Most of the top 50 economies in the world have engaged in one form or another of monetary stimulus since the start of 2009. Halfway through 2014, most still endeavor to keep interest rates low to encourage borrowing by consumers and businesses; nearly all of those countries or regions also hope to fuel exports with modestly depreciating currencies. Theoretically, tactics designed to devalue a currency as well as push borrowing rates into the basement should strongly benefit precious metals like…
Are investors cautiously optimistic? Probably. A little bit greedy? Maybe. Yet I would be hard-pressed to describe the current psychology in terms of euphoria. The most apt descriptor is complacency. Keep in mind, geopolitical tensions are rising in the Middle East, Ukraine and off the coastal waters near China. Not surprisingly, gasoline prices have remained stubbornly high with the price of crude holding well above $100 per barrel. Yet none of these troubles have impeded the historic rally for U.S….
Most folks experience anxiety about carrying any kind of debt load. Many of us do not even distinguish between the different types of debt that we owe. Of course, some debts may be “better” than others. A subsidized Stafford loan from the Federal government allows a student to defer his/her principal and interest during college, pay back a low fixed rate of roughly 3.86% after school, as well as achieve a degree that increases one’s salary potential. Similarly, a first…
Whatever happened to the “Great Rotation?” You remember the predictive theory that ultra-low yields would encourage investors to rotate out of bonds and into stocks. The notion picked up steam shortly after the Federal Reserve announced its intention to taper its quantitative easing (QE) program in May of 2013. Yield-sensitive assets of all stripes — corporate bonds, Treasury bonds, munis, preferred shares, REITs — experienced the type of rapid wealth destruction that is more commonly associated with significant stock slumps….
In a matter of weeks, funds like Vanguard Emerging Markets (VWO) surged forward by as much as 8.5%. Do investors suddenly believe that Russia, Brazil and China will collectively get their developing economies back on track? Not necessarily. Is the investing community waking up to the 40% price-to-earnings (P/E) discount for shifting capital into emergers instead of U.S. equities? Probably not. Rather, we may simply be looking at a wave of short-sellers covering their short trades. Look at it this…
Last week, board members of the Federal Reserve signaled that they may begin hiking overnight lending rates as early as 2015. A majority of analysts believe that the message is in line with an anticipated acceleration of U.S. economic growth and a more robust expansion. Similarly, economists polled by the National Association for Business Economics (NABE) foresee a 2.6% bounce in consumer spending here in 2014. If we’re going to spend more, however, wouldn’t our paychecks need to grow at a…
For the better part of three years, investing in mining companies has been an exercise in extraordinary patience. A significant portion of the poor performance is attributable to the slowdown in emerging market growth. Economic weakness from China to Brazil to India has contributed to plummeting commodity prices and fresh lows for industrial metals. Shares of miners suffered alongside commodity angst. Market Vectors Gold Miners (GDX) had been particularly battered, experiencing price erosion of 65% between May of 2011 and…
Non-residential construction, home building and manufacturing have been decelerating. Nowhere is this more evident than in the new 52-week lows being set by industrial metals like iPath Copper (JJC) and multi-sector metals investments like PowerShares DB Base Metals (DBB). The latter tracks a rules-based index composed of futures contracts in widely used metals like aluminum, copper and zinc. Many attribute the commodity price declines to weakness in global economies such as China, Brazil and Russia. Granted, slowdowns in emerging market…
Can we really attribute all of the horrendously weak economic data to icy pavements and polar vortexes? The Institute of Supply Management (ISM) services sector report for February recorded its weakest data point in four years (51.6), posting a percentage decline that is the second worst ever. In the same report, a sub-index on jobs showed that services sector employment actually contracted. Meanwhile, after-tax personal income for consumers dropped 2.7% from one year earlier — a decline that rivals the…
Glum economic data derailed U.S. stocks in January. A mammoth “miss” for manufacturing activity, an unsettling decline in mortgage applications as well as an appalling “net-new-jobs” number were some of the high-profile culprits. At long last, it seemed as if the market might treat bad news as a reason to recoil. Here in February, though, disappointing data have only strengthened the resolve of buy-the-dip investors. Job growth deceleration from a 3-month rolling average of 190,000 down to 150,000 sent U.S….