Extraordinary rallies off bear market bottoms are typical. Bullish run-ups in March of 2003 as well as March of 2009 registered enviable unrealized gains of 35% and 65% respectively; each advance experienced little resistance for roughly 9-10 months. Powerful moves off minor corrections are less typical, if not downright suspicious. Investors in the S&P 500 SPDR [...] Continue Reading...
Treasury bonds are rocketing, commodities are reeling and the euro-zone’s economy is contracting. That is hardly the backdrop for continued equity price appreciation. Yet the U.S. stock market has had little resistance in capturing all-time records. Regardless of region, asset classes typically move in the same direction. It follows that one would not expect unabashed buying [...] Continue Reading...
People are feeling better about spending money. Similarly, investors are feeling better about risking it. The problem is, whenever people begin to feel wealthy due to a faulty premise (i.e., the U.S. Federal Reserve can keep buying bonds to depress interest rates without longer-term implications), they may spend more than they have. Others may blindly [...] Continue Reading...
Daily sentiment can change on a “Susan B. Anthony.” For instance, in the time that Prime Minister Mario Monti has held the reins of control in Italy, global markets have felt better about the prospect of the European Union holding itself together. At the start of Monday’s trading, in fact, stock assets around the world [...] Continue Reading...
As long as interest rates remain low, excess money eventually moves into riskier areas on the spectrum. Higher yielding bonds, convertibles, preferreds, stocks… they all benefit. Of course, if fewer people buy treasuries because they pursue greater risks, the Federal Reserve must continue to offset waning demand. Is $85 billion per month enough? It better be. Consider [...] Continue Reading...
For the last week, market participants have been adding to their stock risk. The activity seems to fly in the face of how markets tend to react to significant uncertainties like the fiscal cliff. While many expect a financial deal to get done, the market’s collective calm is reminiscent of the debt ceiling stalemate of 2011. [...] Continue Reading...
Many of us in the financial services industry expected the outcome of the election to be determined by Ohio alone. Perhaps surprisingly, while Ohio was close throughout the evening, there was never a need for recounting the “Buckeye State” ballots; President Obama had won the electoral votes needed without a single-state showdown. While a protracted battle [...] Continue Reading...
FedEx (FDX) recently blamed its weak profitability prospects on $4.00 jet fuel, as producers may be opting out of costly air shipments. However, railway transporters don’t expect a bottom line bonanza either. Norfolk Southern (NSC) lowered its earnings outlook on weakness in coal transportation as well as general merchandise; NSC fell as much as 6% [...] Continue Reading...
According to the U.S. Census Bureau and a variety of institutions that study human population growth, the world will need to feed roughly 70 million new mouths every year. That is the current ”net” projection when births are offset by deaths. Pundits from Marc Faber to Jim Rogers have talked about the demographic changes. Their solution? Invest in agriculture. Faber tends to [...] Continue Reading...
Are investors as scared as certain indicators seem to suggest? On the one hand, 10-year treasury yields have dropped to all-time record lows of 1.62% and the U.S. dollar via PowerShares Dollar Bullish (UUP) is sitting at fresh 52-week highs. On the other hand, gold prices have plummeted 20% from the top and the franc via Currency [...] Continue Reading...
