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In Treasuries, the Risks Outweigh the Rewards
by Russ Koesterich of BlackRock,
The 1Q GDP report was mixed, but the lack of income growth remains troubling. Oil prices are likely to remain range-bound, but that should be good enough to help energy stocks. While yields could decline further in the near-term, Treasuries look quite unappealing.
Likely Rate Cut from the European Central Bank Will Be No Magic Wand
by Darren Williams of AllianceBernstein,
Disappointing April data suggest that the ECB is set to cut the refinancing rate at Thursdays Council meeting. This is likely to have limited economic impact but could encourage expectations of more creative policy action later, helping to take some upward pressure off the euro.
Implementing Behavioral Portfolio Management
Behavioral portfolio management is based on the notion that if the advisor can redirect his or her emotions and mitigate the impact of client emotions, it is possible to build superior portfolios by harnessing market emotions. This article describes how this can be done and presents evidence of the superiority of focusing on investor behavior when constructing and managing portfolios.
Stockman to America: Sinners, Repent!
In a massive volume that melds economic history and social criticism, the former Reagan administration budget director David Stockman has documented countless ways in which America went astray over the last century. Most notably, he decried the corruption of free-market capitalism by those seeking effortless profits at the public?s expense. This is the source of his book?s title, The Great Deformation.
Electric Vehicles: The Devil is in the Battery
by Michael Edesess,
Electric cars are part of the vision of a clean energy society, in which Americans would use few fossil fuels, emit limited greenhouse gases and depend less on foreign sources of energy. Will that vision be realized ? and are electric cars even necessarily part of that vision? Are electric cars environmentally friendly? Are they an economical means of transportation now? How likely are they to capture the market in the coming years?
Developed Asia Pacific: Regional Economic Review
by Team of Thomas White International,
After facing subdued economic conditions for the most part of 2012, developed Asia Pacific economies started 2013 on a cautious note. While most countries opined that downside risk to GDP growth declined substantially, challenges to growth arose from a recessionary scenario in key developed economies, especially from the European Union.
New Highs Bring New Worries
by Richard Golod of Invesco,
The sustainability of the rallies in US and Japanese equities this year so far is looking uncertain amid slowing year-over-year earnings growth and mixed global economic signals. European and emerging market shares have traded lower year to date and seem likely to continue lagging in the near term. However, on balance, I remain optimistic about global equities, seeking yield opportunities and investments with an actively managed, more selective approach.
The Cashless Society
A cashless future might be farther off than we either fear or hope. Not only is it farther away than some think, we are actually seeing an increase in the use of cash all over the world (and this is not just a US phenomenon). We will look at some interesting factoids that make for thought-provoking discussions, but when we couple them with research on the rise of the unreported economy (aka the underground economy) and the number of people who get some form of government assistance, we may find problematic consequences resulting from hidden incentives that work in unintended ways.
Many Of My Dividend Growth Stocks Have Become Overvalued, What Do I Do Now?
by Chuck Carnevale of F.A.S.T. Graphs,
To me, theres almost nothing better than finding a great company that I truly want to own at a fair valuation, or better yet, undervalued. In the long run, it has been my experience that this usually leads to outsized future returns, especially if you buy stocks when they are undervalued at the time. But there is quite often a side effect that can prove very disconcerting. Once an undervalued stock starts moving to the upside, momentum will often carry it above what prudent fair valuation would dictate.
Financial Repression: Why It Matters
by Shane Sheperd of Research Affiliates,
Financial repression refers to a set of governmental policies that keep real interest rates low or negative, with the unstated intention of generating cheap funding for government spending. The ramifications of these policies will be measured in decades, not years.
A Playbook for Investors: How to Shoot, Score, Win
So, in the competitive spirit of the NBA playoff season, I?ve gathered a series of plays that investors can use to shoot, score and win during this year?s market. I?m happy to say they include all the elements of an exciting game, including a comeback kid, an upset and an underdog.
The Return of the Asian Tigers: Guinness Atkinson Asset Management Asia Brief
Often overlooked by international investors, South East Asia encompasses some of the worlds best performing equity markets in recent years, putting the more established emerging markets in the shade. This performance is backed by good economic results and the favourable demographics of some of these countries, with youthful populations ready to improve productivity and increase consumption. One catalyst for future growth is the Association of Southeast Asian Nations (ASEAN) free trade area, which will bring down trade barriers between the South East Asian nations.
An Update on the Global Business Cycle
Understanding where we are in the an important aspect of investing, as the behavior of asset classes may vary throughout that cycle. Recent data indicate that the U.S. remains in its fourth year of expansion, but payroll and retail numbers have disappointed. Outside the U.S., Europe continues to be mired in recession while Chinas growth rebound recently has appeared to sputter. In this edition of Strategic Spotlight, we review what these developments mean for the global business cycle and how to position portfolios accordingly.
The End of “Expansionary Austerity?”
by Scott Brown of Raymond James,
A few years ago, an economic paper by Harvard professors Carmen Reinhart and Kenneth Rogoff helped fuel the push for austerity. It was met with some criticism from economists, but was widely embraced by the press and by politicians on both sides of the Atlantic. The study has now been demonstrated to have had serious flaws, but will those in power fold? Or will they double down on bad economic policy?
Q1 2013 Market Commentary
The country now in the news is tiny Cyprus, which received a bailout for its banks from the European Union (EU), but only after agreeing to steep losses for those banks large depositors. Hitting up bank deposits represents a new dimension to the European debt crisis and illustrates how in a crisis, leaders can and often will resort to whatever means are necessary. When the Cypriots first requested a bailout from the EU and were told their depositors had to suffer, they balked and said that was unacceptable...
Surf's Up!
by Jeffrey Saut of Raymond James,
Last month I was reminded of Surfs Up! while rereading said report from my departed friend Stan Salvigsen of Comstock Partners fame. While that is the organization Stan, Michael Aronstein, and Charles Minter formed in the late 1980s, Stans investment career actually began in 1964 as an analyst with the Value Line Investment Survey. Subsequently, he was an equity strategist at a succession of firms, including Dreyfus, Oppenheimer, C. J. Lawrence, and Merrill Lynch.
Like Air Out of An Untied Balloon...
by Blaine Rollins of 361 Capital,
Earnings hit the market like a ton of bricks this week. It wasnt that the reported numbers were a disaster, but that the new data points did not change the trajectory of the current buying and selling patterns. Investors rewarded the defensive earners (bought more Coca-Cola, Johnson & Johnson, and Microsoft) and sold their shares in more cyclical stocks (Industrials, Semis, and Oil Services). Financial stocks survived the week, but few owners went home Friday feeling better about their bank names than at the start of the week.
Growth From the Ground up in Iskandar
Our emerging markets team isnt too keen on following crowds. Part and parcel of Templetons contrarian approach is traveling to places others arent, and thinking about the long-term potential in specific industries and companies that may not be on others radar screens. One place weve had our eye on for several years now is Iskandar, Malaysia, which has recently been attracting more investor attention. I think it could be viewed as an example of the potential we see in Southeast Asia.
An Awesome Gift For Your Kids, Grandkids, or You
This week, I veer from our usual economic and investment themes to tell you about what I believe is one of the greatest gifts you can ever give your children, grandchildren or others who are dear to you (or maybe even yourself). What I am about to describe is something that has literally changed the lives of dozens of my friends and relatives over the last 30+ years.
Europe's Sovereign Debt Problem: A Call for a Clear Destination
Without political commitment to a common fiscal destination, the long-term instability and market distortions within Europes capital markets are likely to intensify. To preserve the euro, the eurozone must develop federal fiscal policies that tackle significant economic, cultural and societal differences and define a credible roadmap to achieving structural reforms, a banking union, political union and fiscal union. Historical precedents in Europe may help guide the way.
The Next Steps For the Euro: What Is Needed to Ensure Its Survival?
The near term outlook for the Eurozone remains bleak, with the latest International Monetary Fund (IMF) forecasts showing 2013 as another year of falling output for the region. Better growth is desperately needed and there is a case for more cyclical support through easier monetary policy, but there are also structural obstacles to stronger growth. Unless these are addressed, any pick-up in growth will ultimately flounder. In this Talking Point I look beyond the near term cyclical challenges and consider what the Eurozone needs to do to ensure its long term viability.
The New Challenges to Reinhart and Rogoff
by Robert Huebscher,
Advocates for debt reduction and austerity have had no more authoritative sources than Carmen Reinhart and Ken Rogoff. But last week, these two professors had to defend claims that errors in their research ? ranging from a typo in a spreadsheet to the failure to include data from New Zealand ? invalidated their much-acclaimed findings.
How to Help Your Middle-Class Clients Retire
by Dan Richards,
The burgeoning field of behavioral finance points to some simple methods to help clients save more, invest their savings more effectively and maintain motivation through tough patches. Using these methods, advisors can help middle-income clients take the steps to increase the odds of being able to retire when they want, how they want ? and to reduce their stress along the way.
Looking Back at Peak Oil: The Coming Crisis in Energy Supplies
Peak Oil ? the maximum sustainable rate of global oil production ? happened in 2012. Thats one of the main conclusions of a new report, Fossil and Nuclear Fuels ? The Supply Outlook, released in March 2013 by the Energy Watch Group. This event will have profound long-term implications for how advisors should manage clients portfolios, and how clients should plan their future expenses.
Enhancing Credit Returns in 2013
by Andreas Berndt, Ryan Blute of PIMCO,
While credit achieved exceptional returns in 2012, achieving such returns in 2013 will be challenging in light of less upside potential and limited spread compression. Challenged by continued loose central bank monetary policies, alpha generation plays an increasingly significant role in seeking attractive total returns within credit portfolios.
Encouraging investors to provide managers with a variety of innovative approaches and flexibility may enhance the return potential of a European corporate bond portfolio without materially changing overall credit or interest rate risks.
Emerging Europe: Regional Economic Review
by Team of Thomas White International,
The European Bank for Reconstruction and Development (EBRD) was established in 1992 to help Russia and former communist states such as Poland, Hungary, and Czech Republic among others in their transition to market-based economies. In its January forecast, the London-headquartered bank sounded optimistic over the economic prospects of most of the countries covered in this review, which also include Turkey.
Commodity Declines and Weak Data Startle Investors
by Bob Doll of Nuveen Asset Management,
U.S. equities declined last week as the S&P 500 fell by more than 2.0%, which came on the heels of a new all-time high the prior week. Led by gold, commodities experienced volatility and declined over the past two weeks. Other detractors included disappointing first quarter Chinese economic numbers and somewhat softer U.S. releases.
Quarterly Review and Outlook
The Federal Reserve is printing money. No statement could be less truthful. The Federal Reserve is not, and has not been, printing money as defined as an acceleration in M2 or money supply. A review of post-war economic history would lead to a logical assumption that the money supply would respond upward to this massive infusion of reserves into the banking system. The reality is just the opposite. Printing money? No.
Fed to End QE, Obama's Tax & Spend Budget
Today I tackle several topics, each of which could take up an entire E-Letter. But these topics are very important, and I want to address them today. The first is the minutes from the March 19-20 Fed Open Market Committee meeting that were released last Wednesday. Those minutes definitively confirm that the Fed is ready to chart an end to quantitative easing.
Japan Steps into the Void
by Peter Schiff of Euro Pacific Capital,
In the years following the global financial crisis, economists and investors have gotten very comfortable with very high, and seemingly persistent, government debt. The nonchalance may be underpinned by the assumption that globally significant countries that can print their own currencies cant get trapped in a sovereign debt crisis. However, it now appears that Japan is preparing to put this confidence to the ultimate stress test.
The Pharaoh's Dream
by Andrew Bosomworth of PIMCO,
As yields on assets decline, central banks ultra-loose monetary policies are effectively forcing investors further out the concentric circles into lower quality, more illiquid sectors in search of positive yielding assets after deducting inflation. In order to achieve 6%-7% returns in the future, investors may be required to take on more risk. Allocating part of a portfolio away from middle circle asset classes into assets with higher return potential as well as assets offering liquidity is the right strategy in our opinion.
Gold Buyers Get Physical As Coin and Jewelry Sales Surge
Even with the gold price dropping, why are gold coins selling at a premium? Its Economics 101: The coin supply is limited and the demand is high. This buying trend isnt only occurring in the U.S. In Bangkok, Thailand, for example, crowds of buyers were filling stores, eagerly waiting in multiple lines to purchase gold jewelry and coins.
The Lure of Hedge Funds
by John West of Research Affiliates,
Investors often buy what they think is exciting, sophisticated, and complex with the embedded assumption that all of these attributes will lead to greater returns. We see this today where we witness the continued explosive growth of hedge funds. But, a careful examination of the data reveals that these fancy lures fail to hook as much in excess, after-fee returns as more time tested strategies.
Why Landing Clients is Like Dating ? and Seven Other Rules for Prospecting
by Dan Richards,
In the last 10 years, the dynamics of acquiring clients has fundamentally changed. Todays article outlines eight new rules for prospecting; among them why gravity no longer moves prospects through a funnel and the need for a communications catalyst as a result.
Gold in the Crosshairs
by Peter Schiff of Euro Pacific Capital,
In the opening years of the last decade, most mainstream investors sat on the sidelines while "tin hat" goldbugs rode the bull market from below $300 to just over $1,000 per ounce. But following the 2008 financial crisis, when gold held up better than stocks during the decline and made new record highs long before the Dow Jones fully recovered, Wall Street finally sat up and took notice.
The Asian Economic Crisis and the IMF
In May 1997, a speculative run against the Thai baht became the first clear signal that a problem was developing in Asia. Over the next three years, Asia and other emerging markets, including Russia and Brazil, were rocked by a historic financial crisis. These nations recovered strongly in the following eight years and generally made it through the 2007-09 global financial crisis in relatively good shape. However, the impact of the Asian economic crisis remains a major factor in the behavior of these emerging nations.
Valuation Based Equity Market Forecasts - Q1 2013 Update
Click to viewWe endorse the decisive evidence that markets and economies are complex, dynamic systems which are not reducible to normal cause-effect analysis. However, we are willing to acknowledge the likelihood that the future is likely to rhyme with the past. Thus, we believe there is substantial value in applying simple statistical models to discover average estimates of what the future may hold over meaningful investment horizons (10+ years), while acknowledging the wide range of possibilities that exist around these averages.
The (Up) Beat Goes On, Part II
by Bob Doll of Nuveen Asset Management,
We wrote Part I of this theme on February 11 during the first quarter rally, when the S&P 500 closed the week at 1518. This past week the S&P ended at 1589, after increasing 2.3%. Global stock prices continue to push to new highs and thus provide support for a pro-equity bias. One nuance is that the composition of the equity rally has been abnormally defensive.
And That's the Week That Was
by Ron Brounes of Brounes & Associates,
Another dayAnother record. With last weeks poor unemployment releases suddenly a distant memory, investors looked forward (and not backward) and took the Dow Jones and S&P 500 back into record-setting territory with a four-day winning streak. By weeks end, however, some key earnings reports disappointed and analysts became more concerned about the state of the consumer (though there is clearly no consensus on that front either).
The Great Secret
by Jeffrey Saut of Raymond James,
When I was a young boy, I remember my father coming home looking very ashen from a visit with a dear friend dying in the hospital. His name was Dell Zink and he was one of my fathers closest friends. Mr. Z, as we kids affectionately called him, was a very religious man; a man who was regarded by his friends as intelligent and philosophical.
Results 9,451–9,500
of 10,168 found.
