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QQE2: Japan?s Monetary Banzai Charge
by Chris Richey of Neosho Capital,
In this Age of Monetary Policy, it is impossible to ignore the macro. As much as we would like to focus only on individual enterprises, the mind-boggling scale of $5 trillion of monetary intervention in the U.S., Japan, and Europe renders such cloistered thinking imprudent. Not only must Benjamin Graham?s enterprising investor understand individual stocks, but they must also be keenly cognizant of the role the world?s largest central banks actively play in the value of currencies, bonds, stocks, ETFs, mutual funds, and derivatives of all kinds.
The Swiss National Bank?s Unpleasant Experience of Sleeping Next to an Elephant
On 15 January 2015, the Governing Board of the Swiss National Bank (SNB) unexpectedly exited its minimum exchange rate regime, which it had adopted back in September 2011 when it was fighting sharp appreciation of the Swiss franc in the midst of the eurozone sovereign debt crisis.
Seizing Credit Opportunities When Oil Prices Are Sliding
by Mark Kiesel, David Linton of PIMCO,
?We believe we are moving into an extended period of lower oil prices, and we are actively managing our clients? energy exposure with an eye toward benefiting from recent events. Differentiation between the winners and losers across countries, sectors and individual companies is essential. We currently favor subsectors and companies with strong asset quality, high barriers to entry, solid production profiles and strong balance sheets and liquidity profiles.
The Long Growth Drag From Financial Market Tinkering?
by William De Leon of PIMCO,
Central bankers and regulators have greatly underestimated the negative impact their actions may have on the economic ?multiplier.? Over the next two to three years this miscalculation may settle into a permanent drag on global growth. Forget fears of bloated central bank balance sheets and their potentially inflationary effects ? rather than generating credit in the consumer sector, much of that ?liquidity? is being used to meet new capital requirements.
Is the Party Over?
Every year it seems to be the same. January arrives and with it the winter blahs set in. The excitement of Christmas Day has passed. The celebration of New Year?s is but a memory. We?re putting away all the holiday decorations. What a pain (literally)! And, forgive me for a parochial slip; the Lions, once again, are out of the football playoff picture and off TV.
Market Outlook 2015: Double Digit Gain...Thank You, May I Have Another?
The U.S. stock market finds itself in rare territory as we enter 2015. For only the sixth time in the past 150 years, the U.S. stock market has registered a double-digit gain for three consecutive calendar years from 2012 to 2014. We will try to answer the question: ?Can the U.S. stock market post a fourth year of double-digit gains??
European Populism
In our 2015 Geopolitical Outlook, one of the risks we discussed was the rise of populism. In this week?s report, we will focus on European populism. The recent attack on the employees of Charlie Hebdo in France makes this a timely topic. In this report, we will define populism, examine why populism has developed in the West, note the particular characteristics of European populism and identify the effects it could have on general geopolitics in the future. As always, we will conclude with potential market ramifications.
A Five-Year Global Financial Forecast: Tsunami Warning
by John Mauldin of Mauldin Economics,
It is the time of the year for forecasts; but rather than do an annual forecast, which is as much a guessing game as anything else (and I am bad at guessing games), I?m going to do a five-year forecast to take us to the end of the decade, which I think may be useful for longer-term investors.
International Equity Commentary: November 2014
by Team of Thomas White International,
International equity prices saw modest gains during the month of November, helped by hopes of additional quantitative stimulus measures from the European Central Bank (ECB) as well as more robust U.S. economic data.
Markets May Be Choppy, but Equities Should Advance in 2015
The year started off with equity markets experiencing volatile trading. Stock prices dropped sharply in the first few trading days before recovering, while oil prices plummeted and bond yields fell. Last week, U.S. equities lost ground and the S&P 500 Index declined 0.6%.
Pie in the Sky?
by Team of Absolute Return Partners,
January each year brings with it a host of forecasts, many of which are 'pie in the sky' - silly predictions on equity markets, interest rates and currency movements. We are not in that game, but this is the first time we have written a letter in January. Why? Because we think investors should be focusing on longer term structural trends when analysing the future.
The Hidden Perils of Low Interest Rates
by John Browne of Euro Pacific Capital,
Late last year, with the U.S. economy experiencing falling unemployment and seemingly low inflation, observers were extremely confident that the Federal Reserve would move judiciously in 2015 to restore 'normal' interest rates sooner rather than later. However, in light of the recent fall in both stocks and oil, that conviction has softened considerably.
Shades of APEC Blue
by Raymond Deng of Matthews Asia,
During last year's Asia-Pacific Economic Cooperation summit, Beijing revealed stunning blue skies to replace its normally smog-choked atmosphere?a result of intentional government closings of factories and roads. Producing "APEC blue" as it came to be called was a complicated and expensive task. Asia Weekly explores such initiatives in China.
Levitate: More Market Mood Swings in 2015?
by Liz Ann Sonders of Charles Schwab,
Secular bull market is likely intact, but 2015 could bring more volatility associated with Fed policy and/or global events. Longer-term sentiment suggests the ?wall of worry? is intact; but shorter-term sentiment is more troubling. Falling oil and rising dollar have generated loads of questions from clients ? history tells a generally positive story.
Is Your Portfolio Ready for 2015? #crash
by Axel Merk of Merk Investments,
Is the recent bout in volatility yet another ?buy-the-dip? opportunity or a sign of worse to come? Investors struggle to both keeping up with the markets while protecting themselves against a severe correction. By taking a step back, investors might be able to see the forest for the trees to gauge whether their portfolio is ready for what lies ahead.
How Can The Bond Bull Keep Going?
by Roger Nusbaum of AdvisorShares,
In our Weekly Market Update we have made an effort to track the deflationary story being told in the global fixed income markets, specifically sovereign yields have continued to trade lower defying what most investors thought was possible; Swiss 10 year debt recently yielded 25 basis points. A while back I quoted a Seth Klarman Tweet about German debt trading at multi-century low yields.
The Shiller P/E Enters Rarefied Air
The domestic stock market cannot deliver a sustainable double-digit return without entering a speculative bubble, based on historical data reflecting correlations between the level of the Shiller P/E and subsequent outcomes in the stock market over the past 134 years. Conditions are ripe for a speculative bubble in the domestic stock market in 2015, and investors should reduce risk in their portfolios in stages during the coming year.
2015: More Investment and Profits, Higher Rates, Dollar and Stocks
Contrary to popular opinion, business investment is a key factor behind the current recovery. Productive investments have boosted profits to record highs and, in turn, those profits have driven stock prices to record highs. They should continue to do so.
Oil, Currencies, and the Fed
Fourth quarter headlines included volatility spikes, dramatic declines in oil prices, and positive views of the economy by the Fed. Oil declined 41% this quarter and 46% for the year. The dollar continued to gain against some major developed global currencies. For the year, the dollar gained 13.6% against the euro and 13.8% against the yen while gold was down 2%.
Why the World Needs the US Economy to Struggle
by John Mauldin of Mauldin Economics,
In this weeks letter, my associate Worth Wray explores what a rising dollar means for emerging markets and what central banks are likely to do in response. Can they smooth the ride, or will it be the worlds scariest roller coaster? This letter will print long because of the number of fabulous charts Worth provides. I might make a brief comment or two at the end. Heres Worth.
Weighing the Week Ahead: Time for the January Effect?
I am not a big fan of seasonal effects unless there is a logical underlying reason. The Presidential cycle logic rests upon taking unpopular actions early in the term while emphasizing economic stimulus later. That does not have much relevance in the current environment. The January tax loss effect is more persuasive, especially in years where there are some clear losers to sell. That was true in many sectors this year.
Inflation Is Not Traveling in the Right Direction
by Russ Koesterich of BlackRock,
Inflation is something that those of us in the investment community have been talking about for a while now. While some economists worry that the easy monetary policy of recent years will eventually lead to significant inflation, it is possible that too little inflation is on the horizon, not too much.
Where Will All the Workers Go?
by Nouriel Roubini of Project Syndicate,
In the years ahead, technological improvements in robotics and automation will boost productivity and efficiency, implying significant economic gains for companies. Yet, unless the proper policies to nurture job growth are put in place, it remains uncertain whether demand for labor will continue to grow as technology marches forward.
2015 Investment Outlook: EuropeThe Saga Continues
Like television fans deciphering a season-finale cliffhanger, investors have been left with unanswered questions about the eurozone as 2014 draws to a close. Will the European Central Bank unleash full quantitative easing? Will the eurozone fall into a recession? David Zahn, head of European Fixed Income and portfolio manager, Franklin Templeton Fixed Income Group, gives his perspective on what he thinks may lie ahead as the eurozones drama continues into 2015.
2015 Global Market Outlook: Exploring the Growth Landscape
For much of 2014, the financial press was filled with dire headlines warning of global stagnation and deflation. These demoralizing reports seemed to paralyze policy makers. The facts behind the headlines, however, suggested the reality was not nearly as gloomy or pessimistic as it seemed. This paper outlines a more optimistic outlook for 2015 where the world economy is expected to remain resilient and where the outlook for sustainable corporate returns remains strong.
2015 Investment Outlook - Stay Tactical!
I wrote often throughout 2014 about the danger signals flashing from an excessive run up in debt and derivatives. We have a repeat of the scenario we suffered in 2008, only much worse. The budget recently passed by Congress put taxpayers on the hook for a 2008-like derivatives failure. The potential losses could exceed the previous financial meltdown as other world market conditions exacerbate a bad situation.
The Lessons of Oil
I want to provide a memo on this topic before I and hopefully many of my readers head out for year-end holidays. Ill be writing not with regard to the right price for oil about which I certainly have no unique insight but rather, as indicated by the title, about what we can learn from recent experience.
2015 Outlook: Watching Our Overweights
by Team of Northern Trust,
Asset class returns were much more differentiated this year than last, with yield-oriented assets and U.S. equities being the standout performers. We entered 2014 overweight risk tactically, but made several changes as the year progressed.
Early Look: Who is the Author?
While I can try to explain why the SP500 can drop 103 points in a straight line (in 7 days), then ramp 106 points in 4 days, I dont think thats where I add value. There are legions of pundits on the #OldWall that use 1-factor moving averages than can help you with that.
Government Spent $29,000 Per US Household in 2014
A new study from The Heritage Foundation found that out-of-control spending in Washington amounted to more than $29,000 per household in fiscal year 2014. Today, I will reprint the highlights of that excellent report. As you will see below, government spending has topped $3.5 trillion in each of the six years that President Obama has been in office.
U.S. Equities: Overvalued or Undervalued?
Market participants have devised tools to value overall equity markets: the cyclically adjusted price to earnings (CAPE) ratio, Tobin's Q-ratio, the regression trendline, market capitalization-to-GNP (Buffett's valuation indicator) and the trailing price-to-earnings ratio. We summarize each one of these valuation tools and its implications for investors.
The US Dollar and the Cone of Uncertainty
by John Mauldin of Mauldin Economics,
For the past two letters weve been looking at the global scene and trying to figure out which issues will help us outline scenarios for 2015. We finish the series today by looking at the impact of the dollar bull market on the probabilities for various 2015 developments.
2014 In Review: A Good Year to Avoid Performance Envy
2014 has been an odd year in many ways. Easy money has continued to be the rule for central governments across the world, and this has created false sense of security that is going on six years (following the end of the financial crisis-induced stock market decline that ended in March, 2009). To us, it was a year of waiting: for an end to the suppression of interest rates to aid retirees, for the U.S. Congress to do something productive, and for investors to start taking risk more seriously and stop falling for Wall Street come-ons.
The Second Wind of Abenomics?
Mr. Abe now has up to four more years in power. While investors are likely to be patient in the near term, unless Abenomics gains a second wind the way a tired athlete finds the will to pick up the pace and finish strong there is a risk that this post-election market euphoria could be short-lived. The time for him to act is now.
Iceberg at the Starboard Bow
by John Hussman of Hussman Funds,
Market history, including the series of bubbles and crashes over the past 15 years, does not teach that valuation is irrelevant, but instead that a key distinction affects whether stability or instability is likely to prevail. When rich valuations are coupled with tame credit spreads and uniform strength across a broad range of market internals and security types, one can infer that investors remain tolerant toward risk. In that environment, risk premiums may be low, but theres no particular pressure for them to normalize, even if the speculation is driven by mindless yield-seeking.
European QE Draws Attention to Irish Bonds
Europes bond markets are starting to focus on the potential impact of ECB sovereign-bond purchases. While we expect QE to prompt a further narrowing of peripheral European sovereign-bond spreads, its important to stay focused on country fundamentals when selecting exposure.
Rising Insurance Premiums: A New Impetus for Voluntary Funding of Corporate Defined Benefit Plans
?The Pension Benefit Guaranty Corporation will hike variable-rate premiums on unfunded liabilities in corporate defined benefit plans in 2015 and 2016. The increases along with muted return potential on stocks and bonds and aging plan demographics could make borrowing to reduce or eliminate funding shortfalls less expensive than paying PBGC variable-rate premiums. For efficient execution, we believe it is important to consider appropriate investment strategies before any funding decisions are made.
The $330 Billion Global Tax Break
According to an article by Jon Markman titled The Saudi Stimulus, the global economy is looking to save hundreds of billions of dollars on an annual basis: "According to EIA data, consumption of crude oil during the latest 12 months was 6.9 billion barrels. So the price drop from $107/barrel at the June 2014 high to $59 today represents a total presumptive savings of $332 billion per year." In a time when China, the European Union and other major markets are trying to jumpstart their economies, a $330 billion tax break can only come as good news. It should help in stimu
Results 8,401–8,450
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