Posted on March 24, 2014 by Joe Kringdon
As the saying goes, ‘hindsight is 20/20.’ How many advisors have had conversations with clients summarizing 2013, only to find them disappointed that they did not participate fully in the strengthening equity markets? These were the same clients that were (perhaps still are) reluctant to take on the additional risk because they were still smarting from the real and psychological damage wrought by the experience of 2008. Their actions and defenses were predicated on the outcome of the most recent harrowing experience; thus, their portfolios were allocated to provide ballast – reinforced with ‘belt and suspenders’ – to keep them engaged in the capital markets. Prior to the end of 2013, the trade-off for a high ‘sleep at night’ factor was lower return expectations. Now, in hindsight, these well-rested clients are experiencing, as the kids today say —FOMO — “fear of missing out!”
Challenging Markets Challenge Your Mettle
It takes a delicate mixture of compassion, knowledge and courage to provide direction to clients during uncertain or confusing markets. All markets are perplexing to some degree. This is the irony of investing . . . we trade actual capital today for the possibility of future returns. As wise and well equipped as any of us all are, we cannot predict the future with any degree of certainty. The legendary money manager, Peter Lynch, once said something to the effect that investing allows us to build a bridge of well-thought out and time-tested assumptions, but we always need to take a ‘leap of faith’ between what is known and what will actually come to be.
Filed under: Equity Market Insights, Joe Kringdon, Mutual Fund Industry | Tagged: Advisor Best Practices, Coaching in Difficult Markets, Joe Kringdon, Relationship Alpha, Uncertain Markets, Volatility and Opportunity | Leave a comment »
Posted on March 3, 2014 by Sam Wardwell
Last week’s U.S. economic data was again on the soft side, but we still can’t rule out bad weather as the cause. New factory orders for durable goods were down 1% month over month (m/m) in January but up 4.6% year over year (y/y). Excluding the volatile transportation segment, they were up 1.1% m/m and 1.2% y/y. This is consistent with bad weather superimposed on a slowly-growing economy – no big surprise. In other data:
- The Markit flash services PMI fell from 56.7 to 52.7 . . . still above 50.
- The Chicago Fed’s National Activity Index fell to - 0.39
- The (local-focus) Chicago-area PMI was strong, at 59.8.
- The Kansas City Fed index came in at +4, even after citing weather as a headwind.
- The Richmond Fed index fell to -6 . . . details were weak . . . weather is blamed.
- The Dallas Fed’s February Manufacturing Outlook Survey showed general business activity, at 0.3, barely in positive (slow-growth) territory. However, factory activity was notably strong, rising for the tenth month in a row.
- Initial unemployment claims rose to 348k – the high end of the recent range.
Filed under: Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Mutual Fund Industry, Sam Wardwell, United States | Tagged: China, currencies, Japan, Sam Wardwell, Slow growth, the Fed, U.S. housing market, Ukraine | Leave a comment »
Posted on February 10, 2014 by Sam Wardwell
Observations on the Capital Markets – Week Ended February 7, 2014
The jobs reports were better underneath than on the surface
The data: Initial unemployment claims for the month were 331K. The “establishment survey” showed headline employment growth of 113k, below consensus expectations of 189k. The details were less disappointing, however.Prior months were revised up by 34k. Wages continued to rise slowly. The household survey — the basis for calculating the unemployment rate — showed employment rising by 616k. But because the labor participation rate rose 0.2 to 63.0%, the estimated workforce rose by 499k and the unemployment rate fell only to 6.6%.
The upshot: The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 514k (so, by implication, the number of full-time workers rose by 1.1 million!). Finally, we got the periodic revisions to the past year’s data, the net effect of which was to revise 2013 job growth up from 2.19mm to 2.32mm.
Comment: There’s often a pretty big divergence between the “household” and “establishment” surveys. It’s not unusual to have discrepancies . . . they tend to vary month-to-month but converge over time. Continue reading
Filed under: Contributors, Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Macroeconomics, Mutual Fund Industry, Political, Sam Wardwell, U.S. Dollar, United States | Tagged: CBO, employment, Obamacare, Unemployment | Leave a comment »
Posted on November 19, 2013 by Giordano Lombardo
The Current Market Reality: Economic Transitions, Equities & Alternatives
At this year’s Global Investment Forum, the discussion among Pioneer investment professionals was generally positive. Of course, everyone was conscious of the current market reality: that the major force behind recent positive, though benign, market trends is the unprecedented creation of liquidity and extremely loose stance of monetary policies around the world. Monetary policy alone cannot be the only conduit to a new economic model of income growth and job creation. Continue reading
Filed under: Equity Market Insights, Fixed Income Market Insights, Giordano Lombardo, Macroeconomics, Mutual Fund Industry, Political | Tagged: alternatives, diversification, economy, fiscal policy, markets, monetary policy, QE, tapering | Leave a comment »
Posted on October 17, 2013 by Paresh Upadhyaya
Last night Congress reached an agreement to raise the debt limit and end the 16-day shutdown. After all the acrimony and tense negotiations, the deal passed by a comfortable margin with 81-18 vote in the Senate and 285-144 in the House.
Key details of the deal:
- The government reopens on October 17, 2013.
- Congress will provide spending authority through January 15, 2014 at the same spending level in effect prior to the shutdown.
- The debt ceiling is extended until February 7, 2014.
- Reality check: the real deadline will be sometime in mid-March, according to Goldman Sachs. The agreement allows the U.S. Treasury to utilize bookkeeping strategies known as “extraordinary measures” once the debt limit is breached on February 7th. Continue reading
Filed under: Equity Market Insights, Fixed Income Market Insights, GDP, Macroeconomics, Mutual Fund Industry, Paresh Upadhyaya, Political | Tagged: Fed policy, Interest rates, rate expectations, sequester | Leave a comment »
Posted on October 14, 2013 by Sam Wardwell
Wardwell’s Weekly Market Report
Observations on the Capital Markets – Week Ended October 11, 2013
- Washington watch: no deal yet, but the parties appear to have begun to look for a deal (as opposed to a crisis they can blame on the other party)
- A couple of debt ceiling tidbits
- Last week in the capital markets: money markets tremble, equity markets say “what, me worry?”
- Obama nominated Janet Yellen to be next Fed chair
- FOMC minutes showed that the decision not to taper was “a relatively close call” despite the 9-1 final vote; the key reason to delay was “risk management”.
- Initial unemployment claims jumped 66k to 374k . . . mostly noise
- Other U.S. data wasn’t really upbeat
- Next week: waiting for Washington Continue reading
Filed under: Contributors, Equity Market Insights, Fixed Income Market Insights, GDP, Macroeconomics, Mutual Fund Industry, Political, Sam Wardwell | Tagged: Congress, Washington Budget Debate, Yellen | Leave a comment »
Posted on October 7, 2013 by Giordano Lombardo
Recent market movements have reminded investors that the fixed income market is facing a secular change, after a 30-year-long bull market driven by a continuous decline in interest rates. I believe the announcements of the death of fixed income as an asset class are greatly exaggerated, and in order to face the new reality, fixed income investors and asset allocators need to adopt a significant change of approach. Continue reading
Filed under: Fixed Income Market Insights, Giordano Lombardo, Macroeconomics, Mutual Fund Industry | Tagged: Alternative Investments, Bonds, Central Banks, Fixed Income, Interest rates | Leave a comment »
Posted on September 23, 2013 by Sam Wardwell
Wardwell’s Weekly Market Report
Observations on Events and the Capital Markets – Week Ended September 20, 2013
- Before the Fed announcement: a batch of pretty solid economic reports
- After the Fed announcement: still more solid economic reports
- More progress on the budget than meets the eye of the T.V. networks
- Fed watch: speeches galore
On Monday, Larry Summers exited the pool of candidates for the next Federal Reserve (Fed) chairman. (Only the timing was really a surprise.) On Wednesday, the Fed didn’t taper and de-emphasized several of the targets they’d set earlier. (Big surprise versus consensus - not central bank best practices). Municipal bond offerings by Puerto Rico, California, and Illinois were met with strong investor demand. Continue reading
Filed under: Contributors, Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Macroeconomics, Mutual Fund Industry, Political, Sam Wardwell | Tagged: economic indicators, Fed, printing money, Summers | Leave a comment »
Posted on September 13, 2013 by Mike Temple
Many investors were conditioned to accept that the economy would be in the rehabilitation ward for the foreseeable future, rates would remain low, and monetary stimulus would continue unabated. It was an increasingly dangerous mindset. Now that’s changing with the slow but steady recovery of the economy and the Federal Reserve’s announcement in August that it may begin “tapering” its billions in monthly bond purchases designed to keep rates low and boost asset prices. These fiscal, financial and policy changes usher in the next great risk for bond investors: the potential return of higher interest rates. So I continue on the subject of “duration” and the risk that it poses to fixed income investors. Continue reading
Filed under: Fixed Income Market Insights, Macroeconomics, Mike Temple, Mutual Fund Industry | Tagged: crowded trade, duration, investor portfolios, rising interest rates, safe haven | Leave a comment »
Posted on April 18, 2013 by Paresh Upadhyaya
Central banks have taken numerous measures to inject liquidity into their domestic economies. This has helped boost risk appetite and investor sentiment.
- The European Central Bank’s stabilization programs have successfully reduced financial market and sovereign tail risk for banks.
- Global growth troughed in Q2 2012, but has been on an upward trend since.
- Market concerns over the U.S. debt situation are easing as the U.S. economy proved surprisingly resilient to many uncertainties.
As a result, investors are concerned that bond yields, which move inversely to prices, have bottomed for the U.S. 10-year Treasury and will surge, raising fears of a bond bear market along the lines of the Great Bond Bear Market of 1994. Continue reading
Filed under: Equity Market Insights, Fixed Income Market Insights, Macroeconomics, Mutual Fund Industry, Paresh Upadhyaya, Political, Uncategorized | Tagged: Central Banks, debt to gdp, ECB, fundamentals, inflation expectations, Interest rates, interest rates rise, rates will rise, rising interest rates, rising yields, where should Treasury yields be trading, where yields should be | Leave a comment »