Trump and Asia: Now the Good News
With Donald Trump about to be sworn in as US president, markets in Asia are nervous about some of his policies, especially on trade. Investors who are alert to these policies’ likely limitations could find attractive opportunities.
The Great Rotation
By now, you have likely heard something, either directly or indirectly, about “The Great Rotation” from bonds into stocks.
Asset Allocation is Not for the Faint of Heart (Long Live Diversification)
I’m starting to feel like a rancorous curmudgeon, but I am frustrated by some of the misguided commentary on asset allocation and how diversification is a myth.
Media Headlines Will Lead You To Ruin
Since investors are mostly individuals that have a “day job,” the majority of their “research” comes from a daily dose of media headlines. Therefore, since the media tends to “focus” their attention on “market moving headlines,” either bullish or bearish, investors tend to “react” accordingly.
Don’t Drink the Cool Aid that Bonds will Under-perform
Don’t get too far ahead of yourself and drink the cool aid that bonds will underperform. Investor fears of higher interest rates have caused volatility, which we believe presents opportunities in the fixed income markets. Global central banks continue to intervene in the markets in such a way that natural market mechanisms cannot function properly.
Will Q4 Earnings Confirm Recent Economic Strength?
My scorecard for earnings season will look for the following company characteristics: Confidence. I expect most to have a murky outlook, with no reason to set the future bar very high. Important trade relationships – imports or exports. Comments on these fears may create some buying opportunities. Concern about a stronger dollar. Everyone is teed up to watch for this, and we should as well.
Are Investors in Denial?
You’re in denial if you believe that U.S. stocks are fairly valued, the Eurozone does not face a crisis or a strong dollar will support stability in the global economy. Those themes were presented by Albert Edwards and his fellow speakers at annual investment conference sponsored by Societe Generale.
New Tools to Prove You Acted as a Fiduciary
This article, the first of two parts, is a review of some of the more prominent new tools that advisors can lean on as they prepare for the full DOL rule implementation on April 10. Each of them addresses a different aspect of the rule, and they all approach it from different angles.
New Research on Forecasting Returns with the CAPE Ratio
I developed a methodology that uses valuations based on a 35-year moving-average of the CAPE ratio instead of its long-term mean. It predicts a 10-year annualized real return of 5.8%, similar to the long-term market trend value of 5.4%.
Forecasting with Friends
I gave you my own thoughts last week (see “Skeptically Optimistic”). Today we’ll review several other forecasts from people who deserve your attention. Of necessity, I must leave out some good ones, but I think the ones I cover will give you plenty of useful information.
One of the attempted barbs tossed my way at various points in the past 20 years is “Cassandra.” Frankly, I kind of like it.
Playing Chess With China
American Small Businesses Party Like It’s 2004
Look at what President-elect Donald Trump’s pledge to lower taxes and slash regulations is doing to business optimism here in the U.S. Last month, the Index of Small Business Optimism soared a phenomenal 7.4 points to 105.8, its highest reading since 2004. The National Federation of Independent Business (NFIB), which conducts the survey, reported that attitudes toward capital spending and job creation in particular surprised to the upside. Research firm Evercore ISI called it a “blowout report,” and I have to agree.
Treasury Snapshot: Yields Down Since Rally
Let's take a closer look at the recent rally in US Treasuries . The yield on the 10-year note ended the day at 2.40% and the 30-year bond closed at 2.99%.
S&P 500 Snapshot: Up 0.18% for the Day, Down 0.10% for the Week
The S&P 500 rose at the open, hitting its 0.36% intraday high about 15 minutes into the session on strong bank earnings. The index then traded in a narrow range through the morning, dipped during the lunch hour, and then sold off to its 0.05% mid-afternoon low. It then recovered to trimmed gain of 0.18%.