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Archives for December 2010
The Revolt
President Obama has a revolt on his hands. This week, his former allies in the house turned on him. The Democratic caucus voted on Thursday to reject the Obama-McConnell tax compromise. Those in the far-left wing of the Democratic Party find the tax deal unacceptable. They have a problem with the estate tax provision that GOP members negotiated and the extension of current tax rates on high-income tax earners. It is no wonder that House Democrats took a beating in November. The provisions that the Pelosi-led liberals want stripped from the bill are the only two Republican proposals in the … [Read more...]
It’s a Shame You Don’t Make More Money
Yes, you may feel it’s a shame you don’t make more money. But you don’t want to make the mistake of being more aggressive with your portfolio to make more money. That’s a fool’s errand. Working more, saving more, and spending less guarantee you’ll make more money. Putting more of your money in stocks or commodities guarantees only one thing: You’ll have more of them. The market has zero interest in you making more money. And don’t think the Fed is doing you any favors with the bubbles it has inflated. Easy money has decimated hedge funds and venture capital. Commodities and farmland may be … [Read more...]
Pimco Total Return Among Biggest Losers as Bond Rally Fizzles
Pimco Total Return Among Biggest Losers as Bond Rally Fizzles By Sree Vidya Bhaktavatsalam and Charles Stein, Bloomberg "Bill Gross’s Pimco Total Return Fund, the world’s largest mutual fund, was the second-biggest decliner among the largest U.S. bond managers in the past month as clients pulled money for the first time in two years amid a selloff in Treasuries. The $250 billion Pimco Total Return fell 3 percent in the 30 days through Dec. 8, trailing all but one of the 10 largest bond mutual funds, which lost an average of 2 percent, according to data compiled by Bloomberg. Only the $33 … [Read more...]
Firms, Funds Feel Squeeze of Low Rates
Firms, Funds Feel Squeeze of Low Rates By Liz Rappaport, Michael Corkery and Leslie Scism, Wall Street Journal More evidence that the Fed’s ultra-loose monetary policy is distorting the economy. Historically low interest rates are starting to take a toll throughout the financial industry, presenting a potential downside to the Federal Reserve's aggressive efforts to reignite growth in the sluggish economy. Rock-bottom rates are squeezing profit margins at banks that rely on the gap between what they charge borrowers and pay depositors. They also are hurting returns at pension funds … [Read more...]
Interest Rates Surge
Long-term interest rates are surging. After falling below 2.40% in October, the ten year T-note yield has risen to 3.26%--an increase of 86 basis points. An investor who purchased long bonds at their yield low is down almost 7% in only two months. That’s almost 3 years worth of interest. … [Read more...]
Tax-Cut Deal Results in Turmoil for Bonds
Tax-Cut Deal Results in Turmoil for Bonds By Mark Gongloff and Tom Lauricella Wall Street Journal “The tax deal in Washington led investors to dump government bonds on Tuesday, with yields on Treasurys hitting their highest level in six months... "The tax compromise will keep the economy on track, but there's the question of how we're going to pay for this," said George Goncalves, head of U.S. rates strategy at Nomura Securities International, who has been bearish on Treasurys since mid-October. "It will require more Treasury borrowing."... One fear among bond investors is that foreign … [Read more...]
Mounting Debts by States Stoke Fears of Crisis
Mounting Debts by States Stoke Fears of Crisis By Michael Cooper and Mary Williams Walsh The New York Times “Their fear is that even when the economy recovers, the shortfalls will not disappear, because many state and local governments have so much debt - several trillion dollars' worth, with much of it off the books and largely hidden from view - that it could overwhelm them in the next few years…But the finances of some state and local governments are so distressed that some analysts say they are reminded of the run-up to the subprime mortgage meltdown or of the debt crisis hitting nations … [Read more...]
China’s ETF Move Pushes Up Gold
China's ETF Move Pushes Up Gold By Chris Oliver And Matt Whittaker, Wall Street Journal “HONG KONG—China's securities regulators are allowing mainland Chinese to invest in foreign exchange-traded gold funds for the first time, unleashing the full buying power of the world's second-biggest economy on funds that already own more gold than most central banks… Lion Fund Management Co. received permission to invest in exchange-traded gold funds outside the country, making the fund the first of its kind for mainland China, according to a statement posted on the Shenzhen fund provider's website.” … [Read more...]
The World’s Best-Performing Commodity
Do you know which major commodity has increased in price most YTD? It’s cotton. Cotton is up 96% YTD. The second-best-performing commodity is palladium. Palladium has gained 88% YTD. The big gains in cotton and palladium are not outliers, though. In Young Research’s Global Investment Strategy, we provide subscribers with a Global Investment Scorecard that shows the performance of all of the major developed and emerging equity markets as well as major fixed-income sectors, U.S. stock sectors, and all the major commodities. For commodities, we break out the performance of energy commodities, … [Read more...]