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Reforms in Asia Bring Big Potential for Small Companies
At Templeton Emerging Markets Group, we believe Asia’s combination of rapid economic growth, generally strong national finances and economic fundamentals has created an attractive landscape for equity investors. Seismic changes have been taking place in Asia’s political arena over the past couple of years, including major elections, leadership transitions and even a military coup. These political shifts have economic reform implications as well.
Advice for Investing in Today's Volatile Markets: 5 Points
by John Calamos of Calamos Investments,
In my view: (1) Volatility will likely continue at an elevated level. Falling commodity prices, global growth fears and political uncertainties in the euro zone are among the factors that will add to volatility in the markets over these next months. (2) The U.S. stock market can continue to advance for 2015. (3) Investors need to look through the short-term volatility and position their portfolios proactively and strategically. (4) Diversification is important?but bonds aren?t necessarily the right answer.
Momentum X 2: Unleashing the True Power of Momentum
Momentum is one of the most researched market anomalies and has become widely accepted and used in a variety of ways for investment management. When used in practice is it most commonly referred to as relative strength or relative momentum. What happens if we combine the power of relative momentum with absolute momentum?
What's Up? Quantitative Easing and Inflation
In a recent piece from Research Affiliates, Chris Brightman, chief investment officer, provides "Central Banking 101," noting that just within the last several months the Fed has ceased its program of quantitative easing (QE) and may soon begin to raise interest rates, Japan has embarked on an even more aggressive program of QE and the European Central Bank (ECB) has just begun QE. In a related development, the Swiss National Bank (SNB) recently stopped pegging the Swiss franc to the euro. Many investors are asking, ?What does all this monetary turmoil mean??
Games People Play
My mother taught me how to play Monopoly ? the game ? and the markets over 40 years past have taught me how to play Monopoly ? the financial economy. Financial markets and our finance-based economy are actually quite similar to the game in terms of the rules and strategies it takes to win. Monopoly?s real-time bank (the Fed) distributes money to players at the beginning and then continues to create more and more credit as the economy passes go.
Commodity Outlook 2015: Watching the Supply Response Across Markets?
Today?s low oil prices should allow for supply and demand to come back into alignment by year-end, led by a decline in the U.S. output growth rate and a modest increase in global demand. We expect continued oversupply to weigh on natural gas prices this year, but some semblance of balance may return to this market in 2016. Grain prices may experience pressure in 2015 as low oil prices pass through to corn prices, which may cause producers to switch to higher-priced crops. With production growth likely having peaked, we expect metals prices to stabilize this year.
Black Cypress: Ignore the Bears; The Force(s) are with Us
The U.S. economy should continue to expand and that bodes well for stocks. The next bear market will likely start due to a recession or geo-political conflict and not from the start of Fed interest rate increases or time elapsed. The current economic landscape is favorable to growth. Stock markets are priced for low returns.
Is There A Case For German Equities?
by Team of GaveKal Capital,
With the highest productivity in Europe, a sizeable current account surplus and rock bottom interest rates, is there a case to made for German equities? Germany's competitiveness, export performance and trade surplus should increase as the Euro weakens helping German exporters in markets outside of the Euro bloc.
Global Economic Perspective: January
by Christopher Molumphy, Michael Materasso, Roger Bayston, Michael Hasenstab, John Beck of Franklin Templeton Investments,
After a much better-than-expected annualized growth rate of 5% in the third quarter of 2014, the stars would seem to be fairly much aligned for continued US growth in the months ahead. Job growth has continued apace, interest rates and energy prices have remained low, and consumer and business confidence has been buoyant. As we start the new year, the main areas of uncertainty would seem to be the pace of growth and the implications of recent price and employment trends for the timing of monetary tightening by the US Federal Reserve (Fed).
What Happened to the Secular Bear Market in Equities?
History shows that US equity prices have consistently alternated between secular bull and bear trends. These price movements typically average 15-20 years in length and embrace several different business cycles. In April 2003 we published an article posing the question, ?Whither the Secular Trend of Equities?? which laid out the case for the year 2000 being a secular or very long-term peak for the US stock market. Since the three previous secular bears averaged just over 18-years, our working hypothesis was for a weak market until sometime around 2018.
No Deflating the U.S. Dollar
by Burt White of LPL Financial,
The latest leg up for the U.S. dollar has been driven by anticipation and arrival of QE by the ECB. The dollar has been strong for a number of reasons, all of them good things. Though not the end all and be all, currency is an important consideration when determining asset allocation.
GDP, Strong Again
With all the focus on Europe in general and Greece in particular, it?s important to keep in mind that the US economy continues to move forward. After real GDP dropped in the first quarter of last year, some analysts were predicting another recession. By contrast, we said the drop was due to unusually harsh winter weather and the economy would rebound quickly.
Key Issues for 2015: The View from Western Asset
The U.S. represents a bright spot in a global recovery best characterized as "two steps forward, one step back." Sector and issue selection remain crucial in this environment, but so do macroeconomic strategies, which may help provide ballast when the pace of recovery slows.
Time to Get Off the Merry-Go-Round ??
by Jerome Schneider of PIMCO,
In 2014, many investors de-risked their portfolios by moving into shorter-duration passive approaches but the potential for capital preservation from these strategies may face challenges. Passive benchmarks and strategies with pre-specified, structural interest rate exposure may have little to no flexibility around their positioning and may push investors into the heart of the proverbial storm. Active strategies not constrained by benchmark limitations may be optimal for investors as they can seek to manage exposure to interest rates.
The Cacophony of Earnings Announcements
As long-duration common stock owners, we are always interested and entertained when the media covers company earnings. To understand why, we think you need to know the facts behind the intrinsic value of a company, what it means to be a business owner and what differentiates a good business from a great one. Our contention is that there is little or no correlation between short-term stock price movements at the time of earnings reports and long-term success in common stock investing.
The Greek Elections: A Gordian Knot?
The upcoming Greek elections on Sunday, January 25 have whipped political and economic pundits into a frenzy. At the heart of the excitement is a possible win by Syriza, the left-leaning political party. This relative new comer on the political stage has promised a slew of populist programs, which include doing away with fiscal austerity, rolling back reforms, and renegotiating bailout terms with the country?s creditors.
The Fed -- Lucky or Smart?
by Paul Kasriel of The Econtrarian,
Given the rapid growth in total thin-air credit, i.e., the credit created by the Fed and depository institutions, during most of 2014, the Fed was correct in phasing down the amount of securities it was purchasing if it wanted to avoid creating another asset bubble and/or an acceleration in price increases of goods and services. But when the Fed ended its securities-purchase program in October 2014, it appeared as though growth in total thin-air credit would slow precipitously in 2015 without some contribution from the Fed.
How Global Interest Rates Deceive Markets
by John Mauldin of Mauldin Economics,
When it comes to interpreting what current interest rates are telling us about the markets in various countries, I have to say that I do not think they mean what the market seems to think they mean. In fact, buried in that list of bond yields is ?false information? ? information so distorted and yet so readily misunderstood that it leads to wrong conclusions and decisions ? and to bad investments.
Equity Investment Outlook: More of the Same
by Team of Osterweis Capital Management,
We are of the view that the conditions for further gains in the bull market that began in early 2009 are still intact and that the conditions for a true bear market are not. The market could, of course, be subject to corrections ? it always is ? but we believe the trend is still upward.
There?s More to the Gold Rally than European Market Fears
Even though gold was down last year, it still ranked as the second-best-performing currency, following the U.S. dollar. The metal has risen about 10 percent year-to-date, and on Tuesday, for the first time since mid-August, it broke through the $1,300 mark.
Connecting to China?s New Equity Plays
Despite a slow start following its launch in November, the Shanghai-Hong Kong Stock Connect share trading scheme has significantly increased foreign access to China equities and created new investment opportunities. Two subsectors are particularly noteworthy for global investors.
Weekly Market Summary
by Urban Carmel of The Fat Pitch,
It's safe to say that US indices have been acting very differently over the past two months than they have at any other time in the past 3 years. This oscillating pattern of sharp falls and rebounds suggests equities are searching for direction. In the past 5 years, this has been a prelude to a change in trend.
Despite Hitting an Oil Slick, Evidence Underpins a Positive Outlook on MLPs
The fall in energy prices has raised concerns that the dramatic hydrocarbon volume growth we have seen from the new shale plays in the U.S. in the past few years is over or might even reverse. We believe these concerns are overblown. We think the current dislocation in the commodity markets is a case of supply temporarily getting ahead of demand.
Winter Quarterly Commentary
Last year, Legos hit the big screen. In ?The LEGO Movie?, as those of you with children are more likely to be aware, a Lego mini-figure named Emmet Brickowski and his allies save the universe from the clutches of the evil Lord Business. Victory in hand, our Lego friends then party, to the tune ?Everything is Awesome?. And indeed, here too in our more mundane real world...everything is awesome!
3 Things - The Fed, Rig Counts And Employment, ECB
by Lance Roberts of Streettalk Live,
Yesterday, I wrote a fairly lengthy discussion on the biggest fear of the Fed is deflation. As I stated: "The biggest worry of the Federal Reserve, and frankly every Central Banker on the planet, is deflation. The reason is that deflation, as an economic pressure, is dangerous and once entrenched becomes difficult to break."
ECB Review: Blowing on the Embers of a Reflationary Fire
by Andrew Bosomworth of PIMCO,
?Not to pursue our mandate would be illegal? is how Mario Draghi ended his last press conference of 2014. Mr. Draghi?s first press conference of 2015 began with the announcement of a quantitative easing (QE) programme that pursues the European Central Bank?s (ECB) inflation mandate with a vengeance. And rightly so, for the disinflationary trends in the eurozone had become all the more precarious as economic output and the price of oil continued to fall.
Deflation, Low Inflation, and Monetary Policy
by Scott Brown of Raymond James,
Central bank policymakers fear deflation more than anything. However, there is good deflation and there is bad deflation. Yet, even low inflation can create problems for an economy. Low inflation is expected to be a key factor in the ECB?s decision to embark on quantitative easing and ought to have some influence on the timing of the Fed?s initial rate hike.
Wait and See at the Bank of England
UK growth looks to be sustainable, with encouraging domestic demand, though we need to see business investment continue to pick up. Although inflation hovering below the 1% lower tolerance band of the Bank of England (BOE) remains a concern, we think it actually gives the central bank welcome breathing room during a period of uncertainty for the global economy. Looking ahead, we see compelling investment value in the intermediate part of the UK yield curve, namely five- to 10-year bonds, as the BOE plays the waiting game.
Investor implications of QE by the ECB
by Axel Merk of Merk Investments,
Is European Central Bank (ECB) head Draghi?s determination to purchase government bonds turning Europe into a banana republic? What are the implications not only for the euro and U.S. dollar, but gold, stocks and bonds? Our analysis shows that conventional wisdom may be proven wrong in more than one way.
Swiss Franc's Surge = Chaos In Global Currency Markets
Last Thursday, the Swiss National Bank stunned the financial world by decoupling the Swiss franc from the euro. This surprise move sent the franc up almost 40% against the euro in one day, although it didn?t close that high (up 19%). Nevertheless, many currency traders, banks and brokerages were left with devastating losses.
What We Are Hearing From Asia-Pacific Investors: Five Themes for 2015
by Eric Mogelof of PIMCO,
Amid lower forward-looking returns, investors are focusing on multi-asset solutions, enhanced beta, income and alternatives in Asia-Pacific. PIMCO is prepared to address these themes, drawing upon our time-tested investment process that combines high-level macroeconomic views with thorough on-the-ground research.
IBM: When a Company Veers Off the Roadmap
In 2010, International Business Machines? (IBM) then-CEO Sam Palmisano unveiled the company?s 2015 Roadmap in which management detailed its plans to grow (non-GAAP) operating earnings to ?at least $20? per share by 2015. This plan was the successor to a 2010 Roadmap, originally unveiled in 2007, in which management outlined its plan to deliver ?at least $10? in earnings per share by 2010. Since the company ultimately exceeded its 2010 Roadmap expectations and delivered $11.52 in 2010 earnings per share, the 2015 Roadmap was generally met with enthusiasm by
European Head Fake?
by Burt White of LPL Financial,
The much anticipated European Central Bank (ECB) policy meeting this week may include a quantitative easing (QE) program announcement. Although we would view a potentially bold QE program from the ECB as an incremental positive, the ongoing growth and deflation challenges in Europe leave us still with a strong preference for the U.S.
Seeking Strong Int'l Growth Stocks Amid Mixed Macro Signals
Previously stretched valuations have become reasonably constructive in Europe's stalled economy. China's structural reforms and corruption crackdown could be positive in the long term. The commodity cycle downturn hurts resource-dependent emerging markets but benefits net commodity importers.
The Swiss Release the Kraken!
by John Mauldin of Mauldin Economics,
In an era when central bankers are supposed to be more open, collaborative, and communicative, what would make the Swiss National Bank decide to turn on a dime and shock the markets ? to release the Kraken, as it were? Note that in fact all hell did break loose. Rather than delivering hints accompanied by a few well-placed leaks, the Swiss decided it would be best to completely surprise the markets. It will be a long time before we get the full story on what must have been going through their heads as they reached the decision.
Swiss Surprise: National Bank Ends Currency Cap
On Jan. 15, the Swiss National Bank (SNB) unexpectedly abandoned its policy to cap the value of the franc at 1.2 euros.1 Over the past few years, the SNB has had to sell billions of francs to buy euros to prevent an excessive appreciation of the domestic currency - a too-strong currency could dent the country?s export business.
Navigating the Oil Slick
by Team of Calamos Investments,
GDP growth for 2015 is likely to be 2.0%-2.5% globally and 2.5%-3.0% in the U.S. Oil prices may fall further but are likely to stabilize over the next several months. The ECB is likely to ramp up QE in the first quarter. These next months are likely to be volatile, but equities have more room to run. Low corporate borrowing costs and high dividend yields should encourage continued M&A and buyback activity, providing support to equity valuations. With the U.S. in the middle innings of the recovery, the case for secular and cyclical growth companies remains strong.
QE and the ECB: "Authorize" is a Slippery Word
by John Hussman of Hussman Funds,
The ECB will authorize a large QE program this week, but my impression is that the details will leave the ECB itself responsible for executing only a fraction of the announced program, with the remaining majority of the program (perhaps 60-75%) being nothing more than the option for each national central bank to purchase its own country?s government bonds, at its own discretion, and its own risk. Moreover, that option is likely to be limited to something on the order of 25% of the outstanding government debt of each respective country.
Clock Will Be Ticking for Greece?s New Government
Greece is holding early parliamentary elections on January 25. A victory for the anti-austerity Syriza party would probably trigger tense negotiations with the country?s official lenders and fresh volatility in Greek government bond markets. But the expected launch of ECB QE should mitigate contagion to the rest of the periphery.
Palladium Was the Winner in 2014
Palladium, 2014?s top commodity, performed relatively according to script. For the year it was up 11.35 percent, compared to its 10-year annualized returns of 14 percent. Much like nickel, palladium was spurred by extenuating circumstances. Between January and June, a labor strike in South Africa, the world?s second-largest producer of the metal following Russia, halted production, which depleted reserves and sent palladium to a three-year high of $850 an ounce.
Results 8,201–8,250
of 10,168 found.
