For all the talk of the FAANG-led stock market rally, one asset class that isn’t getting enough respect is gold. The S&P 500 may be up 20% since year-end 2015, but gold prices are up 21%. If inflation is subdued as many proclaim, and the outlook for stocks remains bullish, why are gold prices so strong? … [Read more...]
Janet Yellen & the Origin of the Populist Backlash
No surprise here. The FT points out what most of the American public already knew. Years of low rates and trillions of dollars blown on quantitative easing did little for ordinary Americans. The biggest beneficiaries were the wealthiest 20% of the public. And among those it was the traders and speculators who benefited the most. Ultra-low interest rates have made a rough go of it for conservative investors and income investors. Sadly, the populist backlash that Yellen & Co.’s regressive stimulus helped engineer may be more harmful for long-term economic growth than the recession the Fed … [Read more...]
El-Erian Warns Against Unleashing New Demons to Fight ‘Lowflation’
Rather than take drastic measures to fight what market participants are calling 'lowflation,' Mohamed El-Erian says that it may be better for central banks to stick with the plan they have. He writes at Bloomberg: Having failed to meet the 2 percent target despite aggressive monetary policy, it is far from obvious that central banks would be able to meet a higher objective. And no one is quite sure how the political system would respond to a central bank that pursues much higher inflation as it tries to offset the shortfalls of prior years. Indeed, until we have a better understanding of how … [Read more...]
Portfolio Strategy: This is the Fair Value Yield on 10 Year Treasuries
Income investors can’t seem to catch a break. Even though the Federal Reserve is finally normalizing short-term interest rates, long-term interest rates remain depressed. The 2.2% yield on 10 year Treasuries isn’t much higher than it was during the last financial crisis. Based on the rate of economic growth, inflation, and the current Federal Funds rate, long-term interest rates should be much higher. How much higher? The chart below compares the actual 10-year Treasury rate (blue line) to the rate predicted (black line) by a simple model of economic growth, inflation, and short-term … [Read more...]
What does the Smart Money think of Tesla?
Tesla has become the largest auto-maker in America as measured by market capitalization even though it produces a small fraction of the cars that General Motors produces. Tesla produced about 84,000 cars last year. General Motors produced over 10 million. Yup, I know, Tesla is different than the other U.S. auto makers. Tesla is a growth stock. You hear it from the analysts whose banks regularly underwrite securities for Tesla that Tesla has a cult following. It is more like Apple than General Motors. That’s possible, but do you want to invest your money in a company that is burning cash … [Read more...]
Wal-Mart Expands Online Grocery Delivery
Amid increasing competition from companies like Aldi, and the potential for more from Whole Foods/Amazon, Wal-Mart is expanding its online grocery delivery service to Dallas and Orlando. Wal-Mart is finding success in online grocery sales, as those who shop online tend to spend more. This mirrors recent success Wal-Mart has been finding on its e-commerce properties. At Bloomberg, Matthew Boyle explains Wal-Mart's push for expanded grocery delivery: The move is the latest step in Wal-Mart’s broader e-commerce push, which includes curbside grocery pickup in more than 900 locations and … [Read more...]
Can China’s Stop-and-Go Market Reforms Work Forever?
It's two steps forward and one step back in China. As the country allows more market liberalization, companies find ways to exploit the system. Inevitably they run afoul of Chinese state interests, and the government adds new restrictions to remedy the situation. Thus is the ebbing and flowing of market reform in China. But how long can that dynamic persist? Today the New York Times reports that China is cracking down on overseas real estate purchases by its corporations. The businesses are using more debt than the state would like, and to limit "systemic risk" it is cracking … [Read more...]
Is China Hiding an Avalanche of Debt?
According to Gabriel Wildau writing for the FT, one Chinese debt analyst believes China's debt could be much higher than the government is reporting. Charlene Chu tells Wildau that the amount of bad debt in China could be $6.8 trillion more than the official figures. Wildau writes: “Everyone knows there’s a credit problem in China, but I find that people often forget about the scale. It’s important in global terms,” Ms Chu said in an interview by phone from New York. Ms Chu left Fitch in 2014 to help launch the Asia operation for Autonomous Research, which specialises in analysis of … [Read more...]
How Will the World Handle Such Unprecedented Central Bank Balance Sheets?
Central banks around the world have employed untested emergency bond buying operations in an attempt to stabilize their markets or to encourage growth. Now those chickens are coming home to roost. The FT reports that leading central banks own a full fifth of their governments' debt. The six most active central banks, the Fed, the BOJ, the ECB, the BOE and the Swiss and Swedish central banks collectively own over $15 trillion in assets. Kate Allen and Keith Fray report: Of this, more than $9tn is government bonds — one dollar in every five of the $46tn total outstanding debt owed by their … [Read more...]
Is Active Management Finally Set to Outperform?
After what seems like every retail investor--including Warren Buffett's wife--has bought in to the index investing mania, it appears the tide may be turning once again in favor of active management. Attracta Mooney writes for the Financial Times: Assets managed in passive mutual funds grew 4.5 times faster than active in 2016 to reach $6.7tn, according to figures from Morningstar, the data provider. On the back of this rapid growth, Moody’s, the rating agency, predicted in February that passive would overtake active management by 2024 in the US at the latest, controlling half the market, … [Read more...]
- « Previous Page
- 1
- …
- 137
- 138
- 139
- 140
- 141
- …
- 218
- Next Page »