Posted on July 21, 2014 by Sam Wardwell
Observations on the Capital Markets – Week Ended July 18, 2014
Federal Reserve Chairwoman Janet Yellen’s Congressional testimony this week, in my view, was not pointing to bubbles. In her testimony, she suggested that valuations of social media and biotech stocks and lower-rated corporate debt appear “stretched.” Some observers suggested she was saying we are in a bubble. But I have a different perspective: I think she was saying, in effect, “yes, prices are high in some niches, but not generally.” In any case, it’s doubtful Yellen is shifting her focus from less-than-full-employment to the question of possible market bubbles. Continue reading
Filed under: Contributors, ECB, Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Inflation, Macroeconomics, Mutual Fund Industry, Political, Sam Wardwell, U.S. Dollar, United States | Leave a comment »
Posted on July 21, 2014 by Jonathan Chirunga
Follow-up to February’s article Puerto Rico: A Delicate Balancing Act.
In June of 2014 the Commonwealth of Puerto Rico’s legislature passed the Puerto Public Corporations Debt Enforcement and Recovery Act (the Act) for restructuring the outstanding debt of public corporations. Its passage got a cold reception from the municipal bond market. Continue reading
Filed under: Contributors, Fixed Income Market Insights, Jonathan Chirunga, Macroeconomics, Political, United States | Leave a comment »
Posted on July 17, 2014 by Giordano Lombardo
Summer is time for vacation, and getting ready for a trip has become almost a ritual for me: pack bags for my large family, load the car, don’t forget the GPS and check weather conditions. The last two points, I believe, apply not only to planning a safe and comfortable personal trip, but also to navigating the financial markets.
The financial “weather” seems nice: volatility is extremely low across almost all asset classes, as a consequence of the extra-loose monetary policy. However, as with the weather, we are aware that financial conditions can rapidly change. History suggests that periods of exceptionally low volatility should be treated with skepticism, as they have usually preceded vicious market turmoil. Continue reading
Filed under: Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Giordano Lombardo, Inflation, Macroeconomics, United States | Tagged: Bonds, Corporate Profits, Fixed Income, Market Bubbles, rising interest rates, Valuations | Leave a comment »
Posted on July 14, 2014 by Sam Wardwell
Observations on the Capital Markets – Week Ended July 11, 2014
It was a tough week for Europe over all last week – industrial production declined in Germany, Italy, France, and the UK, with the details broadly downbeat. Trade (import and export) data, especially from Germany, was disappointing as well. But the big story in Europe last week came from Portugal, where Banco Espírito Santo (BES), a leading Portuguese bank, suffered a share price crash and trading was suspended after reports of financial irregularities.
Filed under: Equity Market Insights, Europe, Fixed Income Market Insights, Inflation, Macroeconomics, Sam Wardwell | Tagged: Banco Espirito, Capital Markets, consumer spending, labor market, Sam Wardwell, the Fed, Unemployment | Leave a comment »
Posted on July 7, 2014 by Sam Wardwell
It’s not surprising that World Cup Syndrome has historically been responsible for lower office productivity around the world – in fact, you may have seen the telling chart created by Bloomberg, which uses European Central Bank (ECB) data to track dips in trading volume during games in the 2010 World Cup.
Perhaps ‘WCS’ is owed a nod for last week’s drop in ISIS (Islamic State) activity? The so-called Group of Death (Syria, Iran, Iraq, and the caliphate formerly known as ISIS) was very quiet last week.
- ISIS renamed itself the Islamist State and said it was a caliphate.
- Iraq’s parliament appears frozen, with Sunni, Kurdish, and Shiite factions apparently unable to strike a deal.
- It appears that the Islamist State gained ground…but oil traders don’t seem worried.
Filed under: Equity Market Insights, Europe, Fixed Income Market Insights, Macroeconomics, Sam Wardwell | Tagged: Capital Markets, Central Banks, ECB, Europe, Sam Wardwell, World Cup, World Cup Syndrome | Leave a comment »
Posted on July 2, 2014 by Paresh Upadhyaya
On June 18, 2014, the Federal Open Market Committee (FOMC) voted to keep the federal funds rate unchanged at 0.25% and for the 5th consecutive meeting to reduce the pace of monthly asset purchases by $10 billion (bn) to $35bn. The tone of the statement and Chairwoman Yellen’s press conference was more dovish than expected. The market responded accordingly, as equities and 10-year yields rallied and the U.S. dollar (USD) sold off. Continue reading
Filed under: GDP, Inflation, Macroeconomics, Paresh Upadhyaya, U.S. Dollar, United States | Tagged: employment, Fed Action, inflation, the Fed | Leave a comment »
Posted on June 30, 2014 by Sam Wardwell
Observations on the Capital Markets – Week Ended June 27, 2014
Summer, summer, summertime – time to sit back and unwind. The Fresh Prince and DJ Jazzy Jeff might have been talking about the quiet tone last week in the capital markets.
- Can you spell Goldilocks? Stocks, bonds, and commodities all rallied in the first half of 2014…for the first time since 1993.
- Currencies: The Euro and Yen each rose 0.5%-1% against the dollar, extending their gains for the month.
- Bonds: The 10-year Treasury yield fell 9 basis points (bps) to 2.54%; the 10-year TIP yield fell 8 bps to 0.27%.The Bank of America Merrill Lynch High Yield Index (BoAML HY) widened 1 bp to 3.48%. The Japanese 10-year bond fell to 0.55%, a 2014 low. Eurozone bond markets were generally quiet.
- Equities: The S&P 500 Index declined almost imperceptibly last week. Within the index, Utilities and Consumer Discretionary (each up 1.0%) led; media companies rallied when the Supreme Court effectively shut down Aereo. Industrials (-1.7%) lagged; Consumer Staples (-1.3%) and Energy (-0.9%) were also weak. MSCI Europe and Japan were each down 1.5-2%. The MSCI Emerging Markets Index was down a bit.
- Commodities: WTI Oil was down about $1 (1%)…still not really reacting to Iraq. Gold, up 3% last week, gained another $5 (0.5%).
Filed under: Equity Market Insights, Europe, GDP, Inflation, Macroeconomics, Political, U.S. Dollar, United States | Tagged: Capital Markets, currencies, ECB, economy, emerging markets, employment, equity markets, Europe, European markets, Fed Action, GDP, housing, inflation, Japan, Sam Wardwell, Ukraine, US GDP | Leave a comment »