represented an attractive boost over the dividend yield of the S&P 500 Index, which at the time was 1.9%.
2015-05-19 00:00:00 Rates and Returns, 2013 versus 2015 by Heather Rupp of AdvisorShares
Given the recent move in Treasury yields, with the 10-year U.S. Treasury yield up over 30bps in just the last 30 days, the concern about interest rate risk is heating up again.
2015-05-18 00:00:00 The "New Era" is an Old Story by John Hussman of Hussman Funds
It’s not monetary easing, but the attitude of investors toward risk that distinguishes an overvalued market that continues higher from an overvalued market that is vulnerable to vertical losses. That window of vulnerability has been open for several months now, and the immediacy of our downside concerns would ease (despite obscene valuations) only if market internals and credit spreads were to shift back toward evidence of investor risk-seeking. Meanwhile, there’s no evidence to suggest that historically reliable valuation measures have somehow become irrelevant.
2015-05-16 00:00:00 Wall Street Underestimates the Great American Earnings Machine by Frank Holmes of U.S. Global Investors
With a little over 90 percent of S&P 500 companies having reported, it looks as if the index has risen a modest 2 percent for the first quarter. That might not seem significant, but as LP Financial Services Chief Investment Officer Burt White points out in a recent Barron’s piece, “given the steep uphill climb that corporate America faced due to the twin drags of the oil downturn and strong U.S. dollar, this is actually a good result.”
2015-05-14 00:00:00 A Look at High Yield Bond and Equity Valuations by Tim Gramatovich, Heather Rupp of AdvisorShares
There has been talk in the media recently about high yield being overvalued at current levels. However, we feel that historical metrics indicate that we are nowhere near a point of overvaluation; rather, there is still value to be had in this market.
2015-05-12 00:00:00 Henderson Unconstrained Bond Fund (HUNAX) update by (Article)
James McAlevey, Head of Interest Rates and Kevin Adams, Director of Fixed Income, provide a review of the Henderson Unconstrained Bond Fund’s performance in April and discuss the drivers of the recent increase in bond market volatility. Performance in April was reasonably good particularly in the context of global bond markets selling off quite substantially.
2015-05-12 00:00:00 Q1 Letter by Team of Grey Owl Capital Management
Grey Owl’s strategies all performed well in the first quarter. The good performance came despite US GDP growth of just 0.2%, continually lowered earnings expectations, and volatile equity and bond markets. Below we discuss the current environment including the now absolute fixation by investors on every Fed comment, our continued focus on an all-weather approach, and our best and worst performing securities during the quarter.
2015-05-12 00:00:00 High Yield: Handling Headline Risk by Milton Ezrati of Lord Abbett
Market movements caused by the sharp drop—and subsequent recovery—in oil prices provide insight on successfully navigating the high-yield market.
2015-05-12 00:00:00 Are We Headed for a Hangover? by Gibson Smith of Janus Capital Group
It’s late, and the punch bowl is half full. With central banks around the globe still in accommodative mode, the threat that the Federal Reserve (Fed) will pull away the punch bowl sets up the markets for some real disruption. Until then, let the party continue.
2015-05-11 00:00:00 Strategic Allocaiton to High Yield Corporate Bonds – Why Now? by Matthew Kennedy of Rainier Investment Management
The demand for higher yielding fixed income investments has never been greater. In the current environment of low yields, from the virtually non-existent rate offered on savings accounts and CDs to the declining, and in some cases negative, yields on global government debt securities, investors are searching for attractive income¬ generating alternatives.
2015-05-08 00:00:00 Made In Europe by Anthony Valeri of LPL Financial
A weak finish to the month of April 2015 was “made in Europe” as expectations of better global growth weighed on bonds. On Monday, May 4, 2015, the 10-year German government bond yield closed at 0.45%, more than quadrupling over the past two weeks. European strength combined with a dovish Federal Reserve (Fed) meeting outcome continued to arrest U.S. dollar strength, a primary driver of the steady decline in inflation and investors’ inflation expectations from mid-2014 through the first quarter of 2015.
2015-05-08 00:00:00 Americans Take 3-Trillion-Mile Road Trip, Dollar Corrects and Commodities Rebound by Frank Holmes of U.S. Global Investors
The busy summer travel season is at our doorstep, starting this Mother’s Day weekend, and with that comes stronger fuel demand.
2015-05-04 00:00:00 On My Radar: “The Rodney Dangerfield Expansion” by Steve Blumenthal of CMG Capital Management Group
"Earnings don't move the overall market; it’s the Federal Reserve board. And whatever you do, focus on the central banks and focus on the movement of liquidity. Most people in the market are looking for earnings and conventional measures. It's liquidity that moves markets." - Stan Druckenmiller
2015-05-03 00:00:00 Show Me the Stocks, Not the Cash, Say Optimistic CEOs by Frank Holmes of U.S. Global Investors
In early March, I made the case that there’s no greater vote of confidence in a company’s growth prospects than when its top officers put some skin in the game and buy their own company stock. Among the examples I used were Warren Buffett, who owns millions of shares in Berkshire Hathaway; Elon Musk, who purchased over $100 million worth of Tesla stock in 2013; and myself, the largest shareholder of U.S. Global Investors. Another example of how bullish an executive is on his own company is when he chooses to forego a base salary entirely and instead be compensated in company stock.
2015-05-01 00:00:00 High Yield Bonds: A Legislative History and the Opportunity Created by Tim Gramatovich, Heather Rupp of AdvisorShares
Throughout history of the high yield market there have been various legislative acts that have created and continue to create the market dislocation that allows investors an opportunity to produce what we see as attractive risk-adjusted returns.
2015-04-30 00:00:00 Breaking Out of Bondage by Ben Inker of GMO
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker provides the basis for future bond returns: "For while it is unlikely that stock investors are going to achieve anything like as strong a return over the next 30 years as they did over the last, it is basically impossible for bond investors to duplicate their feat." ("Breaking Out of Bondage").
2015-04-29 00:00:00 MLPs Waxing not Waning by David Chiaro of Eagle Global Advisors
We view the recent sell off of MLPs/midstream energy infrastructure companies as a buying opportunity. Our long-term evaluation of the total return prospects of these companies is very good, especially on a risk adjusted basis.
2015-04-27 00:00:00 Foreign Factors by Anthony Valeri of LPL Financial
Gauging foreign demand for U.S. bonds, Treasuries in particular, is a constant source of attention for bond investors, with foreign ownership of outstanding U.S. Treasuries remaining fairly constant at approximately 50% over the past few years.
2015-04-17 00:00:00 Hoisington Quarterly Review and Outlook – First Quarter 2015 by Lacy Hunt and Van Hoisington of Hoisington Investment Management
Over the more than two thousand years of economic history, a clear record emerges regarding the relationship between the level of indebtedness of a nation and its resultant pace of economic activity. The once flourishing and powerful Mesopotamian, Roman and Bourbon dynasties, as well as the British empire, ultimately lost their great economic vigor due to the inability to prosper under crushing debt levels.
2015-04-17 00:00:00 Key Themes for Navigating Credit Markets in Alternatives Strategies by Joshua Anderson of PIMCO
Against a backdrop of low volatility and tight spreads, 2014 turned out to be a challenging year for many alternative investors as they watched their trades become crowded, and reverse quickly when expected returns were not realized. One such example was the positioning among investors in advance of the European Central Bank’s (ECB) Asset Quality Review announcement; many had increased their exposure in anticipation of a tightening of European bank-related securities.
2015-04-17 00:00:00 Junior Mining Companies Have Taken a Senior Role by Frank Holmes of U.S. Global Investors
For the past decade, junior mining companies have outperformed senior miners at finding new mineral deposits and generating wealth for investors.
2015-04-16 00:00:00 Implications of a Fed Funds Rate Hike on Asian Securities by Gerald Hwang of Matthews Asia
The prospect of a higher U.S. federal funds rate can make U.S. cash and short duration Treasurys look more attractive vs. risky assets. The effect of higher U.S. short rates is felt across all asset classes, regardless of the pattern of cash flows or currency of denomination. We can expect some market reallocation out of risky assets and into risk-free assets. But why does the market seem to fear a wholesale shift out of risky assets and why might that view be unjustified? In the second installment of a two-part series, Matthews Asia Portfolio Manager Gerald Hwang, CFA, examines the ways in wh
2015-04-11 00:00:00 Finding Value in Declining Commodity Prices by Frank Holmes of U.S. Global Investors
So what’s the deal with Chinese equities right now? After all, China’s economic growth for the first quarter of the year cooled to a six-year low of 7 percent. The market surge is mostly attributable to monetary easing and government policy changes such as housing stimulus and modernization of the country’s financial structure. But there’s more at work.
2015-04-10 00:00:00 Key Themes for Navigating Credit Markets in Alternatives Strategies by Joshua Anderson of PIMCO
??We believe the current investment environment provides extensive opportunities for alternative investors.
2015-04-08 00:00:00 U.S. and Canada: Continued Recovery With Some Potential for Headwinds by Ed Devlin, Mike Cudzil of PIMCO
?Each quarter, PIMCO investment professionals from around the world gather in Newport Beach to discuss the firm’s outlook for the global economy and financial markets. In the following interview, portfolio managers Ed Devlin and Mike Cudzil discuss PIMCO’s cyclical outlook for Canada and the U.S..
2015-04-07 00:00:00 How to Profit When Rates Rise: Negative Duration Bond Strategies by Bradley Krom of WisdomTree
As the debate rages surrounding the timing of the first Federal Reserve (Fed) rate hike, we continue to discuss the potential tradeoffs surrounding this inevitable shift in policy. While some investors may be content to ride out the waning bull market in bonds, others may seek to position more tactically.
2015-04-04 00:00:00 Overview of the Fixed Income Market by Tim Gramatovich, Heather Rupp of AdvisorShares
As we look at the high yield bond market, it is important to have an understanding of the fixed income marketplace and the investment options within it. The first thing to note is the sheer size, which is massive (just under $40 trillion).1 Somewhat surprisingly, mortgages represent the second largest single subcategory of the bond market; this helps to explain why problems in the mortgage market nearly took down the entire financial system in 2008. The largest subcategory is U.S. Treasury debt.
2015-04-01 00:00:00 In the Know: Europe’s Capital Markets Union by Norm Boersma of Franklin Templeton Investments
Templeton Global Equity Group’s Norm Boersma discusses the European Commission’s newly unveiled proposals for Capital Markets Union.
2015-03-31 00:00:00 The Final Say on Spending Rules by Laurence B. Siegel (Article)
After decades of focused research, why can't finance experts decide on a safe withdrawal rate for retirement? It is time to refocus this debate by asking a slightly different question: Is there a spending rule that retirees can use over a fixed time horizon? There is and I call it "the only spending rule you will ever need."
2015-03-31 00:00:00 Fit & Focused by Mark R. Kiesel of PIMCO
Many powerful forces are driving markets and asset prices; chief among them are global monetary policy, technicals and fundamentals. We use rigorous top-down and bottom-up analysis to identify the best sectors and companies around the world. We see opportunities in the U.S. (cyclical consumer and housing sectors), Europe (equities, bank capital securities, high yield bonds and corporate hybrids), China (property, technology and Macau) and Japan (cyclical industries, exporters and financials).
2015-03-27 00:00:00 Liquidity by Howard Marks of Oaktree Capital Management
My wife Nancy’s accusations of repetitiveness notwithstanding, once in a while I think of something about which I haven’t written much. Liquidity is one of those things. I’m not sure it’s a profound topic, and perhaps my observations won’t be either. But I think it’s worth a memo.
2015-03-26 00:00:00 Rates and Bonds by Heather Rupp of AdvisorShares
So at long last we know whether the word “patient” stays or goes: it’s gone and Treasury yields have actually declined as a result. So far this year we have seen rates go from a 2015 low of 1.19% on the 5-year and 1.68% on the 10-year on February 2nd, and then spike a month later at 1.70% and 2.24%, respectively, on March 6th. So an over 50bps move in a month all over the worry about the word “patient” and whether rates will rise as early as June. Only for rates to fall after the statement was released and the key word removed.
2015-03-23 00:00:00 Central Bank Policies And Market Distortions by Sebastiao Buck Tocalino of SBTCapital Clube de Investimento
Recurrent countercyclical monetary policies have given way to several distortions in the economy. It is believed that printed dollars have inflated both stocks and bonds in the US, but that is a misunderstanding! Still attractive, US Treasury Bonds may provide the basis for a sustained appreciation of the US dollar against foreign currencies. Once more, the widely anticipated interest rate hike by the FOMC may get postponed… further into oblivion!
2015-03-21 00:00:00 Five Reasons to Hold High Yield in 2015 by K. Sean Clark of Clark Capital Management Group
We believe that the high yield market may reward investors who adopt a tactical approach. Here are five reasons we anticipate a reemergence of opportunities in the high yield space in 2015.
2015-03-20 00:00:00 Northern Trust Perspective by Team of Northern Trust
The long-telegraphed launch of quantitative easing by the European Central Bank (ECB) has added some accelerant to financial market trends in place so far this year. European stocks, which had been strong performers in local currencies, have continued their strong performance while European bond yields have declined even further.
2015-03-16 00:00:00 How Scary Is the Bond Market? by Robert Shiller of Project Syndicate
With the bond market appearing ripe for a dramatic correction, many are wondering whether a crash could drag down markets for other long-term assets, such as housing and equities. But when an event has never occurred, it cannot be predicted with any semblance of confidence.
2015-03-14 00:00:00 The Airline Industry Ascended to New Records in 2014 by Frank Holmes of U.S. Global Investors
Just as the U.S. economy is in full-recovery mode, so too is the airline industry. It’s lately made an impressive about-face from only a decade ago and, in 2014, soared to several new benchmarks. This industry is flying high again.
2015-03-13 00:00:00 Keep it Short? The Limited-Term Fixed Income Market by Mark Otterstrom, Susan Regan of Ivy Investment Management Company
Concern about interests rates has made fixed income investors more aware of the potential for interest rate risk – or the risk that a rise in rates will reduce the value of their longer-maturity securities. This risk, which is often expressed as a bond or bond fund’s “duration,” has led some investors to consider investments believed to have less potential risk. These securities, which are considered to have a lower duration, are seen as less vulnerable to market volatility.
2015-03-10 00:00:00 Curiouser and Curiouser... by Sponsored Content from Legg Mason (Article)
Though historically low, U.S. interest rates are actually high in comparison to the rest of the developed world. U.S. bonds appear overpriced on domestic fundamentals, but they are a bargain based on global valuations.
2015-03-06 00:00:00 Opportunities in Global Financial Disintermediation by Dave Gallagher of Calamos Investments
Increasing financial disintermediation is a strong secular theme providing tailwinds in several financial industries, but a likely arduous and complicated process warrants the need for a disciplined focus on both risk and reward. The financial system essentially performs one basic function—the direct or indirect movement of funds from savers to borrowers or investors. Although financial disintermediation is formally defined as the shifting of funds from indirect to direct financing, the term is more commonly used to describe the increasing role of non-bank intermediaries.
2015-03-02 00:00:00 Going to the Dogs by Bill Gross of Janus Capital Group
If you were a dog, what kind would you be? I can’t say I’ve thought about it a lot myself, but it is an interesting, possibly introspective question considering the theory that many dog owners pick a breed that looks or perhaps acts like themselves.
2015-03-02 00:00:00 US Economy: Cooler Than Consensus by Brian Horrigan of Loomis Sayles
The rebound is over, and we can’t just blame the dreadful winter weather. Much recent data have been disappointing. Even though I believe they are not bad enough to be recessionary signals, they do suggest that the recovery going forward may be a bit blander than hoped.
2015-03-02 00:00:00 Today’s Floating Rate Loan Market by Heather Rupp of AdvisorShares
Together the high yield bond and floating rate bank loan market total over $3 trillion.1 This has evolved into a significant, and growing asset class. With high yield bonds and loans now representing about 30% of corporate credit2, this market deserves not only our attention, but we also feel is ripe with opportunity for investors.
2015-02-27 00:00:00 Could Apple Buy a Third of the World’s Gold? by Frank Holmes of U.S. Global Investors
So what’s Apple’s next trick? How about moving the world’s gold market?
2015-02-27 00:00:00 On the Long Bond and Why the Widow Maker is Alive and Well by Team of GaveKal
Perhaps one of the most important questions investors need to answer today is whether we've seen the low in the long bonds yields or whether the trend lower is firmly intact. The recent spike in the 10-year bond yields from 1.65% at the end of January to 2.14% just two weeks later has no doubt complicated the situation. In this piece we'll try to layout one case for lower yields still.
2015-02-24 00:00:00 On My Radar: A $9 Trillion Dollar Crisis by Steve Blumenthal of CMG Capital Management Group
Here is the main point of today’s OMR: According to the Bank of International Settlements, non-bank borrowers outside the U.S. have borrowed, in dollars, $9 trillion. This is an increase of $4.5 trillion since the financial crisis and it places that $9 trillion on the wrong side of the dollar bet. The dollar debt is an example of how the Fed’s tightening will impact the world economy. This is a pressure cooker and the pot is starting to boil.
2015-02-20 00:00:00 High Yield in a Rising Rate Environment: Duration and Yield by Heather Rupp of AdvisorShares
We began February with a yield on the 10-year Treasury of 1.68% and today sit at 2.14%.1All the concerns and talk of maybe even no rate rise this year that we saw in January, have turned to frequent mention of a rate rise beginning in June. So what are bond investors to do? Is this finally the year of rising rates and what impact does that have?
2015-02-19 00:00:00 2015 Annual Forecast by Clyde Kendzierski of Financial Solutions Group
It’s already February, but for many readers this is the first communication of 2015 so, Happy New Year! It’s been a great 6 weeks so far and we’re looking forward to many more to come. Let’s get into it…
2015-02-19 00:00:00 February 2015 Economic Update by John Richards of Bronfman E.L. Rothschild
Consumers in the U.S. are showing their optimism by pushing a key consumer sentiment indicator to its highest level in over a decade. Despite a drop-off in Q4 GDP to a 2.6% annualized growth rate and three consecutive months of slowing manufacturing expansion, the U.S. economy still seems to be on strong footing.
2015-02-17 00:00:00 Why We’re Cautious on Credit by Rob Waldner of Invesco Blog
In the current environment of rising global volatility and potentially weak US corporate earnings growth, Invesco Fixed Income is cautious on US and European credit. While European investment grade credit may be supported by the European Central Bank’s (ECB) program of quantitative easing (QE), we believe US investment grade would likely underperform US Treasuries in the current environment, although we would expect it to perform better than riskier assets.
2015-02-17 00:00:00 Shut off the Noise, Hear the Risks by Gibson Smith of Janus Capital Group
Janus Fixed Income CIO Gibson Smith believes volatility in the fixed income market may represent a greater risk than a sustained increase in rates.
2015-02-17 00:00:00 What Does the Current Low Interest Rate Environment Mean for Agency MBS? by Mike Cudzil, Daniel Hyman of PIMCO
After the agency MBS market in 2014 was dominated by low volatility, limited prepayment risk and strong performance, the strong rally in U.S. Treasuries in January resulted in just the opposite. With the Fed ending net purchases of MBS in October 2014, it seems unlikely for the private investment community to take the Fed’s place in the MBS market at this level of interest rates and spreads. PIMCO expects the environment for MBS in 2015 to be quite the opposite of 2014, resulting in higher volatility, cheaper valuations and more attractive excess return opportunities for the active manager.
2015-02-14 00:00:00 When Patience Disappears by Scott Minerd of Guggenheim Partners
Advance notice of the timing of a rate hike by the Federal Reserve may hinge on the removal of just one word, warns St. Louis Fed President Bullard.
2015-02-12 00:00:00 On My Radar: Go Ahead Angela, Make My Day by Steve Blumenthal of CMG Capital Management Group
I spend a great deal of time writing about valuations, probable future returns (near record lows today), portfolio construction and risk management. Reflecting on four days of non-stop sessions, media interviews and meetings at the Inside ETFs Annual Conference this past week, I thought I’d share several key takeaways with you.
2015-02-11 00:00:00 The Sectors Now on Shaky Ground by Russ Koesterich of BlackRock
Bond yields surged last week, putting some dividend-rich stocks (utilities, REITs) in a very vulnerable position. Could this be the end of their rally?
2015-02-10 00:00:00 Curiosity-free Research by Michael Edesess (Article)
You come across an article that won the Financial Analyst Journal's award for best paper of 2013. You tracked it down from something you saw recently in The Economist. It is written by two Yale professors and two researchers at investment management firms - a good mix of academics and practitioners. Is it safe to assume that it provides reliable information about how to invest one's savings?
2015-02-09 00:00:00 The International Ramifications of ECB QE by Andrew Bosomworth of PIMCO
By engaging in quantitative easing, the European Central Bank is pursuing its inflation mandate with a vengeance. Overall, we think the combination of quantitative easing, investment and lower oil prices will help eurozone growth reach approximately 1.3% in 2015. Global central bank balance sheets continue to expand: Although the Federal Reserve stopped purchasing assets in 2014, the Bank of Japan and now the ECB have stepped up buying bonds where the Fed left off.
2015-02-08 00:00:00 Expect a Decade of 1.7% Portfolio Returns from a Conventional Asset Mix by John Hussman of Hussman Funds
The problem for investors here is that risk premiums are compressed in equities at a time when bonds offer no way out. When risk premiums are compressed across the board, conventional asset allocations are very much like trying to squeeze water from a stone. We project a 10-year nominal annual portfolio total return averaging only about 1.7% annually for anything close to a standard portfolio mix of equities, bonds and cash, regardless of how much diversification one has within each of those asset classes.
2015-02-06 00:00:00 Quarterly Letter by Team of Grey Owl Capital Management
Over the past seven months the price of oil has plunged from a peak above $100/barrel to the mid-$40s today. This is just the most extreme version of the market volatility and divergence we began highlighting in our second quarter letter. A cautious investment stance remains the prudent choice.
2015-02-05 00:00:00 Commercial Mortgage-Backed Securities: Approaching the Later Innings of a Recovery by Bryan Tsu of PIMCO
With the U.S. recovery as a supportive backdrop, PIMCO expects commercial real estate prices to rise 4%-6% in 2015. Commercial mortgage-backed securities issuance has increased for five years, and projections for 2015 are for growth of 20%-30%, driven largely by an increase in maturing loans on the supply side and the continued search for yield on the demand side. The growth in issuance does not come without concern: CMBS underwriting standards will likely continue to slip.
2015-02-04 00:00:00 The Opportunity in Volatility by Heather Rupp of AdvisorShares
While 2014 was characterized largely by the lack of volatility for most the year, and active management suffered as a result, we see those tables turning in 2015 as we expect this volatility to continue. As we sit today, we see an attractive entry point into the high yield market for active managers who can parse through the space to determine where there is value to be had, and where there are value-traps.
2015-02-04 00:00:00 There's Diversity in Value by Brent Leadbetter and John West of Research Affiliates
A portfolio comprising long positions in individual fundamentally weighted country indices and short positions in cap-weighted country indices might prove to be the Boris Diaw of a diversified portfolio. Investors would be unlikely to meet their return targets by concentrating all their assets in such a strategy. However, given its high Sharpe ratio and low correlation with widely used asset classes, it seems a suitable addition to a robust asset mix.
2015-02-03 00:00:00 Seeking Value Amid Volatility by Russ Koesterich of BlackRock
Stocks struggled last week, and once again the losses were most pronounced in the United States. Financial markets remain highly volatile, with violent swings in the oil price and interest rates adding to the angst. With the Fed likely to start removing monetary accommodation, 2015 was bound to be a more volatile year than last.
2015-01-29 00:00:00 Momentum X 2: Unleashing the True Power of Momentum by Gordon Nelson of Keystone Wealth Advisors
Momentum is one of the most researched market anomalies and has become widely accepted and used in a variety of ways for investment management. When used in practice is it most commonly referred to as relative strength or relative momentum. What happens if we combine the power of relative momentum with absolute momentum?
2015-01-28 00:00:00 Sell-off in Corporate Credit Creates Income Opportunities for 2015 by Payson Swaffield of Eaton Vance
In this insight, Payson puts last year?s bond market volatility and performance in perspective and points out potential investment opportunities across market sectors in 2015.
2015-01-28 00:00:00 Why European Euphoria Isn?t Likely to Last by Russ Koesterich of BlackRock
The ECB took definitive action against deflation fears with a broad asset purchase program that impressed the markets. Here is a quick analysis of its impact on stocks and bonds beyond the short term.
2015-01-25 00:00:00 There?s More to the Gold Rally than European Market Fears by Frank Holmes of U.S. Global Investors
Even though gold was down last year, it still ranked as the second-best-performing currency, following the U.S. dollar. The metal has risen about 10 percent year-to-date, and on Tuesday, for the first time since mid-August, it broke through the $1,300 mark.
2015-01-25 00:00:00 Fixed Income Investment Outlook: 2014 is Over. Long Live 2014! by Team of Osterweis Capital Management
We believe that at current yields there is no investment grade ?fat pitch? at this time. Our focus remains on keeping duration short and layering-in higher yielding paper, especially on sharp corrections in markets like we have seen recently. We believe that the appropriate time to take a swing at investment grade bonds will be when yields are much higher and the economy is teetering towards recession.
2015-01-25 00:00:00 Decoding The ECB?S QE Paradox by Jeffrey Rosenberg of BlackRock
The ECB?s launch of its one trillion euro rescue plan this week has implications for investors everywhere. Jeffrey Rosenberg dissects two critical comments Mario Draghi made after the announcement.
2015-01-23 00:00:00 Despite Hitting an Oil Slick, Evidence Underpins a Positive Outlook on MLPs by David Chiaro of Eagle Global Advisors
The fall in energy prices has raised concerns that the dramatic hydrocarbon volume growth we have seen from the new shale plays in the U.S. in the past few years is over or might even reverse. We believe these concerns are overblown. We think the current dislocation in the commodity markets is a case of supply temporarily getting ahead of demand.
2015-01-23 00:00:00 ECB Review: Blowing on the Embers of a Reflationary Fire by Andrew Bosomworth of PIMCO
?Not to pursue our mandate would be illegal? is how Mario Draghi ended his last press conference of 2014. Mr. Draghi?s first press conference of 2015 began with the announcement of a quantitative easing (QE) programme that pursues the European Central Bank?s (ECB) inflation mandate with a vengeance. And rightly so, for the disinflationary trends in the eurozone had become all the more precarious as economic output and the price of oil continued to fall.
2015-01-23 00:00:00 High Yield Bonds versus Equities by Heather Rupp of AdvisorShares
Investors are often led down the path that they must invest in equities in order to generate a decent return, and that the high yield market is too risky and speculative. However, reality and the data points suggest otherwise. Looking over the past couple decades and various periods in between, you can see that high yield has outperformed the equity market (as measured by the S&P 500 Index) on a risk adjusted basis (return/risk) over the past 5, 10, 15 and 25 years, and performed equivalently over the last 3 years.
2015-01-22 00:00:00 Rocky Horror Picture Show by Jeffrey Saut of Raymond James
?Rocky Horror Picture Show? was a satirical film production done as a tribute to the science and horror ?B? movies of the late 1930s through the 1970s. I was reminded of the flick last week when one portfolio manager I saw in Fort Lauderdale said to me, ?The first few weeks of the New Year have been an absolute horror show!?
2015-01-22 00:00:00 Fixed Income in 2015: Lower for Longer? by Jonathan Heckscher of Pennsylvania Trust
2014 surprised many bond investors as interest rates fell dramatically on the longer end while they rose as expected on the short end. The result was another solid year of returns for investors that remained in longer-duration bonds, and was adequate for most investors that shortened their duration.
2015-01-21 00:00:00 Buy the Rumor, Sell the News by Scott Minerd of Guggenheim Partners
Economic strength in the U.S. and the announcement of QE in Europe could spell the end of the recent bond rally.
2015-01-21 00:00:00 What We Are Hearing From Asia-Pacific Investors: Five Themes for 2015 by Eric Mogelof of PIMCO
Amid lower forward-looking returns, investors are focusing on multi-asset solutions, enhanced beta, income and alternatives in Asia-Pacific. PIMCO is prepared to address these themes, drawing upon our time-tested investment process that combines high-level macroeconomic views with thorough on-the-ground research.
2015-01-20 00:00:00 Navigating the Oil Slick by Team of Calamos Investments
GDP growth for 2015 is likely to be 2.0%-2.5% globally and 2.5%-3.0% in the U.S. Oil prices may fall further but are likely to stabilize over the next several months. The ECB is likely to ramp up QE in the first quarter. These next months are likely to be volatile, but equities have more room to run. Low corporate borrowing costs and high dividend yields should encourage continued M&A and buyback activity, providing support to equity valuations. With the U.S. in the middle innings of the recovery, the case for secular and cyclical growth companies remains strong.
2015-01-17 00:00:00 Palladium Was the Winner in 2014 by Frank Holmes of U.S. Global Investors
Palladium, 2014?s top commodity, performed relatively according to script. For the year it was up 11.35 percent, compared to its 10-year annualized returns of 14 percent. Much like nickel, palladium was spurred by extenuating circumstances. Between January and June, a labor strike in South Africa, the world?s second-largest producer of the metal following Russia, halted production, which depleted reserves and sent palladium to a three-year high of $850 an ounce.
2015-01-14 00:00:00 Are Macroeconomists Rebuilding a Wall of Worry? by William Smead of Smead Capital Management
Those of you who follow us at Smead Capital Management know that we believe in the idea that good markets die on too much affection and continue due to a lack of affection. You also know that we want to own wonderful companies for a long time and do so through regular stock market corrections/bear markets over the years. Since the stock market bottom in March of 2009, this secular bull market has climbed on a wall of worry and on a lack of optimism.
2015-01-13 00:00:00 Market Outlook 2015: Double Digit Gain...Thank You, May I Have Another? by K. Sean Clark of Clark Capital Management Group
The U.S. stock market finds itself in rare territory as we enter 2015. For only the sixth time in the past 150 years, the U.S. stock market has registered a double-digit gain for three consecutive calendar years from 2012 to 2014. We will try to answer the question: ?Can the U.S. stock market post a fourth year of double-digit gains??
2015-01-13 00:00:00 High-Yield and Bank Loan Outlook by Team of Guggenheim Partners
Investment-grade and high-yield spreads widen as energy plunges.
2015-01-10 00:00:00 Bad News Is Good News: A Contrarian View of China Investing by Frank Holmes of U.S. Global Investors
I asked Xian Liang, portfolio manager of our China Region Fund (USCOX), to outline a few of the most compelling cases to remain bullish on the Asian giant.
2015-01-09 00:00:00 Recovery Gaining Momentum? by Ed Devlin, Mike Cudzil, Lupin Rahman of PIMCO
U.S. growth will remain robust over the cyclical horizon due to increasing consumption driven by the narrowing unemployment gap and increase in disposable incomes. The Canadian recovery should continue, though divergent forces ? including the U.S. recovery and oil price declines ? could have significant implications for the economy. Growth will be muted across Latin America, with some economies benefitting from U.S. growth, and others dragged down by the slowdown in the eurozone and China.
2015-01-09 00:00:00 Investment themes for a ?Groundhog Day? world by David King of Columbia Management
Wall Street strategists and ?financial media pundits have spent much of the last several years foreshadowing a dramatically changing investment environment and telling people what to do about it.
2015-01-03 00:00:00 Flying High in the Sky, Looking for Opportunities in 2015 by Frank Holmes of U.S. Global Investors
Savvy investors know to be patient with their holdings and not easily give in to the prevailing culture of instant gratification. Ive run multiple marathons over the years and am intimately familiar with the personal rewards of going the distance. A similar investing strategy can come with the same rewards.
2014-12-30 00:00:00 2015 Investment Outlook - Stay Tactical! by Stephen Blumenthal of CMG Capital Management Group
I wrote often throughout 2014 about the danger signals flashing from an excessive run up in debt and derivatives. We have a repeat of the scenario we suffered in 2008, only much worse. The budget recently passed by Congress put taxpayers on the hook for a 2008-like derivatives failure. The potential losses could exceed the previous financial meltdown as other world market conditions exacerbate a bad situation.
2014-12-29 00:00:00 The Lessons of Oil by Howard Marks of Oaktree Capital
I want to provide a memo on this topic before I and hopefully many of my readers head out for year-end holidays. Ill be writing not with regard to the right price for oil about which I certainly have no unique insight but rather, as indicated by the title, about what we can learn from recent experience.
2014-12-27 00:00:00 Epic Price Reversal for Commodities in 2014 by Frank Holmes of U.S. Global Investors
If you want to know what happened in 2014 with regard to gold and oil, it?s important to appreciate the inverse relationship between the U.S. dollar and commodities.
2014-12-24 00:00:00 2015 Outlook: Watching Our Overweights by Team of Northern Trust
Asset class returns were much more differentiated this year than last, with yield-oriented assets and U.S. equities being the standout performers. We entered 2014 overweight risk tactically, but made several changes as the year progressed.
2014-12-23 00:00:00 Canary in a Coal Mine? by Dennis Rhee of AdvisorShares
With the collapse of oil, market participants are logically discussing which assets are vulnerable to more selling and which are value buys.
2014-12-21 00:00:00 The 2014 Festivus Airing of Grievances by Paul Kasriel of Econtrarian
Well, its that time of the year again for the airing of grievances. And Ive got a lot of problems with you people! First of which are those of you (PK, NYT?) who insist that the Feds QE did not result in any inflation. It all depends on your definition of inflation. If your definition is restricted to the prices of goods and services, you are right.
2014-12-20 00:00:00 The $330 Billion Global Tax Break by Frank Holmes of U.S. Global Investors
According to an article by Jon Markman titled The Saudi Stimulus, the global economy is looking to save hundreds of billions of dollars on an annual basis: "According to EIA data, consumption of crude oil during the latest 12 months was 6.9 billion barrels. So the price drop from $107/barrel at the June 2014 high to $59 today represents a total presumptive savings of $332 billion per year." In a time when China, the European Union and other major markets are trying to jumpstart their economies, a $330 billion tax break can only come as good news. It should help in stimu
2014-12-20 00:00:00 The Lessons of Oil by Howard Marks of Oaktree Capital
I want to provide a memo on this topic before I and hopefully many of my readers head out for year-end holidays. Ill be writing not with regard to the right price for oil about which I certainly have no unique insight but rather, as indicated by the title, about what we can learn from recent experience.
2014-12-19 00:00:00 A Rising Tide Lifts Most Boats by Saumil Parikh, Daniel Ivascyn of PIMCO
PIMCO expects global growth to accelerate in 2015, reaching about +2.75% year-over-year, with the majority of this improvement due to the (predominantly supply-driven) decline in oil prices. However, there will be large differences in growth dynamics among countries. While fiscal and monetary policies in most developed countries will stimulate growth in 2015, the U.S. Federal Reserve will attempt to break from the pack.
2014-12-19 00:00:00 Outlook for the Global Credit Markets in 2015 by Mark Kiesel of PIMCO
The combination of fundamentals, technicals, valuations and global central bank policies drives our overall constructive outlook for global credit in 2015. Economic growth dynamics, including an improving outlook in the U.S., along with likely changes in global central bank policies, continued energy price volatility and the potential for more shareholder-friendly actions by companies inform our credit views and strategies.
2014-12-16 00:00:00 Strategy Spotlight: An Update on PIMCO'S Fundamental Index-Based Product Suite by Sabrina Callin, Robert Arnott of PIMCO
The Fundamental IndexPLUS AR strategies combine the best of what passive indexing and active management aim to deliver: broadly representative, transparent equity exposure plus the potential for meaningful equity market outperformance.
2014-12-16 00:00:00 An Interest Rate Hike? Check Out Long Bonds, US Dollar Index, Demographics And Money Multiplier. by Sebastiao Buck Tocalino of SBTCapital Clube de Investimento
Inflation is out of sight in terms of Treasury bond yields, dollar exchange rates and demographic outlook lets not even mention energy costs! Much of the FEDs monetary base expansion did not flow into consumption or, more importantly, entrepreneurial productive investments! Money multiplier is more like a fractional now, since not even credit increased the money available for Main Street the way it used to.
2014-12-15 00:00:00 Falling Oil Prices Cause Jitters, but the Economy Stays on Track by Robert Doll of Nuveen Asset Management
The dominant financial story last week was the concern over the continued slide in oil prices, which have dropped close to 40% so far this year.1 Worries about the growing power of the Greek opposition party Syriza, and the potential effect on European policy should it assume control over the government, also contributed to investor unease.
2014-12-13 00:00:00 China Wants to Conduct the World's High-Speed Rail Market by Frank Holmes of U.S. Global Investors
The Chinese want to return to the railroad business. This time, however, they strive to become the world?s leading go-to provider of high-speed rail and exporter of mass transit technology.
2014-12-12 00:00:00 Asia, Looking to 2015 and Beyond by Robert Horrocks of Matthews Asia
Over the next decade, I expect Asias econo-mies to continue to raise living standards and to narrow the income gap between its own citizens and those in the U.S. or Europe.
2014-12-10 00:00:00 Follow the ECB Compass by Eve Tournier of PIMCO
As the European Central Bank continues to expand its balance sheet to counter low growth and ?low inflation, we believe European duration should remain relatively well-anchored and European assets should be well supported. Looking ahead, in a world of low yielding European core rates, we believe credit will continue to attract investors. We continue to see spread compression opportunities in peripheral sovereign, fundamentally improving banks and high yield.
2014-12-06 00:00:00 Dont Let Market Motion Sickness Keep You From Missing the Boat by Frank Holmes of U.S. Global Investors
Despite all of the good news, the recent threat of market volatility, which weve seen plenty of in commodities and emerging markets, seems to have pushed close-to-retirement folks away from equity securities. The August and October downturns, not to mention the decline in gold and oil prices, have understandably heightened consumer fears.
2014-12-06 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
Oil isn't the only commodity enduring a significant correction; The European Central Bank moves closer to QE; The U.S. is nearing full employment, but inflation holds the key to monetary policy
2014-12-05 00:00:00 Getting More From Your Equity and Bond Benchmarks by Ryan Blute of PIMCO
Benchmarks have long served as a starting point, or anchor, for investors, representing the neutral point for an investment decision. They serve as the basic ingredients that combine to form an investors asset allocation and result in a desired risk/return profile.
2014-12-05 00:00:00 Right for the Wrong Reason by Tim Gramatovich of AdvisorShares
It has been a poorly kept secret that I am among the biggest skeptics in the planet as it relates to this whole US energy independence fantasy. As a credit investor, I have been no bid on the entire US E&P business. This was not an easy thing to sidestep as energy as a sub-set is by far the largest component of the various high yield indexes representing around 18%1.
2014-12-05 00:00:00 Three Reasons Why Municipal Bonds May Offer More Than Just Tax-Exempt Income by Stephanie Larosiliere of Invesco Blog
Tax-exempt income historically has been the main reason why investors buy municipal bonds. As a result of newer tax laws, including several provisions that expired at the end of 2013, tax bills for high-income earners have increased in recent years.
2014-12-03 00:00:00 A Brave New World by Niels Jensen of Absolute Return Partners
In the the last two Absolute Return Letters I have argued why one should expect global GDP growth to be below average over the next decade or so, why interest rates should, as a consequence, remain low and why equity returns should also disappoint. Not as in negative returns but below the levels we have grown accustomed to over the past 30 years. If you have read those two letters, none of this should come as a surprise.
2014-12-03 00:00:00 The ECBs Shifting Regimes by Andrew Bosomworth of PIMCO
The European Central Bank (ECB) is likely to commence a broad-based asset purchase programme, i.e., quantitative easing (QE), in the first quarter of 2015. As it stands, the eurozone is stuck in a liquidity trap, the risk of deflation is rising and inflation expectations are deviating from their long-term anchor. With the private sector deleveraging and the policy rate near zero, additional easing will require expanded asset purchases.
2014-12-01 00:00:00 Hard-Won Lessons and the Bird in the Hand by John Hussman of Hussman Funds
The S&P 500 is more than double its historical valuation norms on reliable measures (with about 90% correlation with actual subsequent 10-year market returns), sentiment is lopsided, and we observe dispersion across market internals, along with widening credit spreads. These and similar considerations present a coherent pattern that has been informative in market cycles across a century of history including the period since 2009. None of those considerations inform us that the U.S. stock market currently presents a desirable opportunity to accept risk.
2014-11-29 00:00:00 Giving Thanks to the Innovators and Creators of Capital by Frank Holmes of U.S. Global Investors
Im grateful to live in a society that monetarily rewards such innovation and problem-solving, in addition to the intrinsic rewards entrepreneurs receive for improving the lives of others.
2014-11-26 00:00:00 Global Economic Perspective: November by Christopher Molumphy, Michael Materasso, Roger Bayston, Michael Hasenstab & John Beck of Franklin Templeton Investments
Steady improvements in US employment and relatively good economic growth figures mean that debate over when the US Federal Reserve (Fed) will begin to tighten policy continues to be the order of the day. US job growth increased at a fairly brisk pace in October, and numbers for the previous two months (already good) were revised higher. Since the start of 2014, US employers have added more than 220,000 workers on average each month, which should be sufficient to sustain economic momentum after an initial reading showed annualized gross domestic product (GDP) growth of 3.5% in the third quarter
2014-11-25 00:00:00 Where's Waldo Global Treasury Bond Style by Team of GaveKal Capital
In case some of our readers aren't familiar with the popular picture book/game series entitled Where's Waldo, here's a quick run down of how it works. Basically, the object is to find an inconspicuously dressed Waldo among a throng of people in endless settings ranging from a sports stadium to the Egyptian pyramids and everything in between. Finding Waldo isn't as easy as it sounds as he tends to blend in quite well with his surroundings.
2014-11-22 00:00:00 Solar Energy Powers Record Silver Demand by Frank Holmes of U.S. Global Investors
Silver demand in the fabrication of solar panels is set to outpace photography, if it hasn?t already done so.
2014-11-20 00:00:00 The "Other" Problem for Bond Investors by Robert Isbitts of Sungarden Investment Research
For a while now, my firm and I have been devout in alerting our clients and blog subscribers to the issues that will confront them as investors if/when the more than three decades of generally falling U.S. interest rates reverses itself. But what if they dont rise much for a while, and instead stay around where they are?
2014-11-17 00:00:00 On My Radar: Stocks Remain Richly Valued by Steve Blumenthal of CMG Capital Management Group
Shortly after each month end (after the most recent reported earnings numbers are posted), I like to run through a few of my favorite valuation charts to gauge level, asses risk and to get a sense for what the probable forward return may be. Fortunately, there is a great deal of historical data that can help us.
2014-11-15 00:00:00 Explore and Discover the Winners When Gas Prices Fall by Frank Holmes of U.S. Global Investors
West Texas Intermediate (WTI) oil for December delivery is currently priced at $75 per barrel, Brent for January delivery at $78 per barrel. Many investors, publications and news sources focus only on the drawbacks to falling oil and gas prices-don't get me wrong, there are many-but today we're going to give the spotlight to the biggest winners and beneficiaries.
2014-11-15 00:00:00 Volatility and Risk by Heather Rupp of AdvisorShares
Volatility has seemed to be the trend in markets over the past couple months. It was just a few weeks ago that we saw equity markets getting crushed, only to roar back and actually finish up for the month of October and back near all-time highs. It makes no sense to us that investors have no problem dealing with volatility in stocks, investing for the long run, as the stock market has historically gone up, but with the high yield asset class, we often see the risk on or risk off mentality, meaning investors think they should either be fully invested
2014-11-15 00:00:00 Hard to Hit Two Targets at Once: The ECB ABS Asset Purchase Programme by Felix Blomenkamp of PIMCO
We believe that reviving the asset-backed securities (ABS) market is a better near-term goal, and the primary target of the European Central Banks (ECB) buying programme should be the new issuance market. Sizeable purchases by the ECB in the European ABS market carry the possible risks of crowding out established investors and suppressing interest in this asset class. By not crowding out existing investors while making the asset class more attractive to issuers and investors alike, the ECB has an opportunity to reach its ultimate goal to spur lending.
2014-11-14 00:00:00 How the Long Bond Stole the Trophy by Gibson Smith of Janus Capital Group
The aggressive bet many investors made on long-end rates in 2014 was the equivalent of betting on a Hail Mary pass to win the game. It has been rewarding, but is it repeatable? Probably not. Janus Fixed Income CIO Gibson Smith reflects on why he believes consistency beats the long shot, in sports and in investing.
2014-11-12 00:00:00 Is Levering Bonds a Losers Game Today? by Michael DePalma, Arnab Nilim of AllianceBernstein
Multi-asset strategies like risk parity owe much of their popularity to their ability to navigate the global financial crisis. Lately, critics have cited levered bond returns as the driverand as a looming headwind. We think theyre missing a key point.
2014-11-11 00:00:00 The Continuation of QE by Bob Andres of Andres Capital Management
October 30, 2014 ended the third and final round of Quantitative Easing. Right? The announcement was couched in a hyperlinked document at the end of the FOMC statement. Those who made it through the statement and still felt like reading, realized that the end of QE was not as finalized as one may have expected.
2014-11-10 00:00:00 Eurozone 2015 Economic & Capital Market Outlook by Gregory Hahn, Marco Carvajal of Winthrop Capital Management
Five years after the financial crisis, the Eurozone is facing major challenges in restoring economic growth. The Eurozone is faced with numerous structural problems, high unemployment, excess capacity, stagnant wages, slow banking reform, declining manufacturing, low level of capital investment and the uncertainty of Russian foreign policy. The result is that member countries are struggling to comply with the original terms of the European Union and running budget deficits in order to stimulate growth within their countries.
2014-11-07 00:00:00 Retirement Planning: Millennials vs. Boomers by Noah Beck of Research Affiliates
Rob Arnott and Lillian Wu recently wrote that young workers are more likely than older ones to lose their jobs in an economic downturn.They are also prone to draw on their 401(k) plan to meet basic living expenses while they are unemployed. Given these facts, the early-phase concentration in equitieswhose market prices are roughly correlated with the business cyclemakes target-date funds inordinately risky for young investors. In this article, Noah Beck considers TDFs in the broader context of workers total assets, including their own human capital.
2014-11-07 00:00:00 Central Planners Are In A State of Panic by Chris Martenson, PeakProsperity.com of PeakProsperity.com
By the time a central bank is behaving as recklessly as Japan, it's time to edge towards the exit, because the chance of a flash fire in the building has grown uncomfortably high. That is, instead of providing comfort, these most recent moves should invoke greater worry for those of us alert enough to see them for what they are: acts of panic:
2014-11-07 00:00:00 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company
My first draft of this letter, which I wrote three weeks ago began with: Europe has not solved its problems; Nor has Japan; Nor has China; Nor has the U.S. The rest of that draft is now obsolete. Since mid-September, several items have changed-some economic, some market-related, some psychological.
2014-11-06 00:00:00 Will Rates Rise, Stay Steady or Fall Further? by Steve Rumsey of Optimus Advisory Group
As interest rates fell over the past 30 years, bond investors enjoyed substantial gains due to the subsequent rise in bond prices.
2014-11-04 00:00:00 The Macro Playbook by Darius Dale of Hedgeye Risk Management
The Hedgeye Macro Playbook aspires to present investors with the robust quantitative signals, well-researched investment themes and actionable ETF recommendations required to dynamically allocate assets and front-run regime changes across global financial markets. The securities highlighted above represent our top ten investment recommendations based on our active macro themes, which themselves stem from our proprietary four-quadrant Growth/Inflation/Policy (GIP) framework.
2014-11-01 00:00:00 Dont Be Spooked by Market VolatilityOpportunity Is Still Knocking! by Frank Holmes of U.S. Global Investors
One of the greatest fears this Octoberpossibly the most volatile month of the yearhas been the correlation between the S&P 500 Indexs ascent in the first three quarters of the year and the possible ramifications of the end of quantitative easing (QE).
2014-10-30 00:00:00 Got Loans? by Mark R. Kiesel, Elizabeth (Beth) MacLean, Rudy Pimentel of PIMCO
?We believe select investors looking to reposition portfolios may benefit from a move to senior secured floating rate loans. CLOs have been an important source of demand in the market, and even with more strict risk retention rules just announced under Dodd Frank, we think demand will remain strong. While the Fed has criticized some banks for not following their leveraged lending guidelines, Fed members themselves, in our view, do not appear concerned about loans having a major impact on financial stability.
2014-10-30 00:00:00 Europe Must Act Now by Scott Minerd of Guggenheim Partners
Things in Europe are bad and policymakers appear already to have fallen behind the curve. The reality is the ECB will need to purchase at least another 1.5 trillion in assets, and even that may not be enough to avert a severe slowdown.
2014-10-28 00:00:00 Do Activist Investors Let the Game Come to Them? by William Smead of Smead Capital Management
As a recovering amateur athletethe pinnacle of my athletic career was four years of Division III college golfone concept became obvious at almost every level of athletic endeavor: let the game come to you. Rather than trying to impose your will on the opposing team or opposing player very quickly, you instead seek to discover your opponents weaknesses and use the duration of the contest to establish your superiority.
2014-10-27 00:00:00 Why The Fed Will End QE On Wednesday by Lance Roberts of Streettalk Live
This week we will find out the answer to whether the Federal Reserve will end its current quantitative easing program or not. Today is the last open market operation of the current program, and my bet is that it will be the last, for now. Here are my three reasons why I believe this to be the case.
2014-10-25 00:00:00 As the Eurozone Stalls, China Cuts the Red Tape by Frank Holmes of U.S. Global Investors
France and Germanys industrial production has turned down recently. Their purchasing managers index (PMI) numbers are below the 50-mark line, indicating contraction. This trend is especially worrisome because Europe is a bigger trading partner with China than the U.S. is. So whats the solution? The EU would do well to look east, specifically to China.
2014-10-23 00:00:00 When Will Rates Potentially Rise? by Team of Osterweis Capital Management
When 2014 started, some Wall Street strategists predicted a continuing rise in interest rates as U.S. economic growth accelerated and the Federal Reserve (the Fed) reduced its monthly stimulus. Instead, it has been a one-way street in government bond markets as they continued to deliver low yields at higher prices. In August, the yield on the benchmark U.S. 10-year Note fell to 2.3%, back down to June 2013 levels.
2014-10-23 00:00:00 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company
Since mid-September, several items have changedsome economic, some market-related, some psychological.
2014-10-23 00:00:00 Quarterly Review and Outlook by Team of Hoisington Investment Management
The U.S. economy continues to lose momentum despite the Federal Reserves use of conventional techniques and numerous experimental measures to spur growth. In the first half of the year, real GDP grew at only a 1.2% annual rate while real per capita GDP increased by a minimal 0.3% annual rate. Such increases are insufficient to raise the standard of living, which, as measured by real median household income, stands at the same level as it did seventeen years ago
2014-10-21 00:00:00 Loomis Sayles Core Plus Bond Fund: Navigating Dynamic Markets with Tactical Flexibility by Sponsored Content from Loomis Sayles (Article)
The global economic cycle is a perpetual force influencing interest rates, credit availability and capital markets. For core plus managers who seek to generate total return by balancing liquidity and risk, these undulations pose a clear challenge.
2014-10-21 00:00:00 Rising Rates Implementation Plan: Core Plus & Risk Management by Rick Harper, Bradley Krom of WisdomTree
While our view on rising rates has yet to meaningfully materialize this year, our underlying thesis has not changed. In our view, it may be time for investors to think about how a bond portfolio may perform as a result of changes in Federal Reserve (Fed) policy.
2014-10-19 00:00:00 What the Strong Dollar Does to Yellow and Black Gold and Why We're Seeing Green by Frank Holmes of U.S. Global Investors
The United States is doing better than it has in years. Jobs growth is up, unemployment is down, our manufacturing sector carries the rest of the world on its shoulders like a wounded soldier and the World Economic Forum named the U.S. the third-most competitive nation, our highest ranking since before the recession.
2014-10-17 00:00:00 Why High Yield, Why Now by Tim Gramatovich, Heather Rupp of AdvisorShares
Here are some of the reasons we believe that the high yield bond market looks attractive at current levels.
2014-10-16 00:00:00 Global Worries (And Some Benefits) by Scott Brown of Raymond James
In the latest update of its World Economic Outlook, the IMF revised lower its expectations of global growth in 2014 and 2015. None of that should have surprised anyone. At this point, the IMF expects that European GDP will be relatively weak in 2014 (+0.8% 4Q14/4Q13) and should improve in 2015 (+1.6% 4Q15/4Q14). However, risks are weighted predominately to the downside. Weaker European growth and a stronger dollar will have a significant impact on many U.S. firms, but may have some benefits for the economy as a whole.
2014-10-16 00:00:00 Europe: Draghi's Deflation Desperation by Milton Ezrati of Lord Abbett
The specter of falling prices in the eurozone is making the ECB chiefs job even harder.
2014-10-15 00:00:00 The Sell-Off Continues, But an Opportunity Appears by Russ Koesterich of BlackRock
In recent weeks, investors have been contending with two trends: anxiety over a change in Fed policy and evidence of a slowdown in the global economy. While global growth is likely to remain below historic norms, it is not collapsing. This suggests that investors should be positioned for a slow growth environment, not another recession. This, in turn, implies taking some selective risk in asset classes that have become less expensive as a result of the sell-off. One example of an asset that warrants another look: U.S. high yield bonds.
2014-10-14 00:00:00 The Ultimate Income Portfolio: 7.1% Yield with Low Risk by Geoff Considine (Article)
I analyze the performance of last year's Ultimate Income Portfolio and generate the one for 2014-15. The result is a portfolio that yields 7.1% with a risk level equivalent to a 70/30 stock/bond index fund. I also explore some of the lessons learned from four years of tracking and revising the portfolios.
2014-10-14 00:00:00 You Ain't Seen Nothin Yet by William Smead of Smead Capital Management
Someone recently asked a group of us which band we saw at our first rock concert. My answer was the Canadian band, The Guess Who, in 1975. With hits like No Time, Undun and These Eyes, The Guess Who hit the perfect balance between my 17-year old testosterone driven aggressiveness and my urge to romance the woman of my dreams. The key members of the band in the 1960s and 1970s were Burton Cummings and Randy Bachman.
2014-10-13 00:00:00 Europe: Draghi's Deflation Desperation by Milton Ezrati of Lord Abbett
The specter of falling prices in the eurozone is making the ECB chiefs job even harder.
2014-10-11 00:00:00 Warning: Market Correction This Week? Did You See the Opportunity? by Frank Holmes of U.S. Global Investors
While stocks fell around the world this week amid growing concerns over global economic growth, Europes slowdown cant stop emerging market population growth that drives long-term commodity demand. If the short-term market volatility concerns you, a solution is short-term tax-free municipal bonds. Check out the 5 Reasons Why.
2014-10-10 00:00:00 Divergent Returns by Jim Tillar, Steve Wenstrup of Tillar-Wenstrup
The theme for this newsletter is volatility. Not only are we seeing volatility in financial prices, but also in economic data and in some indicators we use to gauge the market's risk level.
2014-10-08 00:00:00 High Yield Market Technicals by Tim Gramatovich of AdvisorShares
It has been a long quiet period in credit but volatility has returned with a vengeance. I have had an opportunity to discuss this with a number of our institutional clients in recent days, but there are a few factors that are exacerbating the recent price declines in the high yield bond market.
2014-10-04 00:00:00 600 Million Reasons to Keep Your Eyes on India by Frank Holmes of U.S. Global Investors
In the wake of his rock star reception at Madison Square Garden on Sunday, Prime Minister Narendra Modi has emphatically announced to our nation's top corporate and political leaders that India is now open for business. Between September 26 and 30, he met with not only President Barack Obama and other high-profile politicians but also the CEOs of some of our nation's largest and most successful companies.
2014-10-03 00:00:00 Gold update by Adam Feik of Take Time For This
I dont believe rising interest rates are or will be a reason for the dollar to continue to rally (or for gold prices to fall). Right now, investors seem convinced the dollars rally will continue for the foreseeable future. It may; but more likely, the dollar will continue to fluctuate when compared to foreign currencies, as well as when compared to gold. I, for one, will probably view any large declines in gold, silver, oil, gas, and the companies that produce those commodities as an opportunity to buy low. Note, Im not ready to
2014-10-02 00:00:00 Voya Fixed Income Perspectives September 2014 by Christine Hurtsellers, Matt Toms of Voya Investment Management
Change is in the air, and its evident beyond the riot of color overwhelming our natural landscape. Market dynamics, too, are shifting, with the yield on the U.S. two-year Treasury inching higher and the U.S. dollar appreciating. Both not only suggest markets are pricing in a stronger U.S. economy, they are also potential harbingers that the end of zero interest rate policy is near.
2014-10-02 00:00:00 3Q14 Market: Small-Caps at a Relative Disadvantage by Jack Fockler of The Royce Funds
We believe that equities continue to represent an attractive option, that fundamentals matter, especially on a long-term basis, and that stock pickers, i.e., active managers, are uniquely positioned to add value in the current market environment and beyond.
2014-09-30 00:00:00 Asset Allocation in a Time of Complacency by Dimitri Balatsos of Tesseract Partners
Complacency is a dangerous mindset, especially for investors. Having been generously rewarded beyond their expectations, investors were coddled in the arms of complacency as 2013 drew to a close.
2014-09-29 00:00:00 The Ingredients of a Market Crash by John Hussman of Hussman Funds
Market peaks often go through several months of top formation, so the near-term remains uncertain. Still, it has become urgent for investors to carefully examine all risk exposures. When extreme valuations on historically reliable measures, lopsided bullishness, and compressed risk premiums are joined by deteriorating market internals, widening credit spreads, and a breakdown in trend uniformity, its advisable to make certain that the long position you have is the long position you want over the remainder of the market cycle.
2014-09-27 00:00:00 5 Reasons Why Short-Term Municipal Bonds Make Sense Now by Frank Holmes of U.S. Global Investors
Although short-term bonds might not be as sexy as common stocks in fashionable brands like Apple and Tesla, they play an important role in any serious investor's portfolio. Below are five reasons why investing in municipal bonds makes sense now more than ever.
2014-09-26 00:00:00 Reading Fed Tea Leaves by Christopher Molumphy of Franklin Templeton Investments
Monetary policy is of keen interest to fixed income investors, and the US Federal Reserve (Fed) has been known to be particularly obtuse when it comes to interest-rate talk. One thing is clear: The Fed is winding down its longstanding quantitative easing (QE) program. Whats not so clear: when the Fed will actually raise short-term interest rates.
2014-09-25 00:00:00 Playing Defense in Emerging Market Fixed Income by Bradley Krom of WisdomTree
When looking around the global fixed income landscape, investors searching for income potential have essentially two choices: non-investment grade debt or emerging markets (EM). While high yield flows continues to dominate the headlines, emerging markets have generally flown under the radar in recent months. In this discussion, we focus on how investors may be able to best position against a change in Federal Reserve (Fed) policy while maintaining income potential from investments in emerging markets.
2014-09-25 00:00:00 Dont Fight the ECB? Part 2 by Burt White of LPL Financial
Last week we discussed why buying European stocks now, following the recent stimulus announced by the ECB, is very different from buying U.S. stocks during periods of Fed stimulus in recent years. This week we take a deeper dive into the investment opportunity in Europe and evaluate fundamentals, valuations, and technicals. We recommend that investors fight the ECB. We do not believe the additional stimulus is enough for us to recommend European equities over U.S. equities at this time.
2014-09-25 00:00:00 Europe’s Commercial Real Estate Deleveraging: ‘Not Too Fast, Not Too Slow’? by Tareck Safi, Tom Collier of PIMCO
As European bank deleveraging accelerates, we expect that commercial real estate (CRE) will continue to constitute a significant proportion of bank assets to be sold, albeit with a shifting geographical mix. We believe CRE opportunities remain in the form of single assets and complex structured transactions in particular; but a disciplined approach will be key given competition in specific types of assets and in certain jurisdictions. This will require flexible capital, local investment expertise and hands-on asset management, in addition to strategic sourcing capabilities.
2014-09-25 00:00:00 Gold and US Monetary Policy by Ade Odunsi of AdvisorShares
In this weeks Gold Report we conduct a historical analysis of the impact of US monetary policy announcements on the price of gold in US dollars. Beginning with the Federal Reserves extra-ordinary 75 basis point Fed Funds rate cut in January 2008 and the most significant central bank policy announcements since, the analysis looks at the resulting reaction of the gold market and the US 10 year real yield over a three month period.
2014-09-25 00:00:00 Global Equities Stay Thirsty for Liquidity by Rick Golod of Invesco Blog
Taking a step back from the usual economic and market insights, my September commentary is devoted to a topic that Ive been long overdue in addressing. Financial advisors have frequently asked about my approach to asset allocation, and Ive outlined my strategy for diversifying within the US equity space in my commentary, Harnessing the Markets Natural Rotation: An Asset Allocation Strategy. Here, Id like to provide a summary of my outlook, which remains unchanged from the previous month.
2014-09-22 00:00:00 It Will Take More Than ECB Rate Cuts for the Eurozone to Fully Recover by John Greenwood of Invesco Blog
The European Central Banks (ECB) surprise rate cuts on Sept. 4 reducing its main lending and deposit rates by 10 basis points show that its policies so far have been inadequate to solve the euro-areas economic malaise. Economic growth has stalled, and deflation remains a threat in the eurozone. The rate cuts may help to weaken the euro further in the currency markets, but nobody should be under any illusion that banks will start lending or expanding their deposits as a result of the rate cuts alone, or that these cuts will trigger a wider economic recovery.
2014-09-20 00:00:00 Stocks Rally Following Janet Yellen's Conference and Scotland's Historic Referendum by Frank Holmes of U.S. Global Investors
This news gives stocks reason to rally for a considerable time, or at least until the Fed gives us a more concrete timeframe for a rate hike.
2014-09-16 00:00:00 Gundlach on Today's Surprising Driver of Bond Prices by Robert Huebscher (Article)
Inflationary pressures could ultimately trigger an uncontrollable spike in interest rates, according to Jeffrey Gundlach, but such predictions are likely at least five years too early. In the short run, he identified the key driver that will keep rates low - the strong performance of European bond markets.
2014-09-16 00:00:00 High Yield in a Rising Rate Environment: A Perspective on Historical Performance by Heather Rupp of AdvisorShares
Since 1980, Treasury yields have increased (i.e., interest rates rose), in 15 of those years. In every one of those years, high yield has outperformed the investment grade market. The long-term numbers show that over those 15 years since 1980 where we saw Treasury yield increases (i.e., interest rates rose), high yield had an average return of 13.7% (or 10.4% if you exclude the massive performance in 2009). This compares to only a 4.5% average return (or 3.6% excluding 2009) for investment grade bonds over the same period.
2014-09-15 00:00:00 Implications of European Central Bank actions by Phil Apel and James McAlevey (Article)
Phil Apel, Head of Fixed Income and James McAlevey, Head of Interest Rates examine the implications of the recent European Central Bank (ECB) monetary stimulus measures where policy rates were cut by 10bp while a program of asset-backed securities and covered bond purchases was announced. With the ECB taking up the QE baton, Europe is clearly decoupling from the US, intensifying the contrasting fortunes of the two markets. Phil and James share their views and explain how their portfolios are positioned in light of the recent market trends.
2014-09-15 00:00:00 The Economy: September Viewpoint by Bruce Laning of Bronfman E.L. Rothschild
The U.S. economy experienced a robust summer for economic expansion and job growth, however recent consumer data is casting doubt as to whether the current level of activity can be sustained. Our position is to maintain an emphasis on higher-quality bonds and be prepared for short-term rate increase(s) in the months to come. The road ahead for stocks continues to look positive, but it would be prudent to keep in mind the inevitable speed bumps that will likely present themselves down the road, as we have not had a meaningful pullback since 2011.
2014-09-13 00:00:00 Patiently Waiting for Mean Reversion by Frank Holmes of U.S. Global Investors
Because small caps tend to have higher beta than blue chips, you would expect them to outperform in a generally rising market?which we?re currently in. So it appears that a major rotation out of these riskier, more volatile stocks has inexplicably occurred, leading to the wide bifurcation between small and large companies. The good news is that, based on 20 years of historical data, stocks in the Russell 2000 tend to rally in the fourth quarter and continue steadily until around the end of the first quarter. Over this 20-year period ending in December 2013, the Russell has generat
2014-09-12 00:00:00 Schwab Market Perspective: Diverging Paths…Growing Risks? by Liz Ann Sonders of Charles Schwab
The U.S. stock market continues to reach new highs but sentiment is extended and we are entering a period that has historically seen weakness. We believe the ultimate trend is higher, but bumps could get more pronounced in the near future. The U.S. economy is improving, with data suggesting self-supporting expansion is taking hold. Whether this means accelerated Fed interest rate hikes is being closely watched, while midterm elections often inject some more uncertainty into the market. The European Central Bank (ECB) finally acted, but structural issues and lack of demand remain problems.
2014-09-11 00:00:00 Understanding China's Property Market by Andy Rothman of Matthews Asia
One of the biggest misconceptions about Chinas property market is that most buyers are speculators. In fact, the residential market is driven by owner-occupiers, and even many poor Chinese are homeowners; China is a global leader in homeownership with urban ownership rates at 89%. The boom days may be over, but fundamental demand remains healthy. New home prices rose at an average annual pace of 9% over the last eight years, but nominal urban income rose 13% per year. Communist Party leaders do not appear too worried about property; theyve taken only modest steps to support the m
2014-09-11 00:00:00 As The World Turns ... by Scott Brown of Raymond James
U.S. economic data were mixed last week, but there was nothing in the August Employment Report to suggest that growth is slowing down. A surprise move from the European Central Bank pushed the euro lower, but there appears to be a lot more that the ECB can do.
2014-09-11 00:00:00 ECB Measures Highlight Draghis Determination by David Zahn of Franklin Templeton Investments
The reduction in eurozone interest rates announced on September 4 by European Central Bank (ECB) President Mario Draghi came as a bit of a surprise to some market players. But David Zahn, Head of European Fixed Income and portfolio manager, believes that this move, along with the confirmation of the commencement of the banks asset-backed securities purchase program, is very much in line with its previous action and suggests a central bank president who is in control and determined to get the eurozones economy back on track.
2014-09-10 00:00:00 High Yield Bonds and Interest Rates by Heather Rupp of AdvisorShares
Over the last month, we have seen the equity markets hit all-time highs, all the while bond investors seem to be indicating there are reasons to be concerned, sending the 10-year Treasury to the lowest yields seen over the past year.
2014-09-09 00:00:00 Is it Time to Take the Euro Out of Europe? by Jeremy Schwartz of WisdomTree
On September 4, the European Central Bank (ECB) took further accommodation to support the economic growth environment in Europe. As a result, the euro collapsed about 1% immediately after the news, while European stocks rose on prospects for more monetary policy easing. This reaction mirrors what we saw in Japan in 2013, and it strengthens the case for taking the euro out of Europe.
2014-09-09 00:00:00 Staying Ahead of the Curve by Chris Diaz of Janus Capital Group
Investors could soon face an environment of rising U.S. interest rates and heightened rate volatility. Already, the Federal Reserve has begun setting the stage by tapering its quantitative easing program. Once rates start to rise, its difficult for a fixed income portfolio to make up lost ground if its not already positioned for higher rates. We think its crucial for investors to diversify their yield curve exposure by investing abroad.
2014-09-08 00:00:00 Correlation Convergence is Hurting Your Investment Performance by Vern Sumnicht of iSectors
Correlation is a statistical term that helps describe the relationship between two investments, enabling an investor to determine how similar two investments are to each other. By understanding the correlation between the investments in a portfolio, an investor can understand how likely it is, for example, for two or more of those investments to gain or lose money at the same time.
2014-09-06 00:00:00 The New Challenges of Price Discovery by Frank Holmes of U.S. Global Investors
In the past few years, price discoveryor the act of finding the right price for a securityhas become much more challenging because of falling stock volume and widening bid-ask spreads. These challenges are directly attributable to the infiltration of high-frequency traders into the market, not to mention the expansion of dark pools and non-exchange trading.
2014-09-05 00:00:00 Will Russia Derail the Eurozone Recovery? by Nicola Mai of PIMCO
Geopolitical tensions from Ukraine and the evolving trade war with Russia are threatening what is already a weak recovery in Europe, and could shave approximately 0.3%0.4% off eurozone growth. Should the situation escalate, we could expect an even greater drag with potential to push the eurozone back into recession. Looking ahead, we see attractive opportunities in peripheral bonds and favour an underweight currency position in the euro.
2014-09-05 00:00:00 Voya Global Perspectives Market Update by Douglas Cot of Voya Investment Management
A hawk in doves clothing, Yellen will likely be ahead of the curve when it comes to hiking rates. Driven by strength in manufacturing and a revitalized consumer, corporate America is thriving. The euro zone is an economic basket case, forcing Draghi to reach for another bazooka solution, to the likely benefit of risk assets. Broad, globally diversified portfolios can help protect investors against the volatility that policy normalization may bring.
2014-09-03 00:00:00 Voya Fixed Income Perspectives August 2014 by Christine Hurtsellers, Matt Toms of Voya Investment Management
Like the buzz of the alarm clock on the first day of school, the July/early August market selloff awoke investors to the fact that the lazy, carefree days cant last forever. Though a single catalyst for the latest shift in sentiment is tough to identify, there are a number of suspects: ample geopolitical uncertainty, the possibility that strong U.S. economic data may hasten fed funds rate normalization and Fed rhetoric about froth in certain markets.
2014-08-30 00:00:00 Anticipate Before You Participate: Patterns in Trading by Frank Holmes of U.S. Global Investors
The primary unit of time measurement for high-frequency traders might be the microsecond, but for normal retail traders, it?s vital to know the best months, days and even half-hours of the day to make market transactions.
2014-08-29 00:00:00 The Modern Day Widow Maker Trade is to Short Treasuries by Team of GaveKal Capital
As treasury yields plunge again today to new 1-year lows (the 10 and 30-year treasury bond yields are both down 3bps to 2.33% and 3.07%, respectively), we are reminded of a popular trade over the last decade to short Japanese government bonds, which has aptly been named the "widow maker" trade.
2014-08-28 00:00:00 I Cant Save Europe Alone Mario Draghi at Jackson Hole by Bob Andres of Andres Capital Management
Janet Yellen began her prepared speech on monetary policy and the labor markets in Jackson Hole at 10:00am on Friday. Within minutes, analysts were offering insights into future interest rate policy. The equity markets dipped slightly only to recover quickly to pre-speech levels. The consensus view, which emerged after sifting through the release, was that Ms. Yellens view on interest rates may be a tad less dovish than previously expressed. With no video feeds emanating from the conference and with tepid market reaction, we asked ourselves, Is she whispering or is she Yellen?&rd
2014-08-28 00:00:00 Frustrations of a Frugal Investor by Kendall Anderson of Anderson Griggs
The other day I was leaving the office and a gentlemen who has known me for quite some time asked about the model year of my truck. I told him it was a 2001 and that it should still be good for another 100,000 miles. Of course my truck is known to me and many of my friends as Big Red, and it has become a family member of sorts, capable of and willing to take on any job, rather than just a truck that hauls things around.
2014-08-23 00:00:00 Managing Expectations by Frank Holmes of U.S. Global Investors
The third part of this series on managing expectations is devoted to fundamental resource stock evaluation. I?ll discuss some of the statistical tools we use to pick quality stocks during a treacherous bear market, such as what we?ve seen in gold stocks the last three years
2014-08-20 00:00:00 5 Charts Showing The Taper Effect by Team of GaveKal Capital
We noted yesterday how treasury bond yields keep falling along with the reduction of fed purchases. This inspired us to dig deeper into our chart library to see how other asset classes or economic statistics have performed in relation to our taper model.
2014-08-19 00:00:00 How to Choose the Right Fixed-Income Strategy by Joe Tomlinson (Article)
The fixed-income portion of retirement portfolios is just as important as the equity allocation, yet far less research has been devoted to it. Advisors must decide whether to pursue active or passive strategies and which types of bonds to recommend. I'll address those strategic choices and argue that the best approach is the simplest, lowest-cost one.
2014-08-18 00:00:00 Dont Be Passive About Rising Rates by Chris Marx of AllianceBernstein
Though theyve defied expectations this year, higher interest rates appear to be all but inevitable. Investors need to take measure of the rate sensitivity in their portfoliosand stay agileto negotiate the rough market crosscurrents a rate reversal may bring.
2014-08-16 00:00:00 Managing Expectations - Part III by Frank Holmes of U.S. Global Investors
In the first of this three-part series on managing expectations, I discussed the role cycles play in the investment management process. At U.S. Global Investors, we actively monitor both short- and long-term cycles, from the annual seasonality of gold to four-year presidential elections, in order to manage expectations based on historical patterns.
2014-08-14 00:00:00 A Change In Consumer Behavior? by Team of GaveKal Capital
Retail sales in the US were unchanged in July, which prompted us to dive into our chart library to figure out what may be going on underneath the surface of the economy. Job growth has been pretty solid this year, which when combined with increases in hours worked, has led to a an almost 4% year over year increase in personal income. So what gives?
2014-08-13 00:00:00 Municipal Market Perspectives by Portfolio Team of SMC Fixed Income Management
Heightened international unrest and the likelihood of accelerating economic weakness in Europe will provide further support for fixed income securities. It is unlikely central banks will move from their current accommodative monetary positions anytime soon. Since we do not anticipate a meaningful upward move in Treasury rates, municipal bond prices should also benefit. Yields are likely to remain close to current levels and even possibly move lower. Strong market technical factors will also provide support.
2014-08-13 00:00:00 August Economic Update and Trends by Bruce Laning of Bronfman E.L. Rothschild
Bronfman E.L. Rothschild President Bruce Laning provides commentary on the economy, the bond market and stocks for August 2014. His article includes an analysis of various indicators, their trends, and Bronfman E.L. Rothschilds resulting outlook.
2014-08-12 00:00:00 Flexible Income Strategies - Avoiding Side Effects from the Fed’s Medicine by Dave King of Columbia Management
The U.S. economy went into recession in 2008, and it looked serious. As our fiscal deficit piled up, the political appetite for high government spending waned, leaving monetary policy as the primary available weapon to prevent recession from becoming depression. By mid-2011, Treasury bond yields had reached all-time lows. This strong monetary medicine now seems to be working. Many economic statistics have rebounded to peak levels, while some forward-looking ones, like major stock market indices, have hit new highs.
2014-08-11 00:00:00 A Strengthening Case for European Bonds by David Zahn of Franklin Templeton Investments
The pace of the eurozones economic recovery has been so slow that many people are now asking whether quantitative easing (QE) is inevitable to support a recovery and prevent deflation. But David Zahn, portfolio manager for Franklin Global Government Bond Fund, thinks recent European Central Bank (ECB) interventions in the European financial markets already amount to QE. More importantly, he thinks the extensive set of measures that the ECB has announced not only may support Europes economic recovery, but bring a highly favorable backdrop for European fixed income investments gene
2014-08-09 00:00:00 Managing Expectations by Frank Holmes of U.S. Global Investors
Financial markets are influenced by relatively predictable cycles, a lesson we at U.S. Global Investors rely on to help us manage expectations and be effective stewards of your money. This is a theme I've frequently written about and discussed in investor presentations, one of which, Anticipate Before You Participate, is a classic that I often use to remind investors of these timeless principles.
2014-08-09 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
Wage Growth May Not Be the Best Gauge of Labor Market Progress; The ECB's Summer Holiday May Not Be Very Relaxing; A Novel Proposal for Mortgage Lending
2014-08-06 00:00:00 Coming Down from a Rocky Mountain High? by Jerry Wagner of Flexible Plan Investments
It was a little after 6 AM as the plane rose from the tarmac of Denver International Airport Saturday morning. Out the windows on the right the sun was just peeking above the horizon. The warm glow of the early morning light washed quickly across the prairie. The land was golden and flat.
2014-08-05 00:00:00 Avoiding the Unintended Migration from Investor to Speculator by Bob Andres of Andres Capital Management.
The identification of value/price in the allocation of capital is essential to successful investing. Assets purchased at levels above intrinsic value reflect an approach based on hope and momentum not sound risk/reward analysis and normally portend negative results.
2014-08-02 00:00:00 5 Takeaways from the Vancouver Natural Resources Conference by Frank Holmes of U.S. Global Investors
Last week I was happy to speak at the Vancouver Natural Resources Conference in beautiful British Columbia. I also had the pleasure of listening to a variety of presentations by some of the most influential names in the investment world, and met a few new faces along the way. Here is what I took away from this years visit to Vancouver:
2014-07-31 00:00:00 Expanding the Opportunity Set for Income Generation by Heather Rupp of AdvisorShares
High Yield investors should understand the difference between an index-based product and its yield generation characteristics and portfolio composition based on the underlying index, versus some of the expanded opportunities available to active managers. For instance in the high yield bond and bank loan space, we see index-based, passive products that are largely high yield bonds or largely floating rate bank loans, not a blend of each.
2014-07-30 00:00:00 The Outlook for MLPs and Midstream Energy Infrastructure Continues to Look Bright by David Chiaro of Eagle Global Advisors
The quarter saw a number of positive developments that underpin our long term positive outlook on MLPs. Firstly, the need for new midstream infrastructure remains significant, and a number of announcements of large new projects highlighted that this need is not abating. Also, a significant new development in the quarter was the emergence of new export markets for ethane and condensate which will entail associated infrastructure development and other possible profit opportunities for MLPs.
2014-07-30 00:00:00 Treasury Bond Yields Still Catching Bid in Line with Slowing QE by Team of GaveKal Capital
Last week we wrote that the bond market is following perfectly the reduction of QE with new 1-year lows and with today's bond moves that trend is still firmly in place. In what may seem counter intuitive, treasury bond yields have had a high positive correlation with the rate of Federal Reserve asset purchases. When the rate of Fed asset purchases rises, bond yields rise, and vice versa. If one thinks of Fed asset purchases as stimulative to growth and inflation expectations (the two components that make up risk-free bond yields) then this positive relationship makes sense.
2014-07-30 00:00:00 Investor Fatigue Setting In? by Russ Koesterich of BlackRock
Despite a generally positive tone to earnings season, investors may be finally showing signs of fatigue, as seen by aggressive selling of risky assets, namely high yield and U.S. equities. Russ K explains the implications.
2014-07-26 00:00:00 Second Quarter Earnings: Marching Toward a Strong Recovery by Frank Holmes of U.S. Global Investors
It?s earnings season once again, and though only a quarter of the Russell 1000 has reported so far, the news is just north of positive. All signs indicate that the market has dusted itself off and is back to its cheerful self after a ho-hum first quarter, which was negatively affected by harsh winter weather.
2014-07-25 00:00:00 The Outlook for Emerging Market Bonds by Shane Shepherd of Research Affiliates
Emerging market bonds exhibit high real yields and improving credit quality. In addition, emerging market currencies are likely to strengthen. This article explains why emerging market bonds issued in local currencies might be a solid addition to a diversified portfolio.
2014-07-25 00:00:00 The 401(k) Event Horizon by Scott Klimo of Saturna Capital
Who would have guessed in 1973 that Roger Waters' meditation on life's fleeting passage would describe the dilemma faced by many today as they consider how best to save for retirement? The good news is that missing the starting gun doesn't prevent you from joining the race. We have all seen the calculations of how big our nest eggs could be if we started saving and investing at a young age, but those unable to do so still have an opportunity to build substantial savings.
2014-07-24 00:00:00 Keep An Eye on Commercial Bank Liquidity Trends by Team of GaveKal Capital
An interesting development this year has been the increase in purchases of US Treasury bonds by commercial banks. In the chart below, we show the year over year increase in the holding of US Treasury bonds by US commercial banks set against the interest rate on 10-year UST. This goes some way in understanding the move lower in rates this year.
2014-07-24 00:00:00 Standing By Convictions in European Equities by Philippe Brugere-Trelat of Franklin Templeton Investments
European equities have garnered a fair share of attention lately as leading indicators suggest economies in the region are starting to recover from years of crisis and austerity-induced recessions. While some observers will point to recent equity market volatility as a sign that investors should remain defensive when selecting stocks in the region, Philippe Brugere-Trelat, executive vice president and portfolio manager, Franklin Mutual Series, says hes encouraged by recent developments.
2014-07-22 00:00:00 Why Market-Timers Go Nuts by Stephen Huxley, Brent Burns (Article)
How do you drive a market-timer nuts? Remind them of the evidence against them. That is, the evidence of shifting and even reversing correlations between stock and bond returns that make it improbable - if not impossible - to use market timing to make profitable investment decisions.
2014-07-22 00:00:00 Is Timing Everything? Practical Implementation of Tail Risk Hedging?? by Michael Connor, Markus Aakko of PIMCO
Just in time hedging is nearly impossible: By the time an investor decides to hedge, the market may already price in the significant risk of a tail event. Instead, hedges could be included as a permanent part of an asset allocation: what we might call just in case hedging. An optimal strategy may involve averaging into a hedging allocation. In addition, using a broader set of hedge instruments may help lower the costs. We believe that tail risk hedges have a place in any portfolio that has a substantial allocation to risk assets. ?
2014-07-19 00:00:00 The Municipal Bond World, According to John Derrick by Frank Holmes of U.S. Global Investors
I sat down with Director of Research John Derrick, who also manages our Near-Term Tax Free Fund (NEARX), to get his thoughts on interest rates, the bond market and what investors should pay attention to as we move into the second quarter of 2014.
2014-07-19 00:00:00 Red Shoots - Today's Top Investor Concerns (Also Known as the Investors "Dirty Dozen") by Robert Isbitts of Sungarden Investment Research
A while back, we published a list that we continually update at Sungarden. We call them Red Shoots. They are essentially the opposite of a set of conditions which gave investors hope that not all was lost, in the throes of the financial crisis of 2008. Those reasons for optimism were called Green Shoots, like a patch of short green grass about to show up on the dirt area you will one day call your lawn. Red Shoots are the opposite: they are the reasons for extreme caution when the market and many investors seem to be forgetting that security prices are not a one-way propositi
2014-07-18 00:00:00 High Yield versus Equities by Heather Rupp of AdvisorShares
Investors are often led down the path that they must invest in equities in order to generate a decent return, and that the high yield market is too risky and speculative. However, reality and the data points prove otherwise. Looking over the past couple decades and various periods in between, you can see that high yield has consistently outperformed the equity market (as measured by the S&P 500 Index) on a risk adjusted basis (return/risk).
2014-07-17 00:00:00 The Tolling Bells of Complacency by Scott Minerd of Guggenheim Partners
A few years ago, facing a world in crisis, central banks aggressively employed monetary policy to avoid catastrophe in financial markets. Now, they must be equally aggressive in fighting complacency.
2014-07-15 00:00:00 The New Neutral: Investment Implications for Insurance Companies by David Braun of PIMCO
Low rates are unhelpful to an industry with legacy long-term liabilities containing rigid embedded credited rates; they exacerbate asset-liability mismatches and pressure earnings margins. Insurers may want to recalibrate their expectations of future interest rates, as well as broad bond and equity market returns. In The New Neutral, with beta from stocks and bonds likely to be relatively low, insurers should look to enhance buy-and-hold return potential via active management.
2014-07-15 00:00:00 High-Yield and Bank Loan Outlook by Team of Guggenheim Partners
Certain areas of leveraged credit are overvalued, particularly CCC-rated bonds and bank loans, but often some of the best profits come in the final phase of a cycle. Low yields on U.S. Treasury bonds and European sovereign debt have kept the global search-for-yield theme alive and have lured more capital into U.S. credit markets, helping the ongoing rally in high-yield bonds and bank loans, which gained 2.4 percent and 1.2 percent (as represented by the Credit Suisse High Yield Index and Credit Suisse Institutional Leveraged Loan Index) in the second quarter of 2014, respectively.
2014-07-14 00:00:00 Strategies for Income-Seeking Investors by Ed Perks of Franklin Templeton Investments
Many income-seeking investors have traditionally centered their portfolios around government bonds, often failing to consider other asset classes. Ed Perks, executive vice president and director of portfolio management, Franklin Equity Group, believes equities can be a key part of an income-oriented portfolio, although individual stock selection is particularly important as valuations rise and interest rate dynamics may change.
2014-07-12 00:00:00 2014 Commodities Halftime Report by Frank Holmes of U.S. Global Investors
What a difference six months can make. After a disappointing 2013, the commodities market came roaring back full throttle, outperforming the S&P 500 Index by more than 4 percentage points and 10-year Treasury bonds by more than 6.
2014-07-10 00:00:00 Are Prices Too High in U.S. Commercial Real Estate?? by John Murray of PIMCO
The recovery in commercial real estate (CRE) has been driven more by low rates than improvements in fundamentals. However, fundamentals are improving and capitalization rates should remain low amid low New Neutral policy rates. We expect capital flows in both debt and equity to CRE to continue to increase, and we see opportunities for investors resulting from capital flows, demographics, loan maturities and regulatory reforms. ?
2014-07-10 00:00:00 Guarding Against Complacency by Scott Minerd of Guggenheim Partners
Investors should expect a quiet summer with markets rolling along, but with valuations becoming frothy now is a time to consider greater exposure to assets with higher credit quality.
2014-07-08 00:00:00 GMO versus Blackrock: Divergent Views of Global Markets by Justin Kermond (Article)
GMO's Ben Inker says he wouldn't touch U.S. small-capitalization stocks "with a 10-foot pole" - and says he sees no asset class that is attractively priced. That isn't the way Blackrock, the world's largest asset manager, views things. Blackrock's Dennis Stattman likes Japanese equities and gold and isn't afraid of rising rates.
2014-07-05 00:00:00 I'm Grateful to Live in America. Here's Why. by Frank Holmes of U.S. Global Investors
An important principle of our investment process at U.S. Global Investors is a belief that government policies are a precursor to change. As a result, we closely monitor the fiscal, monetary and other impactful governmental policies of the worlds largest countries, both in terms of economic stature and population. Were always listening for the proverbial shot heard around the world. As we approach Americas Independence Day, this belief rings especially true.
2014-07-03 00:00:00 A Perspective on High Yield Spreads by Heather Rupp of AdvisorShares
There have been recent headlines about yields in the high-yield market hitting all-time lows. Yes, this is true, but lets put this in some context. First, interest rates have been at or near all-time lows for years, pressuring yields in all fixed income securities as investors search for places to generate returns. Comparatively, we believe the high yield market still looks very attractive.
2014-07-03 00:00:00 The Outlook for Yields by Scott Minerd of Guggenheim Partners
As U.S. economic growth gathers pace, yields on 10-year U.S. Treasuries should shift higher over the next two to three years, eventually moving as high as 3.75-4 percent.
2014-06-30 00:00:00 The Delusion of Perpetual Motion by John Hussman of Hussman Funds
The Federal Reserves promise to hold safe interest rates at zero for a very long period of time has not created a perpetual motion machine for stocks. No it has simply created an environment where investors have felt forced to speculate, to the point where stocks are now also priced to deliver zero total returns for a very long period of time. Put simply, we are already here. Investment decisions driven primarily by the question What other choice do I have? are likely to prove regrettable.
2014-06-28 00:00:00 Health Care Sector Spurred by Population Growth and M&As by Frank Holmes of U.S. Global Investors
Recently I spoke with John Derrick, director of research here at U.S. Global, to pick his brain about what he thought was the most interesting sector right now. You might expect him to have said energy, perhaps because of the intensifying violence in Kurdistan Iraq, a major oil producer. But instead, he said that he had his eyes on health care.
2014-06-27 00:00:00 Timing Low Volatility Investments by Feifei Li of Research Affiliates
If a secular bear market is coming, a low-volatility strategy might serve well. The five-year return of a simulated low-vol portfolio beat cap-weighting 75% of the time when the market P/E exceeded 20.
2014-06-27 00:00:00 Avoiding the Losers by Team of Hotchkis & Wiley
In Hotchkis & Wiley's 2014 High Yield 2Q Newsletter, Ray Kennedy, Mark Hudoff, and the rest of Hotchkis & Wiley's high yield team discuss the team's belief "that averting mistakes is the single most important quality in successful high yield investing," and that an "avoid the losers mentality can be achieved by focusing on securities that are senior in the capital structure, emphasizing asset coverage, and looking closely at covenant packages, a third level of defense that the team believes is often overlooked by high yield investors.
2014-06-24 00:00:00 Is the Equity Premium Getting Smaller? by Michael Edesess (Article)
An estimate of the expected return on equities in excess of the risk-free rate seems to be anybody's guess. It would be nice to have a sound theory that tells us how to estimate it.
2014-06-21 00:00:00 Ah, the Power of Mean Reversion. by Frank of U.S. Global Investors
The chatter this week has been gold. The precious metal flew up $45 an ounce on Thursday, surprising investors, the media and markets alike.
2014-06-20 00:00:00 Global Economic Perspective: June by Franklin Templeton Fixed Income Group of Franklin Templeton Investments
With 10-year US Treasury yields dropping below 2.5% at one point during early June in spite of improving forward economic indicators, the US bond market has continued to send out confusing signals, in our view. Purchasing manager indexes have remained well over the 50 mark that separates expansion from contraction for many months, consumer demand has remained relatively buoyant, and nonfarm payrolls show job creation running at over 200,000 per month for 13 of the 21 months to May 2014.
2014-06-19 00:00:00 Designing Balanced DC Menus: Considering Inflation-Hedging Strategies???? by Stacy Schaus, Ying Gao of PIMCO
Inflation-hedging strategies are fundamental to DC investment lineups and participants? need to build and preserve purchasing power in retirement. Plan sponsors should evaluate these assets separately and in combination before adding them to core lineups and target-date strategies. Selected assets or blends should be designed to deliver the primary benefits of inflation responsiveness, diversification relative to stocks, volatility reduction and downside risk mitigation.
2014-06-18 00:00:00 Getting in Gear for The New Neutral – What Does It Mean for Investors? by William Benz of PIMCO
Smart beta is increasingly important when returns are likely to fall short of what most investors need and expect. Active managers can use multiple tools to help generate higher returns. With outcome-oriented strategies, investors can align their portfolios toward meeting specific risk and return objectives. Investors with more aggressive income or return needs may benefit from bespoke, multi-asset solutions. ?
2014-06-18 00:00:00 Hedged High Yield by Heather Rupp of AdvisorShares
A strategy that we have seen emerge over the past year within the high yield market has been hedged high yield, most recently with iShares rolling out an product last month that uses their passive, index-based HYG fund as the high yield component. The gist of the hedged high yield strategy is to go long high yield bonds and short Treasuries (or Treasury futures). The basic premise is that the strategy will hedge interest rate risk, with any bond pricing decline due to rising rates being offset with the short in Treasuries.
2014-06-17 00:00:00 Long Term Parking by W. Ben Hunt of Salient Partners
Like the Soprano Family in 2002, the problem with the US economy in 2014 is not that there is too much private debt being created, but too little. The danger for US markets is not that there is some private debt bubble about to burst, but that markets have become disconnected from the natural cycle of debt and growth, a cycle which remains decidedly anemic.
2014-06-17 00:00:00 Gundlach: A Big Moment for the Economy and the Markets by Robert Huebscher (Article)
The benchmark 10-year Treasury bond is an attractive investment, according to Jeffrey Gundlach, although its yield is likely to stay between 2.2% and 2.8% for the remainder of the year. Despite that narrow range, Gundlach foresees pivots in other parts of the investment landscape.
2014-06-16 00:00:00 Unconstrained Bond Investing in The New Neutral by Mohit Mittal, Saumil Parikh of PIMCO
At our recently concluded Secular Forum, PIMCO investment professionals from around the globe gathered in Newport Beach to discuss and debate the secular outlook for major world economies. With insight from guest speakers and new MBA/PhD hires, PIMCO coined the phrase The New Neutral to define its secular three- to five-year outlook for the world economies. In his most recent Investment Outlook, Bill Gross further elaborated on The New Neutral.
2014-06-14 00:00:00 Gold Investors: Let This Cycle Be Your Guide by Frank Holmes of U.S. Global Investors
U.S. Global Investors recently welcomed Doug Peta, an economist from BCA research, to our offices. He presented some interesting research regarding the Fed Funds Rate Cycle, and in turn, what that research could mean for gold. I wanted to share points from his presentation, as well as our own in-house research, to help you understand the positivity we see for the precious metal looking towards 2015.
2014-06-07 00:00:00 China Leads the World in Green Energy, Gaming and Gambling Markets by Frank Holmes of U.S. Global Investors
Last month, Xian Liang, co-portfolio manager of our China Region Fund (USCOX), attended the 19th CLSA China Forum in Beijing. There he and hundreds of other global attendees were given the opportunity to meet with representatives from Chinese corporations, some of which U.S. Global owns. Xian also managed to get a sense of how the nation?s recent changes in consumer behavior and governmental policy reforms might affect its investment outlook. Although China remains an emerging market, it has lately taken a number of considerable strides to position itself as one of the world?s most
2014-06-06 00:00:00 The ECB finally acts and hopes for a good reaction by Carl Tannenbaum and Asha Bangalore of Northern Trust
Many have criticized the European Central Bank (ECB) for preferring words over action in recent months. So credit must be given to ECB President Mario Draghi and his colleagues for enacting a series of measures aimed at shaking the eurozone from its malaise. The question is whether yesterdays decision will result in more credit given to eurozone borrowers.
2014-06-05 00:00:00 Interpreting the bond rally from a multi-asset perspective by Jeffrey Knight of Columbia Management
If theres one thing investors agreed upon at the beginning of this year, it was that bond yields were heading higher. Over the past few weeks, I have read any number of research reports attempting to understand the reasons for this unexpected rally. Several plausible explanations have been offered, including the growing probability of a policy rate cut by the European Central Bank (ECB).
2014-05-31 00:00:00 From Constantinople to Istanbul, Turkey Has Never Been Better by Frank Holmes of U.S. Global Investors
Every time he travels to Turkey, portfolio manager of our Emerging Europe Fund (EUROX), Tim Steinle, says the country continues to develop. Although technically classified as an emerging market, one wouldn?t think to label the country as such upon arrival. The population is young and growing, there are improvements to infrastructure everywhere you look, beautiful green parks are more prevalent, and the professional staffs that run many of the shops and businesses are both well organized and thriving.
2014-05-30 00:00:00 Four Simple Charts To Explain The Move In Bonds This Year by Team of GaveKal Capital
As an old friend used to say, "Price changes create their own news flow." This is a good way to think about all the "stories" that have surfaced lately explaining the unexpected plunge in bond yields this year.
2014-05-25 00:00:00 Mounting Momentum? by Liz Ann Sonders, Brad Sorensen & Michelle Gibley of Charles Schwab
Although the stock market remains sluggish, with the potential for a correction elevated, the U.S. economy appears to be improving. There is probably no great rush to get into the stock market at this point, but maintaining a steady investing discipline in the face of what we think is a continuing secular bull market is key. Investors frustrated with the low yield environment should be careful about adding too much risk to a portfolio in search of higher yields.
2014-05-24 00:00:00 In a Flash, China Looks Strong by Frank Holmes of U.S. Global Investors
If you want to know where the world economy is headed, there is one number that I believe investors should focus on: the HSBC China Manufacturing Purchasing Managers Index (PMI). On Thursday, the preliminary flash PMI for May came in at 49.7, beating Bloombergs consensus of 48.3.
2014-05-21 00:00:00 Interest Rates Have To Go Up. The "Bond King" Says No by Gary Halbert of Halbert Wealth Management
The prevailing view on Wall Street and Main Street is that medium and long-term interest rates have to go higher in the months and years ahead. Interest rates have to get back to normal at some point, so were told. Yet in the last several months, yields on 10-year Treasury notes and 30-year Treasury bonds have fallen rather significantly. Whats up with that?
2014-05-19 00:00:00 The Belgian Connection by Peter Schiff of Euro Pacific Capital
One of the biggest questions at the end of 2013 was how the Treasury market would react to the reduction of bond buying that would result from the Federal Reserves tapering campaign. If the Fed were to hold course to its stated intentions, its $45 billion monthly purchases of Treasury bonds would be completely wound down by the 4th quarter of 2014.
2014-05-17 00:00:00 Which Resource Areas Show Signs of Strength? by Frank Holmes of U.S. Global Investors
Global synchronized growth, as measured by the Global Purchasing Managers' Index (PMI), remained stable or positive for the past 12 months until Japan reversed the momentum in April with a precipitous drop in its PMI. China is contributing modest growth but, fortunately, the U.S. and Europe are rebounding. This lack of consistent global momentum has created a short-term, volatile, hot and cold, stop-and-go sentiment. Global real GDP growth peaked in 2010 at 5.2 percent then slowed for the next three years to 3 percent. Global growth in 2014 is likely to accelerate, for the first time in four y
2014-05-16 00:00:00 Breaking Good by Scott Minerd of Guggenheim Partners
After breaking out of their recent trading range, yields on U.S. Treasuries could now be heading significantly lower and the U.S. economy could enjoy fast economic growth in the coming months.
2014-05-15 00:00:00 Schroders Monthly Markets Review: Overview of Markets in April 2014 by Keith Wade, Azad Zangana, Craig Botham of Schroder Investment Management
Global equities edged higher in April. Some stronger macroeconomic data from developed economies helped to support returns but the ongoing crisis in Ukraine remained a headwind for equities. Developed markets outperformed emerging markets. In the US, a generally firmer tone to macroeconomic data and a broadly encouraging corporate earnings season supported sentiment. Investors were also reassured by comments from Federal Reserve (Fed) Chair Janet Yellen about maintaining low interest rates.
2014-05-10 00:00:00 The Good, the Bad and the Opportunity by Frank Holmes of U.S. Global Investors
Twice a day, in the morning and at lunch, our investment team sits down together to discuss what?s important and what?s immaterial. This past week, in my opinion, the good outweighed the bad. Much of the economic news was a direct result of government policies, both fiscal and monetary. Here are my findings, which I hope will help you filter through the noise.
2014-05-09 00:00:00 Overview of the Fixed Income Market by Tim Gramatovich of AdvisorShares
Junk bonds are often still considered an alternative asset class and remain tremendously confusing to much of the investing public. They are considered by many to be very risky and illiquid. The truth is that the high yield market is a relatively straightforward, well developed and liquid market.
2014-05-04 00:00:00 Albania's Fertile Grounds for Oil Opportunities by Frank Holmes of U.S. Global Investors
Texas is oil country. The state I now call home leads the nation in oil production and would be one of the top oil-producing nations if it were its own country. But that doesn?t stop us from exploring other promising oil opportunities further afield. Last week I traveled to Albania to check out a drill site of Petromanas Energy, a Calgary-based international oil and gas company focused on exploration and production throughout Europe and Australia. We own the junior stock in our Global Resources Fund (PSPFX) and Emerging Europe Fund (EUROX).
2014-05-02 00:00:00 Need for New Midstream Energy Infrastructure Remains Strong by David Chiaro of Eagle Global Advisors
Capital expenditures expected to surpass $640 billion by 2035, says David Chiaro, co-portfolio manager of the Eagle MLP Strategy Fund.
2014-04-30 00:00:00 De-Risking Pensions in a Time of Tapering by Rene Martel, Markus Aakko of PIMCO
Despite improved funding in corporate defined benefit pension plans, some sponsors concerned about rising rates may be tempted to delay glide path prescriptions to boost fixed income allocations. For these sponsors, a better approach might be to break de-risking into two steps, potentially allowing for significant risk-reduction benefits yet preserving tactical flexibility in timing purchases of long-duration bonds. Any reduction in equity and other return-seeking assets should be implemented in short order to lock in recent market gains. ?
2014-04-30 00:00:00 Achoo! by William Gross of PIMCO
There?s nothing like a good sneeze; maybe a hot shower or an ice cream sandwich, but no ? nothing else even comes close. A sneeze is, to be candid, sort of half erotic, a release of pressure that feels oh so good either before or just after the Achoo! The air, along with 100,000 germs, comes shooting out of your nose faster than a race car at the Indy 500.
2014-04-26 00:00:00 China Holds the Keys to the Gold Market by Frank Holmes of U.S. Global Investors
It?s important to follow the money, or in this case the gold, to see how people around the world react to this rare commodity. Looking forward, stay curious as an investor and you?ll see if China can keep the key to the gold market.
2014-04-23 00:00:00 Positioning Your Portfolio for Rising Rates. by Team of Forward Management
Accelerating outflows from bond funds in 2013 highlight investor nervousness over the prospect of rising interest rates. Investors may want to carefully assess the role of fixed-income investments in their portfolios, particularly in light of other types of income-producing vehicles. Upon careful evaluation of their options, investors can make adjustments suitable to their objectives.
2014-04-21 00:00:00 Spring Checkup: Five Investment Ideas for Your Portfolio by Russ Koesterich of iShares Blog
As the second quarter of 2014 gets underway, many investors are wondering how they should adjust their portfolios given the events of the first three months of the year. Russ shares five investing opportunities that he and his BlackRock colleagues think are worth considering this spring.
2014-04-18 00:00:00 Quarterly Review and Outlook by Van Hoisington, Lacy Hunt of Hoisington Investment Management
After examining much of the latest scholarly research, and conducting in house research on the link between household wealth and spending, we found the wealth effect to be much weaker than the FOMC presumes. In fact, it is difficult to document any consistent impact with most of the research pointing to a spending increase of only one cent per one dollar rise in wealth at best. Some studies even indicate that the wealth effect is only an interesting theory and cannot be observed in practice.
2014-04-17 00:00:00 Designing Balanced DC Menus: Considering Diversified Fixed Income Choices by Stacy Schaus, Ying Gao of PIMCO
Sponsors of defined contribution plans face a dual challenge: They must present investment options appropriate for plan members and design menus that encourage selection of well-structured portfolios. We believe that actively managed strategies designed to potentially reduce risks, invest globally and enhance yield relative to the index may improve diversification and lower concentration risk in fixed income offerings. Plan sponsors may consider a range of return and risk measures as they evaluate current and prospective fixed income offerings.
2014-04-17 00:00:00 Fixed Income Outlook by Team of Osterweis Capital Management
Given that the Fed is likely to complete its asset purchases this year and may raise rates in early 2015, we still feel that Treasuries and investment grade bonds are unattractive. Although yields in the high yield universe are low by historical standards, they still give us a decent cushion against rising rates, especially at the shorter end of the maturity spectrum. Maintaining a shorter duration exposure in high yield and some convertible bonds, as well as a cash reserve, continues to make sense.
2014-04-17 00:00:00 Why Energy is Catching the Market's Eye by Frank Holmes of U.S. Global Investors
Over the last month the energy sector has outperformed the market, and as you can see in the chart below, has done so by 6.5 percent. Year-to-date the sector is beating the S&P 500 Index by over 3 percent. In a spectacularly performing market during 2013, energy lacked some of the incredible performance seen throughout the other sectors, but recently it has turned up, catching the attention of the market yet again.
2014-04-17 00:00:00 Three Yards and a Cloud of Dust by Sam Stewart of Wasatch Funds
Former Ohio State football coach Woody Hayes was well-known for his conservative offense-often quoted as saying, "There are only three things that can happen when you pass, and two of them are bad." The two bad outcomes are either an incompletion or an interception. Instead, Hayes favored a methodical, grind-it-out approach, running the ball directly into the line: "three yards and a cloud of dust." What Hayes style of play may have lacked in pizazz, it more than made up for in results. The U.S. economy today is following a similar offensive playbook, but with less satisfying results.
2014-04-15 00:00:00 Does Rebalancing Really Pay Off?? by Michael Edesess (Article)
No investment advice is more universally offered than the advice - originally posited by William Bernstein - to rebalance your portfolio. Yet, the evidence that this practice is beneficial is shockingly meager.
2014-04-15 00:00:00 Credit Availability Underpins Recovery in Commercial Real Estate Prices, But Also Poses Risks to CMB by Bryan Tsu of PIMCO
Credit availability, low interest rates, limited new construction and improving economic conditions have contributed to the recovery in commercial real estate (CRE) prices. We expect a strong 2014 in the commercial mortgage-backed securities (CMBS) market, which has been a primary source of CRE credit expansion. Increasingly aggressive loan underwriting is a concern. CMBS investors need to speak with their wallets and push back on either valuations or underwriting standards if recent trends continue.
2014-04-14 00:00:00 Why Today?s Environment Favors Active High Yield Strategies by Darren Hughes, Scott Roberts of Invesco Blog
Fixed income investors are looking for ways to prepare their portfolios for rising interest rates. While bond prices generally fall when rates rise, history shows that high yield bonds have typically held up well in rising rate environments.
2014-04-12 00:00:00 Proper Perspective by Liz Ann Sonders, Brad Sorensen & Michelle Gibley of Charles Schwab
Getting caught up in the weeds is easy in this 24-hour news cycle where everyone is looking to make a splash, but successful investing requires staying above the fray. The U.S. economy is growing and equities appear fairly valued, Europe has issues to deal with but has come a long way from the depths, Japan may be working against itself but improvement has been seen, and the threat of a Chinese debacle at this point seems minimal.
2014-04-10 00:00:00 Assuage Your Fears of Rising Rates with Global Diversification by Julie Salsbery of PIMCO
?Although PIMCO believes interest rates are fairly anchored in the near term, we think investors can position their fixed income portfolios more defensively. Global diversification across developed and emerging markets can offer a defense against rising U.S. rates by reducing the concentration of risks within a portfolio, while also potentially lowering volatility and enhancing returns.
2014-04-09 00:00:00 Management?s History of Shareholder Friendliness by William Smead of Smead Capital Management
Many years ago, United Airlines had the slogan, "Fly the Friendly Skies." At Smead Capital Management, we like to own companies for a long time which are "friendly" to their public shareholders. In this missive, we will define what it means in our eyes to be shareholder friendly and give a company specific example of this friendliness.
2014-04-09 00:00:00 Master Limited Partnerships by Greg Reid and the Salient MLP Team of Salient Partners
Master Limited Partnerships (?MLPs?) are a unique asset class in the investment landscape. Historically, MLPs have been primarily owned by high net worth and retail investors due in part to the tax complexities. However, MLPs have started gaining traction over the past few years among institutional investors as they seek alternative sources of yield in our present low-yield world.
2014-04-09 00:00:00 Dare to be Great II by Howard Marks of Oaktree Capital
In September 2006, I wrote a memo entitled Dare to Be Great, with suggestions on how institutional investors might approach the goal of achieving superior investment results. Ive had some additional thoughts on the matter since then, meaning its time to return to it. Since fewer people were reading my memos in those days, Im going to start off repeating a bit of its content and go on from there.
2014-04-08 00:00:00 Do Commodities Belong in Your Allocation? by Geoff Considine (Article)
For much of the last several years, poor performance from commodities has hurt investors’ portfolios, a result of depressed interest rates, low inflation and slow economic growth. Any diversification value they provided was masked by strong equity-market performance. My analysis shows that only a small allocation to commodities is justified, and advisors can obtain most of the same benefits with REITs or individual TIPS.
2014-04-08 00:00:00 Avoiding Losers Is as Important as Picking Winners in High Yield Markets Today by Andrew Jessop, Hozef Arif of PIMCO
Although high yield bonds span a broad range of sectors, industries and individual credits, their yields today tend to fall within an increasingly narrow range. Narrow dispersion means portfolio decisions that target outperformance should now be guided by avoiding deteriorating credits as much as by selecting the most attractive rising stars. Strategies for picking the rising stars can extend to CCC rated credits where agency ratings lag the improvement in the underlying credit profile.
2014-04-08 00:00:00 Moving Forward With the Normalization of Yields by Scott Mather, Michael Story of PIMCO
One response to yield normalization is to consider retaining core bonds and diversifying the specific risk factor of concern, in this case duration. In the past, global bonds have captured most of the upside but avoided a significant amount of the downside relative to domestic-only bonds. Generating capital gains from bonds in a rising yield environment requires defining concretely what yield normalization means ? where yields are going and when they will get there ? and setting these expectations against forward market pricing, country by country.
2014-04-04 00:00:00 Bob by Bill Gross of PIMCO
PIMCO recommends overweighting credit and to a lesser extent volatility and curve. Underweight duration. Although credit spreads are tight, they are not as compressed as interest rates, which are now in the process of normalization. While PIMCO agrees with Janet Yellen that such normalization will be a long time coming (the 12th of Never?), probabilities suggest that as the Fed completes its Taper, the 5?30 year bonds that it has been buying will have to be sold at higher yields to entice the private sector back in.
2014-04-04 00:00:00 Warning Signs in Leveraged Credit? by Elizabeth (Beth) MacLean of PIMCO
Though leveraged credit markets are less levered than they were pre-crisis, signs of more lenient, issuer-friendly terms are prompting regulators (including the Fed) and investors to voice concerns. Regulators have tightened lending guidelines, but strong demand versus supply means the market is able to find ways around such guidance. Detailed bottom-up credit analysis with an emphasis on long-term fundamentals and loss avoidance remains crucial to investing in leveraged credit today.
2014-04-04 00:00:00 What's Abuzz About Gold? by Frank Holmes of U.S. Global Investors
If we continue to see these large movements of the physical metal, especially from the West to the East, it would appear to be only a matter of time until these supply-and-demand factors lift the gold price.
2014-04-04 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
For the European Central Bank, actions will speak louder than words. US hiring is back on track. The debate over unemployment and wage pressure.
2014-04-01 00:00:00 How to Avoid Hidden Costs in Your Bond Allocations by Bob Veres (Article)
The supposedly safe move to shorten bond maturities in anticipation of rate increases has been very costly over the last three years - and there’s no reason to expect the next three will be any different. Here’s a way to quantify those costs and position your portfolios in a way that makes money in a variety of interest-rate scenarios.
2014-03-28 00:00:00 Hotchkis & Wiley: Frequently Asked Questions by Team of Hotchkis & Wiley
In Hotchkis & Wiley's 2014 1Q Newsletter, Ray Kennedy, Mark Hudoff, and the rest of Hotchkis & Wiley's high yield team examines the high yield market and attempt to answer the questions it they get asked most frequently, or ones they believe to be particularly relevant in the current market environment.
2014-03-28 00:00:00 Four Areas Revved Up for a Resources Boom by Frank Holmes of U.S. Global Investors
Commodity returns vary wildly, as experienced resource investors can attest and our popular periodic table illustrates. This inherent volatility can spell opportunity for the nimble investor who can look past the mainstream headlines to identify hot spots. Our global resources expert, Brian Hicks, CFA, identified four we believe are revved up for a resources boom.
2014-03-24 00:00:00 Fed-Induced Speculation Does Not Create Wealth by John Hussman of Hussman Funds
Fed-induced speculation does not create wealth. It only changes the profile of returns over time. It redistributes wealth away from investors who are enticed to buy at rich valuations and hold the bag, and redistributes wealth toward the handful of investors both fortunate and wise enough to sell at rich valuations and wait for better opportunities.
2014-03-22 00:00:00 The Two-Minute Portfolio Manager by Rob Isbitts of Sungarden Investment Research
Its a short attention span world, and while we often wax poetic about investment topics we feel passionate about, today we will summarize our world markets view in less than the time it takes to heat up the dinner your family ate two hours ago (a scenario most familiar to this writer).
2014-03-22 00:00:00 What Makes a Slam-Dunk Portfolio? by Frank Holmes of U.S. Global Investors
As a native Canadian, hockey is in my blood, but after moving to Texas, the icy arenas changed to basketball courts, as the sole major league sports team in the city is the San Antonio Spurs.
2014-03-15 00:00:00 Follow the Money to Asia's Tech Hub by Frank Holmes of U.S. Global Investors
Chinas slower economic data points and a surplus in copper and iron ore drove many commodities lower this week, while gold rose. In the short term, until the copper and iron ore surplus is liquidated, or absorbed at a slower pace, the base metals market will likely be sloppy. As the second-largest economy in the world and a huge driver of commodities demand, its not surprising China provoked such a significant response from world markets. Interestingly, most of the media thought it was geopolitical fears from Ukraine that chopped up the market and lifted gold.
2014-03-15 00:00:00 Like Houdini, the Markets Escape Again and Again by Stephen C. Sexauer of Allianz Global Investors
Like the great escape artist Harry Houdini, the markets have repeatedly escaped a series of potential catastrophes. Central banks around the world have coordinated policy making these escapes possible, but the end result is another trap from which we need to escape - seemingly permanent low interest rates for savers ("financial repression"), slow growth, and high asset prices. Financial repression is better than an outright debt deflation, but it causes its own problems. The outlook is for low returns.
2014-03-14 00:00:00 Deflationary Pressure and Tight Credit Facilities Weigh on Eurozone Recovery? by Andrew Balls of PIMCO
The eurozone is enjoying a broadly balanced resurgence in economic output and domestic demand. Deflation risk is real, and the European Central Bank?s asymmetric attitude toward its inflation target could contribute to a decline in inflation expectations. In the current climate, we continue to favour select regional credit exposure and look to generate attractive returns across European credit and asset-backed securities.
2014-03-07 00:00:00 Making Green from Gold, Palladium and Pollution by Frank Holmes of U.S. Global Investors
Gold is coming back with a vengeance, experiencing a clear recovery and grabbing the attention of market cynics. Analysts from Noruma Securities even upgraded its outlook for gold, expecting bullion to climb over the next three years, according to Barron's.
2014-03-06 00:00:00 Risk Parity ? No Free Lunch by Lisa Goldberg of Aperio Group
2013 was tough for risk parity. Many of the most popular funds such as Bridgewater, Salient and AQR were flat or down even as investors in the S&P 500 enjoyed a return of almost 30%. A brief look at what happened.
2014-03-05 00:00:00 A Tough Spring Ahead for Stocks? by Russ Koesterich of iShares Blog
Despite last week's disappointing economic data, stocks rallied to record highs. Russ explains what's behind this disconnect and why stocks may be vulnerable come the spring.
2014-03-05 00:00:00 A Tough Spring Ahead for Stocks? by Russ Koesterich of iShares Blog
Despite last weeks disappointing economic data, stocks rallied to record highs. Russ explains whats behind this disconnect and why stocks may be vulnerable come the spring.
2014-03-03 00:00:00 Bond Aid: Positive Outlook for High Yield in 2014 by Darren Hughes, Scott Roberts of Invesco Blog
While most fixed income asset classes tied to interest rates saw negative returns during 2013, high yield bonds returned more than 8%, according to the JP Morgan Domestic High Yield Index. While we anticipate slightly lower returns in 2014, it looks to be a positive year for high yield markets.
2014-02-28 00:00:00 Hide and Seek by Herbert Abramson, Randall Abramson of Trapeze Asset Management
Hide and seek. A game investors played as children but should not forget these days. Currently, investors need to hide safely to protect from some unfavourable developments in an environment that could hurt them.
2014-02-28 00:00:00 What Areas of the Market Will Remain in the Limelight? by Frank Holmes of U.S. Global Investors
The current bull market has been five years in the making. Since the bottom on March 9, 2009, the S&P 500 Index has grown an incredible 174 percent. With this spectacular performance, investors are asking if U.S. companies will stay in the limelight or if it is time to draw the curtain on equities.
2014-02-25 00:00:00 Flirting With Deflation by Andrew Bosomworth of PIMCO
Over the medium term, we see downside risks to both growth and inflation in the eurozone, unlike the ECB?s more balanced view. However, even if eurozone inflation sinks close to 1% in 2014?2015, as PIMCO forecasts, this in itself probably would not be low enough for the ECB to consider further easing. A lack of further policy action may undermine the ECB?s credibility to anchor longer-term inflation more closely to 2%.
2014-02-22 00:00:00 Sameness by Robert Isbitts of Sungarden Investment Research
The start of each year is full of market predictions from investment strategists. I tend not to get too caught up in that (it is one of the benefits of being an independent firm ? no one is compelling us to provide one!). Not wanting to get lost in the sea of 2014 market predictions, we now take a look back at the seven-week mark of the year?when many of these predictions are already out of the news cycle.
2014-02-22 00:00:00 Going for the Gold by Frank Holmes of U.S. Global Investors
Everyone wants the gold. Around the world, athletes train for years to compete for a gold medal. In Hong Kong and China, the Love Trade seeks gold coins, bars and jewelry.
2014-02-20 00:00:00 Bond Investors Need Not Feel Powerless by Jeff Hussey of Russell Investments
Jeff Hussey, global CIO, explains the strategies investors should be pursuing when considering fixed income investments in their portfolios and how additional yield cushion while opening a door to additional security selection returns from active management.
2014-02-14 00:00:00 Arresting Disinflation Will Require Taking up the Slack by Carl Tannenbaum of Northern Trust
Arresting disinflation will require taking up the slack. Estimates of the U.S. output gap remain substantial. The U.S. achieves budget peace but still faces long-term fiscal challenges.
2014-02-14 00:00:00 These Gold Charts Will Make Your Heart Beat Faster by Frank Holmes of U.S. Global Investors
So while gold may correct over the next several months as the metal enters its seasonally weak period of the year, this looks promising for gold investors.
2014-02-13 00:00:00 Admit it: You were wondering, why hold bonds? by Jeff Hussey of Russell Investments
Jeff Hussey, global CIO, highlights the importance of holding fixed income investments within portfolios, even at a time when we are seeing exceptionally low and likely rising interest rates.
2014-02-12 00:00:00 The Expanding Leveraged Loan Market by Heather Rupp of AdvisorShares
At the end of the day, a loan investor may be left with a security that has a low starting yield, little left in the way of capital gains potential, and with coupon income that is not at all increasing even if rates were to rise. While there are some selective opportunities for value in the loan space, broadly speaking we see high yield bonds as a more attractive market in the current environment.
2014-02-11 00:00:00 The 2013 Commentary Scorecard by Jill Mislinski (Article)
Let’s look at what prominent forecasters said in January 2013 about how the markets and economy would perform last year.
2014-02-11 00:00:00 Leveraged Finance Outlook: Riding the Low Default Wave by Andrew R. Jessop, Elizabeth (Beth) MacLean of PIMCO
Following strong performance in 2013, we expect low (1%-3%) defaults in leveraged finance markets this year. Issuance should remain healthy, and continued slow but steady growth in the U.S. economy should offer further stability to these companies. However, careful credit selection and monitoring of sector trends remain imperative. Investors with low tolerance for volatility and more interest rate sensitivity may emphasize loans, while investors with greater risk tolerance and a more benign outlook for rates may look to high yield.
2014-02-07 00:00:00 Over-Stimulated, Over-Priced by Neeraj Chaudhary of Euro Pacific Capital
At the end of 2013 Wall Street appeared to be convinced that the markets were enjoying the best of all possible worlds. In an interview with CNBC on Dec. 31 famed finance professor Jeremy Siegel stated that stocks would build on the great gains of 2013 with an additional 27% increase this year. So far 2014 hasnt gone according to script. In contrast to the prevailing optimism I maintain a high degree of skepticism regarding the current rally in U.S. stocks. But opinions are cheap. To back up my gut feeling, here are six very diverse indicators that suggest U.S. stocks are overvalued.
2014-02-07 00:00:00 What's the Game Changer for Gold? by Frank Holmes of U.S. Global Investors
What will break gold of its losing streak? Will inflation, which is a lagging indicator, be stronger than expected? In one of my most popular posts last year, I said that based on the jobs market, the limited housing recovery and regulations slowing down the flow of money, the Fed would have no choice but to start tapering and raising rates very gradually to keep stimulating the economy.
2014-02-06 00:00:00 Year-End Odds and Ends by Jeremy Grantham of GMO
In a new quarterly letter to GMOs institutional clients, chief investment strategist Jeremy Grantham offers "Year-End Odds and Ends": Fossil Fuels: Is Tesla a Tease or a Triumph?, Fracking and Yet More Technical Stuff on Fracking, Update on Metals, Fertilizers, and Food, Problems in Forecasting Short-term Prices for Resources, Another Look at U.S. GDP Growth, Investment Lessons Learned: Mistakes Made Over 47 Years
2014-02-06 00:00:00 Divesting When Discomfited by Ben Inker of GMO
Ben Inker explains why, "for our asset allocation portfolios we generally try to trade slowly." He notes, "The slightly odd fact is that moving slowly on value-driven decisions has simply made more money historically than moving immediately would have."
2014-02-04 00:00:00 The Albatross of MPT Thinking by Michael Edesess (Article)
The January/February issue of the Financial Analysts Journal includes an article titled "My Top 10 Peeves" by Clifford Asness, who was trained in modern portfolio theory (MPT) and its underlying assumptions. Many of Asness peeves are directed at people who depart from the MPT worldview. In discussing his peeves, I will offer counter-arguments and explain why I think the MPT perspective is flawed.
2014-01-31 00:00:00 Thrift, Thrift, Burning Bright by Christine Hurtsellers, Matt Toms of ING Investment Management
Does the title sound familiar? Think feral instead of frugal, and William Blakes "Tyger, Tyger, burning bright" may start to flicker between the synapses of memory and an English lit class you once soldiered through. But even if you havent read "The Tyger", its theme is aptly captured in the opening line and its image of a big flaming kitty cat. Essentially, Blake saw reality in duality: To appreciate the ferocious feline in all its glory is to come face to face with the same force that created "The Lamb", another entry in the poets Songs of Innocence and of Experience.
2014-01-30 00:00:00 Quarterly Review and Outlook - Fourth Quarter 2013 by Van Hoisington, Lacy Hunt of Hoisington Investment Management
In The Theory of Interest, Irving Fisher, who Nobel Laureate Milton Friedman called Americas greatest economist, created the Fisher equation, which states the nominal bond yield is equal to the real yield plus expected inflation. It serves as the pillar of macroeconomics and as the foundational relationship of the bond market. It has been reconfirmed many times by scholarly examination and by the sheer force of historical experience. Examining periods of both low and high inflation offers insight into how each variable in the Fisher equation affects the outcome.
2014-01-30 00:00:00 High Yield in 2014: Where Can You Look for Upside in a 'Medium Yield' Market? by Andrew Jessop, Hozef Arif of PIMCO
Default rates and credit losses in high yield markets remain below their long-term averages, and we believe default rates will remain low in 2014 and 2015 as well. Investors should consider positioning for better convexity via exposure to sectors with favorable industry dynamics and positive event risk from M&A or equity offerings, potential upside from price recovery in high quality bonds trading below par and exposure to select new supply from former investment grade companies.
2014-01-30 00:00:00 The Equity "Game" by Heather Rupp of AdvisorShares
We have seen the cracks begin to emerge in the equity story over the past week. Earnings are beginning to come in and so far have been a disappointment. The retail sector is showing signs that Q4 was weaker than originally expected, with store cuts announced by, Sears, J.C. Penney, and Macys and job cuts at Target. Emerging markets have been roiled this week, with Argentina shifting policy, likely devaluing their currency, and other currencies plunging.
2014-01-29 00:00:00 How the Pioneer of Hydraulic Fracturing changed the MLP Landscape by David Chiaro of Eagle Global Advisors
A banner year for MLPs and the future looks bright.
2014-01-29 00:00:00 All Things in Moderation, Including Housing by Ed Devlin of PIMCO
In our view, the cooling housing market and other domestic factors will keep Canadian growth at a modest 1.75%-2.25% in 2014, despite a boost from higher U.S. growth. While we expect a correction in Canadas housing market to begin this year, the macroeconomic environment and the availability of mortgage credit suggest a housing crash is unlikely. In this environment, we think the Canadian dollar should remain attractive, 10-year bonds should offer the potential for gains, and provincial bonds will likely outperform federal government and corporate bonds.
2014-01-27 00:00:00 Closed End Fund Review - Fourth Quarter 2013 by Jeff Margolin of First Trust Advisors
2013 was a mixed year for the closed-end fund (CEF) structure. While the Morningstar universe of 176 equity CEFs were up on average 12.13% on a share price total return basis and clearly benefited from the global rise in equity prices, the Morningstar universe of 387 fixed-income CEFs was lower by an average of 8.56% on a share price total return basis.
2014-01-27 00:00:00 Increasing Concerns and Systemic Instability by John Hussman of Hussman Funds
The potential collapse of a now-complete log-periodic bubble is best considered something of a physics experiment, and its not what drives our investment stance. Still, the backdrop of steep overvaluation, extreme bullish sentiment, record margin debt, and international dislocations could hardly provide a more fitting context for a disruptive completion to the present market cycle.
2014-01-25 00:00:00 Why the Recent Lift in Junior Miners Will Likely Continue by Frank Holmes of U.S. Global Investors
Junior venture companies in Canada are finally seeing a significant lift. In early January, the S&P/TSX Venture Composite Index rose above the 200-day moving average for the first time in three years. The index is also very close to experiencing a golden cross, which is when the shorter-term 50-day moving average crosses above the 200-day moving average. Historically, traders see this cross as extremely bullish.
2014-01-25 00:00:00 A Grim Intermediate Outlook for High-Quality Bond Returns by Robert Isbitts of Sungarden Investment Research
Rates have been steadily falling since the 1980s. A simple "reversion to the mean" in which rates rise toward their long-term average (the average 10 year U.S. Treasury rate since 1926 according to data sourced from the St. Louis Federal Reserves website) would mean that rates would rise to about 5%. Thats almost a 2% increase from where we are right now. We suspect that would be more than enough to spur a dramatic change in investors attitudes toward bond investing, and to increase interest in viable alternative strategies for retirement income.
2014-01-24 00:00:00 Fundamentals Suggest Yen Could Strengthen in 2014 by Team of GaveKal Capital
Weve noted on several occasions over the past few weeks the fact that trader positioning and sentiment towards the yen is pushing the most extreme negative levels in a decade.
2014-01-22 00:00:00 Crosscurrents Buffet Markets by Bob Doll of Nuveen Asset Management
U.S. equity performance was mixed last week, as the S&P 500 recovered from Mondays sell-off that was the largest one-day decline since early November. Economic data was mostly in line or slightly better than expected, following the disappointing December unemployment report. Corporate earnings drove much of the price action. Bank earnings were fairly well received but did not always translate to good performance since the stocks ran up earlier. Negative guidance trends remain an overhang, particularly for retail.
2014-01-22 00:00:00 The Virtualization of Everything by Francois Sicart of Tocqueville Asset Management
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, looks at the motivations of participants in capital markets, and how with the advent of synthetic investments and complicated derivatives products, he is concerned that "the stock market has lost its close link to the "real" economy and has become more of a gigantic casino."
2014-01-21 00:00:00 Superstition Ain't the Way by John Hussman of Hussman Funds
When you believe in things that you dont understand, then you suffer.
2014-01-17 00:00:00 TIPS And Inflation Reality by Team of GaveKal Capital
By decomposing a US Treasury bond, we can get a sense of the markets expectations for real rates and inflation expectations. The inflation component is easy to flesh out by just subtracting the TIPS yield, for the same maturity, from the nominal bond interest rate. From there, we can compare the implied breakeven inflation rate embedded in long bonds to actual measures of inflation.
2014-01-17 00:00:00 Getting Lucky by Howard Marks of Oaktree Capital
Sometimes these memos are inspired by a single event or just one thing I read. This one - like my first memo 24 years ago - grew out of the juxtaposition of two observations. Ill introduce one here and the other later on. Contrary to my wife Nancys observation that my memos are "all the same," the subject here is one Ive rarely touched on.
2014-01-17 00:00:00 Bonds and Rates by Heather Rupp of AdvisorShares
Right now the topic de jour in the fixed income space is interest rate risk. The traditional thought is that as interest rates rise, bond prices fall. But looking at history, the high yield market has defied this widely held notion. Lets examine the four main reasons why high yield bonds have historically performed well during times of rising interest rates.
2014-01-17 00:00:00 What Does It Take to Be in the Top 1 Percent? Not As Much As You Think by Frank Holmes of U.S. Global Investors
You might be surprised to learn that the top 20 percent of income earners bring in a household income of just over $100,000. The top 10 percent of earners have a household income of more than $148,687. To be considered in the top 1 percent, household income is at least $521,411.
2014-01-16 00:00:00 Keep Optimistic and Carry On by Scott Minerd of Guggenheim Partners
This is likely to be another good year for risk-on investing, as an improving economic outlook supports stocks and bonds in an environment marked by less volatility than 2013.
2014-01-16 00:00:00 Home (Finance) Repairs by Eric Schaefer of American Independence Financial Services
Five years after the 2008 financial panic, there are still no concrete plans for what to do with the twin mortgage finance giants, Fannie Mae and Freddie Mac. The only consensus among Congress, the Obama administration, regulators and the banking industry is that no one knows what to do. No clear compelling vision for the federal governments role in residential mortgage finance has yet to be offered by a party to the debate.
2014-01-14 00:00:00 What Have We Learned from the Financial Crisis? by Michael Edesess (Article)
Why do we need yet another discussion of the 2007-09 financial crisis and its aftermath? That question is asked and answered by Alan S. Blinder in his new book, After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead. Blinder provides new details about this harrowing chapter in our financial history and valuable insights about the effectiveness of potential regulatory policies.
2014-01-13 00:00:00 Hovering With an Anvil by John Hussman of Hussman Funds
In my view, the stock market is hovering in what has a good chance of being seen in hindsight as the complacent lull before a period of steep losses. Meanwhile, we would require a certain amount of deterioration in stock prices, credit spreads, and employment growth to amplify our economic concerns, but even here we can say that there is little evidence of economic acceleration. Broad economic activity continues to hover at levels that have historically delineated the border of expansions and recessions.
2014-01-10 00:00:00 High Yield and Bank Loan Outlook- January 2014 by Team of Guggenheim Partners
Improving U.S. macroeconomic conditions should spur additional investor demand for high-yield bonds and bank loans, particularly with defaults exceptionally low. Still, investors should monitor trends pointing to an erosion of safety in leveraged credit.
2014-01-10 00:00:00 Continuing a Winning Formula for 2014 by Frank Holmes of U.S. Global Investors
We believe there?s a way that increases the odds of winning. It?s by combining a bottom-up approach with a top-down strategy: Find great, fast-growing and shareholder-focused companies and focus on the best stocks in the sectors experiencing positive momentum.
2014-01-08 00:00:00 AdvisorShares Weekly Market Review by AdvisorShares Research of AdvisorShares
In this new year, the magnitude of 2013 comes full circle. The S&P 500 and the Dow finished the year with 29.6% and 26.5% gains, respectively. For the Dow, that was the biggest annual gain since 1995, and the fifth consecutive positive year. Most impressive in the developed markets was Japans Nikkei Stock Average, which surged 57%.
2014-01-07 00:00:00 Waiting for the Great Pumpkin by James Moore of PIMCO
Shortly before Thanksgiving, I had the privilege of being on an investor panel at Bank of Americas Debt Capital Markets and Derivatives Conference. On the panel before me was a trio of BofAs chief strategists, among them Michael Hartnett, their chief investment strategist. Mr. Hartnett reminded the audience that he was the man who coined the phrase "The Great Rotation" and after much anticipation, at long last, it was here.
2014-01-03 00:00:00 Gold Stocks: What to Expect in the New Year by Frank Holmes of U.S. Global Investors
After three years of pain, can gold stocks break their losing streak and see a gain in 2014? History says chances are good.
2013-12-31 00:00:00 A Look Ahead at 2014 by Russ Koesterich of iShares Blog
Last week, Russ shared his annual look back at his 2013 economic and investment calls. Now, its time for his annual look forward.
2013-12-27 00:00:00 2013: Looking Back at the Year of the Bull by Frank Holmes of U.S. Global Investors
Will stocks continue to climb in 2014? Odds are "very good," finds BCA Research. According to historical data going back to 1870, there were 30 times when annual returns in domestic stocks climbed more than 25 percent. Of these, 23 experienced an additional increase, resulting in a mean of 12 percent, says BCA. Thinking back to January 2013, investors had a very different frame of mind. While we recently talked about the year?s biggest stories in U.S. energy and gold, today, we recap our popular commentaries focused on the domestic market.
2013-12-20 00:00:00 A Surprising Way to Participate in Today's Tech Boom by Frank Holmes of U.S. Global Investors
China has become one of the best consumption stories out there, and looking over the next few years, local technology companies are almost certain to benefit. So while many U.S. investors are getting excited about the growing number of initial public offerings in the tech sector, they would be remiss if they didnt look beyond Silicon Valley.
2013-12-20 00:00:00 Strategies for a Runaway Market (year-end edition) by Robert Isbitts of Sungarden Investment Research
It seems to me that the best advice for the upcoming year as an investor is "dont anticipate what will happen, just balance reward potential and risk potential for each client situation and be ready for anything." This is very similar to the feeling the surrounded markets in 1999 just before the dot-com bubble burst, and again in late 2007 when the credit crisis started to become more widespread. So, here is my advice for those investors and financial advisors who wish to start getting mentally ready for surviving 2014.
2013-12-17 00:00:00 The Monster That Is Europe by John Mauldin of Millennium Wave Advisors
This week, Geert Wilders and his Party for Freedom in the Netherlands and Marine Le Pen of the Front National (FN) of France held a press conference in The Hague to announce that they will be cooperating in the elections for the European Parliament next spring and hope to form a new eurosceptic bloc.
2013-12-16 00:00:00 The Coming Retreat in Corporate Earnings by John Hussman of Hussman Funds
The problem is not simply that earnings are likely to retreat deeply over the next few years. Rather, the problem is that investors have embedded the assumption of permanently elevated profit margins into stock prices, leaving the market about 80-100% above levels that would provide investors with historically adequate long-term returns. An equivalent way to say this is that stocks are currently at levels that we estimate will provide roughly zero nominal total returns over the next 7-10 years, with historically adequate long-term returns thereafter.
2013-12-16 00:00:00 Absolute Return Letter: Squeaky Bum Time by Niels Jensen, Nick Rees, Tricia Ward of Absolute Return Partners
QE has led to asset price inflation. That much we established in the November Absolute Return Letter. In this months letter we go one step further and look at whether we are now in bubble territory. Considering the strong bull-run we have experienced in 2012-13 it is perhaps surprising to learn that, in a historical context, it is not an outsized rally, nor are equity markets - with the possible exception of the United States - particularly expensive.
2013-12-16 00:00:00 Settling In by Mark Kiesel of PIMCO
An improving outlook for U.S. housing will be constructive for consumer spending, confidence and jobs. There are many ways to invest directly and indirectly in companies that should benefit from higher housing prices, a pickup in home repairs and remodeling, and residential investment spending. We continue to favor select investments in homebuilders, building materials, appliance manufacturers, lumber, home improvement, banks, title insurance, mortgage origination and servicing, and non-Agency mortgage-backed securities.
2013-12-13 00:00:00 Stanley Black & Decker: Powering Its Way Toward Fair Value by Team of F.A.S.T. Graphs
Stanley Black & Decker (SWK) is a machine tools company built on namesakes of - you guessed it - three individuals with the last names: Stanley, Black and Decker. Frederick Stanley started a hardware manufacturing company in 1843. Duncan Black and Alonzo Decker started a similar shop in 1910, becoming known for the worlds first patent for a portable power tool. In 2010 the two companies merged to form what is today Stanley Black & Decker.
2013-12-13 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
The Federal Reserve should find a way out of quantitative easing (QE) soon. And I think the Fed will take the first step in that direction at its December 17 - 18 Federal Open Market Committee (FOMC) meeting. Here are the arguments for and against reducing quantitative easing that the discussions will feature.
2013-12-13 00:00:00 Hedged Dividend Investing: The Best Strategy You've Never Heard Of? by Robert Isbitts of Sungarden Investment Research
Our industrys challenge: How to deal with that via creation of intelligent investment strategies that allow advisors and their clients to follow through on their desire to skirt both the bond and stock bubbles of the future, while still striving for a competitive yield for their retirement portfolios.
2013-12-13 00:00:00 One of the Most Notable Stories of the Year: Energy Renaissance in the U.S.A. by Frank Holmes of U.S. Global Investors
Only a few years ago, we were contemplating the supply constraints facing the petroleum industry, as many major oil fields around the world were facing a decline in production. Now, with the disruptive technology in shale oil and gas, we may be looking forward to decades of drilling.
2013-12-12 00:00:00 Stay the Course or Take an Unconstrained Approach to Bonds by Matthew Pasts of BTS Asset Management
BTS Asset Management contends that todays bond market environment calls for an unconstrained approach to bonds with the ability to move between bond asset classes based on economic indicators and market opportunities. The potential discrepancy in results among bond asset classes may be more pronounced than we have seen in the past 30 years which creates opportunity for a more tactical approach. Now may be the time for an unconstrained approach to the bond market.
2013-12-10 00:00:00 A Framework for Understanding Bond Portfolio Performance by Laurence B. Siegel (Article)
Investors are legitimately concerned that interest rates, after falling reliably for decades, are on their way up and that bond portfolio values are on their way down. Investors now seek interest-rate protection. I provide a framework for analyzing and, hopefully, predicting the returns on actively managed portfolios of bonds - a task different from analyzing the bond market itself.
2013-12-06 00:00:00 Did the Government Shutdown Help the Economy? by Frank Holmes of U.S. Global Investors
Take the government shutdown in October, when the House and Senate fought over the debt ceiling. Economic data wasn?t released, services were halted, national parks were closed, and "non-essential government workers were told to stay home. As a result, GDP was expected to collapse. Yet, data released this week reveal a different, stronger image of the U.S. economy. I think Shakespeare would deem the media?s fear mongering tactics as Much Ado About Nothing.
2013-12-03 00:00:00 On the Wings of an Eagle by William Gross of PIMCO
Ive always liked Jack Bogle, although Ive never met him. Hes got heart, but as hes probably joked a thousand times by now, its someone elses; a 1996 transplant being the LOL explanation. Hes also got a lot of investment common sense, recognizing decades ago that investment managers in composite couldnt outperform the market; in fact, their alpha would be negative after fees and transaction costs were factored in.
2013-11-29 00:00:00 ING Fixed Income Perspectives - November 2013 by Christine Hurtsellers and Matt Toms of ING Investement Management
Given rich valuations globally, we remain broadly neutral on interest rate risk with the exception of Japan.
2013-11-29 00:00:00 From the Taj Mahal to Westminster Abbey: Notes from a Global Investor by Frank Holmes of U.S. Global Investors
I recently returned from India, a nation where an incredible 600 million people are under the age of 25. That?s nearly double the entire population of the U.S.
2013-11-29 00:00:00 "Fixed" Income Investing is Broken by Robert Isbitts of Sungarden Investment Research
Back in June of this year, the Fixed Income (a.k.a. bond) market may have experienced the defining moment of this generation of investors. The yield on the 30-year U.S. Treasury bond moved above 3.50% for the first time since the summer of 2011. It stands at about 3.80% now. After many fake-outs, this could be the start of a long-term trajectory higher.
2013-11-28 00:00:00 The Race is On by Howard Marks of Oaktree Capital
Theres a race to the bottom going on, reflecting a widespread reduction in the level of prudence on the part of investors and capital providers. No one can prove at this point that those who participate will be punished, or that their long-run performance wont exceed that of the naysayers. But that is the usual pattern.
2013-11-26 00:00:00 Wal-Mart: Fairly Valued Retail Powerhouse by Team of F.A.S.T. Graphs
This Bentonville, AR based mega-retailer perennially ranks amongst the top of the Fortune 500 list and likely needs no introduction. In lieu of a business summary, we thought it might be interesting to highlight some prominent statistics. For instance, every week more than 245 million customers visit Wal-Marts (WMT) 11,000 stores under 69 banners in 27 different countries. Last year alone the company had sales of about $466 billion while employing 2.2 million associates.
2013-11-25 00:00:00 An Open Letter to the FOMC: Recognizing the Valuation Bubble in Equities by John Hussman of Hussman Funds
The Fed has done enough, and perhaps dangerously more than enough. The prospect of dismal investment returns in equities is an outcome that is largely baked-in-the-cake. The only question is how much worse the outcomes will be as a result of Fed policy that has few economic mechanisms other than to encourage speculative behavior.
2013-11-22 00:00:00 A Twenty-Year Look at the 30-Year Treasury Bond by Doug Short (Article)
What about the 30-year Treasury? Earlier this week I received an email from Floyd Flanagan featuring an interesting pair of monthly charts, courtesy of Stockcharts.com, for the 30-year Treasury Bond going back 20 years. The left side below shows the 30-year price index, the right side the yield. Floyd has annotated the two with support and resistance.
2013-11-22 00:00:00 Understanding the Rise of China by Frank Holmes of U.S. Global Investors
If the sweeping economic reforms planned by Chinese leaders during the Third Plenum can be our guide, it looks to be a promising decade for global investors. Details released this week confirmed President Xi Jinpings concerted efforts to move China toward a market-based economy that mirrors the West.
2013-11-19 00:00:00 October 2013 Market Commentary by Andrew Clinton of Clinton Investment Management
The Feds decision in September to maintain its policy of asset purchases, better known as Quantitative Easing (QE), caught the broader market by surprise. Fed tapering of QE was broadly expected to begin in September. The Feds decision to delay the reduction of QE pushed back the date upon which anticipated tapering would begin. This resulted in a meaningful rally in Treasury bond prices in September. To the surprise of many media pundits calling for ever higher interest rates, US Treasury yields ended October at 2.55%, virtually unc
2013-11-18 00:00:00 Chumps, Champs, and Bamboo by John Hussman of Hussman Funds
At bull market peaks, it often seems that the market is simply headed higher with no end in sight, and buy-and-hold appears superior to every alternative. Meanwhile, the reputation of value-conscious investors and risk-managers goes from champ to chump. Then, the bamboo tree suddenly sprouts, and the entire lag is often replaced by outperformance in less than a year. Only after the fact does the reputation of risk-managed strategies surge from chump to champ.
2013-11-15 00:00:00 Has Washington Drama Taken Its Toll On MLPs? by David Chiaro of Eagle Global Advisors
They did it! They blew it up! shouts Charlton Heston in the iconic ending scene of the film Planet of the Apes when he finds out he has been living on a post-nuclear war planet Earth. Americans are probably having some of the same feelings about our current world resulting from the ongoing political nuclear war raging in our nations capital.
2013-11-15 00:00:00 Dressed to the Nines with Gold by Frank Holmes of U.S. Global Investors
While paper gold is getting the cold shoulder in the West, the Love Trade buyers in the East are wrapping their arms around all the physical gold they can get their hands on.
2013-11-13 00:00:00 Accenture: Continuing To Deliver A Growth Story by Team of F.A.S.T. Graphs
Accenture (ACN) is a global management consulting, technology services and outsourcing company with approximately 275,000 people serving clients in more than 120 countries. As of the end of fiscal year 2013, the company had revenues just shy of $29 billion and a market capitalization that was roughly double that amount. Additionally, Accenture provides services to a wide spectrum of industries ranging from Automotive and Aerospace to Energy and Travel. Effectively, Accenture wants to deliver a high performance solution to whatever problem you have on hand.
2013-11-12 00:00:00 The Bomb Shelter Portfolio: Maximum Income with the Least Risk by Geoff Considine (Article)
Conservative investors are faced with unappealing choices. They can reduce risk and accept low yields and high exposure to rising rates, or they can push the bounds of their risk tolerance to increase yield. My analysis shows a way out of this predicament: a “bomb shelter” portfolio of ETFs, which offers attractive yield with minimal volatility and exposure to rising rates.
2013-11-08 00:00:00 Penske Automotive Group: Fast Cars, Fast Growth by Team of F.A.S.T. Graphs
If we told you about a company that saw earnings per share drop by nearly half from $1.49 a share to $0.86 during the recession, what would you think? Before you answer, its important to also point out that the company suspended its dividend from late 2008 until early 2011 as well. At first blush this might seem like a worst case scenario. Usually we go about our research time looking for the best companies that have held up even in the worst of times this type of company does not fit the bill. Yet what is not readily obvious is the fact this would have been the best time to buy.
2013-11-08 00:00:00 Taking Stock in the Economy by Ken Taubes of Pioneer Investments
Now is a good time to take stock in the current macro environment from a market perspective. Heres what we think could happen at the end of this year and next year.
2013-11-08 00:00:00 Should You Walk Away from a Fed that Prints Money? by Tad Rivelle of TCW Asset Management
Either the markets or the Fed itself will come to accept that financial repression is a box canyon whose only escape is by climbing out through higher rates and wider spreads on risk assets. Staying risk on requires the investor to underwrite the exacerbating risks inherent in an economy that is being given bad signals and is accumulating a menagerie of mispriced assets and bad loans. Yes, you should walk away from a Fed that prints money.
2013-11-08 00:00:00 Big Ideas in the Big Easy by Frank Holmes of U.S. Global Investors
This is likely a contrarian view to the folks in the White House, but I think investors benefit from being contrarian and thinking differently. In preparation for my presentations in New Orleans as well as for the Metals & Minerals Investment Conference in San Francisco and the Mines and Money in London in a few weeks, I?ve been pulling together this kind of research that we can all put to use now.
2013-10-30 00:00:00 Fed Tapering Could Be Off The Table Until 2014 by Michael Materasso of Franklin Templeton
Sometimes, hindsight is insight. The mystery of why the Federal Reserve didnt start pulling back or tapering its prolonged quantitative easing program at its September policy meeting seems more clear now that weve experienced the fallout from the fraying of US fiscal policy soon thereafter, including a 16-day government shutdown in October. Given that the Congressional agreement reached in October only funds the government through January 15 and extends the debt ceiling through February 7, more political grandstandingand economic consequencescould lie ahead.
2013-10-29 00:00:00 Defining the EM Corporate Bond Opportunity by Sponsored Content from Loomis Sayles (Article)
Finance is a numbers business. Investors study prices, yields, rates of return. However, when it comes to sizing up emerging markets, we think they should also pay attention to semantics. In the past, terming a country “emerging” made it synonymous with low credit quality and higher risk. But today, many emerging markets boast strong credit profiles while parts of the developed world buckle under heavy debt loads.
2013-10-25 00:00:00 The Deserted Island Portfolio by John West of Research Affiliates
What would a Deserted Island investment portfolio look like, managed without the distractions of cable news and short-term benchmark comparisons?
2013-10-25 00:00:00 Why Growth is Deep in the Heart of Texas by Frank Holmes of U.S. Global Investors
TIME Magazine?s cover this week features an engaging collage of the 50 states reassembled to fit within the boundaries of Texas. With a growing number of solid-paying jobs, affordable housing, and low taxes, ?the Lone Star State is America?s Future,? declares economist and writer Tyler Cowen.
2013-10-25 00:00:00 Quarterly Review and Outlook by Van Hoisington, Lacy Hunt of Hoisington Investment Management
When an economy is excessively over-indebted and disinflationary factors have forced central banks to make overnight interest rates as close to zero as possible, central bank policy has repeatedly proved powerless to further move inflation or growth metrics. Four considerations suggest the Fed will continue to be unsuccessful in engineering stronger growth and higher inflation with their continuation of the current program of Large Scale Asset Purchases.
2013-10-23 00:00:00 Positioning for Municipal Market Volatility by Joseph Deane, David Hammer, Sean McCarthy of PIMCO
We do not anticipate a significant increase in the frequency of municipal defaults, but there are pockets of credit stress in U.S. municipalities and territories, particularly those with unfunded pension obligations and unsustainable budget imbalances. Large concentrations of exposure to Puerto Rico within subsets of the municipal market will likely lead to an increase in spread volatility across other municipal sectors in the coming quarters.
2013-10-23 00:00:00 I Thought The Safety Was On by Liam Molloy, Bethany Carlson, Charlie Mas of Galway Investment Strategy
For the past thirty years investors could allocate a portion of their portfolio to investment grade bonds and regard that money as safe. Wealth preservation was easy buy a ladder of Treasuries or triple-A rated corporates and go back to bed. That perceived safety was a direct result of a continuing, if not steady, decline in interest rates.
2013-10-22 00:00:00 Bond Legend Dan Fuss on Rising Rates by Robert Huebscher (Article)
Having just celebrated his 80th birthday, Dan Fuss can claim a unique achievement ? his tenure in the fixed income markets has spanned a full market cycle, from the great bear market that began in the early 1950s through the equally great bull market that commenced in 1981. Fuss said today’s environment most closely resembles what he confronted in the late 1950s, when long-term rates were 3% and beginning their march upwards.
2013-10-18 00:00:00 Just Like Yesterday by Francois Sicart of Tocqueville Asset Management
In his latest essay, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, with help from Chetan Parikh, of Indias Capital Ideas Online, provides excerpts from and commentary on a 1971 speech by iconic investor David L. Babson. He begins by noting: "It is eerie how timely this speech, delivered 42 years ago, remains today."
2013-10-18 00:00:00 High Yield Bond Outlook: A Time for Unconstrained Management by Vilis Pasts, Matthew Pasts, Isaac Braley of BTS Asset Management
Using our unconstrained approach, BTS indicators signaled a move back into High Yield bonds near the end of September.BTS Asset Management views the High Yield bond sector as exhibiting solid fundamentals. Based on historical comparisons, High Yields have strong cash flow coverage for interest payments, due to conservative use of leverage. Post 2008, companies hired less people and have kept other fixed costs down.
2013-10-18 00:00:00 Debt Limit Extended, Fed Policy in the Wings - What to Expect from the Markets by Paresh Upadhyaya of Pioneer Investments
Last night Congress reached an agreement to raise the debt limit and end the 16-day shutdown. After all the acrimony and tense negotiations, the deal passed by a comfortable margin with 81-18 vote in the Senate and 285-144 in the House.
2013-10-18 00:00:00 Trying to Stop a Bull Market Has Risks by Frank Holmes of U.S. Global Investors
U.S. stocks have been on a tear. The S&P 500 Index has climbed a surprising 20 percent so far this year, as a global synchronized recovery takes shape and funds flow back to equities. As I often say, investors take risks when they try to stop a bull run, and plenty of data suggest you might regret taking that action this year.
2013-10-15 00:00:00 Bond Market Review & Outlook by Thomas Fahey of Loomis Sayles
Flip-flopping Federal Reserve (Fed) policy defined the third quarter. Last quarter, the Fed threw the markets a curve ball by announcing possible tapering of its large-scale asset purchases beginning this year. That ?taper talk? set off a mini-riot in global bond markets. Many emerging market (EM) countries, like Brazil, India, Indonesia and South Africa, were the biggest victims, as their bond yields rose and their currencies crashed.
2013-10-15 00:00:00 Equity Markets to Congress: What, me worry? by Sam Wardwell of Pioneer Investments
President Obama said he was willing to have discussions, though he said he wouldnt engage in negotiations. (Comment: I guess it depends of what the meaning of "is" is.) So far, those discussions havent produced a deal, but at least theyve started talking.
2013-10-14 00:00:00 Short Horizon, Long Horizon by John Hussman of Hussman Funds
On all evidence, were far more inclined to view the position of stock prices as a temporary overextension of already extreme conditions than some durable change in the workings of the financial markets.
2013-10-12 00:00:00 These Could be the Most Lucrative Energy Plays by Frank Holmes of U.S. Global Investors
Sometimes the most attractive energy assets arent found in the ground. Rather, at times like today, they are listed on the stock exchange.
2013-10-10 00:00:00 Tipping the Scale Toward High Yield Bonds by Scott Minerd of Guggenheim Partners
The U.S. Federal Reserves decision in September to delay at least for now any reduction in its asset purchases drove U.S. Treasury rates down materially from the highs seen over the summer, easing concerns about the impact of higher rates on economic growth. Now as we start the fourth quarter, the below-investment grade investment outlook appears positive, and more positive for high yield bonds than bank loans.
2013-10-09 00:00:00 Little Visible Progress on the Budget Shutdown, but Some Inside Baseball In Play by Sam Wardwell of Pioneer Investments
President Obama canceled his planned visit to Asia and participation in the Asia-Pacific Economic Cooperation summitciting the inconvenience caused by the government shutdown (the difficulty in moving forward with foreign travel in the face of a shutdown), sending John Kerry in his place, and reiterating his unwillingness to negotiate with Republicans.
2013-10-09 00:00:00 Equity ETF Flows Send Bullish Signals by Minyi Chen of AdvisorShares
U.S. Equity ETFs gave up $4.3 billion in the week ended October 1, reversing a $3.4 billion inflow in the previous week. This weeks outflows signal low demand for stocks, a bullish short-term indicator from a contrarian perspective.
2013-10-08 00:00:00 Forecasting Bond Returns and Evaluating Bond Funds by Laurence B. Siegel (Article)
While past performance is not a guarantee of future alpha, it sure is a hint ? the skills needed to generate alpha in a given market are likely to be as valuable in one period as in another. This principle is the basis of selecting active managers. How can we adapt it to bond funds, given the larger market forces at work?
2013-10-07 00:00:00 The Real Cause of Bank Failures by Miguel Perez-Santalla of BullionVault
My favorite section money and investment is a shell compared to what it was like 20 years. Still, many times there are gems to be read. In February 2013 under the section Heard On The Street was a piece written by David Reilly entitled Too Big to Fail Casts a Very Long Shadow and it put real fear in me.
2013-10-07 00:00:00 Defining the EM Corporate Bond Opportunity by Elisabeth Colleran, Peter Frick, Peter Marber, David Rolley, Edgardo Sternberg of Loomis Sayles
Finance is a numbers business. Investors study prices, yields, rates of return. However, when it comes to sizing up emerging markets, we think they should also pay attention to semantics. In the past, terming a country emerging made it synonymous with low credit quality and higher risk. But today, many emerging markets boast strong credit profiles while parts of the developed world buckle under heavy debt loads.
2013-10-04 00:00:00 Nowhere to Hide: Navigating Rising Rate Risk in High-Yield Markets by Gibson Smith, Colleen Denzler of Janus Capital Group
Over the past few years, investors have flocked to high-yield credit, many believing it a good way to mitigate their interest rate risk as well as capture additional yield. However, they may not realize the level of rate risk that has followed them. High-yield indices, negatively correlated to five-year Treasury bond yields over the past 15 years, have been positively correlated for the past year.
2013-10-04 00:00:00 The New Normalization of Fed Policy by Tony Crescenzi of PIMCO
The Fed is sending a message that the unwinding of its extraordinary accommodation will be done with great care and patience, and will take time - a long time. In delaying a taper, not only did the Fed show markets it has little tolerance for any tightening of financial conditions, it also strengthened its forward guidance considerably. The Feds decision to delay a taper will likely relieve some of the upward pressure on longer-term interest rates.
2013-10-04 00:00:00 What Is The Correct Discount Rate To Use? Part 2B by Chuck Carnevale of F.A.S.T. Graphs
One of the most widely-accepted and utilized methods of valuing a business in todays world of modern finance is discounted cash flow (DCF) analysis. Obviously, in order to calculate valuation, practitioners must rely on mathematical formulas. However, the challenge with utilizing mathematical formulas to determine the net present value (NPV) of a future stream of income is in determining the proper inputs. Consequently, the accuracy of our result is subject to the principle garbage in garbage out.
2013-10-04 00:00:00 Introducing the Tortoise Economy by Sam Stewart of Wasatch Funds
All things considered, large U.S. companies that operate globally appear to be particularly attractive right now. Because many of these companies are generating significant portions of their sales outside the U.S., investors are effectively getting some international exposure with what I consider to be more-quantifiable risks.
2013-10-04 00:00:00 The Fire Fueling Gold by Frank Holmes of U.S. Global Investors
For patient, long-term investors looking for a great portfolio diversifier, a moderate weighting in gold and gold stocks may be just the answer. And, today, when looking across the gold mining industry, you?ll find plenty of companies that have paid attractive dividends, many higher than the 5-year government yield.
2013-10-03 00:00:00 Survival of the Fittest? by William Gross of PIMCO
I hate crows and my wife Sue hates bugs, but like most married couples we have learned to live with our differences. Crows eat bugs though, and bugs eat bugs, and that scientific observation sets the context for the next few paragraphs of this months Investment Outlook.
2013-10-03 00:00:00 PIMCO Cyclical Outlook for the Americas: A Slow-Moving Fed Benefits Economies on Both Continents by Mohit Mittal, Lupin Rahman, Ed Devlin of PIMCO
PIMCO expects the U.S. economy to grow 2.0%2.5% over the next year. However, a continued government shutdown would be a drag on growth. In Latin America, we see growth picking up to 3.0%3.5%, but the outlook varies by country. Mexico should fare well, but Brazils story is more mixed. In Canada, we believe the housing correction will be less severe than many are predicting, and we expect GDP to grow 1.5%2.0% over the cyclical horizon.
2013-10-02 00:00:00 The Math is Pretty Straightforward... by Blaine Rollins of 361 Capital
Congress and the White House must be pretty fired up that D&D2 started filming last week. The new movie might be the only thing more stupid than our elected leaders failing to negotiate and reach a deal. Most everyone either wants to spend our tax dollars like drunken professional athletes or hold our economy and financial markets hostage via a government shutdown and failure to raise the debt ceiling.
2013-10-02 00:00:00 The Death Knell of Global Synchronized Trade by Bill Smead of Smead Capital Management
At Smead Capital Management, we believe the interest on September 18th in emerging markets, oil and gold are the last gasps of a dying trend. Our discipline demands that you must avoid popular investments and completely avoid investments attached to a perceived new era. We argue that the international investment markets reaction to Bernankes reprieve on September 18th is proof of a vision we have of the future.
2013-10-01 00:00:00 The Ultimate Income Portfolio Revisited by Geoff Considine (Article)
Rising interest rates will be unkind to income-generating assets and the investors who depend on them in retirement. My ultimate-income portfolio (UIP) provides a solution to this problem. It has reliably produced high income and low volatility with respect to the stock market, and its performance is likely to continue, even if rates rise further.
2013-10-01 00:00:00 Corporate Bond ETFs Attract Steady Inflows Amid Bond Market Sell-Off by Minyi Chen of AdvisorShares
Corporate bonds remained popular with investors amid the bond sell-off in recent months, while Foreign and Municipal bond funds experienced the steadiest and heaviest redemptions.
2013-09-30 00:00:00 Sitting Ducks by John Hussman of Hussman Funds
Stocks are a claim on a very long-term stream of future cash flows that will be distributed to shareholders over time, and P/E ratios are simply a shorthand. P/E ratios are useful only to the extent that the earnings measure being used is reasonably representative and informative about the long-term stream of cash flows what might be called a sufficient statistic.
2013-09-30 00:00:00 Fourth Quarter Outlook: A Turning Point? by Gene Goldman of Cetera Financial Group
It seems sometimes that the outlook for the global economy and the markets has been unchanged for years. Since the end of the recession, each year has commenced with forecasts that the United States economy would break out of its below-trend growth mode, only to see expectations dashed. Meanwhile, Europe has been mired in its own recession as it struggles with heavy post-crisis debt burdens. Growth has slowed in the emerging markets, ending the commodity boom of the first decade of this century.
2013-09-27 00:00:00 How to Profit from a Changing China by Frank Holmes of U.S. Global Investors
We believe Chinas rebalancing is positive for investors who selectively invest in its stocks. As Jim ONeill puts it, When a country is embarking on a significant compositional change to its economy, stock-pickers rather than index-trackers have the upper hand.
2013-09-25 00:00:00 After the Fed's Surprise: 4 Asset Allocation Implications by Russ Koesterich of iShares Blog
The Feds surprise no-taper announcement confirmed Russ expectation that the global recovery remains soft and that interest rates are likely to remain contained this year. What does this mean for investors? There are four implications for asset allocations, says Russ.
2013-09-24 00:00:00 ENERGY MLPs: A Suitable and Sustainable Asset Class by Sponsored Content from ClearBridge Investments (Article)
Key Takeaways: MLPs have provided income with little correlation to other asset classes and little sensitivity to interest rates, commodity prices or economic cycles. The market for MLP stocks has expanded greatly and offers liquidity which appeals to long-term institutional investors. The renaissance in U.S. energy production is driving sustainable growth in the infrastructure that MLPs own and operate
2013-09-24 00:00:00 How the Roll-Down Effect Now Helps Bond Investors by David Schawel, CFA (Article)
Retail investors have been rapidly selling out of bond funds. That may be either wise or unwise with the benefit of hindsight, but one often-overlooked fact remains: New and existing bond investors now have the benefit of a much steeper yield curve. In fact, the roll down portion of a bonds return is one of the most important and least understood aspects of a bonds total return.
2013-09-24 00:00:00 Why Bond Funds are Toxic for Your Portfolio by Raul Elizalde (Article)
Thirty years of rate declines have convinced many that bonds are safe. Indeed, a conservative portfolio has come to be synonymous with one that is heavy on bonds. But a rising interest-rate cycle is taking hold, and bond investors are now exposed to unfamiliar risks in their conservative portfolios. Bond funds will not provide the safety that investors seek. Holders of individual bonds will fare much better.
2013-09-23 00:00:00 Enhanced Dividend for Income by Jim O'Shaugnessy of O'Shaughnessy Asset Management
It is axiomatic in the financial planning canon that investors searching for a steady source of income should rely heavily on bonds. Stocks are for capital appreciation and bonds for income. The practice is so ingrained, that I have not heard of many investors who would make the case for using an equity portfolio to generate income. Bonds also appeal to advisors because of their inherent principal protection advantage. As a bond owner, you are a creditor, not an owner.
2013-09-23 00:00:00 Happy Anniversary? Perspectives on the Financial Crisis Five Years Later by Nanette Abuhoff Jacobson of Hartford Funds
Since 2008, theres been slow but steady improvement in the global economypolicy makers unconventional tools have helped stabilize ?nancial markets and bought time for economies to rebalance. Expectations are too low for developed-market growth and in?ation, in our view. As such, we think this environment will be positive for developed-equity marketsparticularly in Europe and Japan.
2013-09-21 00:00:00 Fifty Shades of Gold by Frank Holmes of U.S. Global Investors
Unlike many commodities, there are many shades to gold, such as the Love Trades buying gold for loved ones and the Fear Trades purchasing gold as a store of value. An additional shade investors need to be aware of is how the Fed interprets the recovery of the U.S. economy.
2013-09-20 00:00:00 Rising Interest Rates Must End Soon by Scott Minerd of Guggenheim Partners
The yield on the benchmark 10-year U.S. Treasury bond has risen by more than 84 percent from May to early September, one of the most violent and rapid increases on record. This spike has caused severe convulsions in the bond market, leading many investors to wonder how long the torment can last.
2013-09-20 00:00:00 The Fed's About-Face by Scott Minerd of Guggenheim Partners
The Federal Reserves decision not to taper quantitative easing telegraphed a mixed signal to markets about policy guidance while tempering forward economic growth expectations. Dramatically lower interest rates can be expected.
2013-09-20 00:00:00 Growth and Rising Stars by Mark Kiesel of PIMCO
While developed market growth in several regions is picking up cyclically from low levels, overall global economic growth should remain subdued over the next several years. We believe credit spread tightening and rating upgrades are most likely for specific companies in industries and areas with strong growth. We see these "rising star" companies in the U.S. and European auto sector, the gaming, energy and chemical industries and in sectors tied to the U.S. housing market.
2013-09-18 00:00:00 Active ETF Market Share Update & Weekly Market Review by AdvisorShares Research of AdvisorShares
Last week, total AUM in all active ETFs increased by over $68.76 million. Assets in Short Term Bond active ETFs increased by nearly $140 million. The second largest increase in AUM came in the High Yield ETF category, which rose by about $20.366 million, largely due to creation units. US Equity active ETFs also saw a significant increase in AUM of over $8.68 million. The biggest decreases in AUM came in the Global Bond and Foreign Bond categories, which fell by $58.85 million and $44.3 million respectively.
2013-09-17 00:00:00 Gundlach ? Where to Expect the Next Crisis by Robert Huebscher (Article)
Unless there is a crisis, dont expect a major decline in interest rates, according to Jeffrey Gundlach. And if such a crisis occurs, Gundlach warned, it will most likely take place in this emerging market.
2013-09-17 00:00:00 High Yield Market Overview August 2013 by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, was down 0.62% for the month of August. Political uncertainties continue to weigh on investor sentiment, including a potential military response to Syria and the U.S. approaching the debt ceiling limit in mid-October. Uncertainty about Fed policy and who will be the next Chairman are also in the background.
2013-09-16 00:00:00 U.S. Equity ETF Flows Send Bullish Signals Despite Recent Inflows by Minyi Chen, TrimTabs of AdvisorShares
Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) shares recent fund flow trends.
2013-09-16 00:00:00 Russia is Tough to Love, Easier to Hate, Hard for Investors to Ignore. Here's Why by Frank Holmes of U.S. Global Investors
Russian President Vladimir Putin created a stir recently when he shared his thoughts with Americans in an op-ed printed in The New York Times. According to The Times, very few pieces written by heads of state have been published by the paper and very few received the attention Putin attracted.
2013-09-16 00:00:00 The Next Big Challenge to Investors: Rising Rates by Mike Temple of Pioneer Investments
Many investors were conditioned to accept that the economy would be in the rehabilitation ward for the foreseeable future, rates would remain low, and monetary stimulus would continue unabated. It was an increasingly dangerous mindset. Now thats changing with the slow but steady recovery of the economy and the Federal Reserves announcement in August that it may begin tapering its billions in monthly bond purchases designed to keep rates low and boost asset prices.
2013-09-13 00:00:00 What's Happening to Bonds and Why? by Mohamed El-Erian of PIMCO
To say that bonds are under pressure would be an understatement. Over the last few months, sentiment about fixed income has flipped dramatically: from a favored investment destination that is deemed to benefit from exceptional support from central banks, to an asset class experiencing large outflows, negative returns and reduced standing as an anchor of a well-diversified asset allocation.
2013-09-13 00:00:00 The View from Here - September 13, 2013: Five Years After by Carl Tannenbaum of Northern Trust
How much have we recovered from the global financial crisis?
2013-09-10 00:00:00 Some Scary Bumps in the Road Just Ahead by Gary Halbert of Halbert Wealth Management
The major stock indexes moved lower after setting new record highs in early August, although prices have recovered somewhat in the last few days. So was the weakness in August just an overdue correction before moving even higher? Maybe, but there are a number of things coming up in the next month or so that could rattle the markets even more, including whether or not we go to war with Syria. Well talk about those today.
2013-09-06 00:00:00 Weekly Market Review by AdvisorShares Research of AdvisorShares
The major US stock indexes fell once again last week, capping off the worst monthly performance of the S&P 500 in over a year. However, the index is only 4.69% below its all-time intraday high reached on August 2nd. While fear that the Fed would vote to start ending extraordinary stimulus measures at the next meeting late in September was the main reason cited for the decline, thin trading volume in August and especially the week before Labor day may have made led to increased volatility and price declines.
2013-09-06 00:00:00 The Good, The Bad and The Ugly by Douglas Cote of ING Investment Management
Good economic news in developed markets has been overshadowed lately by the bad (burgeoning Asian currency crisis) and the ugly (Syria). Unwinding central bank support from the markets will be arduous; it is already contributing to destabilization of certain emerging market currencies. News out of Washington this autumn tapering, Fed leadership and the debt ceiling has the potential to add volatility and uncertainty. The U.S. equity market has been the place to be this year, but diversification remains key.
2013-09-06 00:00:00 Will Gold Follow Its Seasonal Pattern This Year? by Frank Holmes of U.S. Global Investors
There are factors beyond Syria this week driving gold. Thats the Love Trade. This group gives gold as gifts for loved ones during important holidays and festivals. This is the time of the year that we are in the midst of right now. Historically, September has been golds best month of the year. Looking at more than four decades of monthly returns, the precious metal has seen its biggest increase this month, averaging 2.3 percent.
2013-09-04 00:00:00 How Syria Could Spark New Middle East War by Gary Halbert of Halbert Wealth Management
What does the stand-off in Syria have to do with the investment markets? Potentially, a lot. As I have argued in recent weeks, if the Middle East devolves into another military quagmire, it could be quite bearish for the US stock and bond markets going forward. Thats why we will talk about the implications today.
2013-08-30 00:00:00 An American Energy Revolution by Frank Holmes of U.S. Global Investors
In Texas these days, theres a feeling of absolute and unwavering confidence in the concept of an American energy revolution. From the depths of reserves to the richness of the energy, an incredible transformation is taking place.
2013-08-29 00:00:00 High Yield Bond Market Mid-Year Check In by Matthew Pasts of BTS Asset Management
After a prosperous 30-year bull market, the prospect for the future direction of High Yield bonds would seem to hinge on not whether, but when their decline starts.Dan Fuss has been managing bonds for 55 years. His multi-sector bond fund, Loomis Sayles Bond Fund, ranks in the top 10% of its peer group over the last 15- and 10- year periods as of December 31, 2012. Fuss believes that bonds are currently the most overbought market I have ever seen in my life in the business.
2013-08-29 00:00:00 Middle East Tensions, Oil Prices and the US Economy by Russ Koesterich of iShares Blog
A further escalation of violence in the Middle East will not only have a terrible human toll, it could also lead to rising oil prices, which in turn could hurt consumers and the global recovery. Russ explains the situation and shares how investors can prepare.
2013-08-28 00:00:00 Forrest Gump Stock Market by Bill Smead of Smead Capital Management
After watching "Forrest Gump" for about the thirtieth time recently, I realized that the US economy and US stock market share a great deal in common with Forrest. In this missive, we will be reminded of the journey of a true American folk hero and of the journey back from the abyss the US economy and stock market have made since early in 2009.
2013-08-28 00:00:00 ING Fixed Income Perspectives August 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management
While it?s been said that a picture is worth a thousand words, some pictures are just not that complicated. Take the current U.S. yield curve, for example, our interpretation of which can be boiled down to just a handful of syllables: ?zero interest rate policy? and ?taper?.
2013-08-27 00:00:00 Do Income-Oriented Portfolios Reduce Safe Withdrawal Rates? by Geoff Considine (Article)
Among studies of safe withdrawal rates (SWRs) researchers have followed a common path: constructing portfolios with the goal of optimizing total return. This strategy achieves the highest SWR, but retirees often prefer a more income-oriented portfolio. I will illustrate the tradeoff investors make ? in terms of a lower SWR ? as they increase allocations to income-producing securities. But increasing income also brings a key benefit: lower estimation risk.
2013-08-27 00:00:00 Policy Uncertainty on the Rise by Libby Cantrill, Josh Thimons of PIMCO
Congress seems to be digging in and ramping up the rhetoric in advance of a possible government shutdown, a debt ceiling increase and a probable selection of a new Fed chair. We think it is likely policymakers will agree to a short-term deal to fund the government and avert a shutdown, and also cobble together a resolution on the debt ceiling, although neither is likely until the last minute. The Fed chair debate will likely continue to sway markets over the next few months, leading to greater uncertainty and greater market volatility.
2013-08-27 00:00:00 Choose Your Door Wisely.. by Blaine Rollins of 361 Capital
If I was being forced to choose a side for year end 2013 performance, I would have to agree with Mr. Plant. While September is historically a difficult month for the markets, we also know that the Q4 tends to reward the equity markets.
2013-08-26 00:00:00 The Outlook Will Shift as Conditions Shift by John Hussman of Hussman Funds
Though I expect that the present cycle will be completed by a market loss on the order of 40-55%, conditions can certainly emerge over the course of this cycle that could warrant a more constructive stance than we have presently, though possibly less extended than wed like. The most likely constructive opportunity would emerge from a moderate retreat in market valuations, ideally to oversold conditions from an intermediate-term perspective, coupled with an early firming in measures of market internals.
2013-08-23 00:00:00 Economic Update: August 2013 by Lori Liffring, Michael Bridgeman, Gaylan Abood, Justin Anderson, Karen Benefiel of Cambridge Advisors
Stocks had another strong month in July with the large-cap S&P 500 index up 5.0% and the small-cap Russell 2000 up 7.0%. International stocks in developed markets were also 5.2% higher as measured by the MSCI EAFE index while emerging market stocks were up less than 1%. Bond prices stabilized during the month resulting in only a slight 0.1% gain.
2013-08-23 00:00:00 Float Research: Fund Outflows Surge Amid Bond Market Anxieties by Minyi Chen of AdvisorShares
Stock and bond funds have given up a net $32.4 billion in August thanks to strong outflows from ETFs and mutual finds alike. Read this investor insight by Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) to learn about the recent fund flow trends.
2013-08-23 00:00:00 5 China Charts That Look Bullish for Commodities by Frank Holmes of U.S. Global Investors
Over the past few months, investors have seen better economic data coming out of Europe. Consumer confidence in the continent has been rising, manufacturing data is improving and the fiscal situation is on the mend. Now, China appears to be strengthening as well, which could signal better times ahead. Below are five charts that look bullish for China and commodities. While not meant to be comprehensive, they do point to areas where investors might want to pay close attention.
2013-08-23 00:00:00 Embrace Bottom Up by Herbert and Randall Abramson of Trapeze Asset Management
With all the conflicting macro news, some good, some not, and with the S&P 500 and the Dow at new highs while many sectors languish, it is preferable to focus on the little picture not the big one. The big one may currently be more unpredictable than the small one, being bottom up investment in undervalued securities. Those may currently be less popular, but we value investors are naturally driven to buy investments low, that are neglected and unpopular, with the view of selling them high when their popularity is enhanced. Buy low and sell high. Not buy high and sell higher as is now in vogue.
2013-08-23 00:00:00 The Next Big Challenge to Investors: Duration by Mike Temple of Pioneer Investments
Many investors have been conditioned to accept that the economy will be in the rehabilitation ward for the foreseeable future, rates will remain low, and monetary stimulus unending. We believe this is an increasingly dangerous mindset and the next great risk for bond investors is coming into view: the return of higher interest rates. We look at the refuge subsectors those areas of the fixed income market that investors may believe provide safe haven from the gathering storm.
2013-08-22 00:00:00 Active ETF Market Share Update & Weekly Market Review by AdvisorShares Research of AdvisorShares
Last week, total AUM in all active ETFs fell by over $60.5 million. AUM in the Global Bond category fell by nearly $89 million both because of falling values for ETFs in the category and redemptions in certain ETFs. The Foreign Bond category had another bad week, ending almost $36 million below where it began. As in previous weeks, assets in Short Term Bond active ETFs increased, this time by almost $36.5 million.
2013-08-21 00:00:00 The Danger of Duration: The Damage Potential of Rising Rates by Mike Temple of Pioneer Investments
The Federal Reserves initial goals from The Great Monetary Experiment are accomplished. Investors could now face the threat of rising bond yields.
2013-08-21 00:00:00 The Big Secret Mutual Fund Companies Are Hiding by Gary Halbert of Halbert Wealth Management
Do you know that most (if not all) mutual fund and ETF sponsors are keeping vital information about their funds secret from you? Well start todays E-Letter with a discussion about what that valuable information is and why fund companies dont want you to know about it.
2013-08-20 00:00:00 A Lot Of Action In What Was Expected To Be A Quiet Week by Sam Wardwell of Pioneer Investments
Most of the U.S. economic data released last week was rather ho-hum, consistent with continuing slow growth, but markets werent boring. Maybe markets are thin because its August, but the U.S. Treasury market had one of its worst weeks in a long time, and the selling spilled over into the U.S. stock market.
2013-08-20 00:00:00 Epic Climb Up and to the Right... by Blaine Rollins of 361 Capital
Interest rates continue to make an epic climb up and to the right...
2013-08-16 00:00:00 Purgatory Is Heaven by Tony Crescenzi of PIMCO
Since June, the Fed has stressed three messages: Tapering is not tightening, the federal funds rate will not move in tandem with a slowdown in asset purchases, and any change in Fed policy will rely on data, rather than a date. If Ben Bernanke leaves the Fed when his term expires, whoever is chosen to replace him will be bound by rules and the strength of the institution. The outlook for interest rates depends more on the Feds overall approach to the policy rate, and PIMCO believes the Fed will not increase that rate until 2016.
2013-08-16 00:00:00 What Happens When You Tell Indians to Stop Buying Gold by Frank Holmes of U.S. Global Investors
With the government in India raising its import tax for gold to 10 percent this week, I firmly believe Indians will continue indulging in gold, even if they have to smuggle it in.
2013-08-15 00:00:00 High Yield Market Overview July 2013 by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch High Yield Master II Constrained Index, was up 1.88% for the month of July. High yield recovered some of the sell-off experienced in May and June as Treasury yields stabilized and mutual fund and ETF (exchange traded fund) flows turned positive. The markets rally occurred as rate fears subsided, which resulted in retail flows returning to the asset class.
2013-08-14 00:00:00 Active ETF Market Share Update & Weekly Market Review by AdvisorShares Research of AdvisorShares
Overall the total AUM in all active ETFs declined by $1.2 million last week, an insignificant amount for the $14.4 billion space. Short Term Bond increased by almost $29.3 million, while Global Bond fell by around $15.8 million. Foreign Bond had another bad week, ending almost $34 million lower than where it began, as did the Currency category which declined by more than $8.7 million.
2013-08-12 00:00:00 Extreme Brevity of the Financial Memory by John Hussman of Hussman Funds
The period of generally rich valuations since the late-1990s (associated with overall market returns hardly better than Treasury bill returns since then) has created a tolerance for valuations that, in fact, have led to awful declines, and have required fresh recoveries to elevated valuations simply to provide meager peak-to-peak returns.
2013-08-09 00:00:00 A Generational Selling Opportunity for the U.S. Long Bond by Jim O'Shaughnessy of O'Shaughnessy Asset Management
Because investors tend to extrapolate what their general experience in markets has been recently well into the future, its easy to see why investors are having a long-term love affair with bonds. Yet the data in this paper suggests that a crisis in long bonds is coming and, given this information, individual and institutional investors alike should reconsider the bond portion of their portfolios.
2013-08-09 00:00:00 A Surprising Way to Play a Europe Rally by Frank Holmes of U.S. Global Investors
After a lengthy period of stagnant growth and lackluster results, the gradual crescendo of improving economic data that?s been coming out of Europe lately certainly commands attention.
2013-08-09 00:00:00 Real-Time Tax Data Indicates U.S. Economy Rapidly Losing Steam by Minyi Chen of AdvisorShares
The U.S. economy real growth is slowing even more now than in July as signs indicate an even weaker economy than we think. Read this investor insight by TrimTabs Asset Management to learn what tax withholdings and recent fund flows may be foretelling.
2013-08-08 00:00:00 Absolute Strategies Fund Portfolio Commentary by Jay Compson of Absolute Investment Advisers
In our last quarter commentary we posed a simple question: "Why does the economy need so much stimulus and quantitative easing for so little growth?" Over the last two years or so, we feel that we have identified and explained the structural issues and risks very clearly. But in the second quarter, the equity and credit markets may have done a better job offering investors a true glimpse of the realities facing global markets.
2013-08-08 00:00:00 Quarterly Letter by Team of Grey Owl Capital Management
To begin, let us state that we are tired of writing about macroeconomic issues. We suspect you are tired of reading about them. We would like nothing more than to send out a quarterly letter full of updates on the companies we own and the rationale for individual buy and sell decisions. Nevertheless, we must address the market action following Federal Reserve Chairman Ben Bernankes May 22nd testimony before Congress, where he merely floated the idea of tapering the Feds quantitative easing efforts.
2013-08-08 00:00:00 Is The Financial Crisis Over For Financial Stocks? by Chuck Carnevale of F.A.S.T. Graphs
The cause of the financial crisis of 2007 -2008, also known as the Great Recession of 2008, is attributed to many different theories. However, one of the most common theories is an easy money regulatory environment that led to an abundance of subprime loans, which in turn inflated real estate prices to bubble levels. Additionally, many blame the Financial sector, predominantly the money center banks, for exploiting the lax lending requirements with reckless and greedy behavior.
2013-08-06 00:00:00 The ABCs of ABS: Identifying Opportunities in Asset-Backed Securities by Scott Minerd of Guggenheim Partners
In the search for yield, ABS offers an opportunity to generate higher returns through rigorous analysis, unaccompanied by additional credit or interest-rate risk.
2013-08-05 00:00:00 Two Charts Illustrate How to ?Follow the Money? by Frank Holmes of U.S. Global Investors
Too often investors get caught up in their political allegiance or parties, focus on the negative and lose confidence in stocks. As a result, they can miss great bull markets. I believe when it comes to finding investment opportunities, it?s not about the political party, it?s about the policies, both monetary and fiscal.
2013-08-05 00:00:00 The Minsky Bubble by John Hussman of Hussman Funds
In his classic treatise on speculation, Manias, Panics and Crashes (originally published in 1978), the late Charles Kindleberger laid out a pattern of events that has periodically occurred in financial markets throughout history. Drawing on the work of economist Hyman Minsky, the conditions he described are likely far more relevant at the present moment than investors may recognize.
2013-08-02 00:00:00 QE Why $85 Billion per Month? Why Not $170 or $42 -1/2 Billion? by Paul Kasriel of Econtrarian, LLC
Am I the only one who wondered how the Federal Reserve arrived at a figure of $85 billion as the amount of longer-maturity securities it planned to purchase per month in its third round of quantitative easing (QE)? Why not double that amount? Why not half that amount? How will the Fed know when it is time to taper its securities purchases? How will the Fed know by how much to taper? Inquiring minds want to know.
2013-07-31 00:00:00 Calm Has Replaced Fear in the Bond Market by Tony Crescenzi of PIMCO
Calm largely returned to the bond market in July following a bout of turbulence in June. Volatility declined across the broad spectrum of fixed income assets, with interest rates and credit spreads falling from their highs, in some cases dramatically. Flows have also turned positive in many market segments, particularly for high yield and bank loan securities.
2013-07-31 00:00:00 Still High Time for High Yield? by Team of Rainier Funds
Given recent strong performance and yields hovering at historic lows, a current topic of debate has been whether the high yield bond market has become an asset bubble and how much of a risk is the potential end to the Federal Reserve?s accommodative monetary policy to high yield investors. While we at Rainier acknowledge there are current risks in the fixed income market, we believe these concerns are not unique to high yield bonds.
2013-07-30 00:00:00 The Power of Diversification and Safe Withdrawal Rates by Geoff Considine (Article)
When Bill Bengen published his seminal research in 1994, a 4% safe withdrawal rate (SWR) was clearly attainable with a variety of asset allocations. But bond yields are lower now than they were then, and equity returns for the next 20 years are unlikely to exceed those of the prior two decades. Indeed, a new paper by three highly respected researchers showed that SWRs for stock-bond portfolios are well below 4%. But as I will demonstrate, a 4% SWR is still possible with a more diversified portfolio ? and without subjecting clients to additional risk.
2013-07-30 00:00:00 ING Fixed Income Perspectives July 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management
We are constructive on interest rate risks in many developed and emerging economies as global central banks reinforce accommodative monetary policy. We favor the U.S. dollar versus the Japanese yen, the Euro and other developed market currencies. Credit spreads should narrow from current levels as the markets gain confidence and the Treasury market stabilizes. preads offer more than adequate compensation for likely credit losses and a further rise in interest rates. Spreads have been pressured to pre-QE3 levels and mortgages look attractive at these higher levels as prepayment speeds slow.
2013-07-26 00:00:00 Is Europe Ready to Take Off? by Frank Holmes of U.S. Global Investors
After the U.S.?s huge run, is it possible the country will be handing off the baton across the Atlantic for the next leg of the relay race? Here are a few areas of strength that could send European stocks higher.
2013-07-25 00:00:00 Summer Quarterly Commentary by John Prichard of Knightsbridge Asset Management
Recently the Fed indicated it may begin returning control over market pricing and interest rates to Adam Smiths invisible hand... and borderline chaos erupted. The episode began mid-day May 22nd as Congress questioned Fed Chairman Bernanke and suddenly the cat was out of the bag and a paradigm shift ensued. Bond funds suffered some of their largest weekly redemptions on record. Rates spiked and markets swooned around the world through late June as investors assumed the worst.
2013-07-25 00:00:00 Perspective by Jim McDonald of Northern Trust
Investors have faced a torrent of central bank actions and communications during the last month, and markets continue to differentiate among economies and companies a welcome maturation from the markets? prior regime of ?risk on/risk off.? We believe the Federal Reserve has moved from an easing bias to one of tightening but at an elongated pace that will remain data dependent. Joining in this parsimony are some key emerging-market central banks, including the People?s Bank of China, which is working to control credit risk in the Chinese economy.
2013-07-25 00:00:00 The Damage Potential of Rising Rates by Michael Temple of Pioneer Investments
The initial goals of the Federal Reserves Great Monetary Experiment to keep rates low, create negative real yields, spur consumption and cushion the budgetary consequences of fiscal stimulus have largely been accomplished. Investors could now face the threat of rising bond yields. Various bull and bear scenarios might ensue. What are they and what could trigger them? What are the risks to portfolios?
2013-07-24 00:00:00 Average Gas Price Could Hit $4 by Labor Day... Or Not by Gary Halbert of Halbert Wealth Management
With the recent jump in gasoline prices, several energy analysts are forecasting that prices at the pump will top $4 a gallon (national average) later this summer. On the other hand, some analysts feel that gas prices will only go up another 5-10 cents a gallon just ahead, and then move lower in the fall. Of course, no one knows for sure. Today, well take a look at whats driving gas prices higher.
2013-07-24 00:00:00 Quarterly Review and Outlook by Van Hoisington, Lacy Hunt of Hoisington Investment Management
The secular low in bond yields has yet to be recorded. This assessment for a continuing pattern of lower yields in the quarters ahead is clearly a minority view, as the recent selling of all types of bond products attest. The rise in long term yields over the last several months was accelerated by the recent Federal Reserve announcement that it would be tapering its purchases of Treasury and mortgage-backed securities. This has convinced many bond market participants that the low in long rates is in the past.
2013-07-24 00:00:00 Active ETF Market Share Update & Weekly Market Review by AdvisorShares Research of AdvisorShares
This past week, total assets in the active ETF space increased by over $60 million. The top 3 categories (Global Bond, Short Term Bond and Foreign Bond) all saw increases in AUM. The Alternative Income category fell in AUM, after weeks of only going up.
2013-07-23 00:00:00 You Thought It Was Hot Outside... by Blaine Rollins of 361 Capital
You thought it was hot outside? Wait until you see the weekly cash inflows into U.S. Equities... Funds that hold only U.S. stocks gained $15.58 billion in new cash, the most since June 2008. ETFs that hold domestic equities attracted $12.45 billion of those gains.
2013-07-23 00:00:00 Dear Bernanke - You Can't Have Your Cake And Eat It Too by John Rothe of Riverbend Investment Management
The U.S. stock market continues its euphoric rise into record territory despite continuing weakness in economic data. Recent comments from Federal Reserve Board Chair, Ben Bernanke, indicating that the Fed does not have a predetermined plan to stop its stimulus plan has investors increasing their allocations to equities.
2013-07-19 00:00:00 Challenging a Long-Held Assumption about Commodities by Frank Holmes of U.S. Global Investors
It is widely accepted that China spurred higher commodity prices in the past decade. And if the country was the force behind the boom, then the assumption is that China?s lower, but still healthy growth will be a drag on commodity prices. But recent research challenges this assumption.
2013-07-18 00:00:00 Second Quarter 2013 Financial Market Commentary by Andrew Zimmerman of DT Investment Partners
To taper, or not to taper, that is the question that investors are currently grappling with.
2013-07-18 00:00:00 The Death of Disasterism by Steven Vincent of BullBear Trading
From late 2012 I have been gradually layering and developing the thesis that a secular bull market started in November of 2012 (with a possible revised start date of June 2012), ending the sideways secular bear market that started in 2000. Here are the basic components of that thesis through the last report.
2013-07-17 00:00:00 Fed's Gobbledygook - What Do They Really Mean? by Gary Halbert of Halbert Wealth Management
Recent communications from the Fed and comments by Chairman Bernanke cast a great deal of uncertainty on the equity and bond markets in late June. Specifically, Bernankes remarks in his press conference on June 19 where he discussed ending its program of quantitative easing prompted a huge global selloff in the stock and bond markets.
2013-07-17 00:00:00 Canadian Secular View: Into Darkness? by Ed Devlin of PIMCO
Many investors are buying Canadian federal government bonds, shorting Canadian bank stocks and selling Canadian dollars in anticipation of a prolonged downturn. While significant risks are clearly facing the Canadian economy, our baseline forecast does not justify positioning our portfolios for a prolonged Canadian downturn.
2013-07-16 00:00:00 High Yield Market Overview June 2013 by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch High Yield Master II Constrained Index (the Index), was down 2.64% for the month of June. Yields moved sharply higher during the month as the high yield market experienced record retail outflows, quickly adjusting expectations around the Treasury market, and increased equity price volatility. Volatility spiked after a more hawkish message emanated from the Fed after the Federal Open Market Committee (FOMC) meeting on June 19th.
2013-07-12 00:00:00 Commodities 2013 Halftime Report: A Time to Mine for Opportunity? by Frank Holmes of U.S. Global Investors
It was a challenging first half of the year for most commodities, with only two resources we track on our Periodic Table of Commodities Returns rising in value. Natural gas and oil rose 6.5 percent and 5 percent, respectively, while silver lost a third of its value and gold lost a quarter of its price from the beginning of the year.
2013-07-11 00:00:00 The Capital Flight from Safety: It is Not About Tapering it is About Growth by Scott Colyer of Advisors Asset Management
Since Ben Bernankes comments seemed to unleash the bond vigilantes on June 19, we have seen a reversal in money flows that have used the U.S. Treasury market and the gold market as a flight to safety trade.
2013-07-10 00:00:00 Rising Rate: Challenge and Opportunity by Gibson Smith, Lindsay Bernum of Janus Capital Group
While the prospect of rising interest rates generally strikes fear into the hearts of fixed income investors, its important to remember that periods of rising rates are normal and can create opportunities for active bond managers. Since 1970 there have been 21 periods in which interest rates rose significantly. While each has had its own unique characteristics, over the past 20 years equities have rallied during these periods, which has tended to support corporate credit markets.
2013-07-10 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
The Bulls returned to stocks this week and bonds got crushed again. Comments out of the ECB, strong data out of Japan, and a good jobs number contributed to the rally, but at the end of the day the market had gotten a bit oversold. Bernanke is scheduled to speak today so if past history repeats itself things could get interesting again. Next week we will get a bunch of Q2 corporate earnings to that could also have quite an impact on the market either way.
2013-07-10 00:00:00 Safeguarding Leveraged Credit Portfolios Amid Heightened Interest-Rate Volatility by Team of Guggenheim Partners
While rapidly deteriorating credit quality and excessive market leverage were the chief culprits behind the end of the previous credit rally in 2007, neither factor is currently a significant concern in the leveraged credit market. Interest-rate risk, specifically the markets uncertainty regarding future monetary policy, precipitated the recent market sell-off and will likely continue to shape the performance of high yield bonds and bank loans in the near term.
2013-07-09 00:00:00 Retirement Portfolios: Fears over Rising Rates are Overblown by Joe Tomlinson (Article)
The second quarter saw increases in interest rates, losses in every category of bonds and investors abandoning fixed-income markets. The distress has been particularly acute among retirement investors who considered bond funds to be safe. But are fears of bond losses overblown? I will make the case that the rise in interest rates is actually good for retirement portfolios. To see this, one has to look beyond the quarterly statement losses and focus on overall retirement outcomes.
2013-07-09 00:00:00 ENERGY MLPs: A Suitable and Sustainable Asset Class by Sponsored Content from ClearBridge Investments (Article)
Greater capitalization. More liquidity. The energy MLP market has grown steadily, with good reason: our constant demand for energy. While oil prices go up and down, volume has stayed consistent. Production is increasing. And the infrastructure is needed to support it. Add some risk, and you’ve got an investment which could fit in a diversified portfolio.
2013-07-08 00:00:00 Absolute Return Letter: Much Ado about Nothing by Niels Jensen, Nick Rees,Tricia Ward of Absolute Return Partners
A 300 bps rise in bond yields across the term structure would, according to their calculations, do substantial damage to financial institutions balance sheets. Holders of U.S. Treasuries alone would lose in excess of $1 trillion on such a move in rates, equal to 8% of U.S. GDP. Other countries would fare even worse. Losses on JGBs would equal 35% of the Japanese GDP, effectively wiping out its banking industry in the process. Holders of U.K. bonds wouldnt do much better, losing the equivalent of 25% of U.K. GDP.
2013-07-05 00:00:00 The Asian Giant Stampeding into Gold by Frank Holmes of U.S. Global Investors
In this environment, gold should remain attractive. However, as the West flees the precious metal, another set of gold buyers has come forward with the aim to preserve wealth. Take a look at the chart below which shows total gold production compared to the gold deliveries on the COMEX and the Shanghai Gold Exchange.
2013-07-02 00:00:00 Avoiding the Interest Rate Freight Train with Individual Bonds by Stephen J. Huxley, Jeremy Fletcher and Brent Burns (Article)
For bond funds, rising rates mean that total return has to fight losses on the underlying portfolio. As a fund’s net asset value (NAV) declines, coupon interest may not be enough to overcome the price loss. Making the same fixed-income allocation to high-quality individual bonds instead and holding them to maturity is a superior strategy when rates rise.
2013-07-01 00:00:00 All of the Above by John Hussman of Hussman Funds
Market internals remain broken here. That may change, and it might even change soon. Until it does, we would be inclined to tread carefully, because this may be the highest level investors will see on the S&P 500 for quite some time. Choosing between potential catalysts - credit strains in China, the risk of disappointing earnings, or economic weakness, the incoming data is consistent with one conclusion: all of the above.
2013-06-28 00:00:00 Stay the Course As Mixed Signals Move Markets by Frank Holmes of U.S. Global Investors
We maintain that gold is in extremely oversold territory and mathematically due for a reversal toward the mean. Yet when gold prices plummet, fear takes over and some investors forget the fundamental reasons to own gold: Gold is a portfolio diversifier and a store of value. It is a finite resource with increasing global demand.
2013-06-27 00:00:00 ING Fixed Income Perspectives June 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management
Fears of Fed tapering are overblown; we expect global funding conditions to remain easy. We continue to favor the U.S. dollar and are bearish on the euro and the yen; we are cautious on EM local currencies, as volatility is likely to persist.Spreads are appealing at current levels, with higher-quality industrials offering the most attractive risk/reward.
2013-06-26 00:00:00 The QE Lemon Has Been Squeezed Dry by Tad Rivelle of TCW Asset Management
Weve just witnessed the dress rehearsal for the end of the Feds Quantitative Easing (QE). Markets that had learned to stop worrying and love the financial repression have been given reasons to fear the interest rate cycle. For five years we have lived with a central bank that has used, or abused, a zero rate policy and QE to effectuate the Great Risk-On trade to cure the ills of the Great Recession.
2013-06-26 00:00:00 Win Ben's Money by Bill Smead of Smead Capital Management
From 1997 to 2003 a show called, Win Ben Steins Money ran on the Comedy Central Network. The last five years, investors in the US have been playing a very similar game we are calling, Win Bens Money. The new game stars Federal Reserve Board Chairman, Ben Bernanke. The object is to win the money the Fed creates via Quantitative Easing (QE) through macroeconomic analysis. In this missive, we will look at how these investors chased Bens Money and consider what to do going forward.
2013-06-26 00:00:00 The Fed's Dirty Little Secret: QE Does Not Work by Gary Halbert of Halbert Wealth Management
Today I hope to dispel the myth that the Fed?s massive quantitative easing (QE) policy has driven long-term interest rates lower. I will argue that the opposite is true and demonstrate that the yield on the 10-year Treasury note has actually risen during QE-1, QE-2 and QE-3. This flies in the face of most market commentators.
2013-06-24 00:00:00 "Fixed" Income Investing Is Broken by Robert Isbitts of Sungarden Investment Research
Herb Brooks, who coached the 1980 Miracle on Ice U.S. Olympic Hockey Team to its unlikely win over the Soviet Union, included that quote as part of what I consider to be the best motivational speech in sports history. He was talking about his team and their Russian opponents. He might as well have been talking about bond investors on June 20, 2013.
2013-06-24 00:00:00 A Timetable for Ending QE by David Kelly of J.P. Morgan Funds
In a press conference following this weeks FOMC meeting, Fed Chairman Ben Bernanke provided markets with a clearer understanding on how the Fed expects to phase out its current quantitative easing (QE) program. This timetable is justified both by economic progress and by the significant future costs which a too-large Fed balance sheet is likely to entail. Moreover, the timetable, while never previously explicitly outlined, should not have been a surprise to most market observers. Nevertheless, Mr. Bernankes words have been met by a sharp selloff across a wide range of financial a
2013-06-21 00:00:00 AdvisorShares Weekly Market Review by Team of AdvisorShares
The major indexes finished lower after experienced another volatile week. While no major statements came out of the Federal Reserve, speculation about what the Fed chairman might after say its next meeting ends on June 19 drove a lot of market price movements early in the week.
2013-06-21 00:00:00 Weekly Economic Commentary by Team of Northern Trust
Today, the relative health of banks around the world goes a long way toward explaining differences in economic fortunes. As policy-makers seek ways to improve growth, addressing structural issues in their financial systems may be more effective than monetary or fiscal stimulus.
2013-06-21 00:00:00 What's an Investor to do in Markets like These? by Frank Holmes of U.S. Global Investors
What should an investor do after a day like yesterday? Stay calm and invest on, as I believe there is opportunity in picking up what the bears left behind. Here are a few ideas to ponder.
2013-06-19 00:00:00 Will The Fed Tank The Markets Tomorrow? by Gary Halbert of Halbert Wealth Management
The Fed Open Market Committee is meeting today and tomorrow to set monetary policy going forward. The big question is whether or not the Fed will decide to taper its monthly purchases of $85 billion in Treasury bonds and mortgage securities, which have driven stocks and bonds higher over the last few years. The decision depends largely on the Feds view of the economy, so they tell us.
2013-06-19 00:00:00 Efficient Pension Investing by Jared Gross of PIMCO
Adapting the Sharpe ratio to pension portfolios can help plan sponsors choose among a multitude of investment options designed to achieve the same goal. In our experience, the most significant efficiency gains have come from shifting from intermediate bonds to long-term bonds and introducing lower-volatility substitutes to equities.
2013-06-18 00:00:00 Help Clients Fill the Income Void by Sponsored Content from Legg Mason Global Income Survey (Article)
Affluent investors all over the world just arent getting what they want from their income investments, according to Legg Masons recently released Global Income Survey. Yet there is good news: most say they want to become more knowledgeable about income investing, and theyre eager for financial professionals to point out fresh opportunities.
2013-06-18 00:00:00 High Yield Market Overview May 2013 by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch High Yield Master II Constrained Index (the Index), was down 0.53% for the month of May, as fears of eventual Fed tapering dominated investor sentiment and put upward pressure on Treasury yields. The end result was the most substantial setback in a year for the high yield market. Despite the fears of rising rates, mildly improving economic conditions, healthy corporate earnings/balance sheets, and reduced tail risks and stagnant global growth/low inflation continue to benefit the high yield market.
2013-06-18 00:00:00 Taking Seniority: Looking to Bank Loans in Uncertain Markets by Elizabeth (Beth) MacLean of PIMCO
Bank loans are senior secured loans to non-investment-grade corporations. They are floating rate instruments, secured by the collateral of that company and senior in the capital structure. Bank loans can be a more defensive way for investors to move into the high yield space, due to the collateral and their senior position. While we have seen yield spreads tightening among loans, on a relative basis we do think loan valuations still look attractive. PIMCOs investment process helps us seek these attractive opportunities while managing risk.
2013-06-18 00:00:00 Fed Zombification by Cliff Draughn of Excelsia Investment Advisors
The enthusiasm of our culture for Zombies is estimated to contribute a tidy $5 billion dollar a year to GDP, and that doesnt even include the too-big-to-die zombie banks. In my opinion, the acute interest in zombies and horror (and escapism in general) says something about our countrys mental health.
2013-06-17 00:00:00 2013 Midyear Economic Update -- Another False Dawn? by Paul Kasriel of Econtrarian, LLC
Weve seen this movie before since midyear 2009, havent we? The pace of economic activity begins to quicken and it looks as though a full-throated cyclical expansion might finally be at hand, only to have the economy slip back into the doldrums. Nominal private domestic spending on currently-produced goods and services grew in the first quarter at an annualized rate of 5.5% compared to 3.4% in the previous quarter. Consumer spending accelerated, housing sales picked up and business spending on equipment and software continued to grow at a healthy pace.
2013-06-14 00:00:00 A Sweet Find on an African Adventure by Frank Holmes of U.S. Global Investors
The heart of Africa has been beating strong in recent years due to elevated commodity prices and resilient domestic demand, despite the global economic slowdown. Among the sub-Saharan African countries, Sierra Leone was the fastest growing country last year, according to the World Bank. Its economy experienced growth that is as rare today as Fancy Red diamonds. GDP increased a whopping 18 percent.
2013-06-14 00:00:00 A Taste of Rising Rates by Team of Neuberger Berman
The mantra "sell in May and go away" has taken on a new twist this year. Equity markets saw mixed returns last month but bonds took a beating, with losses materializing in nearly every fixed income segment. The reason? Interest rates rose significantlyand rather unexpectedlyover the course of the month. What implications would rising rates have for the market? We consider whats ahead.
2013-06-12 00:00:00 Bond Realities: The Changing Landscape for Fixed Income and the Death of the Agg' by Andrew Johnson of Neuberger Berman
Earlier this year Andrew A. Johnson, Neuberger Berman?s Chief Investment Officer for Investment Grade Fixed Income, led a series of discussions with institutional clients about the state of the fixed income market and key ideas in approaching opportunistic fixed income investing in the current environment. Here, Mr. Johnson has adapted, and elaborated on, the concepts described at those meetings.
2013-06-11 00:00:00 Gundlach ? Dont Sell Your Bonds by Robert Huebscher (Article)
Dont sell your bonds just yet, according to Jeffrey Gundlach. Global economic growth is slowing, he said, and the U.S. will be competing for a larger slice of a shrinking worldwide pie. A weaker economy dims the prospects for higher interest rates. The benchmark 10-year Treasury yield ? currently 2.08% ? will be 1.70% by the end of the year, according to Gundlach, providing profits for holders of long-term bonds.
2013-06-11 00:00:00 A Better Alternative to Cap-Weighted Bond Indices by Geoff Considine (Article)
Capitalization weighting is the prevailing choice for equity index investors, who can choose from low-cost index funds constructed with theoretically proven methodologies. But capitalization weighting in fixed-income markets enjoys no such theoretical foundation, leaving investors without a clear choice for a diversified core fixed-income holding. A portfolio of bond exchange-traded funds that optimizes the tradeoff between yield and risk gives investors a commendable way to own a broadly diversified core allocation.
2013-06-11 00:00:00 Bursting the Bond Bubble Babble by Andy Martin (Article)
Interest rates will eventually go up. The 50-basis-point spike in May on the 10-year Treasury bond may have been the beginning. But despite industry and media assertions, history shows that there is nothing to fear from rising rates.
2013-06-11 00:00:00 May Flowers Bring Best Equity Market Since 1997 as Bonds Wilt by Douglas Cote of ING Investment Management
The S&P 500 has opened 2013 with its best year-through-May return since 1997. U.S. Treasury prices, in contrast, plunged last month on talks of Fed tapering. Dont expect the reflation in bond yields to continue in the near term, as the Fed continues to struggle in its current war against deflation. Fundamental business activity not quantitative easing is the wellspring of sustained economic growth, creating lasting sales and profits. For investors, the two biggest self-defeating fears continue to be 1) the fear of buying equities and 2) the fear of buying bonds.
2013-06-11 00:00:00 I Spy by Jerry Wagner of Flexible Plan Investments
Its hard to tell which to be most worried about the Chinese spying on us through their computer hacking or the government spying on us through all our data providers! To paraphrase Jay Lenos remark the other night, Voters said they wanted a government that listened to them now theyve got one!
2013-06-07 00:00:00 Strategies for a Runaway Market by Robert Isbitts of Sungarden Investment Research
As stock markets around the world continue their surge, investors should be doing what investors should always be doing AVOIDING COMPLACENCY.
2013-06-07 00:00:00 As Economy Heats Up, Will Commodities? by Frank Holmes of U.S. Global Investors
Dont wait for the Fed to officially raise rates, as research shows that investors get the most benefit from materials and energy stocks by getting in now
2013-06-06 00:00:00 The REAL Great Rotation by Richard Bernstein of Richard Bernstein Advisors
The phrase "Great Rotation" has come to mean a sizeable shift in asset allocation from bonds to stocks. We, too, believe that stocks are likely to secularly outperform bonds, but we dont think that is the "great rotation" about which investors should be concerned.
2013-06-06 00:00:00 More Than a Feeling by Team of AdvisorShares
Tangible signs of fundamental weakness are appearing everywhere, yet financial market participants are simply choosing to ignore these signs. There remains a significant disconnect between the real economy and financial markets. Read this paper by Peritus Asset Management to learn how to navigate the weak fundamental picture in what they believe to be the beginning of a 15-20 year positive technical backdrop, which will put yield generating assets, such as high yield bonds, in the sweet spot.
2013-06-06 00:00:00 Omissions of the Omen: "Hindenburg Omen" and the Selloff Last Week by Liz Ann Sonders of Charles Schwab
Rising US Treasury bond yields and Fed "taper talk" not to mention a "Hindenburg Omen" sighting hit stocks last week. A look inside the Omen should calm fears of impending doom. The market is likely not out of the woods, but we dont expect an overly sinister correction.
2013-06-05 00:00:00 Certainty, Rates and the Year Ahead by Peritus Asset Management of AdvisorShares
The government tells us not to worry, as the Federal Reserve comes to rescue with QE-Forever. Certainty with fiscal policy doesnt seem to change the demand equation and cheapened money doesnt do anything if demand isnt present. Treasury rates remain at 0% for the foreseeable future making yield hard to find. Read this position paper by Peritus Asset Management scrutinizing how all this has come to pass and what indicators are foretelling the near future effects on the high yield asset class.
2013-06-05 00:00:00 The Canary in the Coal Mine by Scott Minerd of Guggenheim Partners
Ongoing monetary stimulus is leading to heightened volatility, and the bull market which has been in place since 2009 is becoming overextended. The recent string of surprise downside moves in markets may be the canary in the coal mine for global investors.
2013-06-05 00:00:00 Weekly Market Commentary by Team of Tuttle Tactical Management
Yesterday ended the streak of up Tuesdays in the market while last week saw an acceleration in the the "crush anything that pays any sort of yield" theme. Treasuries, high yield bonds, preferred shares, Utilities, REITs, etc. all got killed. At this point this just seems like the weird type of dislocation that happens sometimes in markets where money just doesnt want to go anywhere except under a mattress.
2013-06-05 00:00:00 Broader Use of Bail-Ins Could Spur a Revival of Asset-Backed Securities in Europe by Felix Blomenkamp of PIMCO
We believe ABS issuance will likely increase in Europe as eurozone developments and possible future bail-ins potentially result in higher risk premiums and funding costs for European banks. Although regulators are playing catch-up, capital markets are making room for a more credit-intensive product, helping to lead the way for a resurgence in ABS. Due to concerns over the security of bank deposits, investors may look to the ABS sector, which offers collateralized bonds that are free of bail-in risk.
2013-06-05 00:00:00 Driving with the Doors Off, Part II by Doug MacKay, Bill Hoover, Mike Czekaj of Broadleaf Partners
About ten months ago, I wrote about my new bulldozer-yellow Jeep Wrangler, comparing the sensation of Driving with the Doors Off to investing in the New Normal, or as I like to call it, a slow growth for as far as the eyes can see environment. While the pavement had always been a mere twelve inches beneath my feet, Driving with The Doors Off made the experience far more real, far more alive, and far more aware of the risks that had always been there. In the New Normal it feels like we are always and everywhere just one small pothole away from the next economic disaster.
2013-06-05 00:00:00 Harleys and Leather Jackets by Jeffrey Bronchick of Cove Street Capital
We are just about done with Proxy Season and with summer in full swing, there is nothing more that we would like to do than kick back and indulge in the 75 pages of shame, greed, ignorance, and political correctness-with only the occasional bright light of shareholder friendly corporate governance-that make up SEC Form 14A, aka the Proxy Statement. I would postulate that this document remains an underrated and under-read part of the investment puzzle as it is the factual record of managements incentives.
2013-06-04 00:00:00 Wounded Heart by Bill Gross of PIMCO
Joseph Schumpeter, the originator of the phrase creative destruction, authored a less well-known corollary at some point in the 1930s. Profit, he wrote, is temporary by nature: It will vanish in the subsequent process of competition and adaptation. And so it has, certainly at the micro level for which his remark was obviously intended. Once proud, seemingly indestructible capitalistic giants have seen their profits fall short of everlasting and exhibited a far more ephemeral character.
2013-06-03 00:00:00 Treasury Bonds Are No Longer the Conservative Investor's Friend by Jeff Middleswart of Ranger International
For more than three decades, conservative investors have been able to count on Treasury bonds to deliver a consistent income stream, while providing a safe repository for principal. Further, Treasuries have anchored portfolios over their long bull run by limiting the damage when stocks declined.
2013-06-03 00:00:00 Defense and Selective Offense by Mark Kiesel of PIMCO
Given the markets newfound risk appetite for credit and less attractive valuations, we are taking advantage of global credit market liquidity in an effort to reduce our overall risk posture. In our selective offense approach, we continue to favor U.S. housing and housing-related areas, in addition to select investments in the energy, pipeline, specialty finance, gaming, hospitals, and airline and auto industries, given the more positive fundamental outlook for these sectors.
2013-05-31 00:00:00 In an Era of Uncertainty and Lower Returns, It's Time for Alternatives by Sabrina Callin, John Cavalieri of PIMCO
The initial economic and capital market conditions of the 1980s set the stage for a multi-decade bull market for stocks and bonds. Times have changed, however, and traditional investment portfolios are unlikely to deliver returns as healthy as those enjoyed for much of the last 30 years. Its time to think alternatively about asset allocation and index construction, sources of alpha and beta, and risk and return objectives to increase the probability of success in what we believe is a new era for investors and financial markets.
2013-05-31 00:00:00 What's the Answer to Unprecedented Policies and Ultralow Rates? by Frank Holmes of U.S. Global Investors
So what?s the answer to unprecedented central bank policies that have been driving stocks higher and ultralow rates? I believe investors need to stick to a strategy that includes dividend-paying stocks that offer the opportunity for both income and growth.
2013-05-29 00:00:00 Investors Shun Stocks But Cling To Bonds - Why? by Gary Halbert of Halbert Wealth Management
he Halberts are out of town celebrating our sons graduation from college on the sunny beaches of southern Florida. In place of my usual writing, I have chosen to reprint an excellent article from The Wall Street Journals Jason Zweig on investor behavior. The WSJ writer keys in on a new investor survey from Blackwater, Inc., one of the largest money management firms in the world (almost $4 trillion in customer assets). Blackwater surveyed investors that have at least $50,000 in investable assets. The findings are almost sure to surprise you.
2013-05-29 00:00:00 Weekly Market Commentary by Team of Tuttle Tactical Management
Last week we talked about the market being overbought in the short term, so the three day selloff (Wednesday-Friday) was to be expected. The media will blame the Fed but they didnt tell us anything we didnt already know. Bottom line, when the market gets extremely overbought traders will use anything and everything as an excuse to take profits. Interestingly, last week was the first streak of three down days this year. The S&P 500 seemed to find some support at 1640.
2013-05-24 00:00:00 Focus on What You Know and Can Control: Be Aware of Unexpected Risks in Bonds by Warren Pierson of Baird Advisors
While corporate bonds have seen improvement in credit fundamentals, similar improvement has not taken place for municipal bonds. Ongoing challenges in municipal credit could have a meaningful negative effect on municipal bonds. Many callable bonds with longer maturities face significant extension risk with an upward movement in interest rates. Durations currently pegged to shorter call dates could extend as issuers are less likely to call in bonds prior to maturity as interest rates rise. As callable bonds get re-priced to longer maturity dates, the resulting price declines could be profound.
2013-05-24 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
The two Asian giants have a challenging year ahead. The Fed will be challenged to keep the bond market under control.
2013-05-24 00:00:00 The Love Trade for Gold is Still On! by Frank Holmes of U.S. Global Investors
The more important demand for gold, in my opinion, comes from the enduring Love Trade, as countries like China and India buy the precious metal out of love and tradition.
2013-05-24 00:00:00 Ten High Yield Market Takeaways by Mark Hudoff of Hotchkis & WIley
Mark Hudoff, portfolio manager of the Hotchkis & Wiley High Yield strategy, shares his thoughts on the current opportunities and challenges in the high yield marketplace.
2013-05-23 00:00:00 ING Fixed Income Perspectives May 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management
How do you like them apples? By pointing out some Excel blunders in the data of Harvard economists Reinhart and Rogoff, a UMass-Amherst grad student appears to have gotten their number and in the process discredited their seminal work touting the merits of austerity. Though Good Will Hunting fans may be amused to see a couple of Harvardians get their comeuppance, you don?t need the titular character?s wicked smarts to deduce that harsh government spending cuts may not be the best way to pick up your economy.
2013-05-22 00:00:00 If You Didn't Buy That Powerball Ticket... by Blaine Rollins of 361 Capital
So onward and upward. What signals should Bulls be on the lookout for? Change in breadth (Up v. Down Volumes, Advancers v. Decliners), Signs of distribution (Sharp down days accompanied by large % increases in trading volumes), Change in leadership away from RISKON sectors (dont want SmallCaps, Financials, Industrials, Transports or Housing to lag)...
2013-05-22 00:00:00 How to Turn the ECB Straggler into a Central Bank Pacemaker by Myles Bradshaw of PIMCO
In our opinion, the ECB will be most effective if it can design a programme that helps banks deleverage more quickly to stimulate growth in the real economy. To have a meaningful impact on Europes broken transmission mechanism, any ECB programme needs to not only lower the cost of credit, but also be regionally tailored or big enough to be effective. Long-term investors should remain focused on the quality of issuers balance sheets rather than simply taking more risk because of lower prospective returns.
2013-05-22 00:00:00 Where is inflation headed? What will it mean for investors? by Russ Koesterich of BlackRock Investment Management
Slow economic growth and long-term headwinds should keep inflation contained. Low inflation should help support equity markets and high yield bonds, but may be a negative for gold prices. The inflation environment should also help prevent interest rates from rising too fast.
2013-05-21 00:00:00 A Cry for Help from Income Investors by Sponsored Content from Legg Mason Global Income Survey (Article)
Confronted with the stark realities of income investing now, affluent investors all over the world are rethinking their approach, notes Legg Mason’s just-released Global Income Survey. Yet the Survey also found income investors hungry for more knowledge and ideas -- creating opportunities for savvy financial advisors.
2013-05-21 00:00:00 (Yawn)...As Equities Advance Another 2% by Bob Doll of Nuveen Asset Management
U.S. equities advanced again last week, with the S&P 500 increasing 2.1%. Global stocks are reaching new highs in this cycle and the U.S. market is at an all-time high. Bonds were hurt in the move, dragging credit down, while commodities fell slightly on weaker manufacturing data. The unrelenting equity rally and an environment without positive news about earnings and the economy is making many investors uncomfortable.
2013-05-21 00:00:00 High Yield Market Overview by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, was up 1.86% for the month of April, as the high yield market continued to benefit from stable U.S. economic growth and steady asset reflation driven by the Federal Reserve and global central banks.
2013-05-17 00:00:00 Stress Points: What High Frequency Data Tell us About Hidden Tail Risks by Vineer Bhansali, Qingxi Wang of PIMCO
Whereas rare events that occur over lower frequency, longer horizons are much harder to find (and hence much harder to derive statistics from), intraday events create a larger, more accessible data set that can be used to supplement data on tail events. Analyzing the reactions of different markets to intraday tail events can provide valuable information for investors looking for effective tail risk hedges for their portfolios.
2013-05-17 00:00:00 Finding Opportunity Far and Near by Frank Holmes of U.S. Global Investors
Would it surprise you to learn that a vast majority of equity valuation models state that stocks should head much higher over the next five years?
2013-05-15 00:00:00 Weekly Market Commentary by Team of Tuttle Tactical Management
We have been talking about some troubling divergences in the market for the past couple of weeks. These have worked themselves out--- Small and mid cap stocks are now outperforming the S&P 500 over the past week and month and Treasury Bond yields are coming back up.
2013-05-15 00:00:00 The Great Capitulation by Pamela Rosenau of HighTower Advisors
If you were to browse the virtual bookshelves of Amazon, some of the latest titles do not seem overly optimistic about the future. In Niall Fergusons The Great Degeneration, he examines why civil society is in complete free fall. Another recent pick me up entitled The Great Deformation, by former Reagan budget director David Stockman, discusses the negative impacts of Washingtons political dysfunction to our democracy.
2013-05-14 00:00:00 Who is Henry Singleton? by Jeffrey Saut of Raymond James
The year was 1974 and Teledyne (TDY/$77.56/Outperform), on a split-adjusted basis, was trading at about $0.05 per share. By 1986 it was changing hands around $75 per share. Unfortunately, back in 1974 I didnt have enough money to buy more than 10 shares, having lived through the devastating bear market of 1973 1974 where the D-J Industrial Average (INDU/15118.49) lost 47% of its value.
2013-05-10 00:00:00 Weekly Research Briefing by Blaine Rollins of 361 Capital
This weeks focus was squarely on central bank policy decisions and the U.S. April payrolls data. Mid-week the FOMC reinforced the "Bernanke put" by stating explicitly that quantitative easing can be increased if conditions worsen.
2013-05-08 00:00:00 6.7 Million Missing Workers Where Did They Go? by Gary Halbert of Halbert Wealth Management
Today we will touch several bases. We begin with last Fridays unemployment report which was hailed by the mainstream media, but had a lot of bad news to go with the good. From there we look at the estimated 6.7 million missing workers in this economy and ponder if theyre permanently gone from the employment rolls.
2013-05-07 00:00:00 How to Construct a Low-Cost Conservative Portfolio by Geoff Considine (Article)
One of the greatest challenges for investors today is constructing low-risk portfolios that provide the best returns using low-cost funds or ETFs. Doing so requires advisors to define risk as the potential for retirees to fail to achieve their financial goals, instead of as volatility, as it is traditionally measured. I will show how to construct a low-cost portfolio that minimizes this definition of risk while generating a reasonable real return.
2013-05-07 00:00:00 Mutual Fund Companies Need to Prepare for a Changing Environment Fund Industry Turbulence Ahead by Paul Franchi (Article)
The mutual fund industry grew explosively from the 1980s on a rare tonic of a low-inflation credit expansion powered indirectly by international trade flows. That run reached a peak in 2008 when the application of quantitative easing (QE) served to prevent industry collapse with a softer form of transition, which continues today but must end when inflation returns.
2013-05-07 00:00:00 Navigating Opportunities in Senior Loan and High Yield Corporate Bond ETFs by Ryan Issakainen of First Trust Advisors
In this newsletter, we will consider how senior loan and high yield corporate bond ETFs may be utilized by investors to pursue a higher level of income while seeking to mitigate the impact of rising interest rates. Well discuss why we believe benchmark indices are flawed investment strategies for gaining exposure to these asset classes, and well highlight how First Trust utilizes active management to seek better risk-adjusted returns than passive senior loan and high yield corporate bond index ETFs.
2013-05-07 00:00:00 Global Bonds: A Flexible Solution for an Uncertain Market by Olivia Albrecht, Michael Story of PIMCO
The recent rallies in both safe-haven and risk assets have left many investors in a quandary. We believe alpha, or above-market return, will have to play a greater role for investors seeking to meet return targets. In our view, the current environment affords many opportunities for generating alpha.
2013-05-07 00:00:00 Investing for Income and Capital Appreciation by Giorgio Caputo, Rob Hordon, Ed Meigs, Sean Slein of First Eagle Investment Management
A Q&A with First Eagle Investment Managements senior members and their market views and strategic insights.
2013-05-01 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
he mixed economic numbers we have been seeing lately----higher than expected consumer confidence and home prices vs. lower than expected Chicago PMI---might be confusing to some. One number shows the economy improving while another shows the economy contracting. However, for investors this is actually good news as the data continues to confirm that we are in a Goldilocks economy, not too hot, not too cold.
2013-04-30 00:00:00 Beware of the New Systemic Risk by Ashwin Alankar, Michael DePalma of AllianceBernstein
It felt like there was nowhere to hide from the market declines last Monday, April 15, when stocks, bonds and commodities fell in unison across the world, well before the Boston bombings that day. We believe that this failure of diversification was instigated by increasingly powerful multi-asset funds, many of which use leverage, which may have become a new source of systemic risk for investors.
2013-04-29 00:00:00 High Yield in a Rising Rate Environment by Team of AdvisorShares
We have all witnessed a major move in Treasury rates over the last couple months, causing concern for many that we may be in the early stages of a rising interest rate environment. The traditional thought is that as interest rates rise, bond prices fall. But looking at history, the high yield market has defied this widely held notion. This paper from Peritus Asset Management examines the main reasons why high yield bonds have historically performed well during times of rising interest rates.
2013-04-26 00:00:00 A Playbook for Investors: How to Shoot, Score, Win by Frank Holmes of U.S. Global Investors
So, in the competitive spirit of the NBA playoff season, I?ve gathered a series of plays that investors can use to shoot, score and win during this year?s market. I?m happy to say they include all the elements of an exciting game, including a comeback kid, an upset and an underdog.
2013-04-24 00:00:00 The 5% Problem: Double Jeopardy for Traditional Bond Investors by Nathan Rowader of Forward Management
Investors have suffered with low yields, but profited from rising bond values during the 30-year bull market for bonds. We believe the bond market is moving into a bearish phase, putting the value of existing bond holdings at risk. A variety of income-producing options are available for those who want to diversify bond portfolios and seek better yields. Historical analysis shows that a diversified portfolio would have outperformed traditional bonds during the last bear bond market and in periods of rising interest rates.
2013-04-24 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
Bulls and Bears continue to fight it out around the S&P 500 record high. There is a lot to worry about at this point----earnings and economic numbers have been somewhat disappointing, terrorism fears are back (Boston Marathon, Canada, fake Twitter posts, etc), and we continue to see a divergence between riskier areas of the market and less risky areas. On the plus side there is still nowhere else to go except for stocks. As we have said before, volatility around an all time high is normal and to be expected.
2013-04-22 00:00:00 Covenant-Lite Loans: Credit Quality Is Still the Dominant Factor by John Bell, Kevin Perry of Loomis Sayles
As portfolio managers for bank loan products at Loomis Sayles, we are often asked about covenant-lite bank loans, and in particular whether they represent a dangerous trend that suggests loans are overheated and should be avoided. This paper describes our views on what covenant-lite loans are and are not; it is based more on reasoning and experience than proof, because covenant-lite loans have not been offered over a long enough period to establish a meaningful fact pattern.
2013-04-19 00:00:00 Fixed Income Investment Outlook by Team of Osterweis Capital Management
Based on the nearly 2,500-point rise in the Dow Jones Industrial Average since last June, it appears that Mr. Bernanke has been successful in increasing demand for risk assets and creating some exuberance in the stock market. Short-term volatility in the markets may be driven by questions about the Feds eventual exit strategy and how effectively the politicians will deal with U.S. fiscal issues. The good news is that that the U.S. economy is growing, albeit slowly, unemployment is falling, again slowly, and consumer confidence is improving.
2013-04-19 00:00:00 Gold Buyers Get Physical As Coin and Jewelry Sales Surge by Frank Holmes of U.S. Global Investors
Even with the gold price dropping, why are gold coins selling at a premium? Its Economics 101: The coin supply is limited and the demand is high. This buying trend isnt only occurring in the U.S. In Bangkok, Thailand, for example, crowds of buyers were filling stores, eagerly waiting in multiple lines to purchase gold jewelry and coins.
2013-04-18 00:00:00 The Lure of Hedge Funds by John West of Research Affiliates
Investors often buy what they think is exciting, sophisticated, and complex with the embedded assumption that all of these attributes will lead to greater returns. We see this today where we witness the continued explosive growth of hedge funds. But, a careful examination of the data reveals that these fancy lures fail to hook as much in excess, after-fee returns as more time tested strategies.
2013-04-17 00:00:00 The Interest Rate Environment: Comparing High Yield Bonds and Bank Loans by Team of Hotchkis & Wiley
In its first quarter 2013 newsletter, "The Interest Rate Environment: Comparing High Yield Bonds and Bank Loans," Hotchkis & Wileys high yield team analyzes the behavior of the high yield market and the bank loan market in different interest rate environments to determine whether they can make sensible assumptions about the future.
2013-04-16 00:00:00 High Yield Market Overview by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, was up 1.03% for the month of March, as the high yield market continued to benefit from stable U.S. economic growth and steady asset reflation driven by the Fed and global central banks.
2013-04-16 00:00:00 2013 US Financial Markets by Clyde Kendzierski of Financial Solutions Group
In the fall of 2012 the S&P 500 came close to our forecast high (S&P- 1500) Last year we suggested that not only was the S&P likely to reach 1500, but also speculated that renewed bullish sentiment could take us back to the old highs of 1565. When the S&P touched 1563 a couple weeks ago, I started getting client calls complimenting my prescient forecast.
2013-04-15 00:00:00 The Counter-Inflation Playbook Part 1 by Jeffrey Jones of Cornice Capital
One of the most important lessons I learned during my days at UCLA came from my freshman philosophy professor. He told us that should you find yourself engaged in a debate, the surest way to defeat your opponent is to attack his base principles. If those base principles arent fundamentally sound, any case built on top of it, no matter how convincing, is at risk of crumbling all at once.
2013-04-12 00:00:00 How a Landslide Shifts Copper Supply by Frank Holmes of U.S. Global Investors
The U.S. mining industry was dealt a devastating blow as Kennecott Utah Coppers Bingham Canyon Mine experienced a pit wall failure causing a massive landslide with rocks and dirt covering the bottom of the mine pit. Its a miracle no one was hurt due to the vigilance of its owner, Rio Tinto. The landslide is just one example of how quickly and unexpectedly the supply and demand factors facing the red metal can shift, which underscores the need for nimble active management.
2013-04-10 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
The market continues to experience volatility around the new record high. Again, this is to be expected as this is a very psychologically important level so we shouldnt expect the market to blow through this and never look back. There is still a lot of background "noise" in the markets. Last weeks jobs numbers were disappointing, we have had some weaker economic numbers, Cyprus, etc. None of this looks like it can change the fact that money has nowhere else to go but stocks at this point, but the economic numbers bear watching.
2013-04-09 00:00:00 John Hussman ? Why Prospective Returns Are Low by Robert Huebscher (Article)
Monetary and fiscal policies have driven our economy into an unstable equilibrium, pushing investors into higher-yielding securities, according to John Hussman. But those higher yields are illusory, he said, because corporate profit margins are too high to be sustainable.
2013-04-05 00:00:00 PIMCO Cyclical Outlook for the U.S.: Back From the Brink by Josh Thimons of PIMCO
We expect the largest contributors to U.S. growth this year will be housing and related industries, increases in capital expenditures (albeit from very depressed levels), certain manufacturing sectors, such as the auto industry, and the energy sector. We see roughly 1.7 percentage points of drag on GDP coming out of Washington far less than the four to five percentage points of potential drag had there been no fiscal cliff resolution. We believe the Fed will continue with hyperactive monetary policy, which we now call QE Infinity, that does not have an explicit end date or progr
2013-04-03 00:00:00 Spring Economic Commentary by Larry Maddox of Horizon Advisors
The Fiscal Cliff We loudly went over the cliff and received a largely quiet and unexpected market reaction? Risk of rising interest rates After a 30 year period of declining interest rates, caution is in order. Our thoughts on portfolio fixed income positioning. The heightened awareness of uncertainty Despite lingering uncertainty investors should be committed to long term well diversified porftolios.
2013-04-03 00:00:00 Why This Economic "Recovery" is So Weak by Gary Halbert of Halbert Wealth Management
We start today with an excellent editorial I read last week written by Mort Zuckerman, Editor-In-Chief of U.S. News & World Report. My goal every week is to do a lot of reading and summarize what Ive learned in these pages week in and week out. But every now and then I run across something so good that it just makes sense to reprint it in its entirety, even if its not my own work. Not many of my contemporaries are willing to do that, as they think it makes them look less scholarly. I dont have that problem.
2013-04-03 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
After hitting a record close last week the market is showing some warning signs, which is to be expected. You dont typically break through an important resistance point without testing it and re-testing it so some volatility around a record high is normal. We are also slightly concerned that small and mid cap stocks have drastically underperformed the S&P 500 over the past two days.
2013-03-28 00:00:00 2 Factors Keeping a Lid on Interest Rates by Russ Koesterich of iShares Blog
Investors have been expecting interest rates to rise, but with the yield on the 10-year Treasury bond back below 2%, Russ explains two structural factors that are slowing the rate rise.
2013-03-28 00:00:00 What Maslow and Rand Would Tell Investors Today by Frank Holmes of U.S. Global Investors
While gold?s performance in the short term has been counterintuitive, I plan to stick to my own advice. I simply feel safer with a small weighting in gold as insurance.
2013-03-27 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
The continuing mess in Cyprus and the S&P 500 nearing a record close dominated the news this week. As I said last week, Cyprus is insignificant, the only important aspects of what is going on is timing. If the crisis hit the news during a time when the market was oversold and due for a rally then it would have little, if any, impact. The fact that that market has rallied this year without much of a selloff gives traders an excuse to use something like this to take profits.
2013-03-27 00:00:00 Does Blame Predict Performance? by Jason Hsu of Research Affiliates
As an econometrician and a fund-of-funds portfolio manager, I spend much time researching quantifiable metrics to help me identify managers who can outperform consistently. There is, in fact, a rich body of literature exploring different manager selection criteria. Academic papers have considered portfolio manager attributes, such as tenure, the CFA designation, advanced degrees, and even SAT scores; they have also examined fund characteristics, such as portfolio turnover, expense ratios, and assets under management.
2013-03-26 00:00:00 A Cry for Help from Income Investors by Legg Mason Global Income Survey (Article)
Confronted with the stark realities of income investing now, affluent investors all over the world are rethinking their approach, notes Legg Masons just-released Global Income Survey. Yet the Survey also found income investors hungry for more knowledge and ideas -- creating opportunities for savvy financial advisors.
2013-03-26 00:00:00 The Stimulus Trap by Peter Schiff of Euro Pacific Capital
For years we have been warned by Keynesian economists to fear the so-called "liquidity trap," an economic cul-de-sac that can suck down an economy like a tar pit swallowing a mastodon. They argue that economies grow because banks lend and consumers spend. But a "liquidity trap," they argue, convinces consumers not to consume and businesses not to borrow. The resulting combination of slack demand and falling prices creates a pernicious cycle that cannot be overcome by the ordinary forces that create growth, like savings or investment.
2013-03-25 00:00:00 The Hook by John Hussman of Hussman Funds
At the 2000 peak, Richard Russell observed "Every bull and bear market needs a hook. The hook in a bear market is whatever the bear serves to keep investors and traders thinking that everything is going to be all right. There is always a hook."
2013-03-22 00:00:00 Cyprus Lifts the Curtain by Peter Schiff of Euro Pacific Capital
This week financial analysts, economists, politicians, and bank depositors from around the world were outraged that European leaders, more specifically the Germans, currently calling many of the shots in Brussels and Frankfurt, could be so politically reckless, economically ignorant, and emotionally callous as to violate the sanctity of bank deposits in order to fund a bailout of Cyprus.
2013-03-22 00:00:00 In Gold We Trust by Frank Holmes of U.S. Global Investors
Poorly thought out government policies hurt the formation of capital and destroy people?s trust in paper money. Leaders may have good intentions, but some of their actions show disrespect for private property and individualism. This only reemphasizes gold as an important asset class.
2013-03-20 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
The banking crisis in Cyprus dominated the news this week as the market sold off 3 days in a row after being up 10 days in a row. The selloff was blamed on what was going on in Cyprus but that was not the real story. Globally Cyprus is pretty insignificant, most people probably dont even know where it is. The real story is that markets just dont go up for 10 straight days without needing a breather from time to time, Cyprus was just an excuse to take some profits.
2013-03-20 00:00:00 Investors Need to Pivot by William Benz of PIMCO
Fixed income investors need to think differently in the current environment. Investors may want to consider pivoting to strategies that are less focused on traditional benchmarks and more oriented to generating income and providing greater flexibility to hedge against rising rates, widening credit spreads or higher inflation.
2013-03-19 00:00:00 Paul Matlack from Delaware Investments on the Direction of the Bond Market by Robert Huebscher (Article)
Paul Matlack is senior vice president, senior portfolio manager and fixed income strategist for Delaware Investments. His firm oversees $145 billion in fixed-income strategies, and in this interview Matlack discusses his outlook for the economy and the bond market, and how advisors should be positioning client portfolios.
2013-03-19 00:00:00 Rising Political Risk and Ongoing Economic Weakness Challenge a Difficult Journey to Recovery by Andrew Balls of PIMCO
Looking ahead, it will continue to be a very bumpy journey as we anticipate economic contraction in the eurozone by -0.75% to -1.25% over the next year, hampered by growing political risk and fiscal tightening. Although we expect the pace of contraction in the eurozone to diminish over 2013, the duration of the recession is likely to be longer than consensus forecasts.
2013-03-18 00:00:00 Investment, Speculation, Valuation, and Tinker Bell by John Hussman of Hussman Funds
The most important questions investors should be asking are these: what do they know that can be demonstrated to be true; and what do they believe that can be demonstrated to be untrue. It is best to make these distinctions deliberately, lest the financial markets clarify these distinctions for investors later, against investors will, and at great cost.
2013-03-15 00:00:00 Washington May Be Ready to Take a Break From the Brink by Josh Thimons, Libby Cantrill of PIMCO
With Washingtons dysfunction not in the forefront, the economy could be more unencumbered to grow, with markets trending in a similar direction. The Feds proactive policies should continue to favor overweight positions in the five-year through 10-year part of the Treasury yield curve and support interest-rate-sensitive sectors of the economy most notably housing. In the longer term, however, we would advise investors to be cautious: Without meaningful long-term structural deficit reform, real growth will inevitably lag in the U.S.
2013-03-15 00:00:00 High Yield Market Overview by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 0.46% in February, as the high yield market finished on a positive note, after experiencing heightened volatility throughout the month.
2013-03-15 00:00:00 Chinas Next Stop by Frank Holmes of U.S. Global Investors
Would it surprise you to discover that China is planning to add 800 miles to its subway system over the next two years? Thats the distance equivalent to building a network from Dallas to Chicago in less time than the U.S. Congress can resolve a budget!
2013-03-14 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
The Dow continues to make new highs but the rate of climb has slowed considerably this week. This is normal as markets have to take a breather after large moves.
2013-03-14 00:00:00 DC Plan Sponsors: Now's the Time to Get More From Bonds by Stacy Schaus of PIMCO
Long on equities and light on bonds, todays DC plan lineups may expose participants to extreme market risks. Plan sponsors could potentially improve retirement outcomes by trimming choices for stocks and considering additional options for bonds. The inclusion of active fixed income strategies with global exposure or additional income opportunities could help participants reach their retirement goals.
2013-03-13 00:00:00 Who Cares if There's a High-Yield Bond Bubble? by Gary Halbert of Halbert Wealth Management
High-yield bonds, or "junk bonds" as they are widely known, have received a lot of attention in recent months. Is there a high-yield bond bubble? Certainly a ton of new money has gone into high-yield bond funds over the last few years. Millions of Americans who would have never considered high-yield bonds have bought in due to near zero returns on traditional savings vehicles.
2013-03-12 00:00:00 The Retirement Income Problem by Rob Isbitts of Sungarden Investment Research
The most vital and pervasive issue investors will face in the next decade is how to wring out enough income from the savings they have amassed to maintain or enhance their lifestyle. To do so, they will need to be far more flexible in their investment approach. They also must adapt to an environment for "high quality bonds" (Treasuries, Municipals and Corporates) that does not at all resemble that which they are accustomed to.
2013-03-08 00:00:00 How to Keep Calm and Invest On by Frank Holmes of U.S. Global Investors
The market noise of today will not be going away. However, investors can gain confidence in the following wisdom of the crowd. As famous investor Benjamin Graham said, "The individual investor should act consistently as an investor and not as a speculator. Keep calm and invest on.
2013-03-07 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
Yesterday saw a new record close on the Dow Jones Industrial Average and a renewal of the panic buying we saw earlier in the year. While it is great to see that the Dow has retraced all of the losses from the 2008 decline I am concerned about what message will be directed towards individual investors. The asset allocation/buy and hold crowd will use this milestone to "prove" that markets always come back so that their approach is still valid. This is true, but it ignores the fact that it took the market almost 6 years to come back and the lost opportunity cost associated with that.
2013-03-01 00:00:00 The Walk of Life: Stepping Away From Dire Straits and Toward Active Short-Term Mgmt Strategies by Jerome Schneider, Andrew Spottiswoode of PIMCO
Money market investors may find the benefits of recent regulatory and industry reforms bittersweet at best, as they are still tolerating borderline zero percent yields in a persistent low rate environment. Without creative strategies for liquidity management, many investors are finding themselves in the "dire straits" of actual negative real returns on their cash allocations even with modest current levels of inflation.
2013-03-01 00:00:00 Greetings from Istanbul! by Frank Holmes of U.S. Global Investors
As I travel around Turkey, I am reminded how vital good government policies are to the health of a nation. Following a decade of fiscally responsible actions, Turkey is the picture of a growing prosperity. Perhaps Americas elected officials could take a tip from this vibrant country overseas.
2013-02-27 00:00:00 Rational Temperance by Bill Gross of PIMCO
While the market was indeed moving in the direction of "dot-com" fever three to four years later, the Dow Jones Industrial Average at the time was a relatively anorexic 6,000, and the trailing P/E ratio was only 12x. For a central bank that was then more concerned about economic growth and inflation as opposed to stock prices, risk spreads, and artificially suppressed interest rates, the Chairman's query made global headlines, became a book title for Professor Robert Shiller and a strategic beacon for portfolio managers thereafter.
2013-02-27 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
For a while it was obvious that the market had become overbought and was due for a selloff, all traders needed was an excuse, this past week they got two of them. First, the Fed hinted that QE might end and then Italian elections sparked uncertainty in Europe. Add those things in with the looming sequester and you have all the ingredients for a profit taking selloff. At this point this is all part of normal market machinations. The market doesn't go up in a straight line and it doesn't go down in a straight line.
2013-02-26 00:00:00 Howard Marks? Warnings and How to Protect your Portfolio by Geoff Considine (Article)
Howard Marks, founder and chairman of Oaktree Capital Management, wrote in a recent memo that the biggest danger to investors is their willingness to buy risky assets that are likely to provide low returns. Market conditions may not fully reflect current risk; option prices, for example, are very low. Some firms ? notably PIMCO ? recommend investors buy put options to protect their portfolios. I propose an alternative strategy that will be resilient to the potential shocks of increased volatility and higher interest rates, without incurring the cost of options.
2013-02-22 00:00:00 A Test of Strength for Gold by Frank Holmes of U.S. Global Investors
This week, we saw the gold bears growling louder and gaining strength, as the worlds largest gold-backed ETF, the SPDR Gold Trust, experienced its largest one-day outflows since August 2011. The Fear Trade fled the sector following the Federal Reserves meeting that revealed a growing dissension among some of its members over the central banks bond-buying program.
2013-02-20 00:00:00 Trying And Failing To Make The Math Work For Long-Term Bonds by Doug Ramsey, Eric Weigel of Leuthold Weeden Capital Management
For the past 31 1/2 years, owners of 10-year U.S. Treasury bonds have earned "real" total returns of 6.7%on par with the long-term real return to equities. Long before government bonds matched real stock returns, they suffered a 55-year period that offered investors a real return of zero. The short-term implications of higher U.S. Treasury rates on asset allocation decisions.
2013-02-20 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
Markets continued to move up this week in spite of looming Fiscal Cliff budget cuts. Everyone still expects a selloff but money continues to flow into the market as it has nowhere else to go.
2013-02-19 00:00:00 Asset Class Allocation and Portfolios by Adam Jared Apt (Article)
Asset class allocation has been so thoroughly absorbed into the culture of investing that today, most investment guidance is built around it, and you may even have heard that it is the foundation of an investment plan. And like nearly all respectable investment ideas, it is misunderstood and abused. One misconception is that asset class allocation and portfolio management are the same thing. I'll explain why they aren't later, but let's start by considering another misconception.
2013-02-16 00:00:00 When It Comes to Gold, Stick to the Facts by Frank Holmes of U.S. Global Investors
During short-term gold corrections, its much more important to focus on the facts, including the fact that gold is increasingly viewed as a currency. Rather than buying real estate, lumber or diamonds, central banks around the world are buying gold. According to the World Gold Council (WGC), over 2012, central bank demand totaled 534 tons, a level we have not seen in nearly 50 years.
2013-02-15 00:00:00 High Yield Market Overview January 2013 by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 1.38% in January, as the high yield market continued to rally into the new year.
2013-02-14 00:00:00 Understanding Derivative Overlays, in All Their Forms by Markus Aakko, Rene Martel of PIMCO
Passively managed overlays are typically based on a simple formula, while active approaches involve more complex algorithms or decision-making. Overlay examples include portable alpha, LDI, currency, completion, rebalancing, and tactical asset allocation overlays -- as well as tail-risk hedging and hedge fund replication. Potential benefits include the ability to effectively manage cash, reduce costs and risk exposure, simplify manager transitions and express tactical views.
2013-02-13 00:00:00 The Economy: Worst Five Years Since the Depression by Gary Halbert of Halbert Wealth Management
While the many facts and figures below are disappointing, even depressing, Americans need to know the truth about the real state of our economy and our union. Consider what follows as a rebuttal to President Obama's speech tonight. Feel free to forward this to as many people as you wish.
2013-02-13 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
After a decent selloff earlier in the month the market has continued to move up, but in very small increments. Most people seem convinced that we are due for another selloff, which seems to be tempering upside enthusiasm. On the other hand, there also doesn't seem to be any enthusiasm to sell.
2013-02-12 00:00:00 Currency Wars? What Currency Wars? by Christian Thwaites of Sentinel Investments
There's much talk of currency wars right now. We think they're way overblown. The source of the problem lies with Japan, which has made explicit a strategy to lower the yen, increase domestic demand and increase inflation. It needs to do all three. The twenty year old balance sheet recession and deflation in Japan has been a costly error in targeting inflation and not much else.
2013-02-12 00:00:00 Fixed-Income Insights: When High Yield Loses Some Height by Zane Brown of Lord Abbett
If one sought an indication of how monetary policy and historically low interest rates can influence investor behavior, the high-yield bond market could provide some perspective. In 2012, investors' ongoing demand for income was reflected by the high-yield market's 15.6% return, the $32 billion that flowed into the asset class, andas several headlines pronouncedthe market's record-low yields of less than 6%.
2013-02-08 00:00:00 Out With the Dragon In With the Snake by Frank Holmes of U.S. Global Investors
Over 2013, we expect the Chinese government to continue its accommodative efforts, which should reinforce the equity rally. In addition, the new pyramid of power is focused on growth, as it seeks to improve and reform policies that will provide its residents with opportunities and social security, increase incomes and raise standards of living, which should encourage domestic consumption. Growth is set to be considerable over the next several years.
2013-02-08 00:00:00 The Year in Review: 2012 by Richard Bernstein of Richard Bernstein Advisors
Politicians crave the spotlight, but it is unfortunate that investors watch the show. 2012, like 2011, was another year in which Washington theatrics scared investors. As a result, investors largely missed out on above average equity returns. Corporate profits and valuations, and not Washington, continue to be the primary drivers of equity returns. We think there are several important points to consider when reviewing 2012 performance, and when structuring portfolios for 2013.
2013-02-06 00:00:00 The January Barometer by Jeffrey Saut of Raymond James
It's that time of year again when the media is abuzz with that old stock market saying, "so goes the first week of the new year, so goes the month and so goes the year." With the S&P 500 (SPX/1513.17) better by 2.17% over the first five trading sessions of this year, and up 6.10% for the month of January, it is worth revisiting the January Barometer. Devised by Yale Hirsch in 1972, the January Barometer states that as the S&P 500 goes in January, so goes the year.
2013-02-06 00:00:00 Focus on Fixed Income by Steve Van Order of Calvert Investment Management
Last week Administration officials, including the President, clearly ruled out using extraordinary legal measures to avoid defaulting on Treasurys financial obligations in the absence of a debt ceiling hike by Congress. The two legal measures most discussed, going back to the summer 2011, were invoking the 14th Amendment and minting a trillion dollar platinum coin. The coin idea was dismissed as Fed officials commented that the central bank would not honor the coin as a deposit, and the amendment idea has been shelved a number of times.
2013-02-05 00:00:00 Ditto by Howard Marks of Oaktree Capital Management
Anyone who reads my memos of the last 23 years will see I return often to a few topics. This is due to the frequency with which themes tend to recur in the investment world. Humans often fail to learn. They forget the lessons of history, repeat patterns of behavior and make the same mistakes. As a result, certain themes arise over and over. Mark Twain had it right: "History doesn't repeat itself, but it does rhyme." The details of the events may vary greatly from occurrence to occurrence, but the themes giving rise to the events tend not to change.
2013-02-04 00:00:00 A Gross Underestimate by Jonathan Coleman, Soonyong Park of Janus Capital Group
As we enter 2013, we felt it would be an appropriate time to revisit one of last years most controversial predictions of future equity performance. We acknowledge that equities in general may not continue to deliver the same real rate of return they have over the last century; however, we believe the glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross' pessimistic prediction.
2013-02-04 00:00:00 Some Seasonal Blips by Christian Thwaites of Sentinel Investments
We had a week of big numbers last week of which GDP, Personal Income, Durable Goods, the Conference Board's Consumer Confidence, payrolls and the FOMC were the ones that had our attention. We went to print a little earlier this week, so missed the NFPs. But this is what came at us. First GDP. There's a spin to be told but here are the raw numbers with the center column the one that caught markets wrong-footed.
2013-02-01 00:00:00 Dow To 14,000 and Beyond? by Frank Holmes of U.S. Global Investors
So will the Dow go beyond 14,000? Although you cant predict how hot the weather will be this summer, the clouds appear to be parting to reveal the sun today. Make sure your asset allocation positions your portfolio to shine.
2013-02-01 00:00:00 A Gross Underestimate by Jonathan Coleman and Soonyong Park of Janus Capital Group
The glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross pessimistic prediction.
2013-02-01 00:00:00 Look at the Bears! Look at the Bears! by Christine Hurtsellers, Matt Toms and Mike Mata of ING Investment Management
Yes, the grumbling of bond bears is reverberating in Treasury yields, but that sound isnt the death knell of a grizzly; at this point, the closest ursine analogue is Boo-Boo Bear.
2013-01-31 00:00:00 Q4 2012 Letter by Team of Grey Owl Capital Management
During the second half of 2012, central banks turned their massive and coordinated monetary intervention "up to eleven." This is the overwhelmingly dominant economic and market force today. Despite the long-term consequences (which are very real), we believe the central bankers commitment is steadfast. It has and will likely continue to mute both real economic and financial market volatility (at the expense of long-term growth). A deeper analysis of what has changed, our assessment of the impact, and our portfolio response follows.
2013-01-30 00:00:00 Weekly Market Commentary by Matthew Tuttle of Tuttle Tactical Management
The market continued to "melt up" this week. Everybody is expecting some sort of correction, but just like every time there is a consensus on something it never tends to happen. It is hard to envision the market having a massive continuation of this rally without some pullback, but we could easily continue to inch up for a while.
2013-01-29 00:00:00 Strategies for Speculating on the Crisis in Japan by Simit Patel (Article)
Bears on Japan are finally, after nearly two decades of being on the wrong side of the market, getting some vindication. The end of 2012 was marked by a significant decline in the Japanese yen and a rise in the yield on 30-year Japanese Government Bonds (JGBs). Should those trends continue, the conventional wisdom is that investors will do best by shorting JGBs. But a superior strategy is to short the yen itself.
2013-01-28 00:00:00 Capitulation Everywhere by John Hussman of Hussman Funds
The bears are gone, extinct, vanished. Among the ones remaining, many are people whom even I would consider to be either permabears or nut-cases. And yet, the historical evidence for major defensiveness has rarely been stronger.
2013-01-25 00:00:00 Resource Investors: Why You Can Expect Sunnier Days Ahead by Frank Holmes of U.S. Global Investors
During the current commodity supercycle, there have been occasionstoo many to countwhen investor psyche has been damaged by reports about slowing U.S. growth, a hard landing in China or a debt crisis in Europe. Yet just behind the gloom, significant and positive trends are taking hold, causing the storms to start dissipating.
2013-01-23 00:00:00 High Yield Market Overview December 2012 by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 1.59% in December, as the high yield market rallied on the perceived benefits of a fiscal compromise in the U.S.
2013-01-23 00:00:00 Gun Control & How To Play Upcoming Debt Battles by Gary Halbert of Halbert Wealth Management
Ever since the tragedy on December 14 at Sandy Hook Elementary School in Newtown, Connecticut occurred when Adam Lanza senselessly murdered 26 people (20 children and six staff) and then himself there has been a growing cry from millions of Americans for some kind of new gun controls. And the current occupant of the White House is all too happy to oblige. Last week, the president unveiled the most sweeping new gun control laws since the so-called Brady Bill was passed in 1993, requiring background checks on firearm purchasers in the US. Obama's proposals go much further as I will discuss.
2013-01-22 00:00:00 Puppet Show by John Hussman of Hussman Funds
What's fascinating is that in the presence of what are not thin strings, but massive cables supporting the economy like a puppet, the only response that Wall Street can muster is "Hey! He's walking!" as if the puppet is capable of motion without being propped up to a nearly reckless extent.
2013-01-18 00:00:00 Quarterly Review and Outlook by Van Hoisington, Lacy Hunt of Hoisington Investment Management
The American Taxpayer Relief Act has lifted the immediate uncertainty of the fiscal cliff. Nevertheless, tax increases that are already in effect from this act, as well as the Affordable Care Act, impose a major obstacle to growth for the U.S. economy in the first half of 2013. The result of these taxes is considerable, especially in light of the poor trend in household income. In addition, these tax increases will continue to act as a drag on economic growth until late in 2015 and are unlikely to produce the revenue gains advertised.
2013-01-18 00:00:00 Equity Investment Outlook January 2013 by Team of Osterweis Capital Management
Despite many headwinds and amid great uncertainty, both the U.S. economy and stock market enjoyed a rather good year in 2012. Real Gross Domestic Product ("GDP") grew around 2%, and the stock market, as measured by the S&P 500 Index, returned 16%. At the risk of sounding complacent, we believe that the fundamental trends that produced such favorable results in 2012 are still in place and should support another good year in 2013.
2013-01-18 00:00:00 4 Sensational Facts About Gold Investing That You Might Not Know by Frank Holmes of U.S. Global Investors
1. Gold has been a consistent performer over the decades. 2. Gold should remain a hot commodity in 2013. 3. Gold is the least volatile commodity on the table. 4. The last four years were better than you thought.
2013-01-18 00:00:00 Fixed Income Investment Outlook by Team of Osterweis Capital Management
We continue to feel that the mismatch between yield and interest rate exposure means that investment grade bonds are less attractive compared with the non-investment grade universe, especially in shorter maturities. Treasury, investment grade corporate and high yield bonds have yields and effective durations that are virtually unchanged compared to levels three months ago. Yields on short-dated high yield paper have actually risen a bit and are still, in our opinion, the most attractive sector we look at in terms of interest rate risk.
2013-01-15 00:00:00 Gundlach?s Predictions for 2013 by Robert Huebscher (Article)
Don't expect the low volatility that characterized the capital markets in 2012 to continue. Global economic uncertainty remains, and markets are poised like a 'coiled snake' to reward or penalize investors in certain asset classes, according to Jeffrey Gundlach.
2013-01-15 00:00:00 It's Not What Happens That Matters by Bill Smead of Smead Capital Management
Late in 2008 and in early 2009, a group of what we like to call "brilliant pessimists" hit the airwaves with their economic theories. The prognosticators' vision of the future was and is predicated on the history of similar situations and the mathematical realities of the huge debt overhang from the prior ten years of profligate economic behavior. They put very effective names on their visions like "new normal" and "seven lean years". They marketed their visions incredibly well to the point of shaming anyone who might disagree with their theories.
2013-01-15 00:00:00 Declaring Victory at Halftime by John Hussman of Hussman Funds
Present overvalued, overbought, overbullish, rising-yield conditions fall within a tiny percentage of market history that is associated with dismal market outcomes, on average. Its true that we've observed extreme conditions since about March 2012 with little resolution aside from short-term declines. But the S&P 500 remains only a few percent from its March 2012 high, and if history is any guide, the extension of these unfavorable conditions is not likely to reduce the depth of the market loss that can be expected to resolve them.
2013-01-14 00:00:00 Crosscurrents and Contradictions: Which Way Will Municipal Bonds Go? by Tom Dalpiaz of Advisors Asset Management
The two possible scenarios outlined are quite different with very different outcomes for municipal bonds, and that is what makes any 2013 municipal bond outlooks difficult to offer with certainty. Scenario 1 will likely have a relatively benign impact on municipal bond values while the impact of Scenario 2 will be more negative. Of course, the possibilities municipal bond investors will face this year include more than just the two stark contrasts presented above.
2013-01-11 00:00:00 Invest In Equities: Your Future Self May Thank You by Frank Holmes of U.S. Global Investors
Investors have had an illusion about the stock market since the financial crisis. With the barrage of negative headlines and abhorrence toward risk, investors seemed to feel that equities would not improve going forward. This turned out to be a mistaken belief.
2013-01-11 00:00:00 2013 Leveraged Credit Report: High Yield and Bank Loans by Scott Minerd of Guggenheim Partners
Record high prices, historically low yields and gradually deteriorating fundamentals have tempered expectations for the leveraged credit market. Generating above-market returns in 2013 will require an even greater emphasis on fundamental credit analysis to unearth opportunities in attractively valued segments of the market, such as upper middle-market bank loans.
2013-01-10 00:00:00 Things Can Only Get Better by Bill Smead of Smead Capital Management
As long-duration common stock owners, we at Smead Capital Management don't put much emphasis on predicting the year-to-year movements in the stock market. We expect at least a 10 percent or greater decline during each year and a greater than 20 percent decline at least once every five years. With that caveat in place, we will throw our two cents into the debate about what the US stock market will do in 2013.
2013-01-08 00:00:00 Another Lost Year for Active Management by Chris Maxey, Ryan Davis of Fortigent
There is no doubt that 2012 will be remembered by many investors, for reasons both good and otherwise. One group less likely to remember the good of 2012 is active managers. Across the universe of hedge funds and mutual funds, relatively few were able to outperform their comparative benchmarks. This continues a long running trend of active managers lagging their less active counterparts and raises many questions about the efficacy of active management.
2013-01-07 00:00:00 Fixed Income Asset Allocation Post-Apocalypse by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management
December 21, 2012 the day the Earth was prophesized to collide with a black hole of kaputness has come and gone in defiance of the Mayan calendar. The more upbeat interpretation of the 5,125-year Mayan cycle, however, is that the end date doesn't signify Armageddon but rather the beginning of a new time for positive change here on earth. So allow us to suggest an investment playbook to cash in on this silver lining. In short, the sweetness of the metaphorical fortune cookie in your hand will depend on how you allocate your fixed income assets in 2013.
2013-01-07 00:00:00 It's the Bond Vigilantes Stupid by Martin Pring of Pring Turner Capital Group
Most people are looking to the politicians in Washington to reign in the deficit by bringing spending under control. Based on their record this optimism seems severely misplaced. Nevertheless, the technical position of the bond market is suggesting that a more disciplined and powerful force is waiting in the wings. After a long 31-year vacation it may be time for the bond vigilantes (skeptical global bond investors who vote with their money) to return to town. The President has said a deal over the debt ceiling is non- negotiable but the non-partisan bond vigilantes may have a different view.
2013-01-07 00:00:00 An Unconstrained Approach to Bond Market Investing by Sabrina Callin, Lisa Kim of PIMCO
Investors are increasingly focused on alternatives to traditional investment strategies. Unconstrained bond portfolio construction should be driven by an outcome-oriented goal, with strategies assessed on an individual risk/reward and correlation basis, and each investment in the portfolio evaluated rigorously for the expected risk and return as well as the potential impact of the correlation to other investments in the portfolio.
2013-01-04 00:00:00 In 2013, Resolve to Follow the Money by Frank Holmes of U.S. Global Investors
During these first days of January, many adopt an out with the old, in with the new, approach to shed bad habits or extra pounds. Washington opted for its same ol strategy when averting the fiscal cliff, as the addictive nature of can-kicking is a transatlantic sport, according to The Economist. The short-term fix did nothing to control the unsustainable path of entitlement spending on pensions and health care nothing to rationalize Americas hideously complex and distorted tax code... and virtually nothing to close Americas big structural budget deficit.
2013-01-03 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
HAPPY NEW YEAR EVERYONE!We don't know what you did on Monday night to ring in 2013, but the U.S. Senate was in session as they were attempting to avoid the so-called "fiscal cliff".At 2:07 a.m. on New Year's Day the Senate passed a bill, 89 to 8, which does a number of different things.Then late that same morning, the House also passed the bill.We are going to touch on a few of the highlights in this opening Bullet and promise to give a more detailed analysis in our mid-month Bullets.
2013-01-03 00:00:00 Money for Nothin' Writing Checks for Free by Bill Gross of PIMCO
It was Milton Friedman, not Ben Bernanke, who first made reference to dropping money from helicopters in order to prevent deflation. Bernanke's now famous "helicopter speech" in 2002, however, was no less enthusiastically supportive of the concept. In it, he boldly previewed the almost unimaginable policy solutions that would follow the black swan financial meltdown in 2008.
2013-01-03 00:00:00 High Yield Market Overview December 1, 2012 by Team of Nomura Asset Management
The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 0.74% in November, as high yield investors focused on the fiscal cliff and the risk that the U.S. government fails to negotiate a resolution.
2013-01-03 00:00:00 2013 Forecast: Good Economy, Challenged Markets by Douglas Cote, Karyn Cavanaugh of ING Investment Management
We enter 2013 bombarded by conflicting signals. While fundamentals have been mixed of late, longer-term themes our "tectonic shifts" like the energy revolution are gaining momentum and promising to make positive contributions sooner rather than later. And while salutary measures taken by policymakers have eased global risks and lessened fears of Armageddon, there is considerable work yet to be done.
2013-01-03 00:00:00 And That's the Quarter that Was by Ron Brounes of Brounes & Associates
Politics ruled the day over the past three months (and beyond) and unfortunately the trend may very well continue as the averted "fiscal cliff" was merely postponed for another two months. For now, investors are happy, but what will tomorrow bring? (That's a question for you, Prez Obama and Speaker Boehner.) Happy New Year
2013-01-02 00:00:00 Washington Squanders its Gift of Time by John Browne of Euro Pacific Capital
As the clock winds down on 2012, the Fiscal Cliff is all anyone seems capable of discussing. Right now it appears that some sort of narrow deal has just emerged that will include raising tax rates on family income over $450,000 a year, increasing the estate tax rate, extending unemployment benefits for one year, and delaying spending cuts. But the prospect of higher taxes and the great uncertainty that has surrounded this fiscal fiasco has been acting like sand in the gears of the complex but sputtering U.S. economy.
2012-12-28 00:00:00 Readers' Golden Nuggets Focused on Gold, Resources and Overcoming Negativity by Frank Holmes of U.S. Global Investors
The past few days Ive been counting down the most popular commentaries over the past year. China, commodities and bond fund popularity were big hits; so were the Surprises in Gasoline, Oil and Resources Stock Prices. Here are the top four.
2012-12-18 00:00:00 Pulling Back the Lens in Emerging Markets by Western Asset Management (Article)
Emerging markets remain resilient, according to Western Asset Portfolio Manager Rob Abad. But in the face of so much global uncertainty, investors would be wise to consider the latest trends and dynamics impacting this maturing asset class.
2012-12-04 00:00:00 Surprising Choices in the Search for Safety Near-Certain Loss of Purchasing Power versus Short-Term by Jason Petitte, CFA (Article)
Risk, in its many guises, is unavoidable, and investors today are taking on significant amounts of credit risk, duration, and leverage to obtain high yields from many presumably safe bonds. But certain types of risk are often mispriced. By overweighting one's portfolio to those sectors that currently offer attractive risk-adjusted returns, investors will be better positioned to meet their long-term goals.
2012-11-13 00:00:00 How Well Does the Next Generation of Guarantee Riders Protect Your Income? Part 2 - Starting the Inc by Wade Pfau (Article)
Unlike traditional VA/GLWBs, the future payments from stand-alone income riders are tied to 10-year Treasury rates. That's bad news for retirees, who may find their future benefits compromised if interest rates remain at historically low levels - regardless of how the stock market performs.
2012-11-13 00:00:00 Emerging Markets: Maintaining Perspective by Robert O. Abad (Article)
In this Q&A, Western Asset Portfolio Manager Robert Abad discusses the latest dynamics and trends within emerging markets (EM). Although EM continue to demonstrate resiliency, Mr. Abad believes that given the amount of global uncertainty today, it is important that investors evaluate opportunities alongside a manager equipped to guide them through the risks and rewards of this evolving asset class.
2012-11-13 00:00:00 Bank Loans: Looking Beyond Interest Rate Expectations by John Bell and Kevin Perry (Article)
Portfolio managers of Bank Loan Strategies, John Bell and Kevin Perry, outline the major advantages and risks of bank loan investing and the roles that a bank loan allocation can play in a fixed income portfolio.
2012-10-30 00:00:00 The Yield Hunt by Michael Lewitt (Article)
The high-yield market is not in danger of imminent collapse as some have argued. As long as defaults remain relatively low, and interest rates remain invisible, investors will continue to chase yield. But a few things could cause a sharp sell-off in the near future.
2012-10-25 00:00:00 The Arithmetic of Equities by Andrew Redleaf of Whitebox Advisors
t is a first principle at Whitebox to be security agnostic: to penetrate the labels like bond and stock and hybrid and assess the real status of a security by the risks and rewards that flow from the combination of economic circumstances and the details of capital structure. For most of the last decade it was quite clear to us that equities bore all their traditional risk but bolstered only bond-like rewards (at best), while high yield bonds often offered equity-like returns that could be shielded from default risk by shorting the all too risky stock of the same or a similar firm.
2012-10-16 00:00:00 Will Bonds Be ?Burnt to a Crisp?? by David Schawel, CFA (Article)
Bill Gross's recent monthly commentary painted a disturbing picture for investors - he foresees bonds being ?burnt to a crisp.? This isn't just hot air. Such a conflagration is possible, and investors in bond funds, especially those that are constructed similar to the widely followed Barclays bond index, need to heed risks inherent in today''s market.
2012-10-15 00:00:00 High Yield and Bank Loan Outlook by Scott Minerd of Guggenheim Partners
The leveraged credit market turned in an impressive Q3 with high yield bonds and bank loans returning 4.3 and 3.1 percent, respectively. Unprecedented accommodation from central bankers across the globe has alleviated much of the macroeconomic tail risk that we highlighted in last quarters publication. Presented with a seemingly insatiable demand for new issue bonds, issuers returned to the torrid pace of issuance that characterized the start of 2012 by raising a record $99 billion during the third quarter.
2012-10-09 00:00:00 High Yield and Equities Mind the (Equity) Gap by Hozef Arif of PIMCO
High yield bonds returned 12% through September, even as corporate defaults continued to rise, albeit gradually. While the default rate is an important market metric, it has been a lagging indicator of high yield bond total return performance. Investors should closely monitor equity markets for signals on where high yield spreads may go.
2012-09-18 00:00:00 The Trend is Your Friend by Keith C. Goddard, CFA (Article)
John Hussman's recent market commentary, The Trend is Your Fickle Friend, highlighted the limitations of trend-following investment strategies that rely on moving-average crossover rules as a primary filter. But an extensive study conducted by our firm demonstrated that a simple moving-average crossover system outperforms buy-and-hold, while reducing drawdown risk and volatility.
2012-09-18 00:00:00 Gundlach ? The End of the Bond Bull Market by Robert Huebscher (Article)
Likening bullishness on Treasury bonds to a 'mass psychosis,' Jeffrey Gundlach made his strongest statement yet that interest rates are about to rise. In a conference call with investors last Tuesday, he said that the rate on the benchmark 10-year Treasury bond could increase by 100 basis points by the end of the year.
2012-08-28 00:00:00 Who?s Fooling Whom? by Michael Lewitt (Article)
Equity markets are exhibiting a remarkable degree of complacency. The VIX is currently at extremely low levels and it can maintain those levels for a long period of time. The worse things get in terms of the economic data, the higher the market goes on hopes of central bank stimulus. At this rate, the Dow will peak just as the world is coming to an end!
2012-08-16 00:00:00 Markets Holding Up Despite Volatility by Ken Taubes of Pioneer Investments
Despite a steady stream of negative headlines and high volatility, markets are holding up pretty well. The broadest measure of the stock market, the S&P 500 Index, is up nearly 13% year-todate through today, August 13, 2012. The NASDAQ is up almost 17%. High yield bonds are up almost 9.7% while investment grade corporate bonds have gained over 7%. Even Europe has managed 7.5%, as measured by the FTSE Eurofirst 300 Index in dollar terms.
2012-07-19 00:00:00 Quarterly Review and Outlook by Hoisington and Hunt of Hoisington Investment Management
Long-term Treasury bond yields are an excellent barometer of economic activity. If business conditions are better than normal and improving, exerting upward pressure on inflation, long-term interest rates will be high and rising. In contrary situations, long yields are likely to be low and falling.
2012-07-17 00:00:00 Can you Beat SPIAs with Long-Term Bonds? by Michael Edesess (Article)
While single-premium income annuities (SPIAs) guarantee a specific income as long as the purchaser lives, their rates of return generally compare unfavorably with long-term bonds over normal life expectancies. This makes SPIAs look like the inferior investment, notwithstanding their value as longevity insurance. But considering the low level of interest rates and the potential for future volatility, SPIAs are still a good choice for many retirees.
2012-07-16 00:00:00 High Yield and Bank Loan Outlook - July 2012 Sector Report by Team of Guggenheim Partners
After a strong first quarter for high yield bonds and bank loans, the mixed performance of the second quarter has conjured up memories of 2011s volatility. While the lack of clarity in Europe and the looming U.S. fiscal cliff will continue to weigh on the economy, the current macro-induced price dislocations present attractive long-term opportunities for investors with patient capital.
2012-07-10 00:00:00 Benchmarking Your Retirement Portfolio With a Risk-Free Strategy by Laurence B. Siegel (Article)
Making the savings from 35 or 40 years of work pay for a retirement of the same length is a real challenge. At a zero real rate of return, you would have to save half of your income to enjoy a retirement that long without taking a cut in your living standard. There is, of course, a better way - judicious use of TIPS and annuities. A riskless strategy using those asset classes can safeguard one's retirement assets and can serve as a benchmark against which riskier portfolios can be measured.
2012-07-10 00:00:00 The Plight of the Conservative Retiree by Michael Nairne (Article)
Today's extraordinarily low rates on top of a lower equity premium leave conservative retirees with the risk of heightened capital depletion as poorer portfolio returns may be inadequate to offset the combined impact of withdrawals and inflation.
2012-06-19 00:00:00 U.S. High Yield: A Closer Look at Junk Spreads by Hozef Arif of PIMCO
Investors are cautious about high yield bonds which have become more volatile following strong performance and inflows earlier this year. We believe the cyclical bottom in default rates is behind us, and based on a tightening in lending standards compared to last year, we expect a gradual increase toward the mean in default rates and credit losses in 2012.
2012-06-12 00:00:00 Kingdoms of the Blind by Michael Lewitt (Article)
Recent events offer a rare illustration of the combined effects of the failure of monetary, fiscal and regulatory policy to coordinate a meaningful response. Rising budget deficits, record low interest rates, J.P. Morgan's proprietary trading blunder and the botched Facebook IPO process speak to abject policy failures in virtually every aspect of finance. It's not even a question of not having learned our lessons; our collective policy intelligence actually appears to have diminished.
2012-05-31 00:00:00 The Case for Short Duration High Yield by Greg Hahn of Winthrop Capital Management
Valuations in the domestic high yield market appear stretched and we are concerned that opportunities for incremental return are fewer over a near term horizon. In this article we provide an analysis of the structure of the high yield market and a rationale for investing in specific short duration and callable high yield bonds which offer investors a better risk/reward trade-off in the current environment.
2012-05-15 00:00:00 Dividends: A Timeless Component of Equity Return by Loomis Sayles & Company, L.P. (Article)
With interest rates at historic lows and many dividend-paying stocks boasting yields comparable to or higher than US Treasurys, it is no wonder that dividends have recently been at the forefront of many investors' minds. But dividends have a long history as a significant component of total return, and today's buzz is just the most recent chapter.
2012-05-08 00:00:00 Q2 Outlook: "Sell in May" May Not Work This Year by OppenheimerFunds (Article)
Chief Economist Jerry Webman explains why he believes the U.S. economic recovery is real and CIO Art Steinmetz talks about how stocks are as cheap compared to bonds as they have been in decades.
2012-05-01 00:00:00 Q2 Outlook: by OppenheimerFunds (Article)
Chief Economist Jerry Webman explains why he believes the U.S. economic recovery is real and CIO Art Steinmetz talks about how stocks are as cheap compared to bonds as they have been in decades.
2012-04-27 00:00:00 What are ETF and Mutual Fund flows telling us? by Kevin Mahn of Hennion & Walsh Asset Management
On the ETF front, while we did see some positive net flows into bond-oriented ETFs (notably High Yield Bonds), we also observed significant funds flowing into domestic and international emerging market equity products. In terms of outflows, or redemptions in this case, funds were flowing out of a wide variety of Morningstar categories, albeit only slightly on the bond-oriented front. I believe that the divergence in fund flow information for the first quarter of 2012 may primarily be related to the types of investors who generally invest in the products.
2012-04-24 00:00:00 65+5+Dividends: The case for quality dividend stocks in the first five years of retirement by Legg Mason ClearBridge Advisors (Article)
Retirees are living longer than ever before, and for many, outliving their money is a real concern. A good reason to consider quality large-cap dividend stocks in the early years of retirement - which have historically offered higher returns than fixed income with lower volatility than equities overall.
2012-04-03 00:00:00 Senior Loans Attractively Priced Relative to High Yield by OppenheimerFunds, Inc. (Article)
By restoring confidence in the global financial system, the European Central Bank's Long Term Refinancing Operation has allowed global bond investors to participate in attractive opportunities around the world.
2012-03-13 00:00:00 Europe's ?Back-door QE?: Good News for Global Bond Investors by OppenheimerFunds, Inc. (Article)
By restoring confidence in the global financial system, the European Central Bank's Long Term Refinancing Operation has allowed global bond investors to participate in attractive opportunities around the world.
2012-03-07 00:00:00 Winning the War in Europe by Scott Minerd of Guggenheim
Given my view on the global liquidity glut, it probably will come as no surprise that I remain bullish on U.S. investments, including equities, high yield bonds, bank loans and other risk assets, as well as art and collectibles. I believe the United States has entered a period of self-sustaining economic expansion, driven primarily by the aggressive monetary policy of the Fed, which is now being reinforced by the ECB. U.S. growth is necessary to reduce domestic unemployment and to provide support to the struggling economies in Europe and Asia.
2012-02-07 00:00:00 Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns by Laurence B. Siegel (Article)
A forecast of the equity risk premium (ERP) tells you how much to save, how to allocate assets between equities and fixed income, and how much you can consume. Given its great importance, the CFA Institute recently convened a group of top-level academics and practitioners to forecast future ERPs - and to reflect on similar predictions they had made a decade ago.
2012-01-31 00:00:00 Barry Eichengreen on the End of the Dollar by Dan Richards (Article)
Barry Eichengreen is a professor of economics and political science at the University of California, Berkeley and a former senior advisor to the International Monetary Fund. In this interview, he discusses the future of the dollar as the reserve currency and the role of the IMF in the Eurozone crisis. This is the transcript of the interview.
2012-01-24 00:00:00 Must Bond Investors Fear Rising Interest Rates? by Andrew D. Martin (Article)
Thirty-one years ago, in 1981, the one-year Treasury reached its all time high of 14%. Today it hovers around 0.10%. Never before have interest rates fallen so far. Many economists and investment advisors, seeing nowhere to go but up, expect interest rates to climb from these historic lows. But that would not be the catastrophe that many bond investors fear.
2012-01-10 00:00:00 Gundlach on the Key Risk for Bond Investors by Robert Huebscher (Article)
Watch out if you own a bond fund that underperformed its benchmark by 2% or more last year, as most did. Rather than put their careers at risk by suffering a second year of poor performance, those fund managers will turn to indexation, according to DoubleLine?s Jeffrey Gundlach. And since the Barclay?s Aggregate Index holds nearly 35% of its assets in Treasury bonds with near-zero yields, its investors will endure poor returns.
2012-01-06 00:00:00 Wal-Mart - The Worlds Greatest Retailer, After a Long Hiatus, is a Solid Buy by Chuck Carnevale of F.A.S.T. Graphs
We are going to start the new year off by looking at Wal-Mart which we believe is a blue-chip growth and dividend income selection that can be purchased at a sound and attractive valuation. We believe it is currently fairly valued. Therefore, it represents a very attractive candidate for the long-term investor interested in above-average capital appreciation, with an attractive dividend yield that is greater than the 10-year Treasury bond yield and potentially growing at double-digit rates.The company represents an ideal long-term buy-and-hold investment for the prudent fundamental investor.
2011-12-13 00:00:00 Improving on Buy and Hold: A Buy Signal by Georg Vrba, P.E. (Article)
In my August 2010 article I advocated a market timing strategy, to sell or significantly reduce one's stock holdings in anticipation of a recession or slowdown in the economy and switch into cash or a low-beta Treasury bond fund, and then reverse the process ahead of a recovery. A type-A buy signal was generated on December 9, 2011.
2011-11-05 00:00:00 Two High-Yield Choices by Chuck Carnevale of F.A.S.T. Graphs
This article is the second in a series of articles designed to elaborate on the proper utilization and understanding of the PE ratio as an important investing metric. Our first article in this series looked at how the PE ratio could be used to determine overvaluation. With this article we are going to review two companies where each is fairly valued and each has similar current PE ratios. Moreover, both companies offer yields above 3 % which is greater than is available on the 30-year Treasury bond (current yield 30-year Treasury bond 3.02%).
2011-11-04 00:00:00 Corporate Bonds: Figuring out a Fair Price by Russ Koesterich of iShares Blog
Q: How can you determine if corporate bonds are cheap or expensive? A: By looking at the spreads to Treasury bonds, relative to the state of the economy. Why you should care: Corporate bonds look reasonably priced compared with Treasuries. One way to think about corporate bond valuations is to consider thespread. Investors in corporate bonds are assuming credit risk the risk that the issuer wont repay the principal or make good on an interest payment. Investors are arguably not subject to that risk with a Treasury bond (for all its troubles, the US government has never defaulted).
2011-10-04 00:00:00 The Adjusted Gold/XAU Ratio as an Indicator of Forward Returns for Gold Stocks by Georg Vrba, P.E. (Article)
While the recent bull market took gold prices to new highs, the prices of gold-mining companies lagged. Some claim those companies are now drastically undervalued, and we can investigate that claim by examining the relationship between gold and gold-mining prices.
2011-09-27 00:00:00 Reexamining Bill Gross' Decision to Sell Treasury Bonds by Geoff Considine (Article)
Bill Gross made headlines in February by asserting that Treasury bonds were not providing enough yield to make them worth the risk and reducing his allocation to zero in the PIMCO Total Return Fund. The subsequent rally forced him to admit his mistake in August, but by then his fund was trailing 90% of its peers and having its worst year since 1995. I will examine Gross' decision in retrospect, to illustrate its tactical and strategic costs and benefits for his shareholders.
2011-09-06 00:00:00 Five Strategies for a Sideways Market by Kane Cotton, CFA and Jonathan Scheid, CFA (Article)
If this slow growth environment coupled with asset price volatility continues for (to steal a quote from Fed Chairman Bernanke) 'an extended period,' what additional portfolio strategies might aid the overall risk/return profile of investor portfolios? More specifically, how do you manage investments in a sideways market?
2011-09-01 00:00:00 Q&A with Litman Gregory Research by Team of Litman Gregory
We regularly use a Q&A format to address questions from readers about our investment views and current strategy. This format permits us to address a range of different topics and allows readers to focus on areas that are of interest to them. This Q&A piece was worked on jointly by members of our research team and tackles questions received during the past several weeks. We have grouped the questions into broad categories for convenience. The main topics include the Fairholme Fund, Investment-Grade Bonds, Floating Rate Loans, Municipal Bonds, International Bonds, China and Commodity Futures.
2011-08-30 00:00:00 Why High-Yield Bonds Make Sense Today by Geoff Considine, Ph.D. (Article)
None other than Gluskin Sheff's Dave Rosenberg, the widely followed analyst who was been consistently bearish in the current market cycle, said last week that high-yield bonds are 'a good place to be right now.' Recent price declines have made them attractive in the short term, and their risk-adjusted returns make them attractive to longer-term strategic investors.
2011-08-24 00:00:00 The Greatest Risk We Face: To Again Fall Into a Recession by Chuck Carnevale of F.A.S.T. Graphs
A spate of frightening headlines has led to two troubling declines in financial instruments. The first, of course, is the decline in equity prices that has everyone worried about their financial futures. The second troubling decline in financial instruments is the unprecedented drop in Treasury bond yields. This is troubling because frightened investors are fleeing to the safety of Treasury bonds at the precise time when the risk of owning them has perhaps been the highest in recorded history. This is especially true for the long bond, but also applies to shorter-term bonds.
2011-08-23 00:00:00 Strategies for a Rising Rate Environment by Jayant Kumar of Fisher Francis Trees & Watts (Article)
Shortening the duration of a fixed-income portfolio is often considered the default option, but it is not the only way to hedge against a potential rise in interest rates. This article provides investors with a framework to analyze and implement a range of fixed-income strategies, and highlights various investment considerations that should carefully be taken into account.
2011-08-05 00:00:00 Advisor Alert - Placing This Week's Selloff Into Context by Frank Holmes of U.S. Global Investors
The major market indices were lower this week. The Dow Jones Industrial Average lost 5.75 percent. The S&P 500 Stock Index decreased 7.19 percent, while the Nasdaq Composite fell 8.13 percent. Barra Growth outperformed Barra Value as Barra Value finished 7.53 percent lower while Barra Growth decreased 6.88 percent. The Russell 2000 closed the week with a loss of 10.34 percent. The Hang Seng Composite Index finished lower by 6.80 percent, Taiwan fell 9.15 percent, and the KOSPI declined 8.88 percent. The 10-year Treasury bond yield closed 24 basis points lower at 2.56 percent.
2011-07-26 00:00:00 Investing with a View of Significant Inflation by Bob Kargenian (Article)
Almost all the analysis we read has concluded that, with the Fed seemingly printing money out of nowhere, the inevitable consequence must be significantly higher inflation. We're not convinced, but we have identified which strategies are likely to best protect clients if inflation accelerates.
2011-07-19 00:00:00 Gundlach: A Debt Ceiling Impasse Could Drive Rates Lower by Robert Huebscher (Article)
Failing to raise the debt ceiling would be a 'huge financial calamity,' according to Federal Reserve Chairman Ben Bernanke and the general consensus view. But that opinion is 'exactly wrong,' at least as far as the Treasury market is concerned, DoubleLine's Jeffrey Gundlach said in a conference call with investors last Tuesday.
2011-07-14 00:00:00 Three Competing Theories by Van R. Hoisington and Lacy H. Hunt of Hoisington Investment Management
While the massive budget deficits and the buildup of federal debt, if not addressed, may someday result in a substantial increase in interest rates, that day is not at hand. The U.S. economy is too fragile to sustain higher interest rates except for interim, transitory periods that have been recurring in recent years. As it stands, deflation is our largest concern, therefore we remain fully committed to the long end of the Treasury bond market.
2011-07-12 00:00:00 The Titanic Has Sailed by Michael Lewitt (Article)
It was entirely predictable that the U.S. equity market would rally on the news that Greek would not default this month, but it does little to convince me that the long-term outlook for European sovereign debt or the global economy has improved. Markets - particularly the equity markets - are trying to pretend that the global economy is experiencing a self-sustaining recovery. A hard look at the economic numbers would tell an objective observer that no such recovery is occurring.
2011-06-28 00:00:00 Reducing Risk through Value-Oriented Tactical Strategies by Mark E. Ricardo, JD, LLM, AAMS (Article)
Conventional wisdom was that the best way to reduce portfolio risk is to adopt a diversified long-term strategic asset allocation. That paradigm was challenged - deservedly so - following the 2008 financial crisis. Fortunately, an improved paradigm has emerged: Investors should combine long-term strategic allocations with a value-oriented tactical rebalancing strategy.
2011-06-28 00:00:00 Where are Long Bond Yields Heading? The Bond Value Ratio as a Predictor of Future Yields by Georg Vrba, P.E. (Article)
Are long-maturity bond funds still a good investment? My analysis shows that there is currently a maximum potential appreciation of only about 10% for long-bond values. The 30-year bull market for bonds will be ending soon and the risk-reward ratio is too high to warrant buying long-bond funds now.
2011-06-14 00:00:00 The Consequences of Policy Failure by Michael Lewitt (Article)
Investment performance for the rest of the year will be determined by the macro-economic views of investment managers. While microeconomic factors are always extremely important in charting investment strategies, they are particularly important today as the U.S. and global economies continue to fight their way through the detritus of the global debt crisis. A compelling case can be made for weaker 2Q112 growth based on a combination of factors.
2011-05-31 00:00:00 Fantasy-world Returns for Equity Indexed Annuities by Robert Huebscher (Article)
When research fails to meet the basic standards of academic rigor, its conclusions should be questioned. One such case is a recent paper, Real-World Index Annuity Returns, whose conclusions you should trust at your own risk.
2011-05-31 00:00:00 Letter to the Editor ? Challenging Dave Rosenberg by Georg Vrba, P.E. (Article)
Predictions are usually made with great conviction and without a specified time frame. I review some of David Rosenberg's past predictions and show that investors would have underperformed the market had they followed his advice.
2011-05-24 00:00:00 The WikiLeaks of the Economics Profession by Michael Edesess (Article)
What Caused the Financial Crisis presents the most comprehensive account I have seen of the regulations that, when considered as a whole, have incentivized unprecedented self-delusion and risk-taking in the subprime mortgage market. To put it in a manner that financial advisors will understand, the book shows that the policies and regulations greatly increased the Sharpe ratio of the financial industry - they increased the return for taking risk.
2011-05-17 00:00:00 The Smooth Illusion by Michael Lewitt (Article)
In retrospect, the Federal Reserve's interminable zero-interest policy and its quantitative easing programs are likely to be seen not only as ineffective but damaging to the prospects for sustainable long-term economic growth. A number of asset classes are beginning to exhibit bubble-like behavior, something that would be far less likely to occur were interest rates normalized.
2011-05-03 00:00:00 Gary Shilling - Five Things that can Derail the Recovery by Robert Huebscher (Article)
Die-hard deflationists - those who foresee a continued bull market in bonds - are so few in number these days they could all share an elevator, according to Gary Shilling. One is Gluskin Sheff's David Rosenberg, whose views are considered elsewhere in this issue. But the loudest such voice belongs to Shilling himself, who has advocated for a long position in Treasury bonds continuously since 1980, a stance that has always proved prescient so far.
2011-04-26 00:00:00 Long-term Failure with Short-term Bonds by Hildy and Stan Richelson (Article)
Fear of an impending rise in interest rates has many recommending short-term bonds. Such fears are misplaced, however, and investors can better position their portfolios by constructing a ladder of high-quality individual bonds, rather than moving assets into only short maturities.
2011-04-26 00:00:00 The End of QEII: It?s Time to Make the Donuts by Tony Crescenzi, Ben Emons, Andrew Bosomworth and Lupin Rahman of PIMCO
With quantitative easing the Federal Reserve has in essence picked the pockets of Treasury bond investors throughout the world. Ultimately, the U.S. must own up to its past sins and let the deleveraging process play itself out. The U.S. must invest in its people, its land, and its infrastructure, as well as promote free trade, to achieve economic growth rates fast enough to justify consumption levels previously supported by debt.
2011-04-19 00:00:00 Gundlach: Treasuries will Rally When QE2 Ends by Robert Huebscher (Article)
The bonds that PIMCO's Bill Gross sold to take a 3% short position in the Treasury market may have found a buyer in Doubleline's Jeffrey Gundlach. In a conference call with investors last week, Gundlach said that Treasury prices would rise in the near term, once QE2 expires on June 30.
2011-02-08 00:00:00 'Conversation' by Jeffrey Saut of Raymond James Equity Research
While it?s true the DJIA and SPX have made new reaction highs many indices have not. Many emerging markets are declining, the MACD has been negatively configured since Jan 18th, Lowry?s Buying Power Index is falling and it's Selling Pressure Index is rising, and the 30-year Treasury Bond?s yield is about to break out above a spread triple top. The top gaining sector since November has been the Financials, but in the past few weeks the Financials have weakened noticeably. All of this continues to keep me cautious (but not bearish) as we enter February, a historically down month.
2011-01-10 00:00:00 Q4 Bond Market Review and Outlook by Teri L. Mason of Loomis Sayles
The US economic picture brightened as policymakers announced additional steps to stimulate the economy. Bond yields rose, causing many sectors of the bond market to lose ground in the final quarter of 2010, though high yield bonds, selected currencies and equity markets roared ahead.
2010-12-13 00:00:00 It's a Good Deal by Brian S. Wesbury and Robert Stein of First Trust Advisors
Some analysts are trying to tie rising Treasury bond yields to fears about a bigger deficit and the ?cost? of the tax deal. This is a misreading of the markets. Treasury bond yields are rising because a tax hike has been avoided and economic growth is likely to be robust. The bottom line is that stocks remain cheap, while bonds are certainly not.
2010-12-04 00:00:00 Reframing A Case For High Yield Bonds by Tom Fahey of Loomis Sayles
Our contention is that high yield bonds are likely to continue to be a respectable store of value. We base this on their valuation profile and fixed income characteristics, which tend to stand out in the midst of a protracted economic recovery and ongoing deleveraging process that could have significant implications for economic growth and yield potential.
2010-11-23 00:00:00 Seeking Beta in the Bond Market: A Math-driven Investment Strategy for Higher Returns by Georg Vrba, P.E. (Article)
Investors seeking permanent exposure to the bond market should invest in high-beta funds during up markets and low-beta funds during down markets. This simple strategy provides consistent long-term returns that are considerably higher than what a static investment in bond funds would achieve.
2010-11-09 00:00:00 Keynesian Confusion by Michael Lewitt (Article)
Keynesian policies are inflicting untold damage on the U.S. and global economies today. Keynes did not have to be misread. The reason that the current recovery is below par is that the economy is experiencing a massive paradox of thrift. We doubt that reducing already low rates is going to stimulate much of anything other than more frustration on the part of savers. Sooner or later, everything being earned on the upside of this liquidity-induced rally will be given back in spades - the only question is when.
2010-11-03 00:00:00 A Refresher Before Fed's Announcement of Second Round of Quantitative Easing by Asha Bangalore of Northern Trust
The Federal Reserve is widely expected to announce the second round of quantitative easing after the Federal Open Market Committee meeting on November 4. The goal of QE2 will be to bring about an increase in real GDP above the tepid 2.0 percent pace reported for the third quarter, as well as bring down the 9.6 percent unemployment rate. The reputation of the Bernanke Fed largely rests on the success of this new policy. Northern Trust present charts of Treasury bond yields since 2007, with markers for major monetary policy events.
2010-11-02 00:00:00 A Top Economist's Nightmare Scenario by Charlie Curnow (Article)
Remember the 1970s? Stagflation like we saw then could return to the U.S. if unsustainable public debt levels trigger a selloff of government bonds and dollar-denominated holdings, according to a recent study by John C. Cochrane. Cochrane, a finance professor at the University of Chicago, is perhaps best known for his response to Paul Krugman's article in the New York Times on why mainstream economics failed to anticipate the financial crisis.
2010-11-02 00:00:00 'Bubble' Bashing Does Not Imply a Risk-Free Bond Outlook by Team of American Century Investments
The present bond environment still doesn't fit previous 'bubble' profiles. We are, however, in a period of historically low interest rates and Treasury bond yields, with more room to rise than fall. Future bond price declines are a realistic expectation, but these declines are unlikely to rival other post-bubble, extended price plunges. Bonds continue to provide a cushion for equity exposure in diversified portfolios and a source of steady income for those who need it.
2010-10-21 00:00:00 North America Losing Some Serious Momentum by David A. Rosenberg of Gluskin Sheff
The U.S. economy may in fact be contracting again. The monthly data from Macroeconomic Advisers showed that real GDP contracted 0.6 percent in August. While this did follow a red-hot +1.25 percent gain in July, this marks the third decline in real activity in the past four months. Maybe the bond market does not need the Fed's help after all ? the super-soft economic environment is all the Treasury bond market really needs to sustain the downward trend in yields.
2010-10-12 00:00:00 Misconceptions in the Great Bond Bubble Debate by Robert Huebscher (Article)
Interest rates, many claim, have bottomed, making bonds the latest asset class worthy of the dreaded "bubble" label. Others counter that deflationary forces will prevail and that bonds offer the best risk-adjusted returns in the market. Which side of this debate you take matters profoundly, but making that call is not simply a matter of predicting the direction of interest rates, as is the typical focus of analysts.
2010-10-12 00:00:00 Beggar Thy Neighbor, Beggar Thyself by Michael Lewitt (Article)
In the latest edition of the HCM Market Letter, Michael Lewitt argues that reported attempts by countries to devalue their currencies will only result in higher inflation and not economic growth. QE2 will similarly fail, and the necessary "heavy lifting" for the economy should be through fiscal, not monetary, policy. A continuation of Keynesian policies, as advocated by Paul Krugman, will also fail. Lewitt warns of dangers in ETFs and offers his investment recommendations.
2010-10-06 00:00:00 A Sobering Look at U.S. Treasury Debt by Peter Williams of Doug Short
Guest contributor Peter Williams presents charts of U.S. Treasury bond auction results grouped by maturity date and term in order to provide give a bird's eye view of how the Treasury has positioned all debt issued since 1982. The Treasury has issued a total of $4.5 trillion in new debt since 2008. A look at outstanding debt levels, however, suggests that that there is still plenty of wiggle room for more debt to be offered.
2010-09-27 00:00:00 Hemlines and Investment Styles by Howard Marks of Oaktree Capital
High quality, large cap stocks have good potential over a range of possible scenarios, and are more attractive than bonds, which will do well in periods of economic weakness or deflation but poorly during periods of market strength or inflation. Treasury bonds and other high grade bonds currently have all environmental factors in their favor, but are priced rich. For them to do well from here, with yields so low, everything has to work out the way the bond bulls hope. Given current yield spreads, high yield bonds should outperform high grade bonds in most foreseeable long-term environments.
2010-09-22 00:00:00 The Rule of 72 by Jeffrey Bronchick of Reed, Conner & Birdwell
The 'rule of 72' allows the lay investor to determine how long it will take for him to double the value of his investment. It is calculated by dividing the number 72 by the annual yield of an investment. For example, if one divides 72 by the current 10-year Treasury bond rate of 2.7 percent, the formula generates an output of 26.6 years to double one's money. Under almost any definition of an intelligent investment plan, that seems like a very long time. If you cannot earn a rate of return above the 3 percent after-tax cost of debt for 10 years, then you should quit.
2010-09-14 00:00:00 The Centre Cannot Hold by Michael Lewitt (Article)
"A refusal to shed discredited monetary and fiscal policies and embrace creative and politically bold solutions is keeping our economy mired in high levels of structural unemployment and below-trend growth," writes Michael Lewitt in the latest edition of the HCM Market Letter. He also believes that "misguided faith in Keynesian solutions to debt crises, a near-religious belief that mild deflation must be avoided... and uninformed media hype about the alleged benefits of mergers and acquisitions" should be added to the list of bad ideas that lead economic policy and markets astray.
2010-09-07 00:00:00 Jeffrey Gundlach on Bonds, Stocks and Gold by Robert Huebscher (Article)
DoubeLine's Jeffrey Gundlach recently reduced his position from "overweight" to "small underweight" in Treasury bonds, and cited "divergent behavior across the yield curve." In this interview, he discusses that behavior and the rationale behind his move, as well as his thoughts on other asset classes, including equities and gold.
2010-09-07 00:00:00 Basel III Gets the Headlines, but EU Article 122a is the Story by Christopher Whalen of Institutional Risk Analyst
This issue features a comment by Richard Field of TYI LLC about a new European Union rule for the asset-backed and structured securities markets in the European Union called Article 122a. This rule is a direct challenge to the U.S. regulatory community. Implementation will very quickly divide those financial institutions which are compliant and those which are not. Banks which are not in compliance with the EU rule will be obliged to offer investors significantly higher yields on debt than those banks which are compliant.
2010-09-07 00:00:00 Weekly Investment Commentary by Bob Doll of BlackRock
Equity markets have been shaky in recent months, but the tightening of financial conditions that occurred in the spring and summer appears to be reversing somewhat, which should act as an important stabilizing force. At present, stocks are attractively valued and are on the cheap side - the S&P 500 Index is trading at 11.5 times forward consensus earnings, and the dividend yield for stocks is close to the yield of the 10-year Treasury bond. While no dramatic breakout of the current trading range should come any time soon, the path of least resistance for stocks continues to be up.
2010-08-31 00:00:00 Double ?Bubble,? Toil and Trouble by Sam Bass (Article)
The latest economic prophecy, which has gripped investors' fears for the past three years and counting, is that a 'bubble' in US Treasury bonds is about to burst. Hyperinflation is just around the corner, the prediction goes, and US Treasury bonds, driven up in price to record levels by unprecedented policy measures, are about to crash. In this guest contribution, Sam Bass writes that advisors shouldn't follow the advice of these "seers."
2010-08-24 00:00:00 Improving on Buy and Hold: Asset Allocation using Economic Indicators by Georg Vrba, P.E. (Article)
Most long-term stock market investors follow a buy-and-hold strategy, one that makes big losses unavoidable when major downturns strike the stock market. This strategy assumes that an investor cannot know when to switch from one asset to another and that if one avoids the bad days of the market, one is also likely to miss the best days. In this guest contribution, Georg Vrba presents a way to resolve this dilemma, based on various economic indicators that provide timely buy and sell signals for the S&P 500 index.
2010-08-23 00:00:00 Why Quantitative Easing Is Likely to Trigger a Collapse of the U.S. Dollar by John P. Hussman of Hussman Funds
A week ago, the Federal Reserve initiated a new quantitative easing program, purchasing U.S. Treasury securities and paying for those securities by creating billions of dollars in new monetary base. Treasury bond prices surged. With the U.S. economy weakening, this second round of quantitative easing appears likely to continue. Unfortunately, the unintended side effect of this policy shift is likely to be an abrupt collapse of the foreign exchange value of the U.S. dollar.
2010-08-19 00:00:00 Dow Dividend Yield Versus 10-Year Treasury Yield by Team of Bespoke Investment Group
There has been a lot of talk this week about how 'the great bond bubble' is about to crash and that equities look attractive compared to them. One data point that commentators have been citing is that the Dow's dividend yield is now greater than the 10-year Treasury bond yield. We've heard some say that this is the first time this has happened in decades, but in actuality, the Dow's yield got much higher than the 10-year bond yield as recently as late 2008 and early 2009. Bespoke presents a chart Dow yields minus 10-year Treasury bond yields from 1920 to the present.
2010-08-16 00:00:00 Treasury Yields in Perspective by Doug Short of Doug Short
Doug Short presents charts of inflation, 10-year Treasury bond yields and the federal funds rate since 1962. Last week the Fed said it will reinvest payments on mortgage assets it holds into Treasury bonds. Not surprisingly, yields fell, with the 10-Year Treasury index, for example, closing the week down 4.6 percent from its level the hour before the Fed announcement. As the charts illustrate, Treasury bond yields have occasionally led the market. How the Treasury bond market plays out over the next few months will be of critical importance to equity markets and the economy as a whole.
2010-07-20 00:00:00 The Opportunity in Build America Bonds by Jeff Westergaard (Article)
While the unique aspects of Build America Bonds (BABs) and recent Treasury Department actions are meaningful, the risks to investors have been over-emphasized. BABs remain an attractive vehicle for investors and issuers, and the market for them is likely to grow.
2010-07-13 00:00:00 Fake Diversification Exposed: Does Asset Allocation Work? by David B. Loeper, CIMA, CIMC (Article)
Domestic equities are down roughly 14.5% from their April 23rd high. Many advisors tout sophisticated (and very expensive) asset diversification strategies, supposedly to protect their clients against precisely these circumstances. So, with this recent decline, Dave Loeper asks whether all of those supposed diversifiers protected portfolios?
2010-07-13 00:00:00 Deficits Monetary and Moral by Michael Lewitt (Article)
"The word 'deficit' has come to epitomize not only our economic dilemmas but also our moral and intellectual failures to address them in an era that should be boasting of new breakthroughs in the social and physical sciences," writes Michael Lewitt in the latest installment of his HCM Market Letter, Deficits Monetary and Moral. "Instead, our ability to solve complex problems is weighed down by flawed and corrupted government processes and the lack of courage to forthrightly change them."
2010-06-29 00:00:00 Inflation Protection Investment Strategies by Vern Sumnicht (Article)
The value of the dollar is sure to erode, and investors will be left to grapple with the inflationary consequences. As Vern Sumnicht shows in this guest contribution, recent policies suggest steep inflation may be just around the corner. Fortunately, investors have some options to bolster their portfolios against the threat of inflation.
2010-06-08 00:00:00 Five Strategies for a Rising Rate Environment by Kane Cotton, CFA and Jonathan Scheid, CFA (Article)
The Federal Reserve can't accommodate forever, and the global stimulus effort will likely lead to inflation. Our growing indebtedness can only result in increased borrowing costs. That much we know. What we don't know is when and how quickly interest rates will rise. In this guest contribution, Kane Cotton and Jonathan Scheid examine five strategies for a rising rate environment.
2010-06-08 00:00:00 Ten Ways to Improve Manager Selection by Nancy Opiela (Article)
Today's emphases on fiduciary responsibility, risk management and increased transparency require better due diligence when selecting managers. Especially in today's turbulent markets, advisors who spend more time and resources to do due diligence well can find themselves at a distinct competitive advantage. While these ten tips won't necessarily help you identify the next active management superstar, they can bolster your manager selection and due diligence program.
2010-06-08 00:00:00 The First Thing We Do, Let?s Kill All the Quants by Michael Lewitt (Article)
In the latest issue of the HCM Market Letter, Michael Lewitt draws the parallels between the Gulf of Mexico oil spill and financial reform - both, he says, demonstrate our inability to learn from our mistakes. Lewitt also comments on quantitative trading strategies, economic recovery and the capital markets.
2010-05-18 00:00:00 Understanding Recent Negative International Bond Returns by Team of American Century Investments
This year so far has been a challenge for U.S. investors in high-quality, unhedged international bonds, continuing a downtrend for this sector that began in December of last year. Fortunately, the long-term strategic reasons for holding international bonds remain intact, including inflation protection from a potentially weaker dollar as the U.S. budget deficit grows, and diversification benefits versus traditional domestic fixed income.
2010-05-06 00:00:00 Global Market Correction Has Begun! by Komal Sri-Kumar of TCW Asset Management
The upward march of global equity markets in recent months is unsustainable. While U.S. corporate earnings have recorded healthy increases in recent quarters and, thereby, have been supportive of equity prices, the worldwide macroeconomic backdrop has continues to cause concern. The risks include, but are not limited to, a surge in the level of sovereign debt, a plunging dollar as foreign holders decide to cut their exposures in U.S. Treasury obligations, and a surge in U.S. Treasury bond yields.
2010-05-04 00:00:00 Weren't Interest Rates Supposed to Be Rising? by Team of Bespoke Investment Group
A couple of months ago, the yield on the 10-year U.S. Treasury bond was rising towards 4 percent, and commentators everywhere were declaring an end to the 'bond market bubble,' which would send interest rates sharply higher. So what happened? Thanks to the problems in Greece and the rest of Europe, US treasuries have been a magnet for investors looking to protect their cash. At a current yield of 3.62 percent, the yield on the 10-year U.S. Treasury bond is currently trading at a two-month low, and breaking below support.
2010-04-27 00:00:00 Paul McCulley?s Design for Financial Regulation by Robert Huebscher (Article)
PIMCO's Paul McCulley parents his 20-year-old son with an overarching principle: If you want access to the "Bank of Dad," then you must comply with the regulations of the "Bank of Dad." Wall Street abandoned similar tenets with in the run-up to the credit crisis, and now McCulley says that core principle - to play the game, you must accept regulation - needs to be restored before another crisis unfolds.
2010-04-27 00:00:00 Gary Shilling: America?s Lost Decade by Robert Huebscher (Article)
The US faces 10 years of slow growth and deflation that could rival Japan's "lost decade" - two words which Gary Shilling did not utter but which unmistakably characterize his forecast. Shilling is founder and President of the New Jersey-based economic consulting firm A. Gary Shilling & Co.
2010-04-20 00:00:00 Letter to the Editor ? The Interest Rate Debate by Various (Article)
As a Treasury bond bear of modest conviction, advisor Martin Weil read with interest Gluskin Sheff's David Rosenberg's piece in our April 12 issue. Though providing little data to support his thesis, Rosenberg makes a solid argument for why it is inflation, not supply and demand, that drives Treasury prices and yields. In taking this position, he pits himself against, among others, Jim Grant, with whom he has been carrying on a running debate.
2010-04-20 00:00:00 A Short-Term Buying Opportunity for Long-Term TIPS by Michael Brennan (Article)
Fixed income investors should consider a short-term buying opportunity for Treasury Inflation Protected Securities (TIPS) with maturities of ten or more years, writes Michael Brennan in this guest contribution. The 10-year TIPS should have a total return anywhere from 30 to 40 basis points greater than the comparable nominal Treasury bond.
2010-04-13 00:00:00 Shameless by Michael Lewitt (Article)
The fiscal train wreck in the United States has not been set back on the tracks, and the global imbalances that led to the financial crisis have not gone away. Quite to the contrary, writes Michael Lewittin Shameless, the latest edition of his HCM newsletter. In fact, if progress isn't made with respect to these issues, and if intelligent financial reform is not enacted, future instability is guaranteed.
2010-04-12 00:00:00 Richard Field on Covered Bonds and the Need for Better ABS Disclosure by Christopher Whalen of Institutional Risk Analyst
This commentary features a piece by Richard Field of TYI, LLC, a consulting and technology firm focused on filling information gaps created by financial innovation, on the need to level the disclosure playing field in the asset-backed security markets. Field says that giving investors anything less than daily data on loan portfolio performance is unfair. Meanwhile, the basic tools of machine-to-machine data transfer make daily reporting possible today, as evidenced by the XML-enabled Report of Condition and Income submission system at the Federal Deposit Insurance Corporation.
2010-03-31 00:00:00 ProVise Management Group by Ray Ferrara of ProVise Management Group
While many investors feared that health care reform would hurt the market, the Dow Jones Industrial Average jumped 44 points just after the bill passed, and is now approaching 11,000. Some Wall Street experts predict the bill will boost demand for prescription drugs and medical care, offsetting the tens of billions that health care firms will pay to subsidize the plan. Provise also comments on the impact of the census, corporate budgeting for 2011, the weakness of the Tampa Bay economy, the rising savings rate, increasing Treasury bond yields, IRS audits and college basketball betting.
2010-03-19 00:00:00 Paul Krugman Versus Reality by Peter Schiff of Euro Pacific Capital
Paul Krugman is right about one thing - China's currency peg is destabilizing the world economy and it must end. If China reversed its role in the U.S. Treasury market, however, China would emerge as the long-term winner. The value of the Chinese currency would rise sharply, causing prices to tumble in China. Americans, meanwhile, would lose the ability to buy cheap goods overseas. The U.S. must formulate a plan that weans the country off its dependence on Chinese Treasury bond purchases without forcing change too quickly.
2010-03-16 00:00:00 Greeks Bearing Gifts by Michael Lewitt (Article)
We are again privileged to publish the most recent edition of Michael Lewitt's HCM Market Letter, Greeks Bearing Gifts. Lewitt comments on Goldman Sachs' derivative transactions that helped Greece hide its debt and its larger implications for the financial system, for the European periphery and for Spain in particular. Lewitt also addresses the state of decline of the US economy and other topics.
2010-03-02 00:00:00 Asset Allocation Perspective by Scott Wittman, CFA (Article)
Scott Wittman, Chief Investment Officer for American Century Investments, provides his quarterly review of macro-economic factors and trends which influence the tactical weighting decisions for American Century's asset allocation funds. In the article, Wittman reviews and comments on recent events, trends and expected short-term future changes in monetary, fiscal, industrial, trade, regulatory, political and financial macro economic factors. We thank them for their sponsorship. This is sponsored content.
2010-02-23 00:00:00 Interest Rates, Inflation and the PIMCO Total Return Fund by Robert Huebscher (Article)
The current generation of financial advisors has never experienced rising interest rates, but that will change, based on the forecasts we collected in our survey last week. We review our survey results and look at the implications for the largest bond portfolio, the PIMCO Total Return fund.
2010-01-26 00:00:00 The Potemkin Market by Michael Lewitt (Article)
We are again privileged to publish the current issue of Michael Lewitt's newsletter, titled The Potemkin Market. Lewitt updates his forecast for the S&P 500, criticizes the current financial reform efforts and the ongoing GSE bailout and Fed Chairman Bernanke. Lewitt argues that risk is overpriced in many segments of the market.
2010-01-14 00:00:00 Preferreds and High Yield Bonds Surge by Team of Bespoke Investment Group
The preferred stock and high yield bond markets have done extremely well lately. The two charts below, PFF (preferred ETF) and HYG (high yield bond ETF) have both been surging since the start of Dece
2010-01-08 00:00:00 High Yield Bonds Continue to do Well by Team of Bespoke Investment Group
2010-01-07 00:00:00 High Yield Bonds Continue to do Well by Team of Bespoke Investment Group
2009-11-17 00:00:00 Federal Taxes & Municipal Bonds Historical & Current Perspective by Munder Capital Management (Article)
With income tax increases seemingly around the corner given the budget deficit and a potentially very expensive federal health care plan, the spotlight has returned to municipal bonds and the power of tax-free income. Municipal portfolio managers at the Munder Funds identify the attractiveness of municipal bonds based on projected budget deficits, current spreads over treasuries, and macroeconomic trends. We thank them for their sponsorship.
2009-08-18 00:00:00 Actively Managed TIPS? by Robert Huebscher (Article)
When PIMCO talks, the market listens. But we mustn't forget that the bulk of PIMCO's revenue comes from actively managing bond portfolios so, when they claim that alpha can be earned by actively managing TIPS, a healthy dose of scrutiny is warranted. Our article shows why that scrutiny is justified.
2009-08-18 00:00:00 A Crash Course in Investing Six Lessons from the Market Meltdown by Dougal Williams, CFA (Article)
The market decline from October 2007 to early March 2009 was the worst since the late 1930's. Stocks dropped 60%, investor uncertainty skyrocketed, and trust and confidence were shattered. The age-old rules for personal investing are now being questioned: Is Buy-and-Hold dead? Has Asset Allocation outlived its usefulness? Does Diversification still work? In this guest contribution, Dougal Williams provides answers to these questions that can serve as a guide for long-term investment success.
2009-08-11 00:00:00 What the New Normal Means for Asset Allocation by Geoff Considine, Ph.D. (Article)
Bill Gross of PIMCO forecasts a New Normal - slow economic growth, higher inflation, and increasing correlations among asset classes. If this view is correct, what should investors do? Geoff Considine examines the implications for asset allocation and financial planning by stress-testing some well-known asset allocations to see how well they will serve investors in the forecast environment.
2009-06-16 00:00:00 High-Yield Bonds A Potential Opportunity for the Risk Tolerant by Northern Trust Investments (Article)
High-yield bonds have recently offered investors historically high spreads relative to Treasury and investment-grade corporate bonds, presenting attractive current income potential in today's low-rate environment. The current recessionary environment also poses a heightened risk of default, underscoring the importance of security selection and intensive analysis of underlying fundamentals. We thank Northern Trust Investments for this contribution and their sponsorship.
2009-06-09 00:00:00 Jeff Gundlach: The Party is Over by Robert Huebscher (Article)
The easy money has been made in the credit markets, as investors have reaped strong year-to-date returns, topped by 17% in emerging market debt and 30% in high yield bonds. Now the markets are in a much riskier position, said Jeff Gundlach, Chief Investment Officer of the TCW Group, in his quarterly update to investors that he titled "It was Great While it Lasted."
2009-05-26 00:00:00 Taking Tax Advantage of Municipal Bonds by Northern Trust Investments (Article)
Whether or not tax rates change, municipal bonds clearly offer an attractive alternative to Treasuries and taxable bonds. This piece from Northern Trust Investments explains how the comparatively low volatility, historically high credit ratings - and above all the tax advantage - make municipal bonds an alternative worth considering for risk-adverse investors. We thank them for their sponsorship.
2009-05-19 00:00:00 Opportunities in TIPS by Robert Huebscher (Article)
TIPS offer a perfect hedge against inflation for US investors, but advisors need to understand their risks. We look at the history of TIPS prices and explain why this asset class is more volatile than you might think.