Until recently, investors showed little interest in hedging against a potential collapse in the S&P 500. Some might have even described the environment as complacent with the CBOE S&P 500 Volatility Index (VIX) spending most of the year in the “mid-teens.” Now the VIX is back above 20. At that level, options participants anticipate an “annualized” change of 20% over [...] Continue Reading...
Foreign stocks returned to their winning ways in the first 10 weeks of 2012. By mid-March, however, economic data out of China started to demonstrate sluggishness. A rapid rise in Spanish bond yields began threatening the country’s ability to manage its own finances. And European interbank lending ground to a halt. Nevertheless, as recently as Tuesday (May 1), many commentators [...] Continue Reading...
The Dow and the S&P 500 may have experienced the worst 2-week losses since November. Still, is it really time to panic? When one considers the reality that the major averages are less than -4% from multi-year highs, abandoning stock assets seems a bit premature. That said, you may want to avoid certain investments. For example, [...] Continue Reading...
Virtually everyone acknowledges that Federal Reserve monetary policy (e.g., 0%-0.25% rate, QE 1, QE II, “Operation Twist,” etc.) has been extremely kind to stocks since early 2009. Yet, bulls and bears debate the impact of Fed policy going forward. For example, many bulls believe that stocks will continue to excel due to the Fed’s promise to keep rates at exceptionally low levels [...] Continue Reading...
A seemingly endless string of interest rate hikes (unlucky 13) and bank reserve increases killed India ETFs in 2011. In fact, investors may not have feared inflation as much as they feared that the Reserve Bank of India would go too far. Yet a shift in central bank policy bias towards easing has given emerging market watchers reason to [...] Continue Reading...
Back in 2009, a flood of easy money worldwide sparked super-sized gains for the emerging markets… more so than their developed world counterparts. Granted, stock assets for industrialized and developing regions were both remarkable. Yet the best investment profits involved commodities, materials and rapid-fire economies with the most “stuff.” By mid-2010, the industrializing world found itself tightening fiscal and monetary policies to curtail runaway [...] Continue Reading...
The mainstream financial media may have caught a break in 2011. Neither the S&P 500 nor the Dow fell more than 20% from respective highs, meaning that nobody ran with the “Bear Is Back” headline. It follows that the 3/9/2009 lows still represent the start of a bull market uptrend. Not surprisingly, many have chosen to wistfully recollect the [...] Continue Reading...
There’s a tendency for many writers, analysts and money managers to lump all industrializing nations into a single entity. For better or worse, the popularity of Vanguard Emerging Markets (VWO) and iShares MSCI Emerging Markets (EEM) illustrates the way the developed world chooses to invest money. (Heck, Jim Cramer recently described the investing environment in terms of a 4-legged [...] Continue Reading...
LIBOR (London Inter-Bank Offered Rate) is the interest rate that fellow European banks will charge other banks. Put another way, it is the rate at which a financial institution in the region can borrow money. In order for banks to operate, they are consistently lending out and/or borrowing. If they cannot exchange with one another, required reserve levels could be deemed “inadequate” or investors could [...] Continue Reading...
The prospects for corporate earnings haven’t mattered much to the markets in 2011. Instead, European debt news drives stocks dramatically higher or lower. Last week, stock assets tanked on less-than-anticipated demand for Italian bonds. This week, stocks skyrocket on better-than-expected desire for Spanish bonds. Traders used to profit from this kind of volatility. They haven’t been doing [...] Continue Reading...
