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Signs of Healing in the Markets Are Slowly Starting to Appear
Signs of economic stabilization in China and improvements in commodity
markets helped U.S. equities recover some ground last week. Diminishing
concerns over the delay in Federal Reserve rate hikes also aided sentiment.
For the week, the S&P 500 Index jumped 3.3%, with the energy, materials and
industrials sectors leading the way. Health care, in contrast, struggled.
Gaps, Growth and Headwinds
by Richard Clarida of PIMCO,
Global growth is uninspiring. The global economy plods along with aggregate GDP growth of around 3 per cent to 3.5 per cent and similar levels of inflation. This has been true for the past several years and many expect it to continue for at least the next couple. This is partly because trend growth rates in major economies appear to have slowed from the pre-crisis pace. But slow growth is not just a supply-side condition.
Bob Zenouzi Discusses Delaware’s Dividend Income Fund
by Robert Huebscher,
In this interview, Bob Zenouzi, manager of the Delaware Dividend Income Fund (DDIAX), discusses how he strives to provide investors with a yield that is competitive with fixed income, while achieving a premium yield to equities with better downside protection.
How these 12 TPP Nations Could Forever Change Global Growth
The current members include Canada, the United States, Mexico, Peru, Chile, Japan, Vietnam, Malaysia, Brunei, Singapore, Australia and New Zealand.After nearly seven years of negotiations, the TPP promises to deliver unprecedented free and fair global trade among the 12 participant nations.
Investing versus Flipping
Newport Beach may be known as home to PIMCO (and, of course, Research Affiliates). Locally, however, the business of Newport Beach is real estate finance. Many of my local friends have made a bundle in recent years flipping houses in Orange County (the OC). I have also purchased some houses over recent years, but as an investment rather than as a flip. In this article, I explain the difference between investing and speculating by sharing my personal experience investing in residential real estate.
Chart of the Week: Is It Time to Enjoy High Equity Risk Premiums?
The global average equity risk premium (ERP)–is 6.5%.This is good news for equity investors. With current low inflation across developed markets, the expected return from a portfolio of equities appears very attractive because earnings retention plus dividend yield is far above the sovereign bond yields, and also far above inflation in most markets.
China and the Fed
The third quarter of 2015 was marked by significant losses in capital values and an increase in volatility. The S&P 500 lost 7.55% in the quarter and 6.71% year-to-date; NASDAQ dropped 7.77% quarterly and 2.26% for the year; Dow Jones Industrial average declined 8.15% in the quarter and 8.68% year-to-date. The VIX fear measure closed the quarter at 24.50, an increase of 42.6% since the beginning of the quarter and 37.7% since the beginning of the year.
Third Quarter 2015 Newsletter - Corrected Market!
The US stock market finally succumbed to selling pressure that has been affecting financial markets across the globe. For over a year volatility has been a feature of the world's currency, credit and commodity markets. In addition, many world stock markets have been in correction mode, especially emerging markets. Financial markets are interconnected so as poor economic news piled up last quarter all stock markets headed lower.
US Corporate Bond Spreads Continue To Widen
by Eric Busch of GaveKal Capital,
Spreads are on the move in the bond market, especially for lower credit bonds. The spread between the Bank Of America/Merrill Lynch US High Yield index and 10-year treasuries has widened out to 623 basis points which is the largest spread since June 2012. It’s not just junk bonds that are making multi-year highs in spreads, however. The spread between BAA and 10-year treasuries is the widest since July 2012 and the spread between BAA and junk is the widest since September 2012.
US Bond Market Week in Review; Did the Window Close, Edition?
by Hale Stewart,
A rate hike of at least 25 basis points was a done deal a few months ago. But recent global and domestic events have greatly lowered that possibility. It began with the Chinese equity sell-off followed by the surprise yuan devaluation. Recent Chinese manufacturing weakness adds to the mix. Although some recent US news has been positive, continued price weakness, lower industrial production and a recent employment slowdown show the US is not immune to the slowing international environment.
The Case for Gold to Protect Clients’ Wealth Shorting the Federal Reserve
by Michael Lebowitz,
This article presents the case for an asset that will help managers protect their clients and uphold their fiduciary duty owed to them. I’ll explain why gold is a powerful hedge that will protect your clients’ wealth, but first I’ll look at the history of trade and currencies and how gold evolved to become a global store of wealth.
A Growing Risk of Recession
by John Hussman of Hussman Funds,
With the S&P 500 within about 8% of its highest level in history, with historically reliable valuation measures at obscene levels, implying near-zero 10-12 year S&P 500 nominal total returns; with an extended period of extreme overvalued, overbought, overbullish conditions replaced by deterioration in market internals that signal a clear shift toward risk-aversion among investors; with credit spreads on low-grade debt blowing out to multi-year highs; and with leading economic measures deteriorating rapidly...
Recession Watch
by John Mauldin of Mauldin Economics,
If recovery from a banking crisis can take ten years and we are only seven years in, I expect (barring aliens) that we have a few more years to go. A slow, muddle-through recovery may not be exciting – but it’s better than the alternatives. As I noted at the beginning, I am quite worried about the possibility of a recession in our slow-growth, barely limping along at stall speed economy.
The 10 Most Competitive Countries in the World
No new countries have entered or exited this exalted list, and there was very little rank-shuffling. For the seventh consecutive year, Switzerland is the most competitive country. For the fifth straight year, Singapore is number two. The U.S. comes in at number three for the second year. And so on.
Designing a Dividend Growth Portfolio for a Specific Retirement Yield Objective: Part 1
by Chuck Carnevale of F.A.S.T. Graphs,
Managing an investment portfolio is a very personal matter. Consequently, the most important consideration is to design a portfolio that meets your own unique goals, objectives and risk tolerances. Everyone is different, and consequently, every investment portfolio can and should be appropriately different as well. Stated more straightforwardly, I do not believe in cookie-cutter or one-size-fits-all approaches to portfolio design.
It Ain't Over 'Til It's Over
by Burt White of LPL Financial,
Yogi Berra passed away last week at the age of 90. One of the greatest baseball players of all time, Berra was probably known more for his funny sayings (so-called “Yogi-isms”) than he was for his impressive career as a New York Yankee that lasted from 1946 until 1963 and included 3 MVP awards and 10 World Series championships. Some of these Yogi-isms are relevant for investors, including: 1) it ain’t over ‘til it’s over, 2) déjà vu all over again, and 3) the future ain’t what it used to be. Berra also famously once said, “Make a game plan you can stick to…unless it’s not w
El Niño Update
Meteorologists have been calling for an El Niño event since last year. Current forecasts place the likelihood of an El Niño this winter at over 90%. Water temperatures in the Pacific, one of the first signs of a looming El Niño, have measured much higher than normal. In fact, water temperatures have been on par with the most severe El Niño event from the past 30 years. This report looks at how an El Niño develops and its possible climate, economic and geopolitical effects on the global economy. As always, we outline the potential investment implications of this event.
Speaker Boehner Readies Final Sellout As Debt Ceiling Debacle Looms
It's campaign season, and that means non-stop media coverage of candidate polls, quips, gaffes, tweets, emails, controversies, lies, and scandals. It all makes for a good soap opera. Unfortunately, it's almost all irrelevant in the big picture.
Annual Outlook
by Mary Ellen Stanek of Baird Advisors,
In an environment of low rates and heightened uncertainty, the U.S. has experienced sub-par growth during this economic cycle relative to past expansions. But compared to the rest of the world, the U.S. has been a strong performer. And even with only moderate growth, the U.S. economy has experienced healthy job creation – 11 million jobs since the bottom of the recession, 3 million created last year, the highest since 1999, and 2.5 million this year.
In 2015, Volatility from a Phantom Rate Hike
by Tony Crescenzi of PIMCO,
Many investors are familiar with the adage, “they don’t ring a bell,” to warn when it is time to get in or out of an investment. Well, sometimes they do, or so the famed scientist Ivan Pavlov would likely contend. The physiologist trained dogs to salivate at the sound of a bell, having conditioned them to associate the bell with the delivery of food. Pavlov discovered that he didn’t actually have to deliver the food to get the canines to salivate in anticipation.
Equities May Remain Trendless Until More Clarity Emerges
Sentiment was negative for most of last week, as investors focused on
continued uncertainty over Federal Reserve policy, slowing growth in China
and emerging markets and ongoing weakness in commodities. Stock prices
bounced on Friday following comments from Fed Chair Janet Yellen that a
rate increase was looking more likely in 2015. Nevertheless, equities finished
in negative territory, with the S&P 500 Index falling 1.4%. The health care, materials and industrials sectors came under pressure, while utilities, consumer
staples and financials finished higher.
Nearing Normalization / Shutdown Shuffle – Part 2
by Scott Brown of Raymond James,
Fed Chair Janet Yellen downplayed concerns about the rest of the world and indicated that she was among the majority of Fed officials expected to raise short-term interest rates this year. Meanwhile, while John Boehner’s resignation as House Speaker may signal an agreement on the budget, Congress has moved further away from future compromise.
Fed Bolsters Investment Grade Bond Issuance
Barring an external shock that sends global risk assets lower, the Federal Reserve’s (Fed) decision to keep interest rates unchanged while lowering its projected pace of future rate hikes is likely to support a continuation of the heavy pace of new corporate bond issuance and merger and acquisition (M&A) activity in the US investment grade (IG) market.
Yes, and No
by John Canally of LPL Financial,
The title of this commentary is our answer to the question: Does the Fed know something we don’t know? Many market participants and pundits were asking this question late last week after the Federal Reserve’s (Fed) policymaking arm, the Federal Open Market Committee (FOMC), decided not to raise interest rates at the conclusion of its two-day policy meeting on Thursday, September 17, 2015. Market participants were asking the question although they had priced in just a 30% chance of a rate hike prior to the meeting.
How Will These Leaders of 4 Billion People Change the World?
This week the U.S. played host to three prominent and illustrious leaders to billions of people: Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and Pope Francis. Among them, they lead—either politically or spiritually—nearly 4 billion people worldwide, more than half of everyone living on the planet right now.
Saved by Zero?
So the Fed has chosen to hold off on their goal of normalizing interest rates and the ECB has countered with the threat of extending their scheduled QE with more checks and more negative interest rates and the investment community wonders how long can this keep goin’ on. For a long time I suppose, as evidenced by history at least.
Fed Implications
by Burt White of LPL Financial,
The Federal Reserve’s (Fed) decision not to raise interest rates at its September 17 policy meeting was undoubtedly the biggest event of last week. Although not a big surprise, besides Donald Trump (and perhaps China), the Fed is all that anyone is talking about these days. This week we share some of our perspective on what the Fed’s decision may mean for the stock market and offer some investment ideas.
Equity Funds: What You Should Know about Flows
by Milton Ezrati of Lord Abbett,
Current trends support the notion that U.S. stock valuations are far from overstretched. Prices up, prices down—the trends in mutual fund flows seem to continue unaltered. Money flows out of domestic U.S. equities and into foreign equities, hybrid funds, and bonds, regardless of how low yields fall or how well or poorly the stock market does.
When an Easy Fed Doesn't Help Stocks (and When It Does)
by John Hussman of Hussman Funds,
Investors who wonder why the stock market failed to advance on the Fed’s decision to leave interest rates unchanged would do well to understand that the market is following a script that has played out repeatedly across a century of market history. The short explanation is straightforward. When investors are risk-seeking (which we infer from the behavior of market internals), Fed easing tends to be very favorable for the stock market, because risk-free, low-interest liquidity is a hot potato to risk-seeking speculators.
Annual Outlook Address
by Mary Ellen Stanek of Baird Advisors,
The uncertainty caused by speculating on when the Fed will raise rates is almost worse that the move itself. We think the Fed needs to forecast where the U.S. economy will be in terms of full employment and inflation a year or two down the road given the long and variable lags of the impact of their policy changes. We think they have been too optimistic in terms of the expected growth of the economy.
Here Are Two Ways Investors Can Take Advantage of the Fed's Uncertainty
Although interest rates could still be hiked in one of the two remaining times the Federal Open Market Committee (FOMC) meets this year, I’m inclined to think they’ll stay near zero until at least 2016. The decision is a welcome one for both gold demand and new home purchases. When rates rise, gold becomes less attractive for some investors, who are encouraged to exchange their no-yielding gold for income-producing assets.
Results 9,101–9,150
of 11,878 found.
