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Anarchy in the U.K. / I'm So Bored with the U.S.A.
by Scott Brown of Raymond James,
Caught leaning the wrong way, the financial markets were hit hard by the outcome of the U.K.’s referendum on EU membership. However, the decision to leave the European Union is not a Lehman-type event. A full-blown panic is unlikely and we should see the U.S. market settle down early this week. The outlook for the U.K. economy is not good. Meanwhile, back at home, investors will look to the calendar and collectively yawn.
Brexit and the Bubble in Search of A Pin
by John Hussman of Hussman Funds,
First things first. While the full attention of financial market participants is focused on “Brexit” - last week’s British referendum to exit the European Union - the singular factor to recognize here is that the vulnerability of the financial markets to steep losses has very little to do with Brexit per se. Rather, years of yield-seeking speculation, encouraged by central banks, had already brought the financial markets to a precipice prior to last week’s vote.
Brexit and the Future of Europe
by George Soros of Project Syndicate,
Brexit is likely to cause Britain's economy and people to suffer significantly in the short to medium term, owing to profound uncertainty over the terms of divorce and the future of the UK itself. But the implications for Europe could be far worse.
Global Bonds: A World Without Yield
by Kathy Jones of Charles Schwab,
The plunge in global bond yields intensified during the past month. While short-term interest rates have been less than zero in some markets for quite some time, longer-term bond yields have recently fallen back to the zero level. Ten-year Japanese government bond yields are already in negative territory, with major European yields nearing the zero mark. Overall, record-low yields have been reached in Japan, Germany and the U.K., and Fitch Ratings estimates that more than $10 trillion in government bonds now have negative yields.
ECRI Weekly Leading Index: WLI Down Slightly, Growth Index Unchanged
Today's release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 136.4, down 0.1 from the previous week. Year-over-year the four-week moving average of the indicator is now at 2.07%, down from 2.09% the previous week and the thirteenth week in positive territory. The company's Weekly Leading Index annualized growth indicator (WLIg) is at 7.1, unchanged from last week and its highest since early May of 2013.
Fed Waves The White Flag On More Interest Rate Hikes
As I and others predicted last week, the Fed voted not to raise short-term interest rates at its June 14-15 policy meeting. In light of the terrible May jobs report on June 3, policymakers decided that the US economy is not strong enough for a rate hike at this point.
Playing Dress-Up
When Keynes expressed his thoughts in 1946, the world was beginning to recover from World War II and the Great Depression of the 1930s. As we cross the midpoint of 2016, the market is again staring into the dark, looking for a few sparks of global economic growth to light its path. In many ways, this is more than just a redux of the double-dip recession fears we waded through during 2010 and 2011.
Equities May Struggle, but Should Outperform Other Asset Classes
Last week started on a horrific note with the massacre in Orlando. That event
and growing anxiety over the possible U.K. exit from the European Union (the
Brexit) dragged down investor sentiment. The S&P 500 Index fell 1.1% last
week. Financials came under pressure, while the more defensive telecom and
utilities sectors bucked the broader trend and gained ground. Non-U.S. stocks
fared even worse, with European markets declining around 2% and Japanese
stocks dropping over 3%.
ECRI Weekly Leading Index: WLI Down Slightly, But Growth Index Increases
Today's release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 135.5, down 0.9 from the previous week, which was the highest since December 2007. Year-over-year the four-week moving average of the indicator is now at 2.09%, up from a revised 1.91% the previous week and the twelfth week in positive territory. The company's Weekly Leading Index annualized growth indicator (WLIg) is at 7.1, the highest since early May of 2013.
June Market Outlook Update
by Jim McDonald of Northern Trust,
It appears that, once again, the Federal Reserve’s hopes to raise interest rates are being stymied by the economy. Just last month the Fed’s minutes showed a predisposition to raise rates soon, and Chair Janet Yellen said it would probably raise rates “in coming months” should the data continue to meet expectations.
Last Week’s Highlights on APViewpoint
by Marianne Brunet,
Last week’s top conversations were started by Scott MacKillop, David Blanchett and me, and included comments from new APViewpoint thought leader Stig Nybo. They generated thoughtful discussions on: whether risk tolerance can be measured by questionnaires; how to achieve a more holistic approach to planning; and trends and changes in the global energy market.
Recession Probability Models - June 2016
by Ted Kavadas of RevSD,
There are a variety of economic models that are supposed to predict the probabilities of recession.
While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.
Brexit: Should They Stay or Should They Go?
by Burt White of LPL Financial,
June 23, the day the United Kingdom votes on whether to remain in the European Union, is circled on every calendar on every trading desk globally. The vote will likely be very close, and while the most recent opinion polls show the likelihood of a “leave” vote increasing, though with a margin of error and a sizable undecided vote, the outcome is still unknown.
The Death of the Virtuous Cycle
by Michael Lebowitz,
The elegant virtuous cycle that propelled Western economies to prosperity has been quietly dismantled and replaced with an unproductive imitation. This new, un-virtuous cycle euthanizes discipline and prudence in exchange for the immediate gratification of debt-fueled consumption.
5 Attractive Biotechnology Stocks for Healthy Long-term Returns
by Chuck Carnevale of F.A.S.T. Graphs,
I am a fervent believer that investors are best served by investing towards a specific investment objective that suits their own unique goals, objectives and risk tolerance. In other words, investing is not always trying to get the highest possible total returns. If that were true, no one would have ever invested in bonds, CDs or other fixed income instruments.
Bringing the Human Factor to Index Investing
For decades, Franklin Templeton has been a vocal advocate for active management, believing that the skills and insight that human oversight brings should play a crucial role in the investment process. But the emergence of risk factor investing and the evolution of traditional indexes have opened up fresh opportunities to bring a human touch to evolve what has traditionally been considered the passive space.
Value Unbound: The Implications of a Nascent Value Revival
During the (tech) bubble, all it took to topple tech stocks priced for perfection was a little bit of bad news. Just a little bit of good news may be sufficient today to spark a recovery among value stocks that seem to be pricing in permanent disappointment.
A Slowdown in Job Growth
by Scott Brown of Raymond James,
The economy added nearly 697,000 private-sector jobs in May. That’s before seasonal adjustment (in comparison, we added 996,000 in May 2015). One month does not necessarily make a trend, but figures from March and April were revised lower, reinforcing the view that (seasonally adjusted) job growth has slowed. The question, for the Fed and for investors, is why.
Bear Market Risks: Commodities and the Fed
Last week, we talked about several major warning signs for a bear market: recessions, commodity price spikes, rapid rate increases by the Federal Reserve, and high market valuations. In Friday’s Economic Risk Factor Update, we looked at the probability of a recession in the near future and concluded that it was unlikely.
Today, we’ll consider the next two risk factors: oil price spikes and Fed rate increases.
Pathetic May Jobs Report - New Questions About US Economy
Economists around the world were stunned by last Friday’s unemployment report which showed that a paltry 38,000 new US jobs were created in May, a fraction of the 160,000 new jobs that were expected in the pre-report consensus. It was the fewest number of new jobs in almost six years, reflecting broad hiring cutbacks that raise new concerns about US growth.
The Coming Housing Boom: Millennials in Exile
Much has been written about the factors original to the American generation of adults currently age 21-39. Many of these factors--student loans, marriage later in life, child bearing later in life, the prior era housing bust and fears that we'd become a renter nation--have dominated investors’ attention. We would like to include one more factor(s) into the mix as we give you an update on the coming boom. Millennials, more than any prior generational group, live in exile. We believe this exile living and hesitancy to put down roots has contributed to the slowness of the coming boom and will contribute to its size and duration.
Working Effectively in a Dysfunctional Organization
When I am selling I keep running into my colleagues as competitors. I’ve complained to my boss, and he says he knows and is “working on it.” I am stunned at how the image of this company is so good, but the internal machinations are abysmal. Is it possible for me to succeed here?
Market Thoughts for June 2016
Brad McMillan, Commonwealth’s CIO, discusses the markets and economy in May. After an early pullback, improving economic news helped fuel a rally in U.S. indices at month-end. While manufacturing remains a concern, improvements in consumer spending and housing have boosted confidence, prompting the Fed to suggest that the economy has normalized. Internationally, political risks continue to be a factor. And any bad news could well rattle the markets. What can we expect tomorrow? Time will tell, but spring seems to have arrived. Follow Brad at blog.commonwealth.com/independent-market-observer.
Is Today's Poor Employment Data Reflecting Wide-Spread Macro Weakness?
by Urban Carmel of The Fat Pitch,
The macro data from the past month continues to mostly point to positive (but sluggish) growth. On balance, the evidence suggests the imminent onset of a recession is unlikely. Consumption rebounded in April: real retail sales grew 1.8% yoy (to a new all-time high) and personal consumption grew 3%. Better still, new home sales made a new 8 year high. However, employment continued to weaken: employment growth had been 2% yoy during most of 2015. In May, that fell to 1.7% growth. As employment and wages drive future consumption, upcoming employment data will remain the key watch out.
Wealth Transfers: The Benefit of Annual Gifts
Many wealthy US investors want to give substantial sums to family during their lifetime, while preserving their flexibility, in case they need the money later. That’s fine: Large annual gifts can go a long way to helping your children get started on their careers,buy homes, or simply live more comfortably. Here are several tax-efficient strategies to consider.
Fed: Almost Half of US Households Have Under $400 Saved
We begin today by looking at the recently released Federal Reserve study on the economic conditions of 50,000 randomly-selected US households. This annual survey attempts to capture a snapshot of the financial and economic well-being (or not well-being) of US households. Let me warn you upfront that some of the findings are really bad.
Google’s Lesson on Making Your Team Excel
by Dan Richards,
All successful advisors reach a point where the only way to achieve continued growth is by leveraging the efforts of the team around them. That’s why advisors need to pay attention to new research on the key factor that sets top-performing teams apart, something that Google has built into its team management.
Are You a Return Seeker or a Risk Manager?
Investing, at its most basic level, is a delicate trade-off between return seeking and risk management. For many investors, the factor that dominates their decision making shifts over time with somewhat predictable, and more often than not negative, results.
ECRI Weekly Leading Index: WLI Up 1.0, YoY at 1.29%
Today's release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 136.1, up 1.0 from the previous week. Year-over-year the indicator is now at 1.29%, up from a revised 1.14% the previous week and the ninth week in positive territory. The company's Weekly Leading Index annualized growth indicator (WLIg) is at 6.1, a slight increase from the previous week.
The Great Bond Sell-Off of 2015: Repeating in 2016?
by Anthony Valeri of LPL Financial,
Although not perfect, the path of yields so far in 2016 bears similarities to 2015. Both 2015 and 2016 witnessed sharp declines in yield to start the year before yields moved higher during the second quarter. However, there are key differences this time around that may work in the bond market's favor.
Factors Continue To Underperform
by Greg Swenson of The Leuthold Group,
For factor investors, recent months have been repetitive and painful. In April, Momentum saw its third consecutive month with a performance spread of -5% (or wider). Low Volatility, a trade that has become extremely crowded, continued to underperform. Investors of late have been piling into the so-called “safe” corners of the market. Whether it happens in an up or down market, typically this type of crowding does not have a happy ending.
The Dirty Little Secret of Passive Investing
by Michael Aked of Research Affiliates,
Passive investments have a dirty little secret: Their gross returns are materially depressed by implicit implementation costs. You don’t see these costs in performance attributions, unbundled management fees, or even standard trading cost analyses.
Does Active Management Add Value in Emerging Markets?
by Larry Swedroe,
I continue my series on the ability of actively managed funds to add value for their investors with an in-depth look at the asset class that is the “poster child” for an inefficient market – emerging markets. Can active managers outperform a passive index, given the supposed abundance of mispriced emerging-market stocks?
Results 4,551–4,600
of 6,447 found.
