Airlines: Still America’s Most Poorly Managed Companies (WSJ) Robo-Medicine on the Way (MIT Technology Review) A Currency Rally that is too Good to Last (WSJ) Investors Reach for Yield in CoCo Bonds: (WSJ) Prescription Drug Prices Double (Financial Times) Are Index Investors the Dumb Money? (Financial Times) … [Read more...]
Morning Reads: Is the Left to Blame for Bubble-Bust Economy?
Is the Left to Blame for Bubble-Bust Economy? (Bloomberg) Mutual Fund Managers view Cash as Trash (WSJ) Oil Supply Finally Responding to Price (WSJ) Oil Executives Incentivized to Destroy Value (WSJ) Negative Interest Rates More Dangerous than You Think (Fortune) Merkel Takes a Beating at Ballot Box for Refugee Policy (Financial Times) … [Read more...]
Afternoon Reads: 7 Year Bull Market Built on Shaky Demand
Slammed by Obamacare (WSJ) 7 Year Bull Market Built on Shaky Demand (Reformed Broker) The New Mediocre (Economist) Do Low Rates Cause Low Inflation (The Grumpy Economist) Plastic Eating Bacteria (WSJ) Draghi’s Bazooka Unleashed (WSJ) See also A gift from the Banks Markets on Pace for Most Volatile Year in almost 80 years. … [Read more...]
A Gift from the Banks
Wow! This was a shocker. Yesterday the bankers in Frankfurt came unglued. In an attempt to stimulate the euro-area economy, Mario Draghi and his compatriots at the European Central Bank threw everything they could think of at the European financial system. Not only did the ECB lower interest rates further into negative territory, offer banks another sweet financing deal, and expand the rate of money printing, they also decided to include corporate bonds in their bond buying program. Yup, the ECB is now directly financing private businesses in the euro-area to stimulate growth. Sounds more … [Read more...]
Vanguard GNMA Outlook 2016
With the Fed hiking short-term interest rates for the first time in almost a decade in December, and signaling to investors that additional interest rate hikes are going to come at a gradual pace, the fixed-income landscape has the potential to change profoundly over coming months, quarters, and years. Is your portfolio prepared for such a change? If you have been reaching for yield in long maturity bonds or low-quality securities, because let’s face it, the Fed has deprived Americans of yield for far too long, now is the time to reexamine your fixed-income portfolio. If interest … [Read more...]
Afternoon Reads
Japanese Department Stores Big Winners from Negative Rates (Financial Times) Hedge Funds Getting Hit Hard on Mining Shorts (Financial Times) Bubble Watch in China (WSJ) How to Survive a Bear Market (WSJ) This Bull Market is a Greybeard (Fortune) Junk Bonds Getting Riskier (Bloomberg) Economists and Voters Sour on Abenomics (Bloomberg) … [Read more...]
Are Big Interest Rate Hikes Coming?
Fed Made to Look like Fools
Following its December meeting, the Fed announced to the world it was hiking interest rates for the first time in almost a decade—a meager 0.25%—and that further increases would come at a gradual pace looking at “realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation.” With the economy already at maximum employment by the Fed’s definition of the term and inflation heading higher, economists read the Fed statement to mean an interest rate hike at every other meeting. Then came January. Global markets fell sharply to start the … [Read more...]
Winter is Coming: Is the Economy headed for Recession?
This is an interesting chart from the latest Bank of America Merrill Lynch Global Fund Manager Survey (h/t 361 Capital). The chart shows the percentage of fund managers classifying the current stage of the economic cycle. The four stages are early-cycle, mid-cycle, late-cycle (winter), and recession. Over the last six –to-eight weeks, a majority of global fund managers have come to the realization that we are late in the cycle. The fine readers of our premium strategy reports were ahead of the curve on this. We’ve have been writing for months that the economy is in the Winter stage of the … [Read more...]
Is Your Broker Giving You the Best Advice?
Once again a Wall Street brokerage has been caught red-handed passing off puff pieces on the stocks and bonds of companies it has an investment banking relationship with as unbiased “investment research.” In the latest case, a Deutsche Bank analyst was caught publishing a positive rating on a stock he covered that wasn’t consistent with his outlook. That shouldn’t come as a surprise to savvy readers of this site. The big Wall Street banks have and always will be in the business of distributing securities. Wall Street research is nothing more than a euphemism for advertising. And even when … [Read more...]
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