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An Interest Rate Hike? Check Out Long Bonds, US Dollar Index, Demographics And Money Multiplier.
Inflation is out of sight in terms of Treasury bond yields, dollar exchange rates and demographic outlook lets not even mention energy costs! Much of the FEDs monetary base expansion did not flow into consumption or, more importantly, entrepreneurial productive investments! Money multiplier is more like a fractional now, since not even credit increased the money available for Main Street the way it used to.
A Sensible Proposal and a New Adjective
by John Hussman of Hussman Funds,
The FOMC is well-served by Richard Fishers proposal to consider terminating the current policy of reinvesting proceeds from Fed balance sheet holdings as those securities mature. That shift would not imply any rush to raise the federal funds rate or otherwise normalize policy rates.
Grandma Got Run Over By A Dividend Portfolio
by Roger Nusbaum of AdvisorShares,
Forbes had a very short article titled High Yield Grandma which offers a brief profile of a woman who has overcome a few setbacks and has a very substantial investment portfolio worth $3 million. As the clever title implies she focuses on dividend stocks.
The Fed, Jobs, and the Financial Markets
by Scott Brown of Raymond James,
Looking ahead to 2015, the labor market is expected to play the key part in the Feds path to policy normalization. However, as we learned from New York Fed President Dudley last week, the Fed will also consider the reaction in financial markets.
Follow the ECB Compass
by Eve Tournier of PIMCO,
As the European Central Bank continues to expand its balance sheet to counter low growth and ?low inflation, we believe European duration should remain relatively well-anchored and European assets should be well supported. Looking ahead, in a world of low yielding European core rates, we believe credit will continue to attract investors. We continue to see spread compression opportunities in peripheral sovereign, fundamentally improving banks and high yield.
The Hidden Value of a Reverse Mortgage Standby Line of Credit
by Wade Pfau,
Recent research has investigated how opening a standby line of credit through a reverse mortgage and strategically spending from this line of credit can help improve the sustainability of retirement income strategies. In this article, I show that the benefits of opening a home-equity conversion mortgage (HECM) line of credit extend beyond meeting spending needs.
An Improving Economy Justifies a Pro-Growth Investment Stance
U.S. equities advanced again last week with the S&P 500 Index climbing 0.4%, extending its winning streak to seven weeks. Investors responded well to improving economic data and focused on the positive aspects of declining oil prices. In China, equities moved sharply higher and notched their best weekly performance in seven years as investors speculated that Chinese officials were on the verge on enacting additional policy support.
2015 Fixed Income Outlook: Handle with Care
by Anthony Valeri of LPL Financial,
With sustained improvement in economic growth, slowly rising inflation, and the approach of the Feds first interest rate hike, bond prices are likely to decline in 2015. High-yield bonds and bank loans can help investors manage this challenging bond market.
Go for the Gold: Commodities and Inflation
by Denis Chaves of Research Affiliates,
Unexpected inflation would be especially damaging to portfolio returns when asset class yields are low, but a modest amount of inflation protection can substantially mitigate the risk. Commodities can be effective hedges against inflationary shocks.
The Big Squeeze Begins
by Michael Story of PIMCO,
Current European Central Bank policies, along with the regulatory environment, are constricting the two primary investment vehicles available to store cash. As many money market funds have maxed out the risk they can take and some regional European banks have started to charge the equivalent of negative rates on deposits, large cash investors are left to ponder how to avoid the potential loss of capital. We believe PIMCO's approach to balancing three key cash management trade-offs may provide an attractive solution for investors.
Dont Let Market Motion Sickness Keep You From Missing the Boat
Despite all of the good news, the recent threat of market volatility, which weve seen plenty of in commodities and emerging markets, seems to have pushed close-to-retirement folks away from equity securities. The August and October downturns, not to mention the decline in gold and oil prices, have understandably heightened consumer fears.
Five Things To Ponder: Unstoppable Force Paradox
by Lance Roberts of Streettalk Live,
As we enter the final month of the year, the markets advance got me thinking about something known as the "Unstoppable Force Paradox." While you may not be familiar with the name, you will certainly know the definition which questions "What happens when an unstoppable force meets an immovable object?"
Draghi Crosses the Rubicon while Juncker Peddles "Europhemisms"
The announcement by newly installed European Commission President Jean-Claude Juncker of a package designed to secure 315 billion of investment for the eurozone garnered a lot of press interest in late November. However, John Beck, director of Fixed Income, London, and portfolio manager, Franklin Templeton Fixed Income Group, believes a speech by European Central Bank (ECB) President Mario Draghi at a bankers conference in Frankfurt earlier in the month offers more practical insight for investors. Here he outlines lessons to take from Draghis speech in the lions
Getting More From Your Equity and Bond Benchmarks
by Ryan Blute of PIMCO,
Benchmarks have long served as a starting point, or anchor, for investors, representing the neutral point for an investment decision. They serve as the basic ingredients that combine to form an investors asset allocation and result in a desired risk/return profile.
Three Reasons Why Municipal Bonds May Offer More Than Just Tax-Exempt Income
Tax-exempt income historically has been the main reason why investors buy municipal bonds. As a result of newer tax laws, including several provisions that expired at the end of 2013, tax bills for high-income earners have increased in recent years.
Why OPEC Will Tolerate Cheap Oil
by John Browne of Euro Pacific Capital,
Despite falling oil prices, the Organization of Petroleum Exporting Countries (OPEC) voted on November 27th not to cut production in order to boost prices. The key to this decision appears to have been the attitude of Saudi Arabia, which has long been the first among equals in the coalition.
The Great Escape??
by Tony Crescenzi of PIMCO,
Since the financial crisis, the Fed has engaged both conventional and unconventional tools in a colossal effort to smooth the deleveraging process, help put Americans back to work and boost wage growth. The Fed has achieved two out of three "escapes": 1) Escape from a liquidity trap: Get banks to lend. 2) Escape from quantitative easing: Stop the bond buying program. 3) Escape from the zero bound: Hike the policy rate above zero. Over the longer term, portfolios should be positioned for low policy rates not only in the U.S., but also in Europe and Japan.
Exchange Rate 101: A Primer For International Investors
by Bryce Fegley of Saturna Capital,
A solid grasp of exchange rates and how they impact various asset classes can help international investors make better-informed decisions. The asset class most likely to be impacted negatively by a strengthening dollar is non-dollar fixed-rate bonds.
How Could They?
Punch and Judy fought for a pie. Punch gave Judy a sock in the eye. Said Punch to Judy, "Would you like any more?" Said Judy to Punch, "No my eye is too sore." Mother Goose nursery rhyme. Ah, nursery rhymes! Intended for kids no less! The above little ditty could serve as a modern day NFL domestic playbook, I suppose, while a century ago it was but one of many lesson plans on what not to do when you grow up.
What's Next for the Dollar and Gold?
by Axel Merk of Merk Investments,
Who would have predicted oil prices in the sixty-dollar range a year ago? Something is not right about these markets. Our take: dont get burned when markets add fuel to the fire. Heres what to watch out for as we head into 2015; ignore at your own peril.
A Brave New World
In the the last two Absolute Return Letters I have argued why one should expect global GDP growth to be below average over the next decade or so, why interest rates should, as a consequence, remain low and why equity returns should also disappoint. Not as in negative returns but below the levels we have grown accustomed to over the past 30 years. If you have read those two letters, none of this should come as a surprise.
The ECBs Shifting Regimes
by Andrew Bosomworth of PIMCO,
The European Central Bank (ECB) is likely to commence a broad-based asset purchase programme, i.e., quantitative easing (QE), in the first quarter of 2015. As it stands, the eurozone is stuck in a liquidity trap, the risk of deflation is rising and inflation expectations are deviating from their long-term anchor. With the private sector deleveraging and the policy rate near zero, additional easing will require expanded asset purchases.
Making Sense of Dollar Strength
by Bradley Krom of WisdomTree, Inc.,
Over the last several months, investors and economists alike have started to take note of the broad-based appreciation of the U.S. dollar. However, we believe the magnitude of this years move tells only a portion of the story. In our view, this summers rally does not represent a correction or near-term adjustment, but rather the continuation of a broader trend that started in the middle of 2011.
Response to Larry Swedroe's Article, "How AQR's New Fund Adds Value"
by Michael Edesess,
In our November 18 issue, Larry Swedroe published an article titled "How AQR's New Fund Adds Value." His article was followed by a lively debate on APViewpoint. Michael Edesess took one side of that debate, in opposition to Swedroe, and his position is stated here.
Quantitative Easing, Interest Rates, Real Yield Curves And Fedspeak...Get A Load Of That BULL!
People got it wrong, Quantitative Easing did not lower long-term interest rates. The Federal Reserves money printing actually halted the plunge of yields and cheapened bonds. Yields fell when other institutions showed their hunger for long bonds, and that suggests trouble ahead.
Current Opportunities Built from Short-Term Headwinds
by The Royce Funds,
As bottom-up stock pickers who pay close attention to risk and valuation, we often see negative headlines as an opportunity to reevaluate our holdings and build our exposure to companies with long-term value at attractive entry points. Portfolio Manager Lauren Romeo provides her perspective on macro headwinds and how they affect our investment approach.
Hard-Won Lessons and the Bird in the Hand
by John Hussman of Hussman Funds,
The S&P 500 is more than double its historical valuation norms on reliable measures (with about 90% correlation with actual subsequent 10-year market returns), sentiment is lopsided, and we observe dispersion across market internals, along with widening credit spreads. These and similar considerations present a coherent pattern that has been informative in market cycles across a century of history including the period since 2009. None of those considerations inform us that the U.S. stock market currently presents a desirable opportunity to accept risk.
Pick and Mix: Fresh Ideas for Diversifying Bond Exposure
by John Taylor of AllianceBernstein,
Policy backdrops and growth trajectories around the world are showing increasing signs of divergence. Yet many bond investors continue to congregate in a few selected pockets of the fixed income universe. In our view, its a perfect time to reconsider diversification tactics.
Global Economic Perspective: November
by Christopher Molumphy, Michael Materasso, Roger Bayston, Michael Hasenstab & John Beck of Franklin Templeton Investments,
Steady improvements in US employment and relatively good economic growth figures mean that debate over when the US Federal Reserve (Fed) will begin to tighten policy continues to be the order of the day. US job growth increased at a fairly brisk pace in October, and numbers for the previous two months (already good) were revised higher. Since the start of 2014, US employers have added more than 220,000 workers on average each month, which should be sufficient to sustain economic momentum after an initial reading showed annualized gross domestic product (GDP) growth of 3.5% in the third quarter
Active Investing: Opportunity in Gold
by Tim Gramatovich of AdvisorShares,
As active managers, we embrace both a top down and bottom up investment philosophy as we look for opportunities for investment. One such potential opportunity we are seeing from more of a top down, thematic approach is in gold.
Where's Waldo Global Treasury Bond Style
by Team of GaveKal Capital,
In case some of our readers aren't familiar with the popular picture book/game series entitled Where's Waldo, here's a quick run down of how it works. Basically, the object is to find an inconspicuously dressed Waldo among a throng of people in endless settings ranging from a sports stadium to the Egyptian pyramids and everything in between. Finding Waldo isn't as easy as it sounds as he tends to blend in quite well with his surroundings.
What is Artificial Pricing?
After the sharp plunge in U.S. 10-year Treasury yields on the morning of October 15, 2015, Bob sent us a few articles which blamed the quick v-shaped price movement on the new breed of algorithmic traders often referred to as High-Frequency Traders (HFTs). The robots were at it again. They were scraping headlines; focused on speed and execution; artificially pricing the Treasury market. A herd mentality amongst the machines was blamed to which Geoff replied, Why doesnt someone write an algorithm to arbitrage algorithmic trading, and what do these people mean by artificial pricing
On the Verge of Chaos
by John Mauldin of Mauldin Economics,
In this weeks letter were going to explore some of the ramifications of the currency war that Japan is precipitating. It is more than just Germany, Korea, and China having issues and needing to contemplate their own competitive devaluations. If the yen goes too far too fast, there will be geopolitical repercussions far beyond the obvious first-order connections.
Risk Parity: Comparing the Objections With Reality - Part 2
As the use of risk parity has grown, so have criticisms against the approach. In this blog series, I look at objections Ive heard about risk parity, and explain why we believe they do not apply to our risk-parity approach - the Invesco Balanced-Risk Allocation strategy.
Time to Look at Long Credit?
by Mohit Mittal of PIMCO,
?Tactical decisions regarding the scaling of an LDI allocation cannot be based solely on Treasury market dynamics. Given recent underperformance of long credit relative to intermediate credit, LDI investors should consider increasing long credit exposure. A structured approach that combines rigorous top-down macroeconomic-analysis to take views on duration and credit sectors with equally thorough bottom-up credit research to identify companies where fundamentals are improving may deliver alpha that can help clients reduce their funding mismatch over time.
When 'Buy and Hold' Works, And When It Doesn't
by Urban Carmel of The Fat Pitch,
Imagine if you had invested in the S&P 500 in 1984 and held through the tech bubble and crash and then through the financial crisis and its recovery. How would you have done over those 30 years? As it turns out, very well. On a real basis (meaning, inflation-adjusted), your holdings would have appreciated by over 400%. A $100,000 investment in 1984 would now be worth more than $500,000.
If German Yields Break To New Lows, European Cyclicals Will Likely Follow
by Team of GaveKal Capital,
European cyclicals continue to be the weakest segment of developed global equity markets, and there doesn't appear to be much sign of that changing. We refer to the extremely strong relationship between German 10 year bond yields and the relative performance of European cyclical sectors.
Japanese Recession and the Referendum on Abenomics
by Team of Northern Trust,
Early this week, Japanese Prime Minister Shinzo Abe announced that he will delay to April 2017 from October 2015 the next phase of his countrys consumption tax hike. In addition, he dissolved the lower house of Parliament and announced that elections will be held on December 14.
Investment Implications for UK DC Schemes in Light of Tax and Regulatory Changes
by William Allport of PIMCO,
With greater flexibility and choices available to DC savers in the latter stages of their career, we believe DC schemes need to reconsider their traditional pre-retirement approach to providing low-risk, income-orientated and pre-retirement investment portfolios. The primary immediate challenge for UK DC schemes is navigating the need for capital stability versus a portfolio that can generate a sustainable income stream for DC savers in retirement.
Results 9,801–9,850
of 11,878 found.
