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A Tale of Two Cities – Looking Forward to 2016
by Pamela Rosenau of HighTower Advisors,
The U.S. equity market in 2015 was a tale of two cities. There was a wide divergence of performance within the market, which is reminiscent of the late 1990s. In 1999, tech stocks (per the NASDAQ composite returns) rallied to gain approximately 86% (that’s 86% in one year, not a decade!), while the more prosaic, or “old economy,” stocks (per the S&P 500) gained a mere 21%. In 2015, the divergence was exemplified by the largest ten stocks (by market cap) in the S&P 500 accounting for a 17% return, while the remaining 490 stocks were down in aggregate -5%.
On My Radar: 2016 Outlook
If you haven’t seen the movie The Big Short, go see it. Christian Bale plays Michael Burry in Adam McKay’s adaptation of Michael Lewis’s book about the 2008 financial crisis. Burry was one of the hedge fund managers me and my team knew well. He and others helped us to better understand the approaching sub-prime crisis. I wrote about the issue frequently back then.
Byron Wien Announces Predictions for Ten Surprises for 2016
by Byron Wien of Blackstone,
Byron R. Wien, Vice Chairman of Multi-Asset Investing at Blackstone, today issued his list of Ten Surprises for 2016. This is the 31st year Byron has given his views on a number of economic, financial market and political surprises for the coming year. Byron defines a “surprise” as an event that the average investor would only assign a one out of three chance of taking place but which Byron believes is “probable,” having a better than 50% likelihood of happening.
Emerging Asia Pacific: Economy Trends Update - October 2015
by Team of Thomas White International,
Among the outperformers, India clung to its top position on the list of the world’s fastest growing large economies while the Philippines remained on track to be one of Asia’s fastest growing economies in 2015.
Developed Europe: Economy Trends Update October 2015
by Team of Thomas White International,
The 19-country Euro-zone, which forms a substantial part of the Developed Europe region under our coverage, lost a bit of its growth momentum during the third quarter, signaling that the slowdown in the developing world is likely taking a toll on the export-focused single-currency bloc.
Christmas Edition: 2015 in Review
Before we reach 2016, I want to reflect back on 2015. Everyone is talking about interest rates and monetary policy right now, but the role fiscal policy plays is just as important—if not more so. As I always say, government policy is a precursor to change, and very recently we saw this firsthand.
10 Undervalued Dividend Champions For 2016: Be Greedy When Others Are Fearful
by Chuck Carnevale of F.A.S.T. Graphs,
Dividend Champions/Aristocrats are the go-to dividend paying stocks for prudent investors desirous of a safe, predictable and growing stream of income on the common stock portion of their retirement portfolios. As most investors are aware, in order to be classified as a Dividend Champion/Aristocrat a company must meet the stern test of consecutively increasing their dividend for 25 years or longer. Of all the dividend paying stocks in the universe, only a select few make these prestigious lists.
Weighing the Week Ahead: A Parade of Pontificating Pundits!
Last week’s stock market had a Jekyll and Hyde feeling, setting the background for the two weeks ahead. We will have lighter volume and plenty of people taking vacation during the holiday-shortened weeks. With plenty of explaining to do and a new year ahead, we can expect: A Parade of Pontificating Pundits!
Reversing the Speculative Effect of QE Overnight
by John Hussman of Hussman Funds,
In recent quarters, I’ve remained adamant that the immediate first step of the Federal Reserve in normalizing monetary policy should have been to reduce the size of its balance sheet. The Fed’s failure to prioritize that first step, in the apparent desire to maintain an aggrandized role in the U.S. financial markets, has significantly increased the risk of a collapse from the speculative extremes the Fed has created in recent years. Given the increasing risk-aversion evident in market internals, we doubt that even a reversal of last week’s rate hike would materially reduce that prospect.
International Economic Week in Review: EU Growing, China Slowing, Edition
by Hale Stewart,
As we go into year end, the world economic situation is tenuous. The US, UK and EU are doing fairly well, but Japan and China are weakening. And while Australia is growing, it's clear the Chinese slowdown is hurting. Overall, as noted by the Dallas Fed, the global economic environment is fragile.
The Fed Awakens: A New Hike
On Wednesday, Chair Yellen announced that, for the first time in seven years, easy money will become slightly less easy. The target rate will be set at between 0.25 and 0.50 percent, which doesn’t sound like much, but it’s important that the Fed ease into this cycle cautiously and gradually. Plus, this comes at a time when fellow industrialized nations and economic areas around the globe are considering further monetary easing measures.
Mission Accomplished
by Peter Schiff of Euro Pacific Capital,
The new rounds of rate cutting and Quantitative Easing that the Fed will have to unleash will echo the military "surge" in Iraq in 2007. Those fresh troops were needed to roll back the chaos that the Administration had ignored for so long. But just as that surge only bought us a few years of relative calm, look for the gains brought about by our next monetary surge to be even more transitory. That is a development for which virtually no one on Wall Street is preparing.
The 2016 Geopolitical Outlook
As is our custom, we close out the current year with our outlook for the next one. This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international landscape in the upcoming year. It is not designed to be exhaustive; instead, it focuses on the “big picture” conditions that we believe will affect policy and markets going forward. They are listed in order of importance: the Election Transition, Western Populism, Small-Scale Islamic Terrorism, the Weakening of the European Union, and Trouble in the South China Sea.
Weighing the Week Ahead: Is It Finally Time for the Santa Claus Rally?
Last week’s stock results were poor for nearly all funds and sectors. Will this continue? Until Wednesday, we can expect a continuing focus on the Fed. After that announcement we may see a change in tone: Pundits will be asking:
Is it finally time for the Santa Claus Rally?
Why Dividend-Paying Stocks are Riskier than You Think
by Larry Swedroe,
As advisors shift allocations from bonds to high-dividend stocks, they are exposing their clients to equity market risk. But they are also increasing interest-rate risk. Investors in two of the biggest dividend ETFs – SDY and VIG – are among the most exposed to the surging demand for dividend-paying stocks.
The Slippery Welcome Mat for Rising Rates,
The commencement of a policy-rate-hike cycle by the US Federal Reserve has both symbolic and material significance for the US economy and financial system. Gradually unwinding unconventional, ultra-accommodative monetary policies sets in motion the repricing of assets and other long-delayed adjustments in economic, financial and currency markets. Comparing economic and financial outcomes with prior rate-hike cycles provides clues as to the possible outcomes this time around, but they have little predictive power.
Breaking News!
Tired of reading about the Kardashians? Sick of
egocentric politicians? Disgusted with endless war in
the Middle East? Getting bored reading these monthly
Outlooks? (not that bored or you wouldn’t be reading
this). Here’s some “breaking news” that I find really
interesting and I hope you will too. It’s a recent summary
of some things that scientists have discovered over the
last few decades. Prepare to be amazed.
Weighing the Week Ahead: Will the Fed be Data Dependent?
Back from a quiet, holiday-shortened week, market participants face an avalanche of data and plenty of FedSpeak. This is an irresistible combination for pundits, who will parse each economic report with emphasis on what it might mean for the Fed. In light of many Fed promises, they will all be asking:
Will the Fed really be data dependent?
Devil Inside, Redux: Another Look at the Variety of U.S. Market Valuation Metrics
by Liz Ann Sonders of Charles Schwab,
I’ve written many times about equity market valuation being both in the eye of the beholder and a function of the chosen indicator. Even the most common valuation metric—the price/earnings (P/E) ratio—has many derivations. The table in this report is a summary of most of the common (and somewhat less common) valuation metrics, and a subjective assessment of whether they are sending an inexpensive or expensive message about the stock market presently.
Why Argentina's New Leader Is Good for Latin America and Global Investors
This week, Argentina said no, gracias to further leftist rule when it elected conservative businessman and two-term Buenos Aires mayor Mauricio Macri to succeed Cristina Fernández de Kirchner as president. It was an upset victory for the people of Argentina, who have seen their once-prosperous nation deteriorate under decades of Marxist policies. It was also a strong win for investors around the globe. Not since Narendra Modi's election last year has a leader's entry on the world stage inspired such bullishness.
Weighing the Week Ahead: What are the Best Year-End Investments?
There is a lot of data to be reported in only three full trading days, but it does not rate to signal important economic changes. I expect plenty of participants to take the week off and even more will leave after the first hour on Wednesday. The punditry still has pages and air time to fill, despite the lack of fresh news.
US Equity And Economic Review: A Narrowing Rally, Edition
by Hale Stewart,
The Conference Board reported the LEIs and CEIs this week: LEIs increased .6% while CEIs rose .2%. The only negative LEI component was the ISM manufacturing new orders index, which subtracted .05% from the total number. But two other leading manufacturing numbers were positive. Perhaps best of all, the average workweek of production workers added to the number. Three of four CEI components expanded; only industrial production contracted.
What We’re Paying Attention to Following the Paris Attacks
A week ago today, 129 lives were brutally cut short when assailants affiliated with the terrorist group ISIS, also known as the Islamic State, stormed Paris in a series of coordinated attacks. Along with the rest of the world, we were shocked and saddened as the tragic news unfolded, worsening as the night progressed. Our thoughts are with the victims’ families and friends.
Lessons from Australia and New Zealand on Debt, Immigration, and Food
by Carl Tannenbaum of Northern Trust,
The arc traced by Australian and New Zealand home prices is a source of broad concern. Property values in Sydney, in particular, have risen by 50% over the past 5 years. Observers from near and far fret that the line between fair value and market excess was crossed some time ago.
Realism Returns
Stocks have pulled back after their rip higher in October, which we believe is healthy and in keeping with our expectation of continued volatility. The US economic picture is mixed, but the recent robust labor report boosted the odds of a December Fed rate hike. Finally, while difficult to think about financial matters in the face of such horrific events as the Paris attack, the resilience of both people and economies around the world should give us all hope for the future.
Provise Bullets
by Team of ProVise Management Group,
In a rare display of compromise and cooperation in Washington, Congress passed the Bipartisanship Budget Act of 2015 which settled the budget battles for the next two years and raised the debt ceiling until the spring of 2017. It adds $80 billion to the budget during that time, split evenly between defense and social programs. It also repeals the auto enrollment provision under ObamaCare and limits the Medicare Part B premium increase to a maximum of 15% which was set to go up as much as 50% for some.
Global Economic Perspective: November
While China’s manufacturing sector—which drove China’s rise to its place as the world’s second-largest economy—has been losing steam, it is being supplanted by a domestic, consumer-led economy propelled by a rising middle class with growing income. Other Asian countries are on a similar trajectory.
Political Turmoil in Portugal
Portugal held parliamentary elections in which the incumbent center-right Social Democratic Party received the most votes but fell short of an outright majority. The president tasked the party with forming a government. However, the center-left opposition party and some far-left parties have formed a coalition, together garnering a majority of votes and currently awaiting presidential approval to form a government and take control from the center-right party. This week, we look at Portugal’s current political environment, election results, change in coalition powers and path going forward.
Why We Believe Emerging-Markets Stocks are Attractive
by Rajat Jain of Litman Gregory,
There is certainly no arguing that over the short term, investing in emerging-markets stocks can be a bumpy ride. This is especially true if you invested in the asset class during the crisis-prone years of the late 1990s and early 2000s. When asked why we believe in investing in the asset class, we point to our overarching belief that emerging markets' macroeconomic fundamentals are much better now than they were during those crisis-prone years. In this update, we provide further background on our analysis.
Gasoline and Coffee Fuel Our Daily Lives. Can Commodities Also Fuel Our Investment Portfolios?
Commodities are a tangible part of our daily lives. They are the food we eat, the energy that powers our cars and heats our homes, the metals that go into our electrical wiring and our jewelry. Yet investing in commodities can seem elusive.
Weighing the Week Ahead: What is the Message from Falling Commodity Prices?
Attention quickly shifted from the perceived strength in the monthly employment report to the stock market decline. While some blamed this on the expectation of higher interest rates, there was also plenty of focus on the commodity markets. I expect this interest to continue in the week ahead.
On My Radar: Poking At The Beehive
“The European Central Bank is likely to continue negative rates, extend and enlarge QE, and acquire more balance sheet assets over time. ECB policy influences other nearby non-euro jurisdictions. Essentially, all short-term interest rates of higher-credit-grade and mid-grade countries in Europe are negative, and the policy of negative rates is spreading as the rates go even lower (more negative).” – David Kotok
The Gig Economy Is the New Normal
by John Mauldin of Mauldin Economics,
It’s not just Uber driving or AirBnB. There are literally scores of websites and apps where you can advertise your services, get temporary or part-time work, and do so from anywhere you happen to be. Some “gigs” actually pay pretty good money, but they are for people with specialized skills who prefer to live a somewhat different lifestyle than the typical 9-to-5’er does.
Gasoline and Coffee Fuel Our Daily Lives. Can Commodities Also Fuel Our Investment Portfolios?
Commodities are a tangible part of our daily lives. They are the food we eat, the energy that powers our cars and heats our homes, the metals that go into our electrical wiring and our jewelry. Yet investing in commodities can seem elusive.
Life in a No Growth World and the Impact on Interest Rates
by Heather Rupp of AdvisorShares,
The recent Fed decision seems to provide no more clarity: they left the opening for a December hike but didn’t specifically commit to making a move then. So the question remains, when will the Fed begin raising rates and by how much? It is clear they want to start increasing rates in order to give themselves some flexibility if they need it down the road, all the while fulfilling their dual mandate. However, it seems the “data” for our “data dependent” Fed isn’t getting better globally.
The Bullish Case for Aussie Gold
There’s a gold bear market here in North America, where the yellow metal has plunged to a six-year low of $1,083 per ounce on the strong U.S. dollar. But when priced in the weaker Aussie dollar, the precious metal is sitting at $1,520. As recently as last month, it touched $1,642.
Americas: Economy Trends Update October 2015
by Team of Thomas White International,
The fall in energy and commodity prices continues to drive the divergent economic trends in the U.S. and other countries in the region. While the low fuel costs have supported the ongoing healthy U.S. economic expansion, the resource exporting countries in the region continue to struggle. Brazil remains in an economic recession even as political controversies have worsened the outlook for the country. The recent downgrades by the credit rating agencies have led to significant capital outflows from Brazil, making it difficult for domestic corporations to finance growth.
Growth Will Pick Up
At first blush, the economy’s growth rate in the third quarter (+1.5%) suggests a significant slowing of activity after its solid performance in the second quarter. However, doubts should be set aside, as it was largely a reduction in inventories that held back overall gross domestic product (GDP) growth. In fact, final sales remained strong. Headline growth should pick up as firms increase inventories in the quarters ahead.
Weighing the Week Ahead: What Will Higher Interest Rates Mean for Financial Markets?
Friday’s employment report, rightly or wrongly, confirmed expectations for a December shift in Fed policy. There will be a parade of Fed speakers. We can expect daily discussion about the implications. The punditry will be asking:
What will higher rates mean for financial markets?
The Markets’ Teddy Bear
The sharp market gains seen over the last month are unlikely to persist at the same pace, and investors should be prepared for more volatility. Uncertainty about interest rates will persist, but the US economy continues to chug along at a decent, although not robust, pace. Similarly, global growth seems to be perking up, and helping to stymie predictions of an impending global recession. There are still pressures on global growth, but we believe the upside surprise potential in Europe should benefit stocks in that region.
Results 2,601–2,650
of 3,702 found.
