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A Surprising Gift for Chinese New Year
by Sherwood Zhang of Matthews Asia,
Beijing-based China Credit Trust Company, a firm that operates as a non-banking financial institution in China, announced this week it reached an agreement to restructure a risky high-yield product that had earlier ignited worries over the health of Chinas trust industry. Just in time for the Lunar New Year, investors in the troubled trust may receive a big (metaphorical) red envelope-a monetary gift traditionally given during Chinese New Year or other special occasions-or at least avoid a financial hit.
Value-Hunting in the US
With key stock indices in the US closing the year near historical highs and many pundits predicting stronger growth rates both in the US and globally going into 2014, one would think bargains would be hard to find this year. Januarys volatility, however, proved just how unpredictable markets can be. The recent market gyrations may be somewhat painful for many investors in the short-term, but the silver lining is that corrections can serve up buying opportunities, particularly for long-term, value-oriented investors.
ECRI Recession Watch: Weekly Update
The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 133.8, unchanged at one decimal place from last weeks downward revision from 133.9. The WLI annualized growth indicator (WLIg) at one decimal place rose to 4.3, up from last weeks 4.2.
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.
Demystifying Gold Prices
by Nicholas Johnson of PIMCO,
What is it about gold prices? Many people seem to believe they are impossible to predict, or even understand. At her Senate confirmation hearing in November, Janet Yellen said, "I dont think anybody has a very good model of what makes gold prices go up or down." Ben Bernanke also said last year that "nobody really understands gold prices, and I dont pretend to understand them either." While many factors influence the price of gold, PIMCO believes there is one that can explain the majority of changes in gold prices over the past several years: changes in real yields.
The Three Drivers of Exceptional Success
by Dan Richards,
Any suggestion that theres only one path to success is fatally flawed. As I look back at my 30 years working with extremely successful advisors, what strikes me is the variation in the approaches taken by advisors. That said, there are three categories of behavior that extremely successful advisors share.
Expect Higher Volatility to Persist
by Russ Koesterich of BlackRock,
Last weeks selloff can be attributed to EM turmoil, stretched valuations and mediocre earnings. Volatility is likely to move higher to levels closer to long-term averages. We suggest investors adopt overweight positions in European and Japanese stocks.
Broadleaf's 2014 Investment Playbook
Most sell side firms publish their outlook for the economy and stock market at the end of December and in early January. As a buy side firm, we really arent under any expectation to share our outlook for the coming year and, as funny as it might sound, some of our clients dont even care to know what we think, only that we handle what they hired us to do, which is to outperform the market indices over a full market cycle and help them attain their financial goals over time.
Investing by Duration
by Heather Rupp of AdvisorShares,
Lower duration bonds would not eliminate the interest rate impact, just lessen it. We see this as a good strategy broadly speaking if you are talking the high yield asset class versus the investment grade asset class, with the high yield market naturally having a much lower duration. However, we believe this strategy is lacking when it is used to parse out the high yield space itself, investing in only the lower duration names within the high yield category.
The Policy View From Washington
by Scott Brown of Raymond James,
Lawmakers put the finishing touches on the budget bill, which will remove most of the fiscal policy uncertainty for the next two years. Thats helpful for the economy and the financial markets, although the debt ceiling remains a possible trouble spot. Federal Reserve officials seem intent on continuing the tapering of asset purchases, but economic and financial market developments will dictate the pace.
Stocks for 2014: Growth and Income For Total Return Part 3
by Chuck Carnevale of F.A.S.T. Graphs,
When investing in common stocks, there is no one strategy that fits all investors. Some investors are focused on investing for income, some for capital appreciation and others for various combinations of both. Additionally, there is the issue of risk tolerance. Some investors are willing and capable of assuming greater risk if they believe it will lead to greater returns, while others are more risk adverse. These are just but a few of the many variations that apply to the individual investors own unique goals and characteristics.
What's Your 2014 Market View?
by Robert Horrocks of Matthews Asia,
U.S. monetary policy seems likely to continue occupying center stage as people fret about interest rates. Last year was a somewhat instructive year for monetary policy theory in that it seemed to show that policies can be effective even when interest rates have no further room to be lowered. Can the nominal GDP in the U.S. grow at faster rates in 2014, and what would that mean for Asia? This month Matthews Asias Chief Investment Officer, Robert Horrocks, offers his insights into how reforms planned for China could be a key factor to change and what could lie ahead for the region overall
EPV: Establishing Predictive Value (i.e., Demand Characteristics)
by David Kleinberg of Universal Orbit,
EPV: Establishing Predictive Value (i.e., Demand Characteristics) is designed as a complement to quantitative portfolio strategies and fundamental research. Continuing the thread from EPV:RO, tested is the premise of structural bias in performance benchmarks as determined by third party data vendors with implied effects on peer group analytics and valuation.
Weighing the Week Ahead: More "Experts" Predicting a Market Top
Most potential stock investors have been bruised by events over the last decade. They are receptive to a message of fear, and many pundits are happy to satisfy their urges. Calling for a major market turn can be very profitable for the pundit. This is true even if the prediction is very early and the pundit never signals when to shift back.
Reversal of Fortune - Competitive Advantages Redefining Industrial Investment in the U.S.
As an investment manager, I seek investments with sustainable growth. I have the freedom to look anywhere in the world. Quietly, the U.S. has developed a competitive advantage in energy costs that is rewriting the history books. For the first time in generations an abundant energy supply has the potential to improve the air we breathe while creating hundreds of thousands of new jobs. It is creating opportunities where just five years ago energy intensive industrial production was being shuttered in the U.S.
2014: Once more for '84
by Team of Smead Capital Management,
Since our thinking is always dominated by owning businesses which meet our eight investment criteria in a long-duration time frame, we continue to remain vigilant of the circumstances around us. To that end, we thought it would be helpful to review a similar historical situation and glean a feel for what was wise behavior back then and what might be wise behavior as we look forward to the year 2014.
U.S. Inflation Outlook 2014: Signs of Life
We expect headline CPI to rise to around 2.0% year-over-year in 2014, with our base case oil forecast in the $105-$110 per-barrel range and expectations for food prices to be stable. PCE, in our view, will likely remain below the Feds 2% target, around 1.5%. Individuals will get some relief at the supermarket, but they will feel a pinch from landlords, who will likely raise rents.
Fed Tapering -- Shades of 1937?
by Paul Kasriel of The Econtrarian,
In the press conference immediately following the December 17-18, 2013 FOMC meeting, Fed Chairman Bernanke indicated that it was the FOMCs current plan to have terminated Federal Reserve outright securities purchases by the end of 2014, commencing with a $10 billion reduction in securities purchases immediately after the December 2013 FOMC meeting and then continuing to taper its purchases by about $10 billion after each 2014 FOMC meeting. Of course, this tapering plan is subject to modification in either direction depending on forthcoming economic and financial market developments.
Yellen's Inheritance: Monetary Policy in Flux
Evolving economic challenges are transforming central banking around the world. The new monetary-policy doctrine is likely to put greater emphasis on asset-price developments. But, without a true monetary anchor, central banks could still risk a repeat of the recent boom/bust cycle.
A Healing Economy
The quarter continued the theme of the year, with U.S. equities continuing their dramatic performance. For the quarter, the Dow was up 9.6%, the S&P 9.9%, and the NASDAQ 10.7%. The years returns substantially exceeded last year"s "expert predictions" and much of this years punditry with the Dow up 26.5%, S&P up 29.6%, and NASDAQ up 38.3%.
2014 Outlook: The Emergence of a Global Expansion
by Team of Loomis, Sayles & Co.,
After years of a global recovery characterized by fits and starts, we expect more synchronized global growth in 2014. Global GDP growth will accelerate modestly from 2.7% in 2013 to approximately 3.4% in 2014, primarily driven by larger advanced economies. In particular, we are optimistic that US growth will be sustainable. The fading economic drag from government policy and the ongoing housing recovery should help boost US GDP growth toward 3% as the year progresses. The UK is poised for a similar rate of expansion in 2014, and Europe will likely post positive growth in the coming year.
Is it Lift off Time for Commodity Prices?
by Martin Pring of AdvisorShares,
Martin is the Investment Strategist to the AdvisorShares Pring Turner Business Cycle ETF (DBIZ) - and since 1984, he has published the "Intermarket Review," a monthly global market report revered among analysts and market technicians. Martin shares his technical analysis on short and long term market momentum and the potential effect for commodity prices.
2013 in Review: Best of the "Silver Bullet" Awards
Regular readers of my "Weighing the Week Ahead" series know that I occasionally give the Silver Bullet Award. This recognizes writers who take it upon themselves to debunk dangerously misleading financial analysis. Their often thankless work reminds me of the Lone Ranger, whose adventures often upheld the notion that "...that all things change but truth, and that truth alone, lives on forever."
Estimating the Risk of a Market Crash
by John Hussman of Hussman Funds,
A defensive outlook here does not presume, require, or rely on a market crash. Our ongoing discipline is to align our investment outlook with the market return/risk profile that we estimate on the basis of a broad ensemble of evidence that we can test historically and validate in out-of-sample data. That outlook will shift as that evidence shifts, period.
Let's Get Physical: Gold Bullion and Bitcoin
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), discusses in his latest insights piece the disparity in price direction between gold bullion and Bitcoin, in spite of the strikingly similar rationale for holding the two. He notes that the "Bitcoin-Gold incongruity is explained by the fact that financial engineers have not yet discovered a way to collateralize bitcoins for leveraged trades."
The 2014 Geopolitical Outlook
As is our custom, we close out the current year with our outlook for the next one. This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international situation in the upcoming year. It is not designed to be exhaustive; instead, it focuses on the "big picture" conditions that we believe will affect policy and markets going forward. They are listed in order of importance.
Stay the Course or Take an Unconstrained Approach to Bonds
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.
The Fed, Inflation, and the Perfect Storm in Gold Miners
Neither hopes of job creation nor fears of inflation (based on the massive expansion of the monetary base since late 2008) have thus far materialized. Total credit creation (i.e. money supply) during most of the last five years either shrank or barely grew despite massive growth in the monetary base. Nominal GDP (growth plus inflation) grows in response to total expansion of credit (both from the Fed and the banking system), not just the monetary base.
Fiscal Policy and Monetary Policy - Update
by Scott Brown of Raymond James,
Market participants expected the November Employment Report to be the deciding factor on whether the Federal Reserve would begin to slow its rate of asset purchases this month. However, officials arent going to react to any one piece of data. The best argument for tapering is that it has to start sometime. However, the key factors that delayed the tapering in September and October are still with us to some extent.
Best Consumed Below Zero?
In this report, we will turn our attention to Denmark to study its decision to undertake the below-zero rate, the specifics of the situation that prompted it and the effects of the negative rate on financial conditions and the broader economy. We will then briefly look at the possibility of a below-zero rate policy for the ECB and, most importantly, the geopolitical ramifications of the decision by the worlds second largest currency block to ease into unknown consequences of negative rates to stimulate the economy.
The Myth of the Most Efficient Market
Perception of the U.S. large cap value market is that its the most efficient in the world, and therefore the hardest category for managers to outperform the benchmark. As a result, index funds and ETFs have been gaining dramatic market share. Our latest whitepaper debunks conventional thinking with empirically-proven factors that have significantly outperformed in the U.S. large cap space.
Results 5,751–5,800
of 6,446 found.
