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Life Is Uncertain and So Are Interest Rates
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.
Weekly Market Summary
by Urban Carmel of The Fat Pitch,
It's never perfect in equity markets; when price patterns and breadth look healthy, sentiment is overly bullish and further appreciation becomes limited. When price falls, the price pattern looks scary and breadth looks terrible but sentiment becomes too bearish. These are when longer term lows form. More likely than not, that is where equity markets are now.
Needed at the Fed: An Inverse Volcker
by John Mauldin of Mauldin Economics,
I believe the Federal Open Market Committee should hike rates ASAP. A number of very astute analysts and Fed observers agree with me. On the other hand, an equal-sized army of similarly smart analysts think they should not. It seems to me this recovery is getting long in the tooth. The Fed needs to give itself some room to stimulate when the economy turns down again. As it stands now, their only weapons are to take interest rates negative or to resume quantitative easing. We don’t want either of those.
Technically Speaking: A Sucker's Rally?
by Lance Roberts of Streettalk Live,
In last week's technical review "The Mark Of A Bear," I stated:
"The Bulls have remained firmly in charge of the markets as the reach for returns exceeded the grasp of the underlying risk. It now seems that has changed. For the first time since 2007, as we see initial markings of a potential bear market cycle."
The problem in stating that we MAY be seeing the initial markings of a potential bear market cycle is that individuals assume this means the markets will crash immediately. When such an outcome does not occur, the analysis is presumed wrong.
Making Sense of Market Volatility
• On Aug. 21, the Dow Jones Industrial Average entered a correction and reminded investors what volatility looks like.
• Several Invesco senior investment leaders discuss their views of market volatility.
• They share how it affects, or doesn’t affect, the opportunities they see.
Does Morgan Stanley Add Value For Investors?
by Larry Swedroe,
In the latest 10-year period, only 38% of Morgan Stanley’s mutual funds outperformed their analyst-assigned benchmarks. Thus, while the fees these funds have generated are among the few consistent bright spots of growth on Wall Street, there is still a question for investors: Have these actively managed mutual funds been good investment choices?
Largest Driver of Performance Over the Last Month? Beta
by Jennifer Thomson of GaveKal Capital,
As part of our treasure trove of data and tables, we rely on our factor scoring model to tell us the most important elements that have affected performance over various time periods and in different regions. For developed markets (DM), the most influential factor over the last week and month (coming in 2nd over the last year and 5th over the last three months) has been beta.
The Art of Capital Flight
by Kenneth Rogoff of Project Syndicate,
For emerging-market investors, art has become a critical tool for moving and hiding wealth, which has been a major factor in the spectacular rise in auction prices of the last several years. So, with emerging-market economies from Russia to Brazil mired in recession, and China slowing rapidly, is the art bubble about to burst?
12 Questions for a 12% Correction
by Burt White of LPL Financial,
The recent market downdraft and related uncertainty in China have led to many investor questions. The strong 6.5% rebound in the S&P 500 over the last three trading sessions (August 26, 27, 28, 2015) has cut the S&P 500’s losses from the 2015 peak (2130 on May 21, 2015) to 6.7%. In response to the S&P 500’s recent 12% correction?—?the first decline of more than 10% since 2011?—?we answer 12 investor questions. Bottom line, we do not expect the latest correction and China uncertainty to lead to the end of the U.S. economic expansion or the end of the six-and-a-half-year old bull
Vietnam-EU Agreement: A Good Deal for Southeast Asia
As investors in Vietnamese stocks, the primary constraint we face is one of liquidity and limited choices in which to invest, but we are hopeful that will soon change. Vietnam has had a fast-growing economy, and we have found good companies there, including some that are state-owned.
Searching for Sustainable Growth in Malaysia
by Dilip Badlani of The Royce Funds,
As an active manager with a value orientation, Portfolio Manager Dilip Badlani seeks to locate inexpensive companies helmed by management teams that have demonstrated an ability to consistently execute plans to grow their business irrespective of economic conditions. Though not without its challenges, Malaysia's history of perseverance makes it an attractive market for disciplined and patient investors.
Recession Probability Models - September 2015
by Ted Kavadas of StratX, LLC,
There are a variety of economic models that are supposed to predict the probabilities of recession.
While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.
Bremmer’s Choices
Last week, we wrote our first formal book review as a Weekly Geopolitical Report. The book, Superpower: Three Choices for America’s Role in the World, is a recently published book by Ian Bremmer in which he discusses three models for American foreign policy. In our closing comments last week, we promised to take a deeper look at Bremmer’s foreign policy models to examine their costs and benefits. In this report, we analyze his three models of exercising the superpower role, Indispensable America, Independent America and Moneyball America, and discuss which model is the most likely choice.
August 2015 Commentary
by Joe Becker of Milliman FRM,
As August wound down and families enjoyed the last few lazy days of summer, financial markets clearly had another idea in mind. After trading in a relatively tight range for most of the summer, the last two weeks of August were marked by volatility, the likes of which haven’t been seen since 2011. We attribute this heightened volatility to the confluence of global macro conditions with technical factors.
Weighing the Week Ahead: What Are the Lessons from the Market Turmoil?
Dramatic events reset agendas. People re-evaluate probabilities about what is possible as well as the personal implications. Because the recent market story is so big and so fresh the week will start with the punditry asking:
What are the lessons from the market turmoil?
Making Sense of Market Volatility
by Karen Dunn Kelley of Invesco Blog,
On Aug. 21, the Dow Jones Industrial Average entered a correction, falling 10% from its most recent peak, and reminded investors what volatility looks like after almost four correction-free years. While volatility exposes weaknesses in the market, in my opinion it also reveals the strength of high conviction managers who are skillfully navigating the market. Active management and smart beta strategies seek to surpass the “market averages” offered by traditional benchmarks, providing the potential not only for higher returns, but also for a smoother ride.
Vinson Walden on the Thornburg Global Opportunities Fund
by Robert Huebscher,
Vinson Walden is the co-portfolio manager, along with Brian McMahon, of the Thornburg Global Opportunities Fund (THOAX). Within Morningstar’s World Stock category, THOAX ranked among the top-performing funds over the last one, three and five years. I spoke with Vin about how he constructs the fund and his outlook for the future.
Are Investors Overexposed to Non-Guaranteed RMBS?
by Keith Jurow,
Let’s look at some recent data that shows the extent of the delinquencies in non-guaranteed mortgages with a focus on the most exposed large metro areas. We’ll then examine the implications for advisors whose clients own funds, ETFs or REITs that own that debt.
The Active-Passive Debate Revisited
by Bob Veres,
Asset flows to passively managed funds are surging. But, as often happens,
advisors are embracing a trend just as debunking information is arriving in
the marketplace. New research is showing that selecting above-average
active funds may not be the impossible task that the academic research has
suggested.
Why This Time Could Be Different
by Lance Roberts of Streettalk Live,
In yesterday's post, I discussed the current correction within the context of previous "bull market" corrections. Specifically, the corrections in 1987, 1998, 2010 and 2011.
However, today, I want to look at the current correction in the context of previous starts to "bear markets" and subsequent recessions.
Panic Is Not a Strategy—Nor Is Greed
by Liz Ann Sonders of Charles Schwab,
Admittedly, the development of a long-term strategic asset allocation plan isn't the hard part—it's sticking to it that often becomes the real challenge. Adding to underperforming asset classes and trimming outperforming asset classes goes against the emotions of fear and greed that often drive investment decision making. But if we learn from our mistakes, use our brains over our hearts and look to our portfolios as rebalancing guides, we can expect a more successful investing future and maybe even get a free lunch along the way.
Should You Adjust?
Is it time for a correction?
That is the question that has been on the mind of many investors for some time now. Those who have ridden the wave since the ugly market bottom of March 2009 can afford to be worried as they weathered an uncertain recovery in the market and have generally seen their assets grow quite well. Unfortunately the fires of gloom were hot after the financial crisis with the media fanning the flames of pessimism. Therefore many late arrivers to the market may still be struggling to reestablish their previous portfolio values.
Why a 500-Point Sell-off Isn’t “Massive”
While I was training early this morning, I was forced to endure two hours of CNBC’s seemingly permanent headline across the bottom of the screen that screamed that the markets were heading for a “massive sell off.” At the time, the Dow Jones Industrial Average futures were down about 500 points. When the markets opened at 9:30, the Dow did open down about 500 points (thereafter it actually was down about 1,000 points) before bouncing back to its opening levels.
Risk Turns Risky: Unpleasant Skew, Scale Dilation, and Broken Lines
by John Hussman of Hussman Funds,
Over the years, I’ve observed that overvalued, overbought, overbullish market conditions have historically been accompanied by what I call “unpleasant skew” – a succession of small but persistent marginal new highs, followed by a vertical collapse in which weeks or months of gains are wiped out in a handful of sessions.
Population Growth & Productivity Headed in Wrong Direction
Today we’ll focus on some longer-term economic data which shows, unfortunately, that the US economy is in a multi-decade slide that will be very difficult to reverse. Population growth and worker productivity – the keys to sustained economic growth – are both in decline, trends that are not likely to change anytime soon.
Global Economic Overview: July 2015
by Team of Thomas White International,
While some of the emerging economies continue to face slow growth from lower commodity exports, the outlook for most developed economies has brightened in recent months. The U.S. slowdown during the first half of this year was not as bad as thought earlier, while economic trends from the Eurozone remain stable. Helped by sustained labor market gains, U.S. consumer sentiment is picking up again and should help aggregate growth during the second half of the year.
Donald and Bernie
In this report, we recap the economic and political factors that led us to conclude in previous reports from last year that the next presidential cycle could be unusually significant. From there, we look at the unlikely rise of Donald Trump and Bernie Sanders and what their success thus far signals about the electorate and the next presidential election. Finally, we analyze their potential impact on the election, including the possibility that each might mount an extra-party candidacy. As always, we conclude with market ramifications.
Why You Shouldn’t Trust Most Financial Research
Most claimed research findings in financial economics are likely false, according to a recently published paper. I’ll explain how those researchers arrived at that conclusion by looking at the ongoing search for factors that influence investment returns.
Three Steps to "Good Enough" - In Praise of Simplicity, Common Sense, and Stubbornness
The plain truth is that in the practice of investment, “good enough,” combined with a solid dose of common sense, usually beats precision and faith in mathematical models. So, if a careful analysis has given us a “good enough” idea of a company’s worth, we can assume that its market-traded shares will fluctuate – sometimes wildly – around that fundamental value. And that may be the value investor’s salvation.
Should You Take Some Off The Table?
Is it time for a correction? That is the question that has been on the mind of many investors for some time now. Those who have ridden the wave since the ugly market bottom of March 2009 can afford to be worried as they weathered an uncertain recovery in the market and have generally seen their assets grow quite well. Unfortunately the fires of gloom were hot after the financial crisis with the media fanning the flames of pessimism. Therefore many late arrivers to the market may still be struggling to reestablish their previous portfolio values.
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.
Riding the Energy Wave to the Future
by John Mauldin of Mauldin Economics,
Today I’ll tell you about some big shifts in the energy industry. These shifts are about as positive as can be, unless you need high oil prices to run your country. In the long run, these changes are bullish for the whole world, which I think this will surprise many of you. And though we’ve been used to thinking about energy and technology as two different facets of modern life, today they are inextricably linked.
Exit from Wonderland: Change Is Now on the Horizon
by Ed Easterling of Crestmont Research,
Many investors and advisors are unsure about the current financial market environment.
They have been wrestling with how to weight equities and whether to include alternative
investments. Although equities have performed well in recent years, many alternatives
have lagged expectations. This should not be surprising: the financial world is operating
just as the Fed has intended.
What We Can Learn by Going Back to School
by Burt White of LPL Financial,
The summer has flown by and some children are already going back to school this week. The back to school shopping session is considered the second most important selling season for retailers (after the Christmas/winter holidays), which we think is a good reason to check in on the health of the U.S. consumer and provide our latest thoughts on the consumer discretionary sector. Expectations for this season are low, but several consumer spending tailwinds suggest the sector may be poised to outperform over the rest of the 2015.
Turkey’s Predicament
It is our view that over the next few decades Turkey is well positioned to return to its status as a dominant regional power; however, the situation is much less clear in the near term. Turkey has been trying to run a foreign policy of having “no problems” with its neighbors. This stance has become impossible to maintain. Unfortunately for President Erdogan, Turkey is encircled by instability and is struggling to develop a response.
Results 4,951–5,000
of 6,446 found.
