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Tapering the Taper Talk
by Peter Schiff of Euro Pacific Capital,
As usual the Federal Reserve media reaction machine has fallen for a poorly executed head fake. It has been fooled by this move many times in the past and for its efforts it has tackled nothing but air. Yet right on cue, it took the bait once more. Somehow the takeaway from Wednesdays release of the June Fed statement and the Bernanke press conference is that the Central bank is likely to begin scaling back, or "tapering," its $85 billion per month quantitative easing program sometime later this year, and that the program may be completely wound down by the middle of next year.
ECRI Recession Watch: Weekly Update
Ultimately my opinion remains unchanged: The ECRIs credibility depends on major downward revisions to the key economic indicators -- especially the July annual revisions to GDP -- that will be sufficient to validate their early recession call. Of course, the July revisions will be quite controversial this year, with some major accounting changes and revisions in annual GDP back to 1929. So if we dont get the downward revisions to support ECRI, they can always question the accounting changes in the revision process.
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.
Emerging Markets: Reasons for Optimism
by Team of Janus Henderson Investors,
Emerging market equities are lagging developed markets this year. However, the underperformance creates an opportunity in our view, and does little to change our long-term outlook for emerging markets, where we believe some of the strongest growth opportunities lie.
Fed Zombification
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.
Letter to the Editor
by Various,
Adam Kanzer responds to several letters to the editor that appeared last week. Those letters were in response to his article, Exposing False Claims about Socially Responsible Investing, which appeared June 4. Kanzers article was in response to Adam Apts article, Measuring the Cost of Socially Responsible Investing, which appeared May 21.
Newsletter June 2013
Do you remember hiding under the sheets listening to radio when your parents thought you were asleep? If so, I have an unbelievable collection of all the old-time radio shows we listened to when we were kids, if you have about six months? spare time. Find your favorite, click on it, and it lists literally hundreds of episodes you can re-live.
Submerging Markets: What the Emerging Market Selloff is Telling Us
Investing at its most basic level is about one thing: the return you seek on your investment and the risk you take to get that return. I often emphasize that the biggest risk to investors is volatility, because its the occasional shakiness of markets or market segments that causes investors (whether they manage their money or have someone else do it for them) to react emotionally instead of logically. That plays out every day in markets around the world.
Recent Volatility in the Foreign Exchange Market and the Strengthening Yen
by Team of Nomura Asset Management,
There are two issues underlying the increased currency market volatility; depreciation of the Yen may have resulted in worldwide competitive devaluation and concern about early tapering of quantitative easing (QE) in the U.S. appears to have triggered currency depreciation for countries that are running current account deficits.
ECRI Recession Watch: New Update
The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 131.3, up slightly from last weeks 131.0 (revised from 130.9). The WLI annualized growth indicator (WLIg) rose to 6.6% from 6.4% last week (revised from 6.3%)....
Two weeks ago the company took a new approach to its recession call in its most recent publicly available commentary on the ECRI website: What Wealth Effect?
More...
Gundlach ? Dont Sell Your Bonds
by Robert Huebscher,
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.
May Flowers Bring Best Equity Market Since 1997 as Bonds Wilt
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.
Risk Parity - New Thinking or New Packaging?
by Chris Maxey, Ryan Davis of Fortigent,
Ever since Harry Markowitz brought forth the notion of mean-variance optimization in 1952, academics and practitioners alike have sought ways to build more robust asset allocation methodologies. Recently, the most talked about approach in the institutional world is risk parity, which seeks to focus on risk as its primary input. Risk parity is intuitively appealing, but suffers many pitfalls that investors need to consider.
Letters to the Editor
by Various,
A number of readers responded to Adam Kanzer’s article, Exposing False Claims about Socially Responsible Investing, which appeared last week. Kanzer’s article was in response to Adam Apt’s article, Measuring the Cost of Socially Responsible Investing, which appeared the week before. Several readers responded to other articles as well.
Emerging Market Opportunities
Emerging market equities present both unique opportunities and also unique risks. Unlike more mature economies, emerging markets economies have the potential for impressive growth rates. But emerging markets also have the potential for damaging socio-economic and political instability. Equity returns in these countries are often impressive, but to earn these returns investors must deal with considerably higher volatility than in the developed equity markets.
China: As Growth Slows, the Need for Reform Grows
by John Greenwood of Invesco,
The world is closely monitoring the status of Chinas economic growth rate. The countrys economy began to rapidly grow in the late 1970s, and it had been growing at about 9% or 10% per year, until the global downturn of 2008 and 2009. During the global financial crisis, the economy slowed abruptly. Since then, it has not been able to get back to that 10% growth rate.
Growth in GDP, A Quick Look at Droughts (Yes, Drought) and Pension Data
by Gregg Bienstock of Lumesis,
Im simply not going to take the bait and respond to the Employment Situation report. Regular readers know my thoughts around this monthly report that garners way too much attention (take a look back at the May 6 commentary and others around employment data). This week I focus on how and where State economies are growing, remind you of the availability of some critical data points and pass on some observations and opportunities around Pension data.
Why Don't Investors Understand Emerging Markets?
Big is not necessarily beautiful when it comes to forecasting emerging markets. In fact, the kind of big numbers that are often bandied around can actually make it harder for investors to understand whats really going on. We think there is a better way.
Why It Pays to Invest in Emerging Market Dividend-Payers
An unexpected change of heart happened in May that you might not have heard about. After years of resisting any path other than its rigorous course, Germany announced it is backing off from pure austerity and is now planning to spend billions of euros to stimulate the economies of Europe.
Harleys and Leather Jackets
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.
Will Green Shoots Flourish in U.S. and Latin America?
by Josh Thimons, Lupin Rahman of PIMCO,
The US economy is much further along the road to repair relative to its developed market peers, but it is still dealing with an unsustainable fiscal situation. Latin America is closely coupled to the rest of the world. What happens in the U.S., China and Europe over the secular horizon is especially critical. Our secular investment outlook calls for a more defensive posture toward risk. In U.S. fixed income, this suggests positioning for alpha rather than capital appreciation.
Employment Data, State of the States and Interesting Quotes Worth Exploring
by Gregg Bienstock of Lumesis,
I simply cant seem to shake the notion that some basic issues continue to exist despite some of the favorable headlines and discussions with some pretty smart people who think the worst is behind us (I do subscribe to the view that it is critical to seek out views contrary to my own to keep me in check). During these discussions or when revisiting their basis, I cant help but revert back to the data. After all, facts are facts.
Treasury Bonds Are No Longer the Conservative Investor's Friend
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.
Into the Woods
Excess liquidity, falling net issuance and higher correlations among assets complicate the eventual exit that the Federal Reserve and other central banks must make from their extraordinary policies. The Bank of Japans ideology has completely changed to tackling deflation from tolerating deflation. The key focus in the coming months will be how private sectors react. Investors who depend chiefly upon central bank activism may put themselves at risk. They may need to hedge volatility by ensuring their investments are built more on solid fundamentals and reasona
Global DC Plans: Similar Destinations, Distinctly Different Paths
DC plans in in the U.S., Australia and the U.K. may benefit from better aligning asset allocation defaults to workers needed outcome: purchasing power in retirement. Focusing on needed outcomes would suggest a higher allocation to real assets, earlier de-risking and consideration of tail risk hedging.
The Perfect Team Meeting to Start Your Week
by Dan Richards,
A focused, productive meeting with your team is the single most powerful way to start your week. Despite this, many teams dont have those regular sessions to start the week ? and where meetings do take place, they often underperform versus their potential. For your team to believe that Monday meetings are a good use of their time, those meetings should achieve five goals.
Forward-Looking Broad-Market Investing
by Team of AdvisorShares,
The following is a research study that provides compelling data on a more efficient way to invest in broad markets. Many people have called the equity market of the last 10 years the lost decade due to its lack of net change. Madrona Funds research shows that it would have been possible to have profited by over 200% over the last decade by using their forward looking methodology, which is based on future expected earnings, not past performance.
4 Ideas for Today's Low Inflation Environment
by Russ Koesterich of iShares Blog,
Theres certainly no shortage of things to worry about right now related to the US economy. But one thing were not too worried about right now: Inflation. Not only is inflation low, but the latest numbers show its actually falling. And as I write in my commentary this week, inflation is unlikely to become a problem in the United States for at least another 12 to 18 months. Why? There are a number of headwinds keeping US prices low in the near term.
Investing in Gold: Does It Stack Up?
by Team of Knowledge @ Wharton,
Gold has a timeless allure -- especially if you worry about stock market volatility, inflation, a decay of ordinary currency or the collapse of civilization. Yet not everyone agrees that gold offers the safe haven its promoters describe. How reliable can demand be for a commodity that very few people actually need? What is the proper role for gold in an investment portfolio? Why has its price been falling?
Malaysia's Post-Election Investment Outlook
by Scott Klimo of Saturna Capital,
Earlier this year we identified ASEAN as the most attractive region within the emerging markets universe. That prediction has proved accurate. Market indices (USD returns) year-to-date through April in the Philippines, Thailand, and Indonesia are 23%, 22%, and 16%, respectively. Singapore (which we do not consider an emerging market) gained 6%, while Malaysia rose only 3.9%. So whats the outlook for Malaysia?
General Electric Looks Like It's Becoming The Shareholder-Friendly Company It Once Was
by Chuck Carnevale of F.A.S.T. Graphs,
General Electric (GE) was once revered as one of the bluest of all blue-chip companies in the world. During its glory days, GE was respected as an industrial conglomerate that manufactured some of the worlds best jet engines, locomotives, appliances and even the highly regarded General Electric light bulb. However, as best I can determine, the roots of General Electrics ultimate demise were established in 1930 when the company, responding to the great depression, formed GE Finance in order to help their customers finance GE appliances over time.
Recession Watch: ECRI's Weekly Leading Indicator Declines
Essentially ECRI is sticking to its call that a recession began in mid-2012, although the company calls it a "mild" recession, which is quite a shift from their original stance 19 months ago: "...if you think this is a bad economy, you havent seen anything yet."
Searching For a New Investment Paradigm
by Philip Lawton of Research Affiliates,
Investment management is supposed to be built on brilliant minds novel insights and innovative approachesor so our training and traditions have led us to believe. We celebrate our best investors, such as Warren Buffett, Peter Lynch, and Bill Gross, and our best financial theories, such as modern portfolio theory (MPT) and the efficient markets hypothesis (EMH).
The Truth about April's Budget Surplus
The Truth about Aprils Budget Surplus
Columbia Management
By Marie Schofield
May 16, 2013
Washington finally had some good news to report, specifically on the budget deficit. The Treasury reported a $113 billion surplus, the biggest in five years. April is a critical month for the budget because of tax filing and payment deadlines. While some attribute the surplus to reduced outlays on sequestration, it was mainly due to growing revenues courtesy of a build in individual and corporate tax receipts.
New Normal ... Morphing
by Mohamed El-Erian of PIMCO,
The New Normal has morphed to include consequential elements of a "stable disequilibrium." In the midst of notable multi-speed dynamics, the global economy as a whole is muddling along a road that will give way over the next three to five years to one of two stark alternatives: either sustainable global growth, institutional and political renewal in the West and safe deleveraging; or growth shortfalls that cause financial instability, fuel greater social tensions, accentuate political dysfunctions and complicate debt traps.
Recession Watch: ECRI's Weekly Leading Indicator Continues to Show Improvement
Essentially ECRI is sticking to its call that a recession began in mid-2012, although the company calls it a "mild" recession, which is quite a shift from their original stance 19 months ago: "...if you think this is a bad economy, you havent seen anything yet."
Symptoms Don't Lie
by Peter Schiff of Euro Pacific Capital,
A good doctor will not simply make a diagnosis based on measurements. The symptoms and complaints expressed by the patient are at least as important in making a determination as the data provided by diagnostic tools. When the data says one thing and the symptoms continuously say another, it makes sense to question the reliability of the instruments. This would be particularly true if the instruments are furnished by a party with a stake in a favorable diagnosis, say an insurance company on the hook for treatment costs. The same holds true for the U.S. economy.
US Economy Should be "Good Enough" for Stocks
by Russ Koesterich of BlackRock,
The April employment report confirms that the US is on a slow-but-positive course of economic growth. This environment should be conducive to further gains in equity prices. Europe, in contrast, continues to struggle and investors should approach that region with caution.
Mutual Fund Companies Need to Prepare for a Changing Environment Fund Industry Turbulence Ahead
by Paul Franchi,
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.
That Was the Week That Was
by Jeffrey Saut of Raymond James,
Informally the TV show, That Was The Week That Was, is referred to as TW3and was a satirical comedy program first aired in the early 1960s. The program was considered a lampooning of the establishment. At the time it was considered a radical departure from legitimate television, but it set the stage for many more such radical departures. I revisit TW3 this morning because I have had so many requests for a formal repartee of a number of last weeks Morning Tacks woven into a more formal strategy letter.
Beyond the Headlines: Job Growth, Exports and Housing
by Gregg Bienstock of Lumesis,
Congress has done something for the American public. FAA, sequester, flight delays we can fix that! While I would usually take a cynical swipe at Congress (something like, did they act because they, too, were impacted by their own stubbornness), Ill let well enough alone and simply pass on a heartfelt thanks. Perhaps this is the start of something. I hear they are working closely on immigration reform and an exemption for Congress and their staff from the Affordable Care Act (aka Obamacare). Ok, so two of three initiatives garnering bi-partisan support are purely self-ser
Pring Turner Approach to Business Cycle Investing
by Team of AdvisorShares,
Like the seasons of the year, the environment for bonds, stocks, and commodities progress in a repeatable and sequential fashion. A gardener understands it is difficult to plant in the winter because nothing grows. The same is true for the financial seasons in the business cycle, where investors can use knowledge of the sequence to create a financial market roadmap. This paper from Pring Turner Capital Group, one of our valued sub-advisors, takes you through the six-stages of the business cycle.
Results 6,001–6,050
of 6,446 found.
