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Results 251–300
of 358 found.
Five Forecasters: Few Warning Signs
by Burt White of LPL Financial,
The Five Forecasters still favor the continuation of the current bull market and no recession. The Five Forecasters, which we first introduced in 2014, are five indicators that, collectively, have historically signaled the increasing fragility of the U.S. economy and a transition to the late stage of the economic cycle and an oncoming recession.
FOMC FAQS: Making a Statement
by John Canally of LPL Financial,
The Fed holds its first FOMC meeting of 2016 this Tuesday and Wednesday, January 26–27, 2016. Without a press conference or a new set of economic and fed funds projections, the Fed must rely on its statement to communicate a complicated message to fragile markets.
The Challenges Facing Emerging Markets Debt
by Anthony Valeri of LPL Financial,
Emerging markets debt (EMD) valuations have cheapened in recent weeks, as weaker Chinese economic data and lower oil prices pushed prices lower and yield spreads higher. The average yield spread closed at 4.6% on Friday, January 15, 2016, essentially matching the post-recession peak of August 2015; and the average yield to maturity rose to 6.25%, the highest since mid-2011 and the height of European debt fears.
Window on Main Street
by John Canally of LPL Financial,
During periods of economic volatility, investors sometimes abandon the tools for evaluating markets and the economy that had been serving them well before the volatility started. Good tools, however, should continue to provide insight, which is why we are turning, once again, to the latest Beige Book from the Federal Reserve (Fed) as we gauge the health of the broad U.S. economy as 2015 ended and 2016 began.
Any Bulls Left?
by Burt White of LPL Financial,
The number of bulls is dwindling. In periods of extreme market volatility such as we have experienced in recent weeks—and Friday, January 15, 2016, in particular, when the Dow was down over 500 points at one point before paring losses—we find it helpful to try to take some of the emotion out of our investment decisions. As difficult as that can be at times, this approach can help us reduce the chances of selling at the bottom, even though the natural reaction for many is to panic and hit the sell button.
China: A Rocky Start to a New (Old) Year
by Matthew Peterson of LPL Financial,
Once again, the precipitous decline in the value of the Chinese stock market has spilled over to the broader global financial markets. The value of the Shanghai Index declined almost 15% since the beginning of the year, or at least the beginning of our year. China’s social and economic life is geared around the lunar New Year, which will be celebrated on February 8, 2016. The New Year makes a big difference in China, both psychologically and in real economic activity.
Fed Rate Hike Playbook: Part 2
by Anthony Valeri of LPL Financial,
In Part 2 of our Federal Reserve (Fed) rate hike playbook, we assess how municipal bonds have fared during periods of Fed rate increases. In the first full week of trading for 2016, Fed rate hike expectations declined in response to another bout of Chinese economic concerns and a benign message from the Fed meeting minutes, which appeared to cast doubt on whether the Fed would ultimately follow through on its forecast of roughly four rate increases in 2016.
High Yield: Flows Over Fundamentals
by Anthony Valeri of LPL Financial,
High-yield bond selling, or the threat of selling, has sparked one of the worst sell-offs in the high-yield bond market since the summer of 2011 and the peak of European debt fears. The origin of high-yield weakness has come from the lowest-rated tiers of the high-yield market but has infected the broader market. Last week’s redemption freeze by an $800 million high-yield strategy, and news of a similar halt by a smaller fund over the weekend of December 12–13, 2015, intensified pressure on the high-yield bond market.
FOMC FAQS
by John Canally of LPL Financial,
The Fed holds its eighth and final FOMC meeting of 2015 this Tuesday and Wednesday, December 15–16, 2015.
As of Monday, December 14, 2015, the fed funds futures market has priced in about an 80% chance of a 25 basis point (0.25%) rate hike at this week’s meeting.
Our view remains that the timing of the first hike matters less than the pace of the hikes; the end point for the fed funds rate in this tightening cycle and the gap between the Fed’s own view of rates and the market’s view remain crucial.
What Does the High-Yield Sell-Off Mean for Stocks?
by Burt White of LPL Financial,
High-yield bond weakness has led investors to fear that a recession or bear market may be forthcoming. Widening of high-yield bond spreads (the spread between yields on high-yield bonds and comparable U.S. Treasuries) preceded the start of the stock market downturns in 2000 and 2008, causing many to ask if the latest bout of high-yield weakness portends another downturn. Here we try to answer that question by looking at characteristics unique to the high-yield bond market and prior periods of similar high-yield weakness.
2016 Fixed Income Outlook: New Episode, Same Show
by Anthony Valeri of LPL Financial,
We expect a limited return environment may persist in 2016 and the year as a whole may look similar to 2015. High valuations, steady economic growth, and the lingering threat of Federal Reserve (Fed) rate hikes may keep pressure on bond prices in 2016. We do not envision a recession developing, which we believe is ultimately needed for a sustained move higher in bond prices.
Back to a Routine: 2016 Economic Outlook
by John Canally of LPL Financial,
Our view is that the U.S. economy—as measured by real gross domestic product (GDP)—is likely to post growth of 2.5–3.0% in 2016. This rate is below its post-World War II average of 3.2%, but above the 2–2.5% average growth rate seen in the first six-and-a-half years of this expansion, based on the factors discussed below. Despite the length of the current expansion (already the fourth longest on record), it has not followed what would be considered a routine path.
No Pain No Gain: 2016 May Require Tolerance for Volatility
by Burt White of LPL Financial,
Gains in 2016 may require tolerance for volatility. Stocks historically have offered a tradeoff of higher return for higher risk, the gain of more upside than high-quality bonds versus the pain of market volatility and losses. For the last few years, U.S. stock markets provided below-average pain, while still providing strong returns. Between October 2011 and July 2015, the S&P 500 Index went nearly four years without a “correction” of more than 10%, while climbing an average of 20% a year.
Waiting for the Fed
by Anthony Valeri of LPL Financial,
The inverse correlation between stocks and high-quality bonds failed to hold over the past week, after holding for October 2015, suggesting other forces are at work. The answer to the bond market’s indifference to risk asset performance may lie in market fixation over a possible Federal Reserve (Fed) rate hike in December 2015. According to fed fund futures pricing, market expectations for the timing of the Fed’s first rate were essentially unchanged, with the probability of a December rate hike marginally lower on the week to 64% from 70%.
Tragedy In Paris
by Burt White of LPL Financial,
Our thoughts are with the victims of Friday’s terrorist attacks in Paris. Events like this stir up many powerful emotions, including anger, fear, sadness, confusion, and regret, and these emotions are not easily suppressed. It is difficult to shift our attention away from this tragedy and toward the financial markets in times like this, but it is our responsibility to do so. Here we look at the potential stock market impact of Friday’s tragedy.
How Fast and How High
by Anthony Valeri of LPL Financial,
We do not believe last week’s sell-off is the start of a spike in interest rates. In fact, the spike may have already occurred with the 10-year Treasury yield higher by nearly 0.4% since October 14, 2015. The 30-year Treasury yield has also undergone a significant adjustment [Figure 1]. Yields on both 10- and 30-year benchmark Treasury yields have broken above the September highs and are within striking distance of 2015 highs of 2.5% and 3.2%, respectively. From a technical perspective, a breach above these levels would be needed to sustain a breakout to new yield highs.
Global Earnings Update: Europe and Japan Coming up Short
by Burt White of LPL Financial,
Earnings overseas have generally not kept up with the U.S. We spend a lot of time dissecting earnings season in the U.S. because we believe earnings are the single biggest driver of stock prices over the long run. But earnings are not just important for U.S. stocks, they are also important for stocks overseas. This week we provide an earnings update in Europe and Japan, where results thus far have mostly fallen short of those in the U.S.
Corporate Beige Book
by Burt White of LPL Financial,
According to our new Corporate Beige Book, China has been a popular subject of discussion among corporate management teams this earnings season. Similar to the Federal Reserve’s (Fed) Beige Book, a qualitative assessment of the U.S. economy and each of the 12 Fed districts, conference call transcripts for third quarter 2015 company earnings reports can be used to create a Corporate Beige Book—a window into corporate America.
Charting the Market's Course
This week we highlight seven key charts to watch that may determine the stock market’s near-term direction. The charts cover a wide range of topics including manufacturing sentiment, earnings, oil, and high-yield bonds. We believe these charts can help investors navigate the market’s course for the balance of 2015 and into 2016.
Zero Yields & The Debt Ceiling
by Anthony Valeri of LPL Financial,
The Treasury issued new three-month Treasury bills (T-bills) at 0% yield at auction last week and is on pace to do so again on October 13, 2015. Zero percent T-bill yields, or even lower, are not new, but 0% prevailing at an auction is unusual and made media headlines.
Gauging Global Growth: An Update for 2015 & 2016
by John Canally of LPL Financial,
The market continues to expect that global gross domestic product (GDP) growth will accelerate in 2015 (3.0%), 2016 (3.4%), and 2017 (3.4%) from 2014’s 2.0% pace, aided by lower oil prices and stimulus from two of the three leading central banks in the world.
Earnings Preview
by Burt White of LPL Financial,
Third quarter earnings season will potentially look a lot like the second quarter. This quarter’s earnings preview could almost be a copy and paste of the second quarter preview: It looks like we will get meager earnings growth, if we get any at all. The media will again tout earnings recession, which we discussed on April 6, 2015. The big headwinds from energy sector weakness and a strong U.S. dollar remain. And the big overseas worries are again unlikely to have much impact on earnings overall, as business conditions in the U.S.?—?outside of the energy sector?—?are pretty good.
It Ain't Over 'Til It's Over
by Burt White of LPL Financial,
Yogi Berra passed away last week at the age of 90. One of the greatest baseball players of all time, Berra was probably known more for his funny sayings (so-called “Yogi-isms”) than he was for his impressive career as a New York Yankee that lasted from 1946 until 1963 and included 3 MVP awards and 10 World Series championships. Some of these Yogi-isms are relevant for investors, including: 1) it ain’t over ‘til it’s over, 2) déjà vu all over again, and 3) the future ain’t what it used to be. Berra also famously once said, “Make a game plan you can stick to…unless it’s not w
Yes, and No
by John Canally of LPL Financial,
The title of this commentary is our answer to the question: Does the Fed know something we don’t know? Many market participants and pundits were asking this question late last week after the Federal Reserve’s (Fed) policymaking arm, the Federal Open Market Committee (FOMC), decided not to raise interest rates at the conclusion of its two-day policy meeting on Thursday, September 17, 2015. Market participants were asking the question although they had priced in just a 30% chance of a rate hike prior to the meeting.
Fed Implications
by Burt White of LPL Financial,
The Federal Reserve’s (Fed) decision not to raise interest rates at its September 17 policy meeting was undoubtedly the biggest event of last week. Although not a big surprise, besides Donald Trump (and perhaps China), the Fed is all that anyone is talking about these days. This week we share some of our perspective on what the Fed’s decision may mean for the stock market and offer some investment ideas.
Should Emerging Market Investors Fight the Fed?
by Burt White of LPL Financial,
Emerging market stocks have not won much lately, but the Fed may be a winnable fight. The Federal Reserve, which announces its policy decision on September 17, 2015, is on the verge of starting a rate hike cycle for the first time in more than 10 years. We have previously written that the start of Fed rate hikes has not marked an impending end to bull markets for U.S. stocks (despite the popular Wall Street adage “don’t fight the Fed.”) In reality, the first rate hike has told us we are about halfway through the cycle as discussed in our Weekly Market Commentary of August 25, 2014.
How Much, How Far, How Fast, Not When?
by John Canally of LPL Financial,
The policymaking arm of the Federal Reserve (Fed), the Federal Open Market Committee (FOMC), will hold its sixth of eight meetings of the year this week. On Thursday, September 17, 2015, at the conclusion of the two-day meeting, the FOMC will release a statement and a new economic and interest rate forecast. In addition, Fed Chair Janet Yellen will conduct her third post-FOMC meeting press conference of the year.
Beige Book: Windo on Main Street
by John Canally of LPL Financial,
The latest Beige Book suggests that the U.S. economy is still growing at or above its long-term trend, indicating that some of the “transitory factors” that held the U.S. economy back in the first quarter of 2015 have faded. Comments also indicate that concern over China’s impact on the U.S. economy has increased and that some upward pressure on wages is beginning to emerge.
Consulting Our Technical Playbook
by Burt White of LPL Financial,
When markets are tough, emotions can take over. The natural emotional response to sharp stock market declines is to sell. In periods like these, especially when the media sensationalize every gloomy angle as they tend to do, an objective look at the data can be reassuring and help us make better investment decisions.
12 Questions for a 12% Correction
by Burt White of LPL Financial,
The recent market downdraft and related uncertainty in China have led to many investor questions. The strong 6.5% rebound in the S&P 500 over the last three trading sessions (August 26, 27, 28, 2015) has cut the S&P 500’s losses from the 2015 peak (2130 on May 21, 2015) to 6.7%. In response to the S&P 500’s recent 12% correction?—?the first decline of more than 10% since 2011?—?we answer 12 investor questions. Bottom line, we do not expect the latest correction and China uncertainty to lead to the end of the U.S. economic expansion or the end of the six-and-a-half-year old bull
Summer Quartet
by Anthony Valeri of LPL Financial,
Music from four players continues to influence events in the bond market this summer: the Federal Reserve (Fed), China, oil prices, and the U.S. dollar. The music from these four players has led to a mixed response in the bond market: disturbing for short-term securities, melodic for long-term bonds.
What We Can Learn by Going Back to School
by Burt White of LPL Financial,
The summer has flown by and some children are already going back to school this week. The back to school shopping session is considered the second most important selling season for retailers (after the Christmas/winter holidays), which we think is a good reason to check in on the health of the U.S. consumer and provide our latest thoughts on the consumer discretionary sector. Expectations for this season are low, but several consumer spending tailwinds suggest the sector may be poised to outperform over the rest of the 2015.
Productivity Puzzle
by John Canally of LPL Financial,
All eyes are on jobs this week. The U.S. Department of Labor’s July Employment Situation report (due August 7, 2015) will likely show that the U.S. economy created 225,000 jobs in July 2015, close to the average job creation over the past 12 months (245,000) according to the consensus of economists polled by Bloomberg News.
Earnings Update: Corporate Resilience
by Burt White of LPL Financial,
Once again, earnings season highlights corporate America’s resilience. Investors were braced for an earnings decline in the second quarter of 2015 but will almost certainly end up with another quarterly earnings gain despite the significant drags from the oil downturn and strong U.S. dollar, largely thanks to effective cost controls that have propped up profit margins. With more than two-thirds of S&P 500 companies having reported second quarter 2015 results, we provide an earnings update.
U.S. Dollar Still Stands Tall
by Burt White of LPL Financial,
The U.S. dollar remains strong, defying some skeptics. As has been the case since late 2008 when the Federal Reserve (Fed) began its quantitative easing (QE) program, there has been a great deal of concern recently among some market participants that the dollar is on the verge of a significant decline. Although the dollar may have lost some market share relative to other global currencies in recent decades, it remains the dominant global currency (often referred to as a reserve currency) and we expect it to remain so for the foreseeable future.
Parsing Puerto Rico
by Anthony Valeri of LPL Financial,
Puerto Rico municipal bond prices continue to reflect a significant probability of a potential default or debt restructuring. Puerto Rican difficulties are coming to a head: The commonwealth is suffering through a recession that began in 2006, a severe cash crunch has increased the prospects of a missed bond payment, and a greater than forecast budget deficit means that revenue fell short again and more cost reductions are needed.
The Future is Already Here
by Anthony Valeri of LPL Financial,
A good idea of what the future will look like for bond investors is already here. The three-year average annualized total return of the Barclays Aggregate Bond Index, a broad measure of high-quality bond performance, stood at a very modest 1.8% at the end of June 2015. This is an average return, and shorter-term returns have been both higher and lower over the past three years, but it provides an approximation of what investors may expect over a longer time frame.
Greece Playbook
by Burt White of LPL Financial,
Greece’s critical referendum took place this weekend and the Greek people resoundingly voted “no”?—?rejecting the latest bailout deal from creditors. The referendum result, which some interpreted as a vote to exit the Eurozone, throws Greece’s future in the currency union firmly in doubt. The unexpected result has led to a roughly 2% decline in the broad European indexes but only a modest decline in the S&P 500 (as of 3 p.m. ET today, July 6, 2015). The negative market reaction in Europe is not surprising, given polls heading into the weekend suggested a vote for the bailout was
The Fed After the "No"
by John Canally of LPL Financial,
The “no” vote in the Greek referendum on July 5, 2015, will potentially raise the level of economic and financial market volatility in the coming weeks as global investors assess the market and economic risks associated with an increasingly likely Greek exit (Grexit) from the Eurozone and from the Eurozone’s common currency, the euro.
Batteries Not Included: Midyear Stock Market Outlook
Expect the bull market to continue through 2015. In the stock market, 2015 has felt like déjà vu. In 2014, the year began with a tough first quarter and finished strong. After a weak start to the year, we believe that corporate America will provide a much needed boost for the second half and 2015 may also finish strong?—?providing the seventh year of positive returns, in the 5?–?9% range we forecast.
Putting the Pieces Together: Midyear Economic Outlook
by John Canally Jr. of LPL Financial,
We continue to expect that the U.S. economy will expand at a rate of 3% or slightly higher over the remainder of 2015, once economic conditions recover from yet another harsh winter—and other transitory factors—that held back growth in the early part of 2015. This forecast matches the average growth rate over the past 50 years, and is based on contributions from consumer spending, business capital spending, and housing, which are poised to advance at historically average or better growth rates in 2015. Net exports and the government sector should trail be hind.
Beige Book: Window on Main Street
by John Canally of LPL Financial,
The latest Beige Book suggests that the U.S. economy is still growing at a pace that is at or above its long-term trend, indicating that some of the “transitory factors” that held the U.S. economy back in the first quarter of 2015 have faded and that some upward pressure on wages is beginning to emerge. Overall, the Beige Book described the economy as expanding at a “modest or moderate” pace in most districts. In general, optimism regarding the economic outlook far outweighed pessimism throughout the Beige Book, as it has for the past two years or so.
Bond Tug-of-War
by Anthony Valeri of LPL Financial,
The bond market tried to end the month of May on a high note but did not quite make the mark. The last 10 days of May 2015 witnessed fairly steady improvement in high-quality bond prices after a difficult five weeks, but it was still not enough to offset losses for the month. The broad Barclays Aggregate Bond Index still finished 0.24% lower in May and posted consecutive monthly declines for the first time since the last two months of 2013.
Taper Tantrum Redux
by Anthony Valeri of LPL Financial,
After a brief reprieve at the end of last week (May 4–8, 2015), the global bond sell-off resumed Monday, May 11, 2015, with 10- and 30-year Treasury yields rising to year-to-date highs of 2.28% and 3.04%, respectively. Treasury yields have now broken out of their recent ranges and have done so quickly.
Earnings Recap: Good Enough?
by Burt White of LPL Financial,
The first quarter 2015 earnings season is virtually over and the results relative to lowered expectations were quite good. Investors were braced for an earnings decline and the possible start of an “earnings recession,” but it looks like they will end up with a better than feared, year-over-year earnings growth rate of about 2%, according to Thomson Reuters data. This pace is impressive considering the significant drags from the oil downturn and strong U.S. dollar. Here we recap the first quarter 2015 earnings season and share our earnings outlook for the rest of 2015.
Made In Europe
by Anthony Valeri of LPL Financial,
A weak finish to the month of April 2015 was “made in Europe” as expectations of better global growth weighed on bonds. On Monday, May 4, 2015, the 10-year German government bond yield closed at 0.45%, more than quadrupling over the past two weeks. European strength combined with a dovish Federal Reserve (Fed) meeting outcome continued to arrest U.S. dollar strength, a primary driver of the steady decline in inflation and investors’ inflation expectations from mid-2014 through the first quarter of 2015.
Cross Currents
by Anthony Valeri of LPL Financial,
Cross currents continue to push and pull the bond market, leaving bond prices and yields range bound ahead of another Federal Reserve (Fed) meeting and key batch of monthly economic reports. Intermediate to long-term Treasury yields increased by 0.01% to 0.11% for the week ending April 24, 2015, despite weaker economic data.
Results 251–300
of 358 found.
