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Middle East/Africa: Regional Economic Review - 4Q 2013
by Team of Thomas White International,
The International Monetary Fund (IMF) anticipates weak growth in the Middle East and North Africa (MENA) region mainly due to heightened political instability. Whats more, after years of healthy performance, growth in the oil exporting nations is expected to lose pace due to lower international demand and local oil supply disruptions. Given that these countries are witnessing a population boom, the IMF emphasized the need for economic diversification by the oil exporters and job creation in private non-oil sectors.
Fed Responsible for EM Crisis?
by Axel Merk of Merk Investments,
From the bully pulpits in Sao Paulo to the blogosphere in cyberspace, the Fed is blamed for the turmoil in Emerging Markets (EM). Thats a bit like blaming McDonalds for obesity. Blaming others wont fix the problems in EM economies, it wont fix investors portfolios and it is an unlikely way to lose weight. Investors and policy makers need to wake up and realize that they are in charge of their own destiny. Let us explain.
The Three Drivers of Exceptional Success
by Dan Richards,
Any suggestion that theres only one path to success is fatally flawed. As I look back at my 30 years working with extremely successful advisors, what strikes me is the variation in the approaches taken by advisors. That said, there are three categories of behavior that extremely successful advisors share.
Surviving Austerity
With the Standard & Poors 500 Index having posted a 30% gain, its easy to assume that U.S. stocks easily led the world in 2013. (There is more on what is behind this rally in the latest version of the Euro Pacific Capital Newsletter). But as it turns out, the stimulus-loving U.S. markets had plenty of company. Surprisingly, this includes countries supposedly saddled by the scourge of austerity.
Hasenstab: Standing One's Ground
When the masses are against you, its hard to stand your ground. Going against the crowd is familiar turf for Michael Hasenstab, who manages Templeton Global Bond Fund and co-manages Templeton Global Balanced Fund, and certainly knows the virtue of patience. He has staunchly defended his investment theses over the years, tuning out the naysayers and market noise time and again.
Broadleaf's 2014 Investment Playbook
Most sell side firms publish their outlook for the economy and stock market at the end of December and in early January. As a buy side firm, we really arent under any expectation to share our outlook for the coming year and, as funny as it might sound, some of our clients dont even care to know what we think, only that we handle what they hired us to do, which is to outperform the market indices over a full market cycle and help them attain their financial goals over time.
Why the Recent Lift in Junior Miners Will Likely Continue
Junior venture companies in Canada are finally seeing a significant lift. In early January, the S&P/TSX Venture Composite Index rose above the 200-day moving average for the first time in three years. The index is also very close to experiencing a golden cross, which is when the shorter-term 50-day moving average crosses above the 200-day moving average. Historically, traders see this cross as extremely bullish.
Stocks for 2014: Growth and Income For Total Return Part 3
by Chuck Carnevale of F.A.S.T. Graphs,
When investing in common stocks, there is no one strategy that fits all investors. Some investors are focused on investing for income, some for capital appreciation and others for various combinations of both. Additionally, there is the issue of risk tolerance. Some investors are willing and capable of assuming greater risk if they believe it will lead to greater returns, while others are more risk adverse. These are just but a few of the many variations that apply to the individual investors own unique goals and characteristics.
What's Your 2014 Market View?
by Robert Horrocks of Matthews Asia,
U.S. monetary policy seems likely to continue occupying center stage as people fret about interest rates. Last year was a somewhat instructive year for monetary policy theory in that it seemed to show that policies can be effective even when interest rates have no further room to be lowered. Can the nominal GDP in the U.S. grow at faster rates in 2014, and what would that mean for Asia? This month Matthews Asias Chief Investment Officer, Robert Horrocks, offers his insights into how reforms planned for China could be a key factor to change and what could lie ahead for the region overall
Ordem e Progresso
by Michael Gomez of PIMCO,
Amid stagnant growth and high inflation in 2013, Brazils equity market was one of the worst performers, the real was a chronic underperformer and the corporate sector struggled. Brazil needs to anchor economic policy around a stringent and credible primary surplus target rather than run the current mix of loose fiscal policy, subsidized public credit and ever tighter monetary policy. Valuations are attractive, but unless an effective policy mix is restored, the outlook for order in Brazils financial markets is less certain.
Can Equities Continue Their Rise? Equity Investment Outlook: January 2014
2013 marked the fifth year of recovery following the near-death experience of the 2008 global financial system meltdown. From a low of 677 in 2009, the S&P 500 Index (S&P 500) finished 2013 at 1,848, delivering a stunning 203% total return from the low. Over the same period, the total return for the Dow Jones Industrial Average was 188%. The tech-heavy and arguably more speculative NASDAQ logged a 249% total return. These very large equity returns reflect both a strong recovery in corporate profits and a dramatic clean-up of our financial system.
Crosscurrents Buffet Markets
by Bob Doll of Nuveen Asset Management,
U.S. equity performance was mixed last week, as the S&P 500 recovered from Mondays sell-off that was the largest one-day decline since early November. Economic data was mostly in line or slightly better than expected, following the disappointing December unemployment report. Corporate earnings drove much of the price action. Bank earnings were fairly well received but did not always translate to good performance since the stocks ran up earlier. Negative guidance trends remain an overhang, particularly for retail.
Albert Edwards and Dylan Grice: Bearish Forecasts from Two Top Strategists
by Robert Huebscher,
Its been nearly 18 years since Albert Edwards forecast an "ice age" in which bonds would outperform equities. Hes been right until just recently, when cumulative returns on the two classes converged. But Edwards insists that his thesis is still accurate - deflation will be the force to propel bonds over stocks, he says. Dylan Grice, meanwhile, warns that the markets operate on an unstable equilibrium that could devolve into apocalyptic conditions.
The Deflation Menace
by Peter Schiff of Euro Pacific Capital,
Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble (the paper sees few threats there). Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare.
Are Small Businesses the Engine of Job Growth?
by Marianne Brunet,
What do George W. Bush, Bill Clinton, Ronald Reagan and Barack Obama have in common (besides a conviction that the camera loves them)? They have all promoted the notion that small businesses are the engine of America’s economic growth. But new research shows that the role of small businesses has been overstated.
Stocks 2014: Investing for Growth - The Power and Protection of High Compounding Earnings Growth
by Chuck Carnevale of F.A.S.T. Graphs,
As I become more mature (translate: gotten older), my investment philosophy has slowly evolved into a more conservative posture. When I was a younger investor I felt I had time on my side, and therefore, was willing to take on greater risk as long as I believed that greater rewards could follow. In other words, if I made a mistake by investing in an aggressive and more risky growth stock that went badly, I felt I had adequate time to overcome or recover my losses. Consequently, as a younger investor I relished a good growth stock.
Getting Lucky
Sometimes these memos are inspired by a single event or just one thing I read. This one - like my first memo 24 years ago - grew out of the juxtaposition of two observations. Ill introduce one here and the other later on. Contrary to my wife Nancys observation that my memos are "all the same," the subject here is one Ive rarely touched on.
The Profits Bubble
Profits are dangerously elevated by all reasonable measures. S&P 500 Index real earnings per share are far above their long-term historical trend. Industry profit margins are at or near all-time highs. Corporate profits, both as a percentage of GDP and relative to labor income, are at or near record levels. The dramatic rise in income inequality is a direct consequence of this spectacular reallocation of income to capital and away from labor.
What Does It Take to Be in the Top 1 Percent? Not As Much As You Think
You might be surprised to learn that the top 20 percent of income earners bring in a household income of just over $100,000. The top 10 percent of earners have a household income of more than $148,687. To be considered in the top 1 percent, household income is at least $521,411.
Rebalancing the U.S. Economy
Its happening again-a fourth quarter bounce in economic activity that extends into the first quarter and supports the view that growth really, finally, has started to accelerate. Such bounces have disappointed so far, although it does appear to be more than just hope this time.
Stocks for 2014: Something for Everyone: Part 1
by Chuck Carnevale of F.A.S.T. Graphs,
My biggest pet peeve regarding common stock investing is how so many people have a tendency to over-generalize this asset class. Commonly held beliefs such as investing in stocks is risky, or that the stock market is overvalued, or that the fed is driving stock prices, etc., are just a few examples illustrating my point. In truth, common stocks are as individually different as people are individually different. When dealing with human beings, most reasonable thinking people would reject prejudicial statements. Personally, I believe we should have the same attitude about common stocks.
Weekly Commentary & Outlook
Last year ended very well for us! The New Year has started slowly both because of the weather and because of the middle of the week timing of the holidays. Last Fridays employment report for December was the 1st real piece of economic data which the financial markets could sink their teeth into, and the results have most people (not us) confused.
U.S. Inflation Outlook 2014: Signs of Life
We expect headline CPI to rise to around 2.0% year-over-year in 2014, with our base case oil forecast in the $105-$110 per-barrel range and expectations for food prices to be stable. PCE, in our view, will likely remain below the Feds 2% target, around 1.5%. Individuals will get some relief at the supermarket, but they will feel a pinch from landlords, who will likely raise rents.
Fed Tapering -- Shades of 1937?
by Paul Kasriel of The Econtrarian,
In the press conference immediately following the December 17-18, 2013 FOMC meeting, Fed Chairman Bernanke indicated that it was the FOMCs current plan to have terminated Federal Reserve outright securities purchases by the end of 2014, commencing with a $10 billion reduction in securities purchases immediately after the December 2013 FOMC meeting and then continuing to taper its purchases by about $10 billion after each 2014 FOMC meeting. Of course, this tapering plan is subject to modification in either direction depending on forthcoming economic and financial market developments.
Michael Porter on the Fundamental Problem for Investors
by John Heins,
Harvard Business School Professor Michael Porter’s seminal work on competitive dynamics and the strategies companies can employ to positively impact their competitive positions revolutionized managerial thinking. In this recent interview in Value Investor Insight, however, he’s even more interested in speaking about investing - not all of which is particularly flattering to investors.
Merk 2014 Dollar, Currency & Gold Outlook
by Axel Merk of Merk Investments,
Rarely has the future been so clear. Really?? A lot of money has been lost jumping on the bandwagon. Lets do a common sense check on the greenback to gauge where risks might be lurking and where there might be profit opportunities for investors.
Stocks Rise Modestly in First Full Week of Trading
by Bob Doll of Nuveen Asset Management,
U.S. equities finished mostly higher for the first full week of the year, with the S&P 500 gaining approximately 0.6%. There were no meaningful directional drivers behind the price action, which is a dynamic that has been prevalent so far in 2014.
2014 Economic and Investment Outlook
Although the December 2013 U.S. budget pact between House and Senate negotiators was a welcome development, partisan battles over government spending still are possible in 2014. The agreement ends a three-year budget fight and sets government spending through fall 2015, but it does not eliminate the need to raise the nations borrowing limit - the "debt ceiling."
A Great Time for Investors
Last January, the global economy faced myriad headwinds, choppiness lay ahead, and we expected plenty of volatility. Nevertheless, I said then that risk assets were the best choice for investors. Now, the headwinds of 2013 have largely dissipated, and the outlook is benign for risk assets for the first three to six months of 2014, if not longer.
The Price Action of Stocks Trumps Fundamentals
Perhaps the best argument that one can make for stocks is that many hold doubts about the continuing bull market. The reasons for these doubts are understandable, as the economic recovery has been anemic and growth has slowed significantly - likely leading to lower profits in the future. As a result, corporations have aggressively cut costs, increased productivity and preserved cash - pushing profit margins to historically high levels.
When the QE Tide Recedes, Focus on What is Revealed
While there is fierce debate on the ultimate effectiveness of monetary stimulus surging from the central banks, one cannot dispute the boost that it has given to asset prices. While we may be seeing some "green shoots" of overall growth pick-up in the developed world, the post-crisis recovery in asset values has not been primarily driven by economic or earnings growth. Instead, we have been in a high correlation environment where the rising tide lifted most diversified investor boats as repressed "risk-free" rates pushed money out into riskier asset classes.
Ten Predictions for Advisors in 2014
by Bob Veres,
Nobody can predict the markets. But it is possible to forecast the challenges that financial advisors and planners will face in the next 12 months, or at least provide a warning system for impending threats. Here are my top 10 issues to think about as we enter 2014 - offered with humility and respect for the world’s ability to surprise us.
Waiting for the Great Pumpkin
by James Moore of PIMCO,
Shortly before Thanksgiving, I had the privilege of being on an investor panel at Bank of Americas Debt Capital Markets and Derivatives Conference. On the panel before me was a trio of BofAs chief strategists, among them Michael Hartnett, their chief investment strategist. Mr. Hartnett reminded the audience that he was the man who coined the phrase "The Great Rotation" and after much anticipation, at long last, it was here.
Emerging Markets 2014 Outlook: Shaping the Next Decade
As we embark upon a new year, the Templeton Emerging Markets Group believes 2014 could be an important year for many emerging markets, possibly establishing trends that could play out through much of the remainder of the decade. In particular, Chinese government reform initiatives announced in late 2013 could have far-reaching significance. And, major elections in a number of countries in 2014 could bring dramatic (or not-so-dramatic) changes. Here are a few themes and countries weve got our eye on in the new year.
A Healing Economy
The quarter continued the theme of the year, with U.S. equities continuing their dramatic performance. For the quarter, the Dow was up 9.6%, the S&P 9.9%, and the NASDAQ 10.7%. The years returns substantially exceeded last year"s "expert predictions" and much of this years punditry with the Dow up 26.5%, S&P up 29.6%, and NASDAQ up 38.3%.
Weighing the Week Ahead: Will "Good News" be Good for Markets?
Suppose you knew -- right now, at the start of the week -- that the payroll employment report would show an extreme number. With 200K jobs expected, suppose it were to be 350K? Or 50K? If you had advance information from Mr. Beeks would you even know what to do?
2013: A Review of the Past, the Present and the Future
This commentary is divided into three sections. I begin with a review of current U.S. and foreign stock markets, examining the year 2013 and the past six years, including the crash of 2008. This perspective serves as a launch point into the future, specifically 2014 and the remainder of this decade. I conclude with a review of the past 88 years of U.S. stock and bond markets.
Reflections on 2013: What's Important, What's Not, and What's Ahead
A tale of 2 halves with lingering questions characterizes what we can say was the story for housing for 2013. In the first half of the year, rates were low as the 10 year note was well under 2%. People were still refinancing, as home prices rocketed. Multiple bids were common, and pundits like Ivy Zelman cheered the improving market with praise like "Housing is in Nirvana".
Too Big to Pop
by Peter Schiff of Euro Pacific Capital,
Most economic observers are predicting that 2014 will be the year in which the United States finally shrugs off the persistent malaise of the Great Recession. As we embark on this sunny new chapter, we may ask what wisdom the five-year trauma has delivered.
ProVise Bullets
To say that 2013 was an interesting year would be a bit of an understatement. We learned a long time ago not to make predictions about the stock market because no matter what is predicted, it is likely to be wrong. Even if we get lucky one year, we are not likely to even get close the following year. We do try to give guidance, however. Last year we suggested that, given the late run in the market in 2012 and its 15% return, investors should be happy with a return of 8 to 10% in 2013. Obviously, investors enjoyed much better returns.
2014 Outlook: The Emergence of a Global Expansion
by Team of Loomis, Sayles & Co.,
After years of a global recovery characterized by fits and starts, we expect more synchronized global growth in 2014. Global GDP growth will accelerate modestly from 2.7% in 2013 to approximately 3.4% in 2014, primarily driven by larger advanced economies. In particular, we are optimistic that US growth will be sustainable. The fading economic drag from government policy and the ongoing housing recovery should help boost US GDP growth toward 3% as the year progresses. The UK is poised for a similar rate of expansion in 2014, and Europe will likely post positive growth in the coming year.
Results 8,951–9,000
of 10,168 found.
