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What Brexit Is All About: Taxation Without Representation
I want to continue the Brexit conversation from last week. With only six days left before U.K. voters head to the polls, expectations of which side might win are beginning to shift toward the “Brexiteers,” while betting markets are still putting money on the “stay” campaign. However, the probability of victory for those who favor keeping their European Union membership has weakened rather remarkably in the last month, falling from over 80 percent in mid-May to around 62 percent today, according to BCA Research.
What Is the Market Really Saying?
After a couple of posts on risky business (the Brexit vote and negative rates), let’s take a step back and look at the big picture. It’s easy to get caught up in individual stories, but we need to understand how they fit together—and what the market is saying about it all.
Global Economic Perspective: June
Our view is that the US economy remains on course to pick up over the rest of this year, despite May’s disappointing payroll report, which helped persuade the US Federal Reserve (Fed) to hold back temporarily from raising rates at its June meeting. We do not place too much importance on this single piece of data and believe the economy’s robust fundamentals are likely to fulfill the Fed’s criteria for tightening monetary policy fairly soon.
June Market Outlook Update
by Jim McDonald of Northern Trust,
It appears that, once again, the Federal Reserve’s hopes to raise interest rates are being stymied by the economy. Just last month the Fed’s minutes showed a predisposition to raise rates soon, and Chair Janet Yellen said it would probably raise rates “in coming months” should the data continue to meet expectations.
Weighing the Week Ahead: The Fed, Brexit, and the Markets
This week’s economic calendar is back to normal, with Wednesday’s FOMC announcement the highlight. Last Friday’s trading put the Brexit effects on the front burner, so I expect two themes for the week ahead. The first few days will be all about the Fed and any hints about the pace of rate increases. After the Fed meeting the emphasis will shift to the Brexit build-up, culminating next week.
Expect some punditry magic. The regular Fed experts will morph into Brexit gurus by Thursday morning!
5 Attractive Biotechnology Stocks for Healthy Long-term Returns
by Chuck Carnevale of F.A.S.T. Graphs,
I am a fervent believer that investors are best served by investing towards a specific investment objective that suits their own unique goals, objectives and risk tolerance. In other words, investing is not always trying to get the highest possible total returns. If that were true, no one would have ever invested in bonds, CDs or other fixed income instruments.
Hot Summer Economic Weirdness
by John Mauldin of Mauldin Economics,
We who inhabit the northern hemisphere will soon enter summer. Many would say summer is already with us – most schools are closed, and a general laziness is beginning to set in – especially for those in the “protected” class. For many of them, summer is a verb. They “summer” in the Hamptons, or Lake Tahoe, or somewhere in the tropics.
Consumer Spending in China: “China Play” Again
Once the “world’s factory,” China is no longer the leader in global manufacturing as the services sector has emerged as a dominant engine since manufacturing-centered growth has wound down. Since 2012, the weighting of tertiary industry to GDP exceeded secondary industries, and the gap has widened rapidly.
Are We Nearing the End of the EU Experiment?
If you’re a serious investor—and because you’re reading this, I have to assume that you are—gold is looking more and more like a crucial trade. Only two weeks remain before United Kingdom voters decide on whether the country will continue to be a member of the European Union (EU) or become the first-ever to leave it. The “Brexit,” as it’s come to be known, is arguably the most consequential political event of 2016—perhaps even more so than the U.S. presidential election in November—with far-reaching implications.
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.
Abort, Retry, Fail? Better Options for Tough Investment Challenges
While there are many valid complaints about the shortcomings of various types of investment services, the good news is that there are new offerings that redefine the value proposition. The only catch is that investors will need to do some work to find them.
Split Second Timing
This weekend, my son and I had an opportunity to enjoy the Dairyland Classic at Road America, a spectacle of motorcycle racing at one of the best road courses in the United States. One of the things you learn if you follow these racers, who travel at speeds up to 180 mph around the 4 mile track, is that every move they make, each second, has a meaningful impact on the outcome of their race. One bit of hesitation, turning a few feet too early or late, and the racer’s place is at stake. It is safe to say that the Federal Reserve has a lot more time to determine their next move than these motorcycle racers.
ECB Corporate Purchase Program
by Anthony Valeri of LPL Financial,
The European Central Bank's (ECB) Corporate Securities Purchase Program (CSPP) is set to begin on June 8. This program was initially announced in March, and brings corporate bonds into the European quantitative easing (QE) program, in an attempt to lower debt costs broadly. Though the first purchases are yet to be made, European corporate yields have fallen significantly, showing that the market has priced in its impact, making further broad gains less likely. Still, the low-yield environment is likely to push foreign cash toward the relatively higher yields in U.S. markets, potentially keeping a lid on U.S. Treasury and corporate yields as well.
Brexit Fears are Deliberately Overblown
by John Browne of Euro Pacific Capital,
As the June 23rd BREXIT (the UK-wide referendum to leave the EU) vote draws near, the polls indicate a close result. Those urging a vote for the UK to remain inside the EU are suggesting increasingly dire economic consequences that would follow a yes vote by the British people to leave.
The Irresistible Rise of REITs
by Sebastien Lieblich of MSCI,
Real estate is slated for classification as a stand-alone sector at the end of August, a change that recognizes its distinct characteristics and prominence in the global economy. Over the past 15 years, real estate investment trusts (REITs) have increased their share of equity investment worldwide. “Institutional investors may consider combining direct real estate in their home markets with an allocation to global REITs as a way to help accelerate diversification of their real estate portfolios,” writes Sebastien Lieblich, global head of real estate research, who in his latest post discusses developments that are enhancing the sector's viability.
2Q 2016 Outlook How Long Will Markets Continue This Wild Ride?
Markets have taken investors on a wild ride in 2016, with conflicting messages about expectations for economic growth and inflation. Through April, the S&P 500 Index had returned just more than 3%, erasing its 10% correction at the start of the year. Since a trough on Feb. 11, global and domestic equities have largely followed suit and rebounded to the levels of fourth-quarter 2015. The 10-year U.S. Treasury yield hit a low for the year so far of 1.66% on that date, but ended April around 1.83% — although not without its own choppiness. The CBOE Volatility Index spiked in January and February, fell off in March and early April and then showed rising volatility again at the end of April. In our view, this has become a speculative market.
And with That Jobs Data Point, the Fed Has Gone Surfing…
by Blaine Rollins of 361 Capital,
Cancel the June Fed meeting and good luck getting the FOMC out of their board shorts and bikinis long enough for a July meeting. While one data point should never be enough to influence change, the five sigma surprise in the non-farm payroll numbers last week could create an exclamation point to the ongoing trend of slow economic data.
Brexit Is Freedom
Earlier this year, NHL hockey fans were asked to vote for the captains of the four teams to face off in this year's new All-Star tourney. Three of the picks were players you'd expect: Jaromir Jagr from the Florida Panthers, Alex Ovechkin from the Washington Capitals, and Patrick Kane from the Chicago Blackhawks: True Gods of the Rink, who have scored hundreds of points.
Are You Prepared for a Summer Hike?
Janet Yellen and other Fed officials spent the last few weeks cautioning investors that a rate increase could be imminent owing to favorable economic data. Then came a weak jobs report. Will they or won’t they? Investors are left wondering how to weather the volatility that lies ahead.
Central Bank “Fairy Dust”
If we put hope and wishful thinking aside and look at what the economic and corporate data tells us, the U.S. economy is flirting with recession and markets are due for a bear market correction of 30-50%. The U.S. and global economies are growing more slowly than forecasted just a few months ago. Data indicates that instead of getting stronger, macro trends are getting weaker.
Is India the New China?
Make no mistake, China’s oil demand is still massive, second only to the U.S. But it has begun to contract in recent months, and there to offset the difference is India, who is expected to have the fastest growing demand for crude between now and 2040, according to the International Energy Agency (IEA).
Is Today's Poor Employment Data Reflecting Wide-Spread Macro Weakness?
by Urban Carmel of The Fat Pitch,
The macro data from the past month continues to mostly point to positive (but sluggish) growth. On balance, the evidence suggests the imminent onset of a recession is unlikely. Consumption rebounded in April: real retail sales grew 1.8% yoy (to a new all-time high) and personal consumption grew 3%. Better still, new home sales made a new 8 year high. However, employment continued to weaken: employment growth had been 2% yoy during most of 2015. In May, that fell to 1.7% growth. As employment and wages drive future consumption, upcoming employment data will remain the key watch out.
Wealth Transfers: The Benefit of Annual Gifts
Many wealthy US investors want to give substantial sums to family during their lifetime, while preserving their flexibility, in case they need the money later. That’s fine: Large annual gifts can go a long way to helping your children get started on their careers,buy homes, or simply live more comfortably. Here are several tax-efficient strategies to consider.
Beware the Financial Destruction of Overvaluation
by Chuck Carnevale of F.A.S.T. Graphs,
After such an extended bull run it’s only logical to assume that many stocks are trading at frothy valuations. On the other hand, it’s also important to keep in mind that it is a market of stocks and not a stock market. Nevertheless, the truth is that many stocks are now significantly overvalued based on both historic norms and fundamental values. This is not true of all stocks, because it is also true that there are high quality stocks available today that are fairly valued. However, they are admittedly getting more difficult to find.
Is Everyone Overpaying for "Safety Stocks"?
by Michael Grant of Calamos Investments,
As investors, we naturally aim to understand what is and what is not discounted by financial markets. Of course, this is a difficult feat as it implies we know something about our stocks that others do not. Since the turn of the century, markets have become more informationally efficient and rapidly incorporate new information into stock prices.
Is the Fed Behind the Curve?
This month I have moved my attention to Washington. I am concerned that the Federal Reserve Bank is far too inactive, potentially leading to much more significant inflation down the road. I should stress that our European readers shouldn't worry too much, as the situation is fundamentally different on this side of the Atlantic, but rising U.S. inflation will obviously have at least some effect on European interest rates. Enjoy the read.
Jam-Packed June
by Burt White of LPL Financial,
June is filled with major market events that may go a long way toward determining the near term direction of the equity markets. They include an OPEC meeting, central bank meetings for the Fed, ECB and Bank of Japan, and the "Brexit" vote, a referendum on whether the U.K. will remain in the European Union.
Made in China: China’s Evolving Export Role in the Global Economy
by Nick Niziolek of Calamos Investments,
Infrastructure buildout is one of the key themes driving long-term growth opportunities, especially in emerging markets. We’re seeing a range of government initiatives to promote infrastructure spending, including in Indonesia, India, and the Philippines. However, the single most important of the infrastructure initiatives underway is likely China’s One Belt, One Road project (OBOR).
On My Radar: 2016 Strategic Investment Conference
Yusko took the stage Thursday morning and told a story about a time in 1999 when he served as the chief investment officer of the University of North Carolina endowment. He presented to his board in December 1999 and showed them the GMO 10-year forward annualized return predictions. GMO had advised investors to expect a negative 1.9% over the coming decade (annualized per year for ten years from 2000 – 2010).
Life on the Edge, Continued
by John Mauldin of Mauldin Economics,
Coaches tell athletes that if they still have any energy left when they head back into the locker room when the game is over, they haven’t played hard enough. You’re supposed to leave it all on the field. That’s pretty much how I feel right now, so I don’t have a lot of energy to write a new letter. But thankfully, the comments we received from my May 15 letter, “Life on the Edge,” were among the best we’ve ever had. So I am going to reproduce them and maybe add a few responses of my own in between.
Are You a Return Seeker or a Risk Manager?
Investing, at its most basic level, is a delicate trade-off between return seeking and risk management. For many investors, the factor that dominates their decision making shifts over time with somewhat predictable, and more often than not negative, results.
Economic Reality
Fundamental improvements – intelligent changes in investment incentives, the tax system or infrastructure, for example – can increase the slope of the growth curve and provide substantial net long-term benefits for a society (although not necessarily for every individual member). Short-term fixes simply cannot create wealth out of thin air.
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.
Emerson Electric: High-yield, Sound Valuation and 59 Consecutive Years of Dividend Increases, Part 2
by Chuck Carnevale of F.A.S.T. Graphs,
When I’m looking for a stock to add to my portfolio, there’s nothing more frustrating than spending a significant amount of time and effort on research - only to discover that the company in question is significantly overvalued. Consequently, my first step always starts out with an assessment of the relative valuation of the company I am considering. No matter how much I admire the company, its management team and its financial health and strength, I simply refuse to pay more for a stock than I believe it is worth. The most commonly accepted investing principle is to buy low and sell high.
Can the TPP Save the Global Economy?
According to the Peterson Institute for International Economics (PIIE), the TPP “will increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, by 2030.” For all member nations, the deal is expected to add $492 billion in real income.
Creating Value via Innovation
by Michael J. Oh of Matthews Asia,
Considering Asia's vast consumer market—which by 2020 is expected to have a middle class of about 1.7 billion, and its impressive spending power—the region's middle class population is significant for many reasons. It is now willing, and able, to pay a premium for pioneering, high-quality products and in recent years, we have witnessed many innovative companies meet the demand created by rising disposable incomes and improving lifestyles. All this bodes well for a virtuous cycle of further innovation.
Results 7,051–7,100
of 10,163 found.
