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US Markets and ETFs

The Stock Market Bear That Began 19 Months Ago

By | Asia ETFs, Bond ETFs, China ETFs, Consumer ETFs, Current Affairs and ETFs, Dividend ETFs, Emerging Market ETFs, Energy ETFs, ETF Philosophy, ETF Strategy, Europe ETFs, Financial ETFs, Global ETFs, International ETFs, Large Cap ETFs, Materials ETFs, Mid Cap ETFs, Real Estate ETFs, Special Sectors ETFs, Technology ETFs, US Markets and ETFs, Utilities ETFs | No Comments

Mainstream pundits have been telling stock investors throughout 2019 that it does not matter if long maturity Treasury bonds yield less than short maturity Treasury bonds. They have been explaining that you should ignore the fact that, for the most part, the 10-year yield has been offering less than the 3-month yield since mid-May. However, financial institutions often rely on borrowing money at lower short-term rates and lending at higher longer-term ones. When the spread between short and long flattens,…

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Riskier Assets Are Looking To Get Their ‘Fix’

By | Asia ETFs, Bond ETFs, Consumer ETFs, Current Affairs and ETFs, Dividend ETFs, ETF Philosophy, ETF Strategy, Europe ETFs, Large Cap ETFs, Special Sectors ETFs, Technology ETFs, US Markets and ETFs | No Comments

In last week’s commentary, I wrote the following: “So how will stocks, bonds and other assets respond to the Fed decision? I believe that the Fed will under-deliver, effectively disappointing growth stock enthusiasts. It will be 25 basis points and a whole lot of vague references to data-dependence. The likely result? Bond yields will continue to drift lower over the weeks ahead, compelling the Fed to cut again in the near future. This will be positive for yield sensitive assets…

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Here Comes The Fun (And The Fed Says, “It’s Alright”)

By | Consumer ETFs, Currency ETFs, ETF Philosophy, ETF Strategy, Global ETFs, Large Cap ETFs, Popular Posts, Real Estate ETFs, US Markets and ETFs | No Comments

One might define absurdity as the quality or state of being ridiculous. Or one can glance at the global quantity of negative-yielding debt. The total? Nearly $14 trillion. Holding a bond to maturity that pays a negative return is insane. Wouldn’t risk-averse folks prefer a 0% return that would come with the embrace of physical cash? Unfortunately, central banks do crazy things. The euro deposit rate is at -0.4%. That means savers and investors could lose more money at a…

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How Will You Keep the Stock Wealth That You Created?

By | Bond ETFs, Current Affairs and ETFs, Dividend ETFs, ETF Philosophy, ETF Strategy, Global ETFs, Large Cap ETFs, Popular Posts, Special Sectors ETFs, US Markets and ETFs | No Comments

Bond yields have been collapsing clear across the world. And if history is any guide, the rapid decline is a function of undeniable economic weakness. Consider the correlation between bond yields and time-tested measures like the Institute for Supply Management’s PMI. The 10-year U.S. Treasury yield tends to follow in the indicator’s footsteps. As the chart shows, waning economic growth and falling bond yields occurred in 2012 and 2016. During those periods, corporate earnings struggled immensely. What about today? Not…

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The Last Ones To Add More Stock Risk Will Have Rotten Nest Eggs

By | Asia ETFs, Bond ETFs, Consumer ETFs, Current Affairs and ETFs, Dividend ETFs, ETF Philosophy, ETF Strategy, Europe ETFs, Financial ETFs, Global ETFs, International ETFs, Large Cap ETFs, Mid Cap ETFs, Small Cap ETFs, Special Sectors ETFs, Transportation ETFs, US Markets and ETFs | No Comments

U.S. large company stocks may be celebrating the anticipation of rate cuts. After all, the S&P 500 has been toying with record highs. Yet a broader view demonstrates that the asset class is struggling more than advertised. For example, diversified investors might be aware of world index funds that exclude the U.S. In particular, the iShares MSCI ACWI ex U.S. (ACWX) sits in correction territory, nearly 10% below its January 2018 peak. What about the Russell 2000 – an index that…

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Stock Market Rally: You May Be Right, I May Be Crazy

By | Asia ETFs, Bond ETFs, China ETFs, Commodity ETFs, Consumer ETFs, Current Affairs and ETFs, Dividend ETFs, Emerging Market ETFs, ETF Philosophy, ETF Strategy, Europe ETFs, Frontier Market ETFs, Global ETFs, International ETFs, Large Cap ETFs, Latin America ETFs, Mid Cap ETFs, Middle East ETFs, Small Cap ETFs, Special Sectors ETFs, Technology ETFs, US Markets and ETFs | No Comments

According to Jay Powell, Chairman of the Federal Reserve, the U.S. economy is performing well. It is difficult to take the assessment seriously. After all, as recently as mid-December, the Fed intended to raise interest rates three to four times in 2019. By January, central bank committee members wiped away the possibility of any rate hikes during the year. And now? The Fed is preparing the world for rate cuts as soon as July. “We will act as needed including promptly if that’s…

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July Rate Cut? Wait For the Fed’s Complete Capitulation To Get Aggressive

By | Bond ETFs, Current Affairs and ETFs, Dividend ETFs, ETF Philosophy, ETF Strategy, Special Sectors ETFs, US Markets and ETFs | No Comments

Financial markets now anticipate that the Federal Reserve will begin ratcheting down rates from the 2.25%-2.50% range in July. Remarkably, the “de facto stimulus” associated with the Fed flip from rate raising to rate neutrality only lasted for six months. Reasonable criticism of the Fed’s “way-too-low-for-way-too-long” rate policies notwithstanding, weak economic data may support easing. Imports (-2.7%) as well as exports (-4.2%) contracted. And global manufacturing is the weakest that it has been since 2012. In a similar vein, corporate…

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Buy The Dip In Long-Term Treasury Bonds To Hedge Stocks?

By | Bond ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Mid Cap ETFs, Short ETFs, Small Cap ETFs, Special Sectors ETFs, US Markets and ETFs | No Comments

The 10-year Treasury yield pays 15 basis points LESS than the 3-month Treasury yield. That’s rather nutty when you think about it. Even nuttier? 30-year sovereign yields across the globe are LOWER than the Federal Funds Rate (FFR) of 2.38%. Why are bond market investors demanding the safety of lower-yielding, longer-term, sovereign debt? Why do many crave it more than higher-yielding, shorter-term instruments? Investors anticipate that the Federal Reserve will need to slash its overnight lending rate in attempts to stimulate…

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What The Bond Market And Real Estate Market Are Telling Investors

By | Bond ETFs, Current Affairs and ETFs, Dividend ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Popular Posts, Special Sectors ETFs, US Markets and ETFs | No Comments

Trade wars. Tariffs. Trump. One might think that the “Ts” are solely responsible for financial market volatility. In truth, a wider variety of cross-currents are at work. Some have been bubbling up for a number of years. Consider the debt profiles of investment grade corporations. Cash on the books relative to debt has deteriorated markedly, while gross leverage (debt-to-earnings) is sitting near an all-time peak. The trend for interest coverage is equally concerning. In 2015, roughly 8.3% of corporate income went toward…

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Here’s What Will Cause The Next Recession (Part 2)

By | Bond ETFs, Consumer ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Mid Cap ETFs, Real Estate ETFs, Special Sectors ETFs, US Markets and ETFs, Utilities ETFs | No Comments

Each of the last three recessions contained elements of extraordinary financial instability. For example, Savings & Loan (S&L) institutions used federally insured deposits to make reckless real estate loans in the 1980s. When the Federal Reserve raised its overnight lending rate more than 300 basis points between March 1988 and March 1989, a real estate bubble burst, hundreds upon hundreds of S&L’s fell apart, and the 1990-1991 recession damaged livelihoods. Not surprisingly, one finds comparable patterns of financial senselessness in…

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