Asset markets are frothy. That shouldn’t come as a surprise to investors who spend even a few minutes a day doing some remedial analysis. It may however come as a shock to the growing crowd of investors who continue to blindly throw money at index based ETFs using the same tired return assumptions they used when valuations were much lower. Stocks aren’t the only asset class where things look frothy though. Here the FT highlights investor exuberance in the bond market where investors recently placed almost $10 billion in orders for a $2.75 billion 100-year bond from Argentina—a serial … [Read more...]
Ginnie Mae (GNMA) Bond Yields
What do Ginnie Mae (GNMA) bonds yield? The table below lists the yields on two of the major Ginnie Mae (GNMA) indices as well as the latest SEC yield on some of the top Ginnie Mae (GNMA) dedicated funds. A note of caution when you are looking at yields on Ginnie Mae funds. Like all SEC yields, these yields are based on the last 30-days of income generated by the fund. They are not directly comparable to the yields on the Merrill Lynch and Barclay’s Ginnie Mae (GNMA) indices. Description Symbol Yield as of 4/30/2017 Yield as of 5/31/2017 Merrill Lynch Ginnie Mae … [Read more...]
Should You Buy Apple Stock?
The Wall Street Journal ran a feature on Apple yesterday which included the chart below. The article highlighted the transformation of Apple from a purveyor of personal computers to one of the largest mobile phone manufacturer in the world. The chart shows the percentage of revenue that comes from various apple products. As you can clearly see, in the span of ten years Apple has completely transformed itself into a company almost entirely reliant on mobile phones. Apple should be applauded for its success over the last decade, but if there is any industry where the past is rarely … [Read more...]
China Stocks Enter the MSCI Emerging Market Indices
For four years MSCI has talked with Chinese regulators about including Chinese "A-shares" in its Emerging Markets index. Until now the restrictions on access to Chinese markets have prevented MSCI from including the shares. But yesterday MSCI announced that it would include Chinese shares in the Emerging Markets index, with a selection of 222 large cap stocks making the cut. Reuters reports: The bulk of the shares will be financial and industrial companies, many state-owned. According to Credit Suisse, among the 222 stocks on the simulated list of constituents for the new proposal of China … [Read more...]
What is Driving the Stock Market Higher?
The proliferation of the no-thought required approach to investing (index investment) along with other quantitative and algorithmic based strategies has created some disturbing cross-currents for the dwindling group of fundamental investors. Here J.P. Morgan (via Zerohedge) estimates that only 10% of trading volume originates from fundamental discretionary investors. That is a truly stunning statistic If 90% of the volume in stocks is driven by value-agnostic investors, the obvious implication that we see is bigger booms and much bigger busts that are far removed from underlying … [Read more...]
Pouring Fuel on the Fire in Financial Markets
If you thought the last nine years of manipulation, misallocation, and mispricing that was aided and abetted by misguided monetary policy was a problem, you ain’t seen nothing yet. As the FT reports, the Fed and other global central banks are re-evaluating their 2% inflation targets with an eye toward raising them. Why are Yellen & Co., thinking about raising their inflation targets? The theory is that if central banks can lower inflation adjusted interest rates more than they have in the past, they will be able to provide stimulus to the economy during the next recession. Sounds … [Read more...]
Bezos Buys Whole Foods
It would seem Mr. Bezos is moving beyond the Internet and into the brick and mortar realm. Amazon is buying Whole Foods for $13.7 billion in an all cash deal. Based on both companies' 2016 results Whole Foods will account for over 70% of profits in Amazon’s retail business. Who knew the grocery business could trade at such lofty multiples? Amazon said in its press statement today: SEATTLE & AUSTIN, Texas--(BUSINESS WIRE)--Jun. 16, 2017-- Amazon (NASDAQ:AMZN) and Whole Foods Market, Inc. (NASDAQ:WFM) today announced that they have entered into a definitive merger agreement under … [Read more...]
Slowing Auto Market Signals Late Cycle Dynamics
Although the current economic expansion has been underwhelming for many industries, the auto market was the exception. The auto market was hit hard in the last recession, but carved out a V-shaped recovery with steady growth for much of the expansion. But change is now afoot. The used car market is over supplied. Used car prices are contracting and growth in new car sales has stalled. General Motors has decided to extend its typical summer factory shutdown to clear bloated inventories. GM’s inventories are almost 44% higher than a year earlier. Slower production in the auto sector is … [Read more...]
This Asset Class is on Fire
Even though short-term interest rates are now increasing, investors are telling Yellen & Co., the pace of hikes is still way too slow. The reach for yield remains a dominant theme in fixed income markets. Here the WSJ reports that the demand for leveraged loans is on fire. Investors are desperate for decent income and riskier companies are taking full advantage. The upshot is that the world of leveraged loans appears to be going slightly mad. Loan sales are running ahead of the pace of the past three years, fueled by a rush of money into the sector. Retail investors have piled … [Read more...]
Should You Dump Your Junk Bonds Now?
Despite higher yields, junk bonds today don't look to be worth the risk. If loss rates are factored in, the rosy picture of higher yields begins to look less appealing. MarketWatch reports: The real junk yield The truth is that it’s much riskier than it seems from doing this simple yield, or yield-spread, analysis. That’s because the annual loss rate for junk bonds over the past 35 years has been around 2.5%. You can arrive at the loss rate by adjusting defaults for recoveries. Default rates for junk average about 4.2% annually, according to research from Standard & Poor’s. And … [Read more...]
- 1
- 2
- 3
- …
- 76
- Next Page »