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Oil Hits the Skids
by Burt White of LPL Financial,
We believe the oil sell-off is overdone and expect the commodity to find a floor in the low $80s. We expect firming global growth to increase the markets confidence in global oil demand despite weakness in Europe. Energy service stocks are particularly oversold and may be attractive as the services-intensive U.S. energy renaissance continues.
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.
Loomis Sayles Core Plus Bond Fund: Navigating Dynamic Markets with Tactical Flexibility
The global economic cycle is a perpetual force influencing interest rates, credit availability and capital markets. For core plus managers who seek to generate total return by balancing liquidity and risk, these undulations pose a clear challenge.
The Economy: October Viewpoint
The U.S. economy continues to move forward in its slow but steady recovery. Despite the Federal Reserve ending their bond buying program in October, demand for U.S. fixed income continues to be robust. The recent downward movement in the stock markets has some investors talking correction once again, and growth concerns overseas finally seem to affecting the performance of the domestic markets. We believe there is still more room for improvement for foreign economies, while the U.S. seems to be a more stable environment.
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.
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.
A Treasury Market Disconnect
As the US economy continues to show signs of strength and the US Federal Reserve (Fed) continues to wind down its quantitative easing (QE) program, one would think the US Treasury markets would start reflecting a potential rise in inflation, and the eventuality of Fed monetary policy tightening. However, there has been a bit of disconnect in terms of behavior on the long end of the Treasury yield curve.
Five Ways to Keep Out of the Bond Liquidity Trap
by Douglas Peebles of AllianceBernstein,
Bond investors are used to managing interest-rate risk and credit risk. But the financial crisis should have taught us that there are times when liquidity risk can be just as important to manage. Now is one of those times.
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.
Disinflation Infatuation
by Anthony Valeri of LPL Financial,
Inflation expectations have fallen sharply in recent weeks, driven by European disinflation, lower energy prices, and overall growth concerns. The persistence of low inflation expectations may intensify the lower for longer theme via lower growth expectations and delays to potential Federal Reserve (Fed) interest rate hikes.
Global Evolution a Game Changer for Real Estate
As investors consider rising rates and the impact on yield-based assets, it is time to address a couple of common misperceptions about real estate. Patrick Brophy, Portfolio Manager of the Janus Global Real Estate Fund, explains why rising rates are not directionally bad for real estate equities. He also explains why real estate can be more than just a source of income for portfolios.
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.
Who Will Blink First?
While tax-exempt yields did follow Treasuries higher during September, the snap-back has been fast and significant; yields have recently established new twelve-month lows. Meanwhile, investors appear to be repositioning from equity and other asset classes into fixed income. The move to bonds includes municipal securities, as evidenced by strong flows into tax-exempt funds, which is forcing cash-laden portfolio managers to buy at the highest prices of the year.
Rising Rate Strategy Performance in a Falling Rate Environment
by Rick Harper of WisdomTree, Inc.,
In our view, exchange-traded funds (ETFs) can provide powerful tools for fixed income investors both big and small. Even some of the most sophisticated investment managers have used ETFs to gain broad-based exposure to certain subsets of the fixed income market.
Assessing the Economic Impact of Hong Kongs Occupy Central Movement
by Paul Chan of Invesco Blog,
The Occupy Central (OC) movement was officially launched on Sept. 28, starting with members from the Occupy Central with Love and Peace (OCLP), the HK Federation of Students and Scholarism groups staging a sit-in in Central and Admiralty that blocked traffic in key commercial and business districts in Hong Kong.
The Ultimate Income Portfolio: 7.1% Yield with Low Risk
by Geoff Considine,
I analyze the performance of last year's Ultimate Income Portfolio and generate the one for 2014-15. The result is a portfolio that yields 7.1% with a risk level equivalent to a 70/30 stock/bond index fund. I also explore some of the lessons learned from four years of tracking and revising the portfolios.
Can The Market Make A Comeback?
Although Im a Detroit Lions fan and thoroughly enjoyed my teams rare, 19-to-7 triumph over Green Bays football team last month, Ive always respected the Packers. (Maybe because as a Lions season ticket holder since the 80s, I probably have seen the Lions lose to them more than anyone else.) They epitomize what football is all about.
High Quality Mid Caps Enjoy Performance Advantage
Since 1965, high-quality midcap stocks have outperformed their low-quality peers by a meaningful margin-a premium that has been most pronounced during periods of market transition. As we approach an inflection point in the current market and economy, investors should consider high-quality mid-cap stocks, which appear poised to thrive.
Finding Value in the Municipal Market Today
With the Feds recent remarks regarding their near term plan or lack thereof for short term rates, investors continue to be surrounded by uncertainty as to the timing and velocity of future interest rate movements. This uncertainty creates the question of how one can protect ones capital base, while earning decent returns.
Air-Pockets, Free-Falls, and Crashes
by John Hussman of Hussman Funds,
Once overvalued, overbought, overbullish extremes are joined by deterioration in market internals and trend-uniformity, one finds a narrow set comprising less than 5% of history that contains little but abrupt air-pockets, free-falls, and crashes.
Five Ways to Keep Out of the Bond Liquidity Trap
The good news is that liquidity risk is manageableand can even offer attractive opportunities, given the right time horizon. When liquidity dries up in one sector, it can be plentiful in another. If managed properly, it can be an additional source of returns. Here are five things investors can do to stay afloat.
Venezuelas Spectacular Underperformance
Venezuela is a major oil-exporting economy that is so badly mismanaged that real (inflation-adjusted) per capita GDP today is 2% lower than it was in 1970, despite a ten-fold increase in oil prices. Perhaps that is why its president is lashing out at academics who have the temerity to point that out.
5% Corrections Have Been Normal in this Bull Market
by Gary Black of Calamos Investments,
We believe the 3Q earnings season, which moves into full swing next week, combined with greater unity by European officials on how to jump start economic growth, and additional soothing comments from our own Fed about keeping short-term rates low for a considerable time, should allow this correction to dissipate without incident, propelling the five-and-a-half year bull market to new highs.
Warning: Market Correction This Week? Did You See the Opportunity?
While stocks fell around the world this week amid growing concerns over global economic growth, Europes slowdown cant stop emerging market population growth that drives long-term commodity demand. If the short-term market volatility concerns you, a solution is short-term tax-free municipal bonds. Check out the 5 Reasons Why.
Five Things To Ponder: Through The Looking Glass
by Lance Roberts of Streettalk Live,
Is this the beginning of a bigger correction, or just a respite before the next advance? This is the first correction, since the beginning of the Federal Reserves latest round of quantitative easing, where the market has broken decisively through its shorter term moving average as shown below.
You Only Dance Twice
Dancing, or better yet as the beginning of my Investment Outlook suggests, being asked to dance, seems to have become an important part of my life over the past month or so. Having first been asked by my wonderful wife, Sue, and now by Dick Weil and Janus from a business standpoint, I write to you today from my desk in a new Janus office in Newport Beach, California.
Bullish on Gold Priced in Euro Gold Priced in Dollars, Not So Much
by Ade Odunsi of AdvisorShares,
In this weeks discussion we revisit our earlier analysis looking at the relationship between the gold price and real interest rates. Over the last three months the gold price in dollar terms has fallen 9% moving briefly below $1,200 and naturally raising concerns amongst investors that this pull-back may extend as the dollar continues to strengthen against a broad basket of currencies.
Rethinking Core Fixed Income in a Rising-Rate Environment
Michael Hasenstab, chief investment officer, Global Bonds, Franklin Templeton Fixed Income Group, says it is time for fixed income investors to think outside traditional boxes. He believes that with todays market environment and the prospect of rising US interest rates on the horizon, investors need to rethink their core fixed income portfolio. He makes the case for an actively managed, global, unconstrained fixed income strategy.
Putting the Pieces Together: An In Depth Chart Review of Global Financial Markets
by Team of GaveKal Capital,
One of our favorite grounding exercises is to peruse our chart library and review what has happened in the global financial markets so we can opine about what those prices and patterns are telling us about the world. We'll save the opining for another time, so we present the following charts with little commentary.
Global asset allocation outlook
Recent market performance, particularly in September, has been negative across a widespread array of asset classes as we have seen the U.S. dollar exchange rate rise with increasing intensity in recent months. The worst returns, not coincidentally, were delivered by the very assets that have shown historically high sensitivity to dollar strength. This disruption to currency stability in general, and the particular importance of a rise in exchange value for the worlds reserve currency, represents an important change in capital market conditions.
Welcome to the World, the Country of Catalonia?
On November 9, the Catalonia region of Spain is due to hold a referendum for independence. This week, we will look at the separatist movement in Catalonia. We will start by giving a brief overview of the regions history and politics, then look at the roots of the independence movement. We will explore the probability of independence, the potential future relationship between the region and the central government, and the role of the EU and the Eurozone. As always, we will conclude with market ramifications.
How M&A Resurgence May Unlock Value
Growth is a strong motivator for initiating mergers and acquisitions (M&A). For years, businesses created progressively more complex organizations, acquiring or expanding into unrelated business lines, consequently often suppressing overall company valuations. The complexity of melding disparate corporations appeared to make it exceedingly difficult for investors to evaluate companies true worth. In the present period of slow U.S. economic growth, a new trend in M&A has emerged, as many companies are reversing these moves, benefiting stock prices, investors and, potentially, the
Nontraded REITs’ Dividends Come With Confusion, Controversy
by Walter Stabell III of Invesco Blog,
Interest rates have been low for quite some time, and investors are searching for ways to generate higher yields. An increasing number of them have turned to non-exchange-traded real estate investment trusts (nontraded REITs). However, nontraded REITs offer high levels of confusion and controversy along with their high yields, and regulators are concerned that these products may not be appropriate for many of the people who invest in them.
What’s Next from the Bank of Japan
by Jeremy Schwartz of WisdomTree, Inc.,
I had the opportunity to meet with Takeshi Yamada of the Market Intelligence Group at the Bank of Japan (BOJ), and I attended a presentation at the Mizuho conference by Eiji Maeda, the director-general of the Research and Statistics Department.
600 Million Reasons to Keep Your Eyes on India
In the wake of his rock star reception at Madison Square Garden on Sunday, Prime Minister Narendra Modi has emphatically announced to our nation's top corporate and political leaders that India is now open for business. Between September 26 and 30, he met with not only President Barack Obama and other high-profile politicians but also the CEOs of some of our nation's largest and most successful companies.
The Wayback Machine Birthday Tour
by John Mauldin of Mauldin Economics,
Ive been writing this letter for some 15 birthdays now, well over 10,000 pages of collected work. Every word is still at my website a history, if you will, of what I was thinking at the time. I asked my longtime (and long-suffering) editor, Charley Sweet, to go back over this past decade and a half and give us a review of what I was saying my birthday week.
Banquos Grain and U.S. Interest Rates
Early in Shakespeares "beth," Lord Banquo asks the prophetic three witches, "If you can look into the seeds of time, and say which grain will grow, and which will not, speak then to me." Banquos turn of phrase reminds us that if a farmer planted the wrong grain he could yield a poor harvest, or worse, he might even starve.
I thought about this recently when asked about the outlook for U.S. interest rates. Investors, like farmers, have a sense of the seasons that guides which grains, or investments, are more likely to yield favorable results. While I have
Is the Stock Market Cheap?
by Doug Short,
Here is a new update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly averages of daily closes for the past month, which is 1993.23. The ratios in parentheses use the monthly close of 2003.37. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.
5 Things To Ponder: Motley Cognizance
by Lance Roberts of Streettalk Live,
It has been an interesting week in the financial markets as the current correction process has continued. As shown in the chart below, the correction has primarily occurred in the mid, small and international equities as money has rotated into mega-large cap stocks for safety.
Voya Fixed Income Perspectives September 2014
Change is in the air, and its evident beyond the riot of color overwhelming our natural landscape. Market dynamics, too, are shifting, with the yield on the U.S. two-year Treasury inching higher and the U.S. dollar appreciating. Both not only suggest markets are pricing in a stronger U.S. economy, they are also potential harbingers that the end of zero interest rate policy is near.
Uncertainty in markets, economy puts focus on stock picking
The U.S. Federal Reserve (Fed) has indicated it will stop buying U.S. Treasury bonds and mortgage-backed securities the taper of its QE3 program by the end of October. The Fed also has said it will keep interest rates at a very low level for a considerable time.
PIMCO Cyclical Outlook for the Americas: Recovery Remains Intact, Yet Uneven
U.S. growth can potentially exceed expectations over the cyclical horizon, in part bolstered by a healing consumer and a very accommodative Federal Reserve. While real growth in Canada has been modest in recent years, it increased to 3.1% in the second quarter and we expect that positive momentum to continue this year. In Latin America, we expect growth will pick up for the region as a whole with outperformance by smaller economies like Colombia and Panama.
Markets’ Rational Complacency
by Nouriel Roubini of Project Syndicate,
A century ago, financial markets priced in a very low probability that a major conflict would occur, blissfully ignoring the risks that led to World War I until late in the summer of 1914. Back then, markets were poor at correctly pricing low-probability, high-impact tail risks; they still are.
Results 9,901–9,950
of 11,878 found.
