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ISM Data Point to Strong GDP Growth in Q4
At the start of each month, the U.S. Institute for Supply Management (ISM) released data on the state of the manufacturing and non-manufacturing industries of the U.S. economy. The data are closely followed by economists, stock market brokers, and the media as they provide the earliest reading on the current state of the economy.
Global Economic Overview: September 2014
by Team of Thomas White International,
Global economic growth concerns resurfaced during the month of September, as data from the Euro-zone suggested that select large counties yet again face recession. Even Germany, the bulwark that shielded the common currency area during the fiscal crisis, has slowed down as subdued external demand has taken a toll on exports.
Martin Wolf on the Financial Crisis: The Fire Next Time
by Michael Edesess,
If you think the global financial crisis of 2007-2009 was a one-time event caused by lax regulation and a financial industry run riot, then Financial Times chief economics commentator Martin Wolf has some bad news for you. Wolf, one of the world's most respected economists, says these circumstances were only part of its proximate cause and that the financial crisis was the inevitable product of the global economic system. If that system does not undergo radical change, says Wolf, financial crises may keep on recurring until the world economic order collapses.
Cameron Uses EU Fine to Bolster Support
by John Browne of Euro Pacific Capital,
Last week, the unelected European Commission demanded that the United Kingdom pay an additional $2.8 billion to fund the European Union. The new charges resulted from the fact that the British economy had grown faster than had been expected in the past year. The demand sparked outrage from Great Britain's Prime Minister, David Cameron, and media, particularly as France and Germany would receive rebates, financed largely by the new funds being demanded from the UK.
International Equity Commentary: September 2014
by Team of Thomas White International,
International equity prices corrected in September as investors became concerned about slower global growth and the continued withdrawal of monetary stimulus by the U.S. Federal Reserve. Stronger than expected U.S. growth could support the global economy in the coming quarters, but has made investors anxious of early interest rate hikes. The Euro-zone economic recovery is faltering yet again as growth has slipped in most large countries.
Snail Trail Vortex
The world is undergoing a radical shift towards lower economic growth at the moment. Some of the dynamics driving growth down are structural in nature (e.g. demographics), and even the most extreme monetary or fiscal policy will not change that. We are in for a period of lower, but still positive, global growth whether we like it or not. Despite the somewhat muted outlook, we continue to expect significant regional variations in growth and therefore also in interest rates and equity returns.
The Trouble with Porosity and Prosperity
I am a philosophical nomad disguised in Western clothing, a wondering drifter, masquerading in a suit near a California beach. Sand forms the foundation of my being and its porosity is at once my greatest strength and deepest wound. I have become after 70 years, a man who believes that no belief is sacred. I have ideals and moral standards, but I believe them specific to me. Had I inherited your body and ego, I could just as clearly have assumed "yours." If so, I wonder, if values are relative, then what are mortals to make of them, and what would a judging God make of
Dont Be Spooked by Market VolatilityOpportunity Is Still Knocking!
One of the greatest fears this Octoberpossibly the most volatile month of the yearhas been the correlation between the S&P 500 Indexs ascent in the first three quarters of the year and the possible ramifications of the end of quantitative easing (QE).
A New Breed of Robotics
by Kenichi Amaki of Matthews Asia,
Are collaborative robotsindustrial robots made to better work alongside humanslikely to be well-received in the market? How feasible is a car made from a 3D printer? This week Portfolio Manager Kenichi Amaki discusses his findings from the International Manufacturing Technology Show in Chicago.
Weekly Economic Commentary
by Team of Northern Trust,
Stress testing is performed in a number of arenas. Tools and parts are stressed to ensure that they will stand up to extreme conditions. Medical patients are stressed to detect heart disease. Computer systems are stressed to ensure that they can operate stably at peak times.
How Exchange-Traded Futures Can Improve the Efficiency of Gold & Currency Linked ETFs
by Ade Odunsi of AdvisorShares,
With a number of gold and currency linked ETFs now using exchange traded futures to gain their gold and currency exposure versus the alternative of holding physical gold/hard foreign currency, we discuss below some of the key features of these futures markets which, in our view, mitigate most if not all of the concerns investor may have about these futures based ETPs.
The Week That Was
by Jeffrey Saut of Raymond James,
In the June 26th edition of the Morning Tack, Jeff Saut wrote, I do believe the VIX bottomed last Friday (6/20/14) with an undercut low, much like the undercut low of October 4, 2011 that we identified as the valuation low, and recommended should be bought with the SPX trading back then at 1075. Well that proved to be fitting timing, since from that 6/20 low to the high on Wednesday 10/15, all the VIX did was shoot up about 200%!
Corporate Calm
We remain confident in corporate Americas ability to generate solid earnings growth in the current global economic environment despite the slowdown in Europe (and to a lesser extent, China). A number of U.S. companies have performed relatively well in Europe, with some not yet seeing signs of a slowdown in their business. The business environment overseas appears to be good enough for companies to largely maintain their outlooks for the rest of the year and into 2015.
The Echo of Wirtschaftswunder
Economic problems in the Eurozone continue to periodically emerge. Complicating matters significantly is German opposition to fiscal and monetary stimulus measures. We believe the experience after WWII and the Wirtschaftswunder (economic miracle) that lasted into the early 1960s has played a large role in shaping current German policy. This week we discuss German history with a focus on how German leaders shaped the economy and rebuilt the nation after the war, paying particular attention to the economic model and how the Merkel government is trying to impose that model on the entire Eurozone.
Equities Recover Some Ground and Still May Have Room to Run
With global deflation and growth fears fading, U.S. equities snapped their four-week losing streak last week with the S&P 500 Index gaining 4.1%. This advance marked the largest weekly gain since January 2013. Following the correction from the mid-September to mid-October, the S&P 500 has now rallied 8%, leaving it only 3% from its all-time high.
Fast, Furious, and Prone to Failure
by John Hussman of Hussman Funds,
Though we remain open to the potential for market internals to improve convincingly enough to at least defer our immediate concerns about market risk, we should also be mindful of the sequence common to the 1929, 1972, 1987, 2000 and 2007 episodes.
A Scary Story for Emerging Markets
by John Mauldin of Mauldin Economics,
The all-too-predictable effects of a rising dollar on emerging markets that have been propped up by hot inflows and the dollar carry trade will spread far beyond the emerging markets themselves. This is another key aspect of the not-so-coincidental consequences that we will be exploring in our series on what I feel is a sea change in the global economic environment.
Plot Twistor a Different Book?
Volatility could continue but equity investors should keep the longer-term picture in mind, which we believe is positive. The U.S. economy is improving and monetary policy remains quite loose. The international picture is more concerning but diversification is important across asset classes. We currently favor emerging markets within a diversified international portfolio.
As the Eurozone Stalls, China Cuts the Red Tape
France and Germanys industrial production has turned down recently. Their purchasing managers index (PMI) numbers are below the 50-mark line, indicating contraction. This trend is especially worrisome because Europe is a bigger trading partner with China than the U.S. is. So whats the solution? The EU would do well to look east, specifically to China.
Risk Aversion on the Rise Gold Back in Vogue
by Ade Odunsi of AdvisorShares,
In this weeks commentary we present a simple methodology for measuring the amount of risk aversion in gold markets. This measure of risk aversion (which we define below) compares the variability of observed gold prices versus the variability that can be implied from gold option prices.
Steady as She Goes
For some time now we have been making the case for a long-term bull market in U.S. equities. This has rested on the prediction of a gradual economic recovery devoid of inflationary pressures, played out against a very accommodative monetary backdrop. So far, this is exactly what has occurred. But as we all know, trees dont grow to heaven and nothing lasts forever. Therefore the relevant questions we ask ourselves every day are: (1) what could go wrong and (2) when should we start to worry? We shall devote this quarters Outlook to the things we worry about.
When Will Rates Potentially Rise?
by Team of Osterweis Capital Management,
When 2014 started, some Wall Street strategists predicted a continuing rise in interest rates as U.S. economic growth accelerated and the Federal Reserve (the Fed) reduced its monthly stimulus. Instead, it has been a one-way street in government bond markets as they continued to deliver low yields at higher prices. In August, the yield on the benchmark U.S. 10-year Note fell to 2.3%, back down to June 2013 levels.
Quarterly Review and Outlook
The U.S. economy continues to lose momentum despite the Federal Reserves use of conventional techniques and numerous experimental measures to spur growth. In the first half of the year, real GDP grew at only a 1.2% annual rate while real per capita GDP increased by a minimal 0.3% annual rate. Such increases are insufficient to raise the standard of living, which, as measured by real median household income, stands at the same level as it did seventeen years ago
Risk and Uncertainty, Confidence and Fear
by Scott Brown of Raymond James,
In recent weeks, the financial markets appear to have been reacting less to weaker expectations of global growth and more to the increased downside risks that is, to the fear that things could get a lot worse. The downside risks to Europe are considerable, but America is much less dependent on exports than most other countries and the prospects for moderately strong growth into 2015 remain promising.
How Consensus Thinking Works Against Investors
Over the past several years we have used this newsletter to voice our concerns regarding the macro-economic landscape, while attempting to provide practical solutions for investors. Since our venture into financial commentary, we have questioned the veracity of consensus opinion and how it tends to be wrong, especially in regards to interest rates.
The Eighth Default of Argentina
Very few countries have seen as spectacular of a decline in its economic standing over the past 100 years as Argentina has. Argentina has been in the international headlines recently due to its sovereign debt default, the eighth default in the history of the country. This week we will look at Argentina, its long history of economic booms and busts, its political background, and its extensive chronicle of sovereign debt defaults. As always, we will conclude with market ramifications.
Despite Volatility, This Bull Is Likely to Charge Higher
As the fourth quarter begins, the market has found itself engulfed in anxiety. Volatility has surged in the equity markets while the 10-year Treasury yield has dropped to 2%-leading some to question whether this bull market is breathing its last breath. We believe: * Global GDP growth will likely be in the 2.0%-3.0% range. * The U.S. is in the 5th or 6th inning of recovery, with slow but improving growth. * Despite the surge in volatility, this bull market has more room to run. * A balance of secular and cyclical growth companies presents the most attractive portfolio for this mid-cycle phase.
The Tool that Will Transform Firmwide Financial Planning
by Bob Veres,
Alex Murguia, founder and CEO of InStream Solutions, may be the most creative visionary in today's advisor software ecosystem. And like all people who think outside the box, sometimes he discovers that his best ideas have far better uses than he intended.
Can You Panic and Still be an Investor?
Quite a week we just had, regardless of asset class. By Wednesday the Dow had fallen 688 points by mid-day, thanks to a 480-point morning decline. The problem was a lack of liquiditya buyers strike (no buyers in the market)as we used to call it. In response, stocks fell, as did commodities (with the exception of gold) and yields plunged on bonds.
The Price We Will Pay for Cheap Oil
by Richard Vodra,
Suddenly in June, oil prices started dropping, reaching levels unseen since 2010. What is going on? Why does the price of oil matter to financial advisors? What might these fluctuations mean to the price and supply of oil for the rest of the decade? Isn't oil just another commodity?
Opportunities Amid Divergence
by Michael Gomez of PIMCO,
As in developed markets, the trends of increasing growth and policy dispersion will be borne out in emerging markets over the next 12 months. Brazil has some of the highest interest rates in the world, which presents an opportunity for investors, and we expect the next four years will be marked by a better mix of fiscal and monetary policy. Because our outlook for China has moderated somewhat, we are focusing attention on trade and financial linkages and how the ripple effects of a slower China might unfold.
Equity Losses Continue, but This Correction May Be Ending
Markets endured a sharp pullback and higher volatility, but technical factors suggest we may be nearing the end of the current correction. Long-term, we believe fundamentals remain sound, the U.S. economy should continue to grow and equities should be able to grind higher.
Japan: Small Change Clouds Big Picture
by Mark Jason of Invesco Blog,
We continue to believe that achieving real economic growth in Japan requires changes that are hard to come by. On a recent trip to Japan, it became clear to me that this next stage of Abenomics shorthand for Prime Minister Shinzo Abes three-arrow economic revitalization program of monetary easing, targeted financial support and structural reforms calls for corporate governance reform to take the spotlight as a core part of the important third arrow, particularly as regulatory reforms have made slow progress thus far.
What the Strong Dollar Does to Yellow and Black Gold and Why We're Seeing Green
The United States is doing better than it has in years. Jobs growth is up, unemployment is down, our manufacturing sector carries the rest of the world on its shoulders like a wounded soldier and the World Economic Forum named the U.S. the third-most competitive nation, our highest ranking since before the recession.
Governments Need Inflation, Economies Don't
by Peter Schiff of Euro Pacific Capital,
In an article in the UK's Telegraph on October 10, veteran economic correspondent Ambrose Evans-Pritchard laid bare the essential truth of the nearly universal current embrace of inflation as an economic panacea. While politicians, CEOs and economists talk about demand stimulus and the avoidance of a deflationary trap, Evans-Pritchard reminds us that inflation is all, and always, about debt management.
Global Worries (And Some Benefits)
by Scott Brown of Raymond James,
In the latest update of its World Economic Outlook, the IMF revised lower its expectations of global growth in 2014 and 2015. None of that should have surprised anyone. At this point, the IMF expects that European GDP will be relatively weak in 2014 (+0.8% 4Q14/4Q13) and should improve in 2015 (+1.6% 4Q15/4Q14). However, risks are weighted predominately to the downside. Weaker European growth and a stronger dollar will have a significant impact on many U.S. firms, but may have some benefits for the economy as a whole.
Optimizing a Portfolio Allocation to Gold
by Ade Odunsi of AdvisorShares,
Gold continues to be an attractive asset class that many investors wish to hold in their portfolios primarily for its diversification benefits and defensive characteristics during periods of high risk aversion in global markets. And notably many investors gain their gold exposure via exchange traded products given the ease of access, liquidity and the transparency they offer, particularly to retail investors who historically faced numerous barriers to holding gold in their portfolios.
How Over-Regulation Hurts Us - Some Eye-Popping Numbers
The study entitled Federal Regulation and Aggregate Economic Growth was published by the Journal of Economic Growth. Among other things, the Journal conducts research on how over-regulation hurts the economy. The Journal calculates that over-regulation has shaved at least 2% off of annual economic growth since 1949.
The Sell-Off Continues, But an Opportunity Appears
by Russ Koesterich of BlackRock,
In recent weeks, investors have been contending with two trends: anxiety over a change in Fed policy and evidence of a slowdown in the global economy. While global growth is likely to remain below historic norms, it is not collapsing. This suggests that investors should be positioned for a slow growth environment, not another recession. This, in turn, implies taking some selective risk in asset classes that have become less expensive as a result of the sell-off. One example of an asset that warrants another look: U.S. high yield bonds.
Bill Sharpe on Retirement Planning
by Robert Huebscher,
Bill Sharpe discusses topics at the forefront of financial-planning research: The role of annuities in a retirement portfolio, the proper glidepath for target-date funds, if investors should anticipate mean reversion in market returns and whether ESG- and SRI-oriented portfolios make sense.
Sea Change
by John Mauldin of Mauldin Economics,
The final chapter and conclusion pretty much end as you would expect: the demise of monetary policys ability to soothe the soul of the markets and the return of volatility. We hopefully get a full-fledged restructuring of the sovereign debt markets. The Fed and sister central banks will try the same tired tools they have been using. Except they have already been to the zero rate boundary and have wasted the opportunity they had to increase rates so that they could lower them later. Another round of quantitative easing?
Results 8,551–8,600
of 10,317 found.
