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China Reforms Create a New Muni Market
by Hayden Briscoe of AllianceBernstein,
Are you an optimist or a pessimist? These days, news about China seems to be mainly good or mainly bad. The market and media response to China’s local-government debt swap programme shows why maintaining a balanced view is essential.
Employment, Wages and Housing Leading The Economy Higher
by Urban Carmel of The Fat Pitch,
The majority of US economic data points to strength. Employment growth is the best since the 1990s. Wages and compensation are growing at the highest rates since the recession ended. And housing, both new construction and sales, are the best in 8 years. The overall economic trend remains positive.
Billions and Billions Pour into India and China
It’s been a little over a year since Narendra Modi took office in India, and so far the results have been mostly positive for the South Asian country and the surrounding region. Among other achievements, Modi’s government has managed to enact important policy reforms, increase public investments in infrastructure, lower food inflation and generally open India up to business on a global scale.
Those Were the Days, My Friend
by Paul Kasriel of The Econtrarian,
Although I believe that the nature of the cause of the last recession, a financial crisis, is the principal factor accounting for the relative weakness of the current economic expansion, I also believe that the trend rate of growth of U.S. real GDP in the decades to come will be less than that in the preceding decades. The primary reason for this is related to demographics. A secondary reason is that the credit excesses that preceded the last recession will not be allowed to occur again for some time.
Emerging Market Currencies: All About That Base
by Esty Dwek of Loomis, Sayles & Co.,
The case for investing in emerging local currency debt over the long haul is well-documented: as developing countries improve productivity, their economies globalize and their currencies appreciate.But this is a long-term theory and the current reality may differ somewhat. Indeed, amid the current US dollar strength, many US dollar investors have been disappointed by EM local debt returns -- which have fallen more than 5% each year of the last two years. But what happens if we look at emerging market (EM) local debt returns through the lenses of different currencies?
Strong Demand for Chicago Bonds Shows It’s No Detroit
Moody’s Investors Service recently downgraded Chicago’s $8.1 billion of outstanding general obligation (GO) debt two notches to Ba1, officially putting the bonds in the “junk” rating category, after a May 8 ruling by the Illinois Supreme Court struck down a law overhauling state employee and teacher pensions, narrowing the city’s options for curbing growth in its unfunded pension liabilities.
Why Oil Price Rally Isn’t a Surprise, but Iron Ore’s Price Should Stay Low
While oil has dealt with a relatively recent increase in supply, iron ore has been suffering through a long-term glut. And, based on our analysis of future supply/demand trends, we expect the abundance of iron ore to continue—and possibly increase.
Emerging-Market Stocks for Flywheel Fashionistas
by Sammy Suzuki of AllianceBernstein,
The passion for gym-to-street fashion has gone global, and shows no sign of losing vitality. It’s also keeping business humming for a network of yarn spinners, fabric mills and sneaker makers across emerging Asia.
Greenbriar Gleanings
by Jeffrey Saut of Raymond James,
I always look forward to reading Frederick “Shad” Rowe’s monthly investment letter to his partners. Shad founded Greenbrier Partners, Ltd. In 1985 and has captained the investment fund ever since. He is known as one of the best “stock pickers” on Wall Street, a moniker that is well deserved.
Our $1.3 Trillion Government-Assisted Student Loan Crisis
I have been wanting to address our exploding student loan crisis for over a year now, but the topic didn’t seem to fit into the normal themes I tackle. Yet in fact, it does: It represents just one more financial/debt crisis facing our country that will surely impact the economy and the investment markets at some point.
Greece: An Update
In February, we reported on the situation in Greece. Over the past few months, there has been no resolution to Greece’s debt problem, despite numerous deadlines and meetings. In our earlier report, we framed the conflict between Greece and the EU in terms of game theory. In this report, we will begin by recapping our earlier analysis. Using this framework, we will discuss how a third option has evolved which will likely force PM Tsipras to acquiesce to the EU. As always, we will conclude with potential market ramifications.
On My Radar: Inflation and The Big (Bigger) Short
"Negative-yield bonds now account for some €1.5 trillion of debt issued by governments in the euro area, equivalent to almost 30% of the total outstanding. Many expect even more of the global bond market to fall into negative yield territory. Half of all government bonds in the world today yield less than 1%.”– John Mauldin
Tantrum Potential at Home, Opportunity Overseas
by Russ Koesterich of BlackRock,
U.S. equities continue to climb, but BlackRock Global Chief Investment Strategist, Russ Koesterich, discusses why the best opportunities may reside outside the United States, which, in fact, has been the case so far this year.
World War D—Deflation
by John Mauldin of Mauldin Economics,
Everywhere I go I’m asked, “Will there be inflation or deflation? Are we in a bull or bear market? Is the bond bulk market over and will interest rates rise?" The flippant answer to all those questions is “Yes.” And that can be the correct answer as well, but it depends on what your time frame is and what tools you use to measure the markets and inflation.
Is Now a Good Time to Add More Risk?
About this time in a market cycle, after several years of strong stock market returns, there is a tendency for investors to become more tolerant of risk. One may find his or herself questioning the reasoning behind their current asset allocation and strongly considering adding more stocks and other “risk” assets to their portfolio.
Mr. Bleu
“It’s a spectacle of excess at the highest level”, quoted an art consultant to the N.Y. Times. Perhaps it was. Christie’s, even not counting its archrival Sotheby’s, had bagged $1 billion in sales during its May auction week – rivaling even the frenzied bidding for Manhattan high rise condos. As with high flying stocks, the logic was that the money had to go somewhere and why not a wall instead of a monthly portfolio statement.
Don’t Fear Rising Rates — Embrace Them
by Scott Eldridge of Invesco Blog,
Interest rates have been on the march since late January, thanks largely to global rate markets and a looming US Federal Reserve. In general, bonds are vulnerable to falling market prices as a result of higher rates, but there are income investments that can be used to take advantage of, rather than fall victim to, rising rates. They’re known as floating rate instruments.
What America Can Learn from China’s Infrastructure
As one of the greatest nations on the planet, the United States excels in a number of areas, innovation and entrepreneurship foremost among them. But something you might be hard-pressed to find at the top of anyone’s best-of list is infrastructure—specifically roads, rail and mass transit.
US Equity and Economic Review For the Week of May 18-22; Housing Rebounds But the Markets Continue G
by Hale Stewart,
Last week’s fundamental news was encouraging. Although we’re still in a shallow industrial recession, other sectors of the economy are printing solid results. However, large multi-nationals face sufficient headwinds from a strong dollar, weak international environment and declining oil prices to prevent a sustained advance.
Global Review and Equity Commentary: April 2015
by Team of Thomas White International,
As expected, the global economy slowed during the first quarter but should gain momentum in the coming months. The U.S. economy almost came to a standstill during the first three months of the year as adverse winter weather limited activity. Consumer spending moderated and construction activity slowed, while lower oil prices discouraged businesses in that sector from capital investments. The stronger dollar and labor disputes at some of the seaports limited export gains, and led to a widening of the U.S. trade deficit.
The Student Debt Dilemma and the Role of 529 Plans
While loans can be useful in bridging the gap between savings and final costs, a college degree doesn’t have to come with a mountain of debt. Develop a multi-pronged strategy, and hopefully you or your children can enjoy the fruits of a college education for decades to come.
Why US Economic Growth May Disappoint Again In 2015
Our main topic today is how the US economy continues to disappoint expectations, and 2015 looks to be no exception. Forecasts for GDP growth this year continue to be downgraded, and there is at least a small possibility that the US economy is slipping into recession.
Back to the drawing board
by Scott Brown of Raymond James,
The data reports for April suggest that the second quarter’s anticipated rebound from a weak 1Q15 will fall far short of expectations. We could get revisions, figures for May and June could be a lot stronger, but at face value, the economy has disappointed. However, the Fed is still on track to begin raising short-term interest rates later this year. We should come away with a better understanding of how the Fed sees the situation when the central bank’s two top officials speak later this week.
Crescendo or Consolidation?
by Jeffrey Saut of Raymond James,
The S&P 500 (SPX/2122.73) has basically been locked in a trading range between 2040 and 2100 since early February of this year. Some technical analysts term the subsequent chart pattern a wedge and others call it a rising wedge. While pundits can debate the difference between the two, the important point is which way said chart pattern will be resolved with either an upside breakout, or a downside breakout.
Do Goldman Sachs' Funds Add Value for Investors?
by Larry Swedroe,
Over the last few years, an expanding line of mutual funds created by commercial banks such as Goldman Sachs and JPMorgan Chase have been drawing billions of dollars from investors looking to earn a good return. While the fees these funds have generated are among the few consistent bright spots of growth on Wall Street, the question for investors is whether or not the active mutual funds managed by these banks actually have been good investment choices.
Investor Sentiment Around the World
We certainly don’t want to jump to any conclusions about potential market performance based on investor sentiment (or any one indicator for that matter), but it reminds me of the late Sir John Templeton’s famous words: ‘Bull markets are born on pessimism, grow on skepticism and die on euphoria.
Constructively Dissatisfied
Say I was constructively dissatisfied with how last week went for Global Macro markets. Constructive because I think we made the right research pivot on Dollar Down, Commodities Up. Dissatisfied because devaluing the Dollar isn’t the answer for America’s stagnating economy.
The "New Era" is an Old Story
by John Hussman of Hussman Funds,
It’s not monetary easing, but the attitude of investors toward risk that distinguishes an overvalued market that continues higher from an overvalued market that is vulnerable to vertical losses. That window of vulnerability has been open for several months now, and the immediacy of our downside concerns would ease (despite obscene valuations) only if market internals and credit spreads were to shift back toward evidence of investor risk-seeking. Meanwhile, there’s no evidence to suggest that historically reliable valuation measures have somehow become irrelevant.
Secular Versus Cyclical: Notes from SIC 2015
by John Mauldin of Mauldin Economics,
The consensus I’m hearing and reading from the 500+ attendees at the recent Strategic Investment Conference is that this was the best ever. It was certainly intense, with more divergent views presented this year than at previous conferences. Plus, the range of topics was rather dramatic. This year I was able to listen to all but one of the presentations, and I want to share with you my notes and takeaway thoughts.
Wall Street Underestimates the Great American Earnings Machine
With a little over 90 percent of S&P 500 companies having reported, it looks as if the index has risen a modest 2 percent for the first quarter. That might not seem significant, but as LP Financial Services Chief Investment Officer Burt White points out in a recent Barron’s piece, “given the steep uphill climb that corporate America faced due to the twin drags of the oil downturn and strong U.S. dollar, this is actually a good result.”
Weekly Market Summary
by Urban Carmel of The Fat Pitch,
US indices are in an uptrend. But what they have lacked is the ability to sustain upward momentum for more than a week or two. With SPY at a new ATH, another test of strength has again arrived. There's room for price to move higher, but we suspect that any gains are likely to be short lived.
“Wrestling with Something Else”: Why this Gold Bear Market Is Different
Earlier this week, I had the pleasure to appear on Jim Puplava’s Financial Sense Newshour radio program and discuss the state of the gold market. Along with my peers John Doody of the Gold Stock Analyst and Ross Hansen of Northwest Territorial Mint, I shared my thoughts on how we arrived in the current bear market, what factors might help us get out of it and the role real interest rates play in prices.
Diagnosing China's Debt Disease
by Andy Rothman of Matthews Asia,
China suffers from a serious case of “debt disease,” but the treatment and side effects may not be as severe as some expect, and dramatic credit tightening is very unlikely. Debt is concentrated among state-owned firms, while the private firms that generate most of China’s new jobs and investment have already deleveraged. The biggest risk is the high level of debt among real estate developers.
Beyond the Active vs. Passive Debate
The active versus passive debate is a hot topic in the financial media. That’s no surprise given recent performance and a dramatic shift in investors’ preferences. For several years, the average passively managed fund has outperformed the average actively managed fund.
Problems The Media Ignored In The April Jobs Report
Today we’ll start with a look at last Friday’s unemployment report for April. If you read the mainstream media accounts, it was fantastic – the official unemployment rate fell to 5.4%, the lowest level since 2007. But as usual, if we dig into the internals of the report, we find that the results were much less than desired.
Results 7,901–7,950
of 10,168 found.
