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Results 751–800
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Fed Leaves Rates Unchanged
by Liz Ann Sonders of Charles Schwab,
In a unanimous vote, the Federal Open Market Committee (FOMC) left interest rates unchanged at its two-day meeting which concluded today; however the statement noted rising confidence among business leaders and consumer in the period since the election.
Rise Up: Dow 20k Fails to Thrill Individual Investors
by Liz Ann Sonders of Charles Schwab,
The Dow's flirtation with 20k went on for weeks, with the financial networks breathlessly reporting on every tick as it approached the milestone—subjecting them to much lighthearted ridicule on Twitter and the like.
A New World
The world is changing for investors but we believe it's largely in a positive way, although there will be bumps along the way. The recent sideways equity movement was a healthy consolidation of the post-election gains, and we suggest investors add to U.S. equity positions as needed at the expense of some developed market international exposure. Inflation is ticking higher, and the Fed is becoming more hawkish, but the conditions supporting those moves are also positive supports for stock.
A Perfect Mix?
U.S. stocks have been consolidating gains seen in the aftermath of the November presidential election, a healthy process following such strong gains. Further appreciation should be supported by improving U.S. and global economic and earnings growth. Disappointments are likely on the U.S. policy front but we would view those as buying opportunities for now.
Luminous Times: Looking Ahead With Optimism About 2017
by Liz Ann Sonders of Charles Schwab,
In conjunction with the publishing of a summary of Schwab's 2017 outlook across asset classes; this report is a more detailed summary of my 2017 outlook, with a dash of rear-view mirror analysis of the year just ended. Each of the broad topics discussed below will be further unpacked over the next couple of months in individual reports.
Fed Shocks No One and Raises Rates
by Liz Ann Sonders of Charles Schwab,
The Federal Reserve surprised no one today and the vote was unanimous. The Federal Open Market Committee (FOMC) raised the federal funds rate by 25 basis points—to a range of 0.50-0.75%—for the first time this year; having raised rates initially a year ago at this same time.
You’ve Got to Earn It: Valuations Aided by Improving "E"
by Liz Ann Sonders of Charles Schwab,
The stock market has had an excited run since the presidential election, with heightened optimism for growth looking ahead into 2017. Not to rain on the optimists’ parade, but there was actually ample evidence of improving growth before the election.
Emotional Rescue: What to Make of the Post-Election Surge?
by Liz Ann Sonders of Charles Schwab,
Since the pre-election low on November 4, the S&P 500 is up 4.7%, while the Russell 2000 (small caps) is up a whopping 13.8%—rallies which have confounded many investors given the pre-election consensus that stocks would fall on the uncertainty associated with a Trump victory.
Is the Fog Starting to Lift?
The election is over but some uncertainty remains, which means bouts of volatility are likely to persist. The Fed is likely to hike rates in December but uncertainty about the path of rates in 2017 will persist. Additional uncertainty may come from elections around the world, with the potential for a continuation of surprising outcomes that could rattle markets at times.
Welcome to the Working Week: An Update on Jobs
by Liz Ann Sonders of Charles Schwab,
Given election-related distractions this week, today’s report will be chart-heavy and word-light; but on an important topic. Last Friday’s jobs report garnered much attention given its proximity to the next Federal Reserve meeting.
Looking Past the Election
Stay calm and carry on. We believe U.S. earnings and economic growth will continue to support an ongoing bull market, but gains will likely be modest and pullbacks should be expected alongside political and monetary policy uncertainty. Globally, wage growth is picking up, but that doesn’t have to mean bad news for profits.
Your Time is Gonna Come: Households’ Leverage Down, Government Leverage Up
by Liz Ann Sonders of Charles Schwab,
Over a weekend when I thought, “there are no words…” so often, this report will have few words, but a lot of charts and tables. Speaking of the election, it’s been remarkable that, given the ample deficits of both presidential candidates, rarely do either discuss the country’s deficits or debt.
Every Picture Tells a Story: Recession Risk Up, but Not High
by Liz Ann Sonders of Charles Schwab,
I keep a close eye on every variety of leading economic indicators—of which the stock market is one. Last week’s release of the most-widely followed set of leading indicators—the Conference Board’s Index of Leading Economic Indicators (CB’s LEI)—showed an unexpected decline of 0.2%.
Is That All?
by Liz Ann Sonders of Charles Schwab,
After a 51-day streak of days without the S&P 500 experiencing at least a 1% decline, the market hit a wall on Friday and was down 2.5% on a 40% jump in the volatility index (VIX). It was the worst single-day market decline since the aftermath of Britain’s vote to leave the European Union (Brexit) in June.
Get Ready for the End of the Summer Slumber
Volatility is likely to pick up and investors should consider using volatility to tactically rebalance around longer-term strategic allocations. We believe a near-term pullback is possible but that the longer-term bull market is intact. Individual investors are showing signs of returning to the stock market and investor behavior analysis suggests that may continue to aid a continued upward trend.
All Summer Long: Will the Extreme Lull in Volatility Persist?
by Liz Ann Sonders of Charles Schwab,
In my August 15 report, I applauded the stock market for behaving while I was on vacation in Africa for two weeks. For all investors who took vacations so far this summer, the market has been on its best behavior, for which we are all grateful I’m sure. But are the “dog days” of summer coming to an end?
The Calm Before the….
The summer lull shouldn’t allow complacency to set in. We expect the U.S. bull market to continue, but risks remain and volatility is likely to pick up. But with a solid U.S. consumer, and modestly improving economic and earnings growth, we think the general equity trend will be higher. Although EM stocks have had solid summer gains, we caution investors against chasing returns and to rebalance as needed.
With a Little Help From My Friends: On Africa, Economy and Earnings
by Liz Ann Sonders of Charles Schwab,
I have always loved elephants—even more so now, having shared our lodges with many. Needless to say, when a bull elephant is standing in the path to your room, you wait for him to move. The experience was priceless for all in our little family of four—made even more special thanks to the cooperation of not only the animals, but also the stock market while I was away!
A Hopeful Transmission: Fed Holds Rates Steady, But…
by Liz Ann Sonders of Charles Schwab,
The Federal Open Market Committee (FOMC) held rates steady but noted diminished risks in the U.S. economy and a tighter labor market, highlighting in the accompanying statement “that the labor market strengthened and that economic activity has been expanding at a moderate rate.” This was in contrast to the mention of “weak growth in May”—in reference to the extremely weak May jobs report which helped push the Fed to the sidelines. The Fed also reiterated that it expects inflation to reach its 2% target in the medium term.
19th Nervous Breakout: Stocks Finally Reach New Highs
by Liz Ann Sonders of Charles Schwab,
Happy summer? From its Brexit-related low on June 27, U.S. stocks have staged an impressive 8.5% rally. I’ve been peppered with questions—from investors, financial consultants and the media—about how it’s possible the market is trading at all-time highs with so much global uncertainty and angst. Perhaps the best explanation is one of the oldest in the market’s book: stocks like to climb a “wall of worry.”
Schwab Market Perspective: Looking Beyond Britain
For the past couple of weeks the financial markets have been dominated by the results of a vote from a country that represents roughly 4% of world gross domestic product (GDP) according to the World Bank, and roughly 0.9% of the world population according to Trading Economics. It’s certainly not insignificant but does put some things in context. Financial markets, after a violent reaction to the shock of the vote for the U.K. to exit the European Union (EU), are putting a little context around Brexit’s aftermath as financial instruments have rebounded and shown stability in recent days. Uncertainty regarding economic growth in the U.K. and the rest of Europe will likely be with us for the foreseeable future, adding another reason for volatility to remain elevated, but that doesn’t mean investors should hide in a corner until things become more certain.
Dazed and Confused: Brexit Contributes to Volatile Times
by Liz Ann Sonders of Charles Schwab,
Market expectations are that The Federal Reserve is unlikely to raise rates this year in light of weak growth and the deteriorating financial conditions associated with Britain’s vote to leave the European Union, known as Brexit. We expect the U.S. economy and stock market to continue producing mixed results. One silver lining is that sluggish growth has kept interest rates low and inflation at bay.
British Shock—What’s Next
The next several weeks could be a tumultuous time in global markets, and investors need to keep a longer-term view in mind. Global stock markets have tended to ultimately rebound from other sharp declines—often fairly quickly. It can be tough to get back on track once things reverse, so we recommend investors use volatility to tactically keep allocations in line with their long-term strategic targets.
Global Bonds: A World Without Yield
by Kathy Jones of Charles Schwab,
The plunge in global bond yields intensified during the past month. While short-term interest rates have been less than zero in some markets for quite some time, longer-term bond yields have recently fallen back to the zero level. Ten-year Japanese government bond yields are already in negative territory, with major European yields nearing the zero mark. Overall, record-low yields have been reached in Japan, Germany and the U.K., and Fitch Ratings estimates that more than $10 trillion in government bonds now have negative yields.
Beast of Burden (No More): Households Choosing Savings Over Debt
by Liz Ann Sonders of Charles Schwab,
Much ink has been spilled on the post-debt supercycle era in which we sit, including by yours truly. In today’s report, I want to focus on households; perhaps because the U.S. public sector hasn’t yet begun talking honestly about its debt problem. However, households were “forced” into their deleveraging cycle when the financial crisis hit following the bursting of the housing bubble.
Schwab Market Perspective: Summer of Discontent?
As amusement park visits rise in the summer months, the ever-popular roller coaster analogy seems appropriate for the stock market. Since the beginning of 2015, stocks have had some fairly major ups and downs, but we now sit about where we began. Unfortunately, it’s not as easy for investors to get off the ride, and we expect the frustrating, grinding environment to continue for the near future. Equities have yet been unable to break through to new highs, while fixed income continues to offer little in terms of yield.
Are the Glory Days of Job Growth Over?
by Liz Ann Sonders of Charles Schwab,
It was more like a gory day for job growth in May. And if there is one thing that’s clear about last Friday’s dismal employment report its that the Federal Reserve sees the data at the same time as the rest of us mere mortals. How else would you explain the recent breathless chattering from every variety of FOMC (Federal Open Mouth Committee) member about another imminent rate hike? Never mind…at least this month. The July FOMC (it really stands for Federal Open Market Committee) meeting may still be considered on the table, but unless job growth accelerates from here, it’s more likely to be pushed to September.
Stocks Stuck in the Muck
The running-to-stand-still pattern in U.S. equities may continue, with bouts volatility expected. But U.S. economic growth appears to be improving and stocks could start to sniff out a potentially better second half for both the economy and earnings. Investors should remain patient, and use volatility as opportunities to rebalance around normal strategic allocations in both U.S. and international equities.
Sympathy for the Devil in the Details of Wage Growth
by Liz Ann Sonders of Charles Schwab,
The Fed appears itchy to raise rates again, but concerns about sluggish wage growth remain pervasive.
Traditional wage growth measures in conflict with newer forms which take mix shifts into consideration.
Apples-to-apples wage growth measures show a healthier picture.
Corporate Caution…Global Recession?
Uncertainty among investors and companies has resulted in equities failing to push to new highs…for now. We remain fairly confident that stocks will reach new records, but patience in the near term is required. And selling in May doesn’t appear to be a great strategy for long-term investors as global yield curves are indicating low odds of a global recession. Perhaps hold in May is more apt. Bouts of volatility are likely to persist in light of uncertainty over Fed policy, the upcoming election, and global growth concerns.
Against the Wind: The Sentiment-Driven Rally Could Take a Breather
by Liz Ann Sonders of Charles Schwab,
The late-great Marty Zweig—one of my bosses from 1986 to 2009—was a pioneer in investor sentiment indicators. He was often asked to share his single favorite indicator, and he typically cited “Time and Newsweek cover stories.” Note this was a pre-Internet, pre-social media era, and what he was referring to was the tendency for those two mainstream publications to put bulls or bears on their respective covers in the same week. With nearly perfect timing, when both mags put bears on their covers, the bear market typically in place was likely ending or over. Conversely, when both mags put bulls on their covers, the bull market typically in place was likely ending or over.
Great Expectations!
Expectations and inflection points matter in investing, often more so than the overall level of any given data set. The besting of low expectations has helped stocks to move higher, but the bar has been raised so we continue to suggest a neutral allocation toward U.S. stocks. Globally, currency moves have played a large part in determining stock market action, and some calming in the currency markets could help stabilize global markets.
Sign O’ the Times: Sell in May and Go Away?
by Liz Ann Sonders of Charles Schwab,
As most readers know, I always title my reports with a fitting song title. Sadly, this year I’ve opted to choose one to honor a fallen music legend, like David Bowie and Glen Frey. This week, it’s an ode to the late-great Prince—a life gone too soon.
The Soft and Frustrating Middle
Patience and discipline. Those are the two words to commit to memory in the face of the current environment. A sluggish expansion and a cautious corporate environment leads us to have a neutral view on equities, which means investors should stick with their longer-term objectives and remain committed to their plan. There are glimmers of hope domestically and globally with strong U.S. job growth and U.S. and global manufacturing looking better.
Recession: Your Time is Gonna Come … But Not Yet
by Liz Ann Sonders of Charles Schwab,
Two events recently triggered renewed concerns about a U.S. economic recession. The first was the continued deterioration in Atlanta Fed’s GDPNow model—now down to only 0.1% for expected first quarter real gross domestic product (GDP) growth, after being as high as 2.7% in early February. The second was the pronouncement of a pending “very massive recession” by presidential candidate Donald Trump. Shortly after the latter I tweeted that there was little indication we were headed into a “very massive recession,” and boy did that elicit a very massive response from fellow tweeters. Many agreed that a severe recession was unlikely; but at least as many took the Trump side of the argument—with much “passion” I might add.
What a Quarter! What’s Next?
The first quarter was the proverbial roller coaster, with stocks experiencing extreme volatility, but ultimately ending up back where they started. We continue to believe U.S. stocks are in a secular bull market; but in a more mature phase which will be dotted with volatility and pullbacks. Corporate earnings likely need to recover before stocks can move demonstrably higher. More clarity from the Fed and a better political environment would help, but both seem unlikely in the near term. However, a more dovish tone from the Fed has aided in some recent dollar weakening, which has boosted emerging markets’ performance. While it is an encouraging development, stay disciplined and diversified as we watch to see if global growth can improve.
Echo: Are Stocks Getting Back in Cycle?
by Liz Ann Sonders of Charles Schwab,
The stock market has familiar cycles dating back to at least the 1960s. The visual below (and the accompanying detailed set of tables below that) highlights these cycles and their direction. Each box in the graphic below shows the median return and duration for the seven of these cycles we’ve seen since 1968; but also the return and duration for the most recent phase of the current cycle. The cycles utilize the bull and bear market definitions pioneered by Ned Davis Research (NDR), which are more nuanced than the simple +20%/-20% traditional definition.
Schwab Market Perspective: Sigh of Relief
Beaten down areas of the market have staged a nice turnaround. Stocks have moved well off the lows and the S&P 500 is now within shouting distance of the flatline for the year. Areas of the market that were some of the hardest hit—such as materials, energy and financials—have posted some of the best gains over the past month.
Seven: Happy Anniversary Bull Market (?)
by Liz Ann Sonders of Charles Schwab,
Last week we celebrated the seventh anniversary of the U.S. bull market, which commenced on March 9, 2009 and has since generated a total return for the S&P 500 of 247%. The traditional gift for the seventh anniversary is copper, which is fitting since the strong rally many “risk-on” assets have staged since U.S. stocks bottomed on February 11, has been accompanied (driven?) by a surge in commodities, including copper and more importantly oil.
Schwab Market Perspective: Neutral Does Not Mean Boring
There are two ways to get to a neutral color: 1) just pick the boring beige that we’re all familiar with, or 2) mix a bunch of wild colors together and end up with an altogether bland sort of color—vastly different inputs but relatively the same result. Recently, stocks have resembled the latter scenario as stock indexes have moved out of correction territory but have remained quite volatile, with triple-digit Dow moves more common than not.
Good Times Bad Times…and Lots in Between
by Liz Ann Sonders of Charles Schwab,
In the world of investing, apocalyptic scenarios abound. You can fit the extreme optimists in a thimble. We sit somewhere in the middle—having had a neutral rating on U.S. stocks since the beginning of 2015. It’s certainly more adrenaline-inducing to have a high-conviction extreme view, but investing is typically more gray than it is black or white. But admit it—you are often more intrigued by the apocalyptic scenario.
Schwab Market Perspective: Confidence is Key
There are many words that could be used to describe the first six weeks of 2016 with regard to stock performance but given that this is a family publication we’ll stick with frustrating. There have been rebounds, including the latest fierce recovery which has taken US stocks out of correction mode; but a lot of confidence has been shattered. These are the times that can make or break an investing plan. Our long-held mantra is that panic is not an investing strategy and that investing should always be a disciplined process over time; never about decisions at moments in time.
Results 751–800
of 1,081 found.
