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In Energy Revolution, Bond Investors Must Keep Their Heads
A surge in capital expenditures and leverage in the energy industry could end badly for some companies and their creditors. While select opportunities exist, we think bond investors should think carefully before they blindly bankroll todays North American energy revolution.
Middle East/Africa: Regional Economic Review - Q3 2014
by Team of Thomas White International,
Despite continuing geopolitical tensions and subdued oil prices, the Middle East and Africa region had a largely positive third quarter. South Africa, the largest economy in this region, saw its labor problems diminish while Egypt reported a string of encouraging data, signaling that it is steadily recovering from a long phase of political and economic turbulence.
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.
Weighing the Week Ahead: Are Investors Too Complacent?
There is no investment edge from repeating what you read in the morning paper. Here was my list still worth watching: Geo-political that is not on the current radar a true black swan. An increase in the PCE index that was not accompanied by strong economic growth. Wage increases that were not accompanied by strong economic growth. Declining profit margins that were not accompanied by strong economic growth and increased revenues. An increase in the chances for a business cycle peak (the official definition of a recession). Remote at this point. An increase in financial stress t
ECRI Recession Watch: Weekly Update
by Doug Short,
The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 133.2, up from the previous week's 132.0. The WLI annualized growth indicator (WLIg) is at -2.4, down from -2.9 the previous week. ECRI's latest public statements have focused on Japan. The website now features a November 17th response to the announcement of Japan's Fourth Recession Since 2008.
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.
Indonesian Optimism
Southeast Asia represents one of the fastest-growing regions in the world today, and is one that we are excited about as investors. The Templeton Emerging Markets Group held our semiannual analyst conference in Jakarta in September, and one of the key reasons for choosing that location was to observe and discuss the changes and challenges on the ground with the new regime of President Joko Widodo. Ive invited my colleague Tek Khoan Ong to pen some thoughts on the outlook and investment opportunities in Indonesia today.
Why the Risk-Reduction Benefits of Bond Ladders Have Been Overstated
by Joe Tomlinson,
Proponents of bond ladders argue that they will significantly improve the security of financial plans. Others contend that the risk reduction benefits are merely a mirage. I side with the latter view and will explain why.
Weighing the Week Ahead: Time to Buy Commodities?
It may not be the exact bottom for energy stocks, but they are among the cheapest on a P/E basis. There is a lot of bad future news in current commodity prices, so the risk/reward balance has shifted. Many seem to start with the commodity prices and infer future economic weakness. This method is unreliable with a lot of false signals. I prefer to begin with economic data and then find the most attractive stocks. I provide more detail in Circular Reasoning about Commodities, including why I favor ESV and FCX.
Investment Update October 2014
Coming off a strong second quarter, stocks turned in a mixed performance for the three months ending September 30. The fundamental backdrop for stocks remained relatively stable, with interest rates drifting slightly lower and generally supportive news flow around corporate earnings, economic growth, inflation and Fed policy. While this familiar combination of factors has been hospitable for stocks, this past quarter reflected a growing unease about the prospects of further upside.
Ramifications of Republican Romp
In our recent midterm election preview, we said that Republicans were likely to gain control of the Senate in a close contest; we also laid out some possible implications of such a win. As it turns out, we did not give the Republican momentum enough credit, as election night turned out to be a clear victory for the GOP across the board.
Capital Raising in the MLP Sector Remains Active
We continue to see evidence that underpins our long term positive outlook on MLPs and midstream energy infrastructure companies. The need for new midstream infrastructure remains significant and announcements of large projects continue to be made. New export markets for U.S. hydrocarbons continue to develop and offer new profit opportunities for MLPs.
Knowing What You Can't Know, Knowing What You Don't Know, and Staying Disciplined in Your Investment
by Team of Litman Gregory,
In our investment analysis and decision-making, we try to focus on what is knowable with a reasonable degree of certainty or within a reasonable range of outcomes. We also recognize the importance of staying within our circle of competency, which means not investing in things we don't fully understand. And while our investment discipline requires us to adapt and change our views if the facts and circumstances change, it also protects us against getting swept up in the short-term noise and emotions of the markets.
Americas: Regional Economic Review - Q3 2014
by Team of Thomas White International,
The clear divergence in economic growth trends between the developed economies in North America and Latin America widened during the third quarter. The U.S. is now the fastest growing developed country in the world, and has lifted the outlook for Canada and Mexico, two of its major trading partners in the region.
Weighing the Week Ahead: What the End of QE Means for the Individual Investor
Pulling this all together, Abnormal Returns explains what the individual investor should do create a personal margin of safety. Tadas uses his broad knowledge and experience to pull together advice from several leading sources. If you had followed this approach over the last few years, you would have been able to stick with your program during the tough times. It will be of equal help in the future.
Why Consider Brazil Now?
by David Nadel of The Royce Funds,
We see Brazil as a country whose investment appeal appears evident based on enduring themes, including burgeoning middle-class consumption, a young and unlevered population, business acumen in fields as diverse as agriculture and manufacturing, and more.
U.S. Budget: How Is Spending Trending?
by Milton Ezrati of Lord Abbett,
With the pivotal 2014 midterm election around the corner, here is the first of a two-part look at both sides of the U.S. budget. First up: Examining where U.S. taxpayers money actually goesand whether current spending trends are sustainable.
Plot Twistor a Different Book?
Volatility could continue but equity investors should keep the longer-term picture in mind, which we believe is positive. The U.S. economy is improving and monetary policy remains quite loose. The international picture is more concerning but diversification is important across asset classes. We currently favor emerging markets within a diversified international portfolio.
No More Black Mondays
by Jeffrey Saut of Raymond James,
In a true demonstration of impeccable and apropos timing given the recent volatility we have experienced, yesterday marked the 27th anniversary of one of the stock markets most infamous and chronicled events. Black Monday, October 19, 1987 was one of those multiple standard deviation occurrences that statisticians will tell you are not supposed to ever really happen, but as is the case more frequently than most realize, it of course did happen, and its impact is still being felt today even as there are fewer and fewer investors around that actually had to suffer through it.
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.
On the Tendency of Large Market Losses to Occur in Succession
by John Hussman of Hussman Funds,
We may wish to believe that a 25-30% market plunge has zero probability since we know that the probability of a one-day loss of several percent is quite low, making a whole series of them seemingly impossible. But that view overlooks the tendency of large losses to occur in succession. It also overlooks the tendency for monetary easing to support stocks only when low- or zero-interest risk-free assets are considered inferior holdings in comparison to risky ones.
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.
Special Report: Volatility Update
Volatility can destroy the best of financial plans. Simply doing nothing can be a fine strategy in the face of short-term volatility, but the tension associated with market downdrafts makes both institutional and individual investors feel that doing nothing is not an alternative. However, decisions made under duress are typically decisions that should not be made.
October is a Scary Month
by Brian Andrew of Cleary Gull,
The current environment for stock investors can be trying. Global cross currents regarding economic growth, employment, government policy, and corporate earnings have created the first test of investors mettle in almost two years. We have an opportunity to use current market events to review our investment plan and check our emotional temperature.
What Are We Doing to Our Young Investors?
In the latest piece from Research Affiliates, Rob Arnott, chairman and CEO, and Lillian Wu, researcher, look at the growing use of target date funds by young workers, and how their defined contribution (DC) portfolios are therefore increasingly concentrated in stocks. However, young workers are more likely to cash out their DC assets to meet living expenses during a recession or other hardship, and equity volatility could leave them in a bind. Arnott and Wu offer a potential solution: less risky starter portfolios.
How Over-Regulation Hurts Us - Some Eye-Popping Numbers
The study entitled Federal Regulation and Aggregate Economic Growth was published by the Journal of Economic Growth. Among other things, the Journal conducts research on how over-regulation hurts the economy. The Journal calculates that over-regulation has shaved at least 2% off of annual economic growth since 1949.
Dilma or No Dilma?
During the first round of Brazilian presidential elections on October 5, the incumbent Dilma Rousseff received 42% of the votes while Aecio Neves received 34%. Since neither candidate received more than 50% of the vote, the second round of runoff elections will be held on October 26. This week, we will look at the Brazilian presidential elections along with the countrys current political and economic environment. We will briefly describe the recent political history of the country and look at the specifics of Brazils economic development. As usual, we will conclude with market ra
Dealing With a Really Difficult Prospect
by Daniel Solin,
We have all had experience trying to convert difficult (sometimes really difficult) prospects into clients. In a recent article, I discussed some of the issues I have confronted when dealing with narcissistic advisors. But clients, or prospective clients, can display narcissistic behavior too.
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.
Weighing the Week Ahead: Can Corporate Earnings Reports Reverse the Stock Market Decline?
Last week featured a low signal to noise ratio speech after speech, but little fresh information. This week heralds the start of earnings season. While we have a normal measure of government data, market participants will carefully parse the announcements and conference calls. This week will be all about earnings.
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.
The Statistical Recovery Continues
by Lance Roberts of Streettalk Live,
This past Friday, investors awoke to news that, according to the U.S. Labor Department, employers added 248,000 jobs last month. In addition, job numbers for previous months were revised upward, and the jobless rate fell to 5.9% from August's 6.1%. These numbers had the mainstream media cheering that "economic victory" was nigh and stocks were propelled upward.
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.
A Q3 Letter to Clients: How to Navigate Rough Waters
by Dan Richards,
Each quarter I post a template for a client letter, as a starting point for advisors who want to send clients an overview of the three months that just ended and an outlook for the period ahead. Be sure to customize the letter to reflect your views, especially when it comes to recommendations for the period ahead.
Weighing the Week Ahead: Will global weakness drag down the US economy?
Last week was all about data. This week will be the opposite. The calendar already dished up the big news, and the major earnings reports are still a week away. Meanwhile, we have more conferences and speeches than I can remember seeing for many months. For those of us who think of data as the signal and politicians and pundits as noise, we must get ready for a low ratio! This week will emphasize commentary rather than data, with world leaders, Fed types, and pundits all joining in.
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.
China’s Inscrutable Contraction
by Kenneth Rogoff of Project Syndicate,
As China shifts to a more domestic-demand driven, services-oriented economy, a transition to slower trend growth is both inevitable and desirable. But the challenges are immense, and no one should take a soft landing for granted.
Results 2,951–3,000
of 3,702 found.
