Are we tiring of the fiscal cliff story? Is it becoming cliche to state the obvious… that uncertainty over the resolution of expiring tax breaks and potential spending cuts is adversely affecting the stock market? Perhaps. Yet one avenue that hasn’t received as much digital ink is the possibility that “yield” is turning into a dirty [...] 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...
For months, I’ve expressed optimism on China’s slow-n-steady approach to providing measured stimulus to its economy. Rather than drastically cut interest rates or entertain unconventional bond-buying measures like their central bank counterparts in the developed world, China’s leadership allowed its slowdown to play itself out. The result? China’s manufacturing gauge (PMI) indicated that the segment expanded [...] Continue Reading...
Mom-n-pop investors may not be taking on more risk, but institutional investors are. Perhaps the best example came in a Wall Street Journal article today by Kirsten Grind. Specifically, fund managers are investing in riskier high yield bonds, yet those funds still compare their “benchmark-beating” returns against benchmarks with safer assets (e.g., investment grade bonds). The [...] Continue Reading...
Telecommunication service providers from Verizon (VZ) to AT&T (T) to Sprint Nextel (S) have rocketed over the last 3 months. Some attribute the share price appreciation to investor thirst for high dividend yields. Others regard telecom as a non-cyclical sector like health care and staples, where economic concerns may be driving participants toward safer havens. Then again, there may be multiple reasons for the “tele-tremendous” [...] Continue Reading...
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...
Financial stocks rocketed ahead in the first quarter and Bank of America (BAC) recently received a high-profile upgrade. So why is the SPDR Select Sector Financials Fund (XLF) one of the worst performers over the last 5 days? Aluminum giant, Alcoa, surprised Wall Street with its stronger-than anticipated earnings report. So why is the SPDR Select Sector [...] Continue Reading...
Morningstar used to be a one-trick pony. The company rated mutual funds… and they weren’t particularly good at it. For instance, in 1999, nearly every investment in the Janus stable held 4 or 5 stars. The primary reason? Janus products demonstrated superior performance on a relative basis in most stock categories over popular time frames (e.g., 1 year, 3 year, etc.). Did [...] Continue Reading...
On the first day of December, 2011, a number of brand name corporations hit new 52-week highs. Here are a few that caught my eye: McDonalds (MCD), Phillip Morris (PM), Diageo (DEO), Kraft (KFT) and Treehouse Foods (THS). Keep in mind, most of the media attention centers on the discretionary spending of the consumer (e.g., “Black Friday” widescreens, ”Cyber Monday” acquisitions of [...] Continue Reading...
The troubles in Italy, Portugal and Greece are shockingly serious. How serious? Many insist that these 3 little piggies will eventually succumb to disorderly bankrupties, causing Armageddon for world stock markets and the global financial system. For the doomsday crowd to be right, however, everything has to go wrong. Ev-er-y-thing! For instance, coordinated Eurozone plans for aid to Greece would have [...] Continue Reading...
