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Finding Value in the S&P 500: 9 Healthcare Dividend Growth Stocks: Part 1
by Chuck Carnevale of F.A.S.T. Graphs,
Most everyone would agree that the stock market as measured by the S&P 500 is not cheap today. However, there might be a great deal of disagreement regarding precisely how overvalued the S&P 500 currently is.
Today’s Floating Rate Loan Market
by Heather Rupp of AdvisorShares,
We are high yield debt investors. While our focus over the decades has been on investing in high yield bonds, we also do allocate a portion of our portfolio to floating rate bank loans. We see the inclusion of loans primarily as a way to expand our investment universe.
Stock Market Observations
by Craig Drill of Craig Drill Capital,
Central banks have reacted to the UK vote to exit the European Union, the most recent trigger of brief panic in markets, and tepid global growth with a series of forcible and coordinated actions, including further rate cuts, liquidity injections into the banking system, extended asset purchase programs, and, in the US, postponement of any interest rate increases.
Bullion Investors Who Wait Too Long for Bargains Risk Getting Left Behind
After years of buying based on progressively lower metal prices, bullion investors find themselves facing a dynamic that has been missing for awhile: higher prices. That leaves them in a bit of a quandary, and many are sitting on their hands.
Equities Settle Down After an Extended Rally
Equity markets digested a great deal of information last week. Corporate
earnings continued to improve (particularly in the technology sector) and
the U.S. dollar and oil prices declined. The Federal Reserve acknowledged
financial risks have been diminishing, as the economy appeared to stabilize.
The BOJ Hit Its Limit: A Summer Relief for Banks
by Tomoya Masanao of PIMCO,
The message was clear: The Bank of Japan (BOJ) finally admitted that its current policy framework hit the limit. Disappointed? Well, at least the BOJ’s decision on 29 July provides some relief for Japanese banks, insurance companies and pension funds.
Impermanence and Full-Cycle Thinking
by John Hussman of Hussman Funds,
My friend and teacher Thich Nhat Hanh once said, “It is not impermanence that makes us suffer. What makes us suffer is wanting things to be permanent when they are not. Wilting flowers do not cause suffering; it is the unrealistic desire that flowers not wilt that causes suffering.”
Uncertainty Escalates
by Byron Wien of Blackstone,
We are living in truly turbulent times. Police officers are being shot in the United States. A man drove a truck through a crowd and killed innocent children and others in the south of France. An attempted coup in Turkey has been followed by violent retaliation by the challenged leadership.
High-Yield Municipal Update
by Anthony Valeri of LPL Financial,
High-yield municipal bonds have benefited from broad bond market strength in 2016, but are now more subject to the path of interest rates over the remainder of the year. As we mentioned in our Midyear Outlook 2016: A Vote of Confidence publication, we expect more muted returns across the bond market, and high-yield municipal bonds may see a slowdown after a robust 8.9% total return through July 22, 2016.
July 26-27 - The Fed Will Put Us on Notice for a September 20-21 Rate Hike
by Paul Kasriel of The Econtrarian,
The Fed was cocked and primed to deliver a 25 basis point increase in the federal funds rate on June 15. But on June 3, the BLS announced that nonfarm payrolls increased a paltry 38,000 in May. This monthly random number prompted the Fed to stand down on its interest rate increase.
A Barrel of Texas Tea: Half-Full or Half-Empty?
by Jim Masturzo of Research Affiliates,
Oil prices should remain low, likely in the $30–$40 a barrel range, through summer 2017. Investors seeking greater diversification and yield than offered by traditional asset classes should consider commodities, albeit those not heavily tilted toward oil.
Quarterly Letter
by Team of Grey Owl Capital Management,
US equity indices reached new, all-time highs following Britain’s late-June “Brexit” vote. Yet, domestic equity markets have essentially moved sideways for the past eighteen months. The same goes for global equities. Even the unassertive descriptor “sideways” overstates the case – the full path of US equity markets during the period included three bouts of significant downside volatility.
The Duration Connection
In his quarterly letter today to GMO's institutional clients, co-head of asset allocation Ben Inker observes, "over the last six or seven years... the performance divide has not been between low-risk assets and high-risk assets or between liquid assets and illiquid assets, but between long-duration assets and short-duration assets" ("The Duration Connection").
He advises, "the characteristics that made [short-duration risk assets] disappoint may well prove a blessing if discount rates start to rise."
The Fed's Loud Talk Policy
by Peter Schiff of Euro Pacific Capital,
Theodore Roosevelt’s famous mantra “speak softly and carry a big stick” suggested that the United States should seek to avoid creating controversies and expectations through loose or rash pronouncements, but be prepared to act decisively, with the most powerful weaponry, when the time came. More than a century later, the Federal Reserve has stood Teddy’s maxim on its head. As far as Janet Yellen and her colleagues at the Fed are concerned, the Fed should speak as loudly, frequently, and as circularly as possible to conceal that they are holding no stick whatsoever.
IMF Cuts Global Growth Forecast Less Than Expected
Last Tuesday, the International Monetary Fund (IMF) released its latest quarterly “Global Growth Forecasts” which I will summarize below. Before we get into those, I should note that the IMF had been one of the most outspoken critics of “Brexit” ahead of the surprising UK vote on June 23. Specifically, the IMF warned that a Brexit vote would lead to “severe regional and global damage.”
The Cost of Quality
As is likely the case with other liquid alts managers, we are sometimes asked the question about fee levels. Recently, we received such a question and went on to articulate what we thought was a well-reasoned position, only to receive feedback that our response was inadequate. Such feedback may be expected, so we thought we’d take another stab at addressing how to think about fees in the asset management world.
Does Socially Responsible Investing Work? And How to Do It
by Adam Jared Apt,
Since the 1990s, there has been a movement—a very, very small movement, and mostly foreign—to produce the data needed to evaluate the social responsibility of corporations, by integrating measures of their social responsibility into financial reporting.
Speculative Extremes and Historically-Informed Optimism
by John Hussman of Hussman Funds,
There’s a field in one of our data sets that rarely sees much play, being driven primarily by only the most extreme combination of overvaluation, overbullish sentiment, and overbought conditions we’ve identified across history. It’s one of a variety of such syndromes we track, and I’ve simply labeled it “Bubble,” because with a single exception, this extreme variant has only emerged just before the worst market collapses in the past century.
Confidence About the Global Economy Is Improving
U.S. equities notched a fourth week of gains with the S&P 500 Index climbing
0.6%. The primary forces behind the rally remain better-than-expected
corporate earnings, stability in the banking sector and a growing sense that
equities appear more attractive than bonds given low Treasury yields. In our
opinion, the main risk to equities is a possible spike in bond yields. Despite an
improving economy and growing prospects for an additional rate hike by the
Federal Reserve, however, we think such an event is unlikely.
Will the Gold Bull Market Resume After the Summer Correction?
Only time will tell which candidate will be triumphant in November, but in the meantime, one of the winners might very well be gold, which has traditionally attracted investors in times of political and economic uncertainty. In the United Kingdom, which voted one month ago to leave the European Union, gold dealers are seeing “unprecedented” demand, especially from first-time buyers. Some investors are reportedly even converting 40 to 50 percent of their net worth into bullion, though that’s not advisable. (I always suggest a 10 percent weighting, diversified in physical gold and gold mining stocks.) In Japan, where government bond yields have fallen below zero and faith in Abenomics is flagging, gold sales are soaring. It’s not unreasonable to expect the same here in the U.S. between now and November (and beyond).
Minding the Gap Between Short-Term and Long-Term Trends
The Invesco Perpetual Multi Asset team believes that identifying investment opportunities requires a comprehensive view of economic and market dynamics — one that accounts for short-term, cyclical drivers but also looks beyond to incorporate longer-term, structural trends. We believe a two- to three-year time frame can help account for both types of trends to reveal attractive investment opportunities. In this blog, we explain why.
Equity Investment Outlook
Before the surprising outcome of the Brexit vote we would have argued that the fundamental U.S. economic outlook was little changed from last quarter. The pattern of slow growth, low inflation and low interest rates that has characterized the post-2008 recovery was intact and appeared likely to remain so. But the Brexit vote has introduced an element of uncertainty into the equation and increases the risk of an economic slowdown in the U.K. and Europe that could have spill-over effects in the U.S.
Voting for a Return to a Time that Never Was
British citizens went to the polls on June 23rd and, to the surprise of many and the applause of bookmakers, voted to exit the European Union (“E.U.”). Markets convulsed as investors across the globe grappled with the possible ramifications of the “Brexit.” What does this mean for the world economy?
A Tale Of Two Exits—How Different Is This Time?
by Chun Wang of The Leuthold Group,
Despite the uncertainties surrounding all the possible paths Brexit might take, and the significant differences in the macro backdrop, we think our best guide is still the 1992 U.K. exit from the European Exchange Rate Mechanism (ERM). While the ERM exit was practically forced upon the U.K., Brexit is very much a self-inflicted wound. The initial market reaction was nonetheless similar with big drops in the pound in both cases. Overall, we think the market action of the pound is consistent with an event of this magnitude and there is probably more room on the downside.
Thoughts on Brexit and the Implications for Investment Strategy
After 43 years of membership in the European Union (EU), Great Britain voted last week to withdraw its membership. In spite of all the polls which leaned toward staying, all the political leaders cajoling voters to remain, and the international pundits from the International Monetary Fund to the President of the United States who lobbied Great Britain to remain in the EU, the British public voted to leave. It appears to us to be a vote for independence and sovereign pride, in spite of the unknown costs.
Central Bank 'Put' Leads to Sweet Spot for Stocks
Last week reminded us once again that monetary policy still has a significant impact on asset class prices. US Investment Strategist Kristina Hooper says investors need to be prepared for monetary policy exhaustion, which means embracing a more active approach to investing.
Invincible, Indomitable, Unbeatable?
by Blaine Rollins of 361 Capital,
U.S. equities look like a superhero right now. Bond yields plunged after the Brexit and stocks surged. Then last week bond yields suffered their worst weekly spike in three years and stocks rose. Under the surface of equities, sector rotation and leadership changes also appear to be occurring.
Second Quarter 2016 Economic & Capital Market Summary
Leading up to this past month, the focus of the capital markets was on global economic growth, the weakened condition of the European banking sector and the potential improvement in domestic earnings. The general wait-and-see attitude of the recent initiatives to stimulate economic growth in Japan and Europe combined with signs of improvement in China’s economy helped to provide some stability to equity trading levels. Yet, at the same time investors were trying to digest negative interest rates in Germany, Denmark, Switzerland, Sweden and Japan.
Why I Don’t Believe Trump or Hillary Would Tax this Important Asset Class
U.S. municipal bonds have had a spectacular first half of the year. As of July 1, they returned 6.2 percent on a tax-adjusted basis, compared to the 2.7 percent for the S&P 500 Index, placing them among the top performers of 2016 so far. Last month was munis’ best June performance since 2000, according to Bloomberg, spurred largely by negative bond yields around the globe and investor uncertainty following the Brexit referendum in the U.K.
What Will Happen To the Stock Market When Interest Rates Rise? Part 1
by Chuck Carnevale of F.A.S.T. Graphs,
Interest rates have been in a freefall for the better part of the past two decades. Moreover, the yield on the 10-year US Treasury, which is the flagship interest rate benchmark, has mostly been below 2% since the beginning of 2012. The 10-year Treasury note did reach 3% by the end of 2013 but has promptly fallen ever since to its current level of 1.59 percent.
Insatiable Demand for Safety
Marketwatch.com writer, Ellie Ismailidou, wrote an interesting article on July 5, 2016 proposing that the drop in the U.S. 10-year Treasury Bond Yield below 1.4% represents an “insatiable demand for safety.” As contrarians, we love these kinds of well-written thoughts as the media makes folks more and more aware of what has worked in the stock and bond markets this year. We thought it would be helpful to put today’s circumstances into a historical context and look at clues for the best possible behavior for investors in the past and in the future.
Competing Without a Coach: Why Passive Investors May Be Disappointed
Since our last commentary in January, U.S. stock markets have shrugged off a shallow industrial recession, slowing employment growth, “Brexit”, and a plethora of other negatives. The S&P 500 has risen over 15.0% since late January.
Scrounging Through the Dumpster
by John Hussman of Hussman Funds,
From a long-term and full-cycle perspective, the most reliable valuation measures we follow - those with the strongest correlation with actual subsequent stock market returns across history - are consistent with roughly zero S&P 500 nominal total returns on a 10-12 year horizon, and the likelihood of an interim market loss of about 40-55% over the completion of the current cycle.
19th Nervous Breakout: Stocks Finally Reach New Highs
by Liz Ann Sonders of Charles Schwab,
Happy summer? From its Brexit-related low on June 27, U.S. stocks have staged an impressive 8.5% rally. I’ve been peppered with questions—from investors, financial consultants and the media—about how it’s possible the market is trading at all-time highs with so much global uncertainty and angst. Perhaps the best explanation is one of the oldest in the market’s book: stocks like to climb a “wall of worry.”
Results 8,451–8,500
of 11,871 found.
