Results 1,901–1,950 of 2,106 found.
Middle East/Africa: Economic Review February 2011
With countries led by autocratic rulers marred by stagnation in the economy, high unemployment rates and poor human rights records, protests in the region sparked off in classic ?domino effect? style. With rumblings being heard from countries like Iran, Syria, Jordan, Yemen and Morocco. The economic repercussions of the protests and the unseating of these regimes are yet to be calculated. The first obvious impact would be on oil prices. With the entire world economy hinging on the oil rich Middle East, the seismic shift in the political landscape of the region will be monitored closely.
Turmoil in the Middle East: Should It Have Been Predicted?
The turmoil began, when a young Tunisian college graduate immolated himself on December 17 after being harassed by police as he attempted to sell fruit on the street. Some claim the vendor, Mohamed Bouazizi, did not have the money needed to bribe police officials to continue peddling and earn a living. He died on January 4, sparking deadly demonstrations and riots throughout Tunisia (now called the Jasmine Revolution) in protest of social and political issues in the country. And just 10 days later, on January 14, President Zine El Abidine Ben Ali was forced to step down after 23 years.
2011 Year-End Price Targets
Each week, Bloomberg surveys the head equity strategists at the major Wall Street firms for their year-end S&P 500 price targets. At the start of 2011, the average S&P 500 year-end price target for these strategists was 1,371. This would have resulted in a gain of 9.02%. Since the start of the year, five strategists have increased their year-end targets, Goldman Sachs , Barclays, Bank of Montreal, HSBC and UBS. These increases put the average year-end price target at 1,401, which would result in a gain of 11.40%. With a YTD gain of more than 5% already, the S&P 500 is nearly halfway there
Finding Low Risk Value in Today's Market
The investment environment is transitioning from a macro-driven, reflation environment into one where earnings drive performance. US companies are well positioned at this juncture and contrary to consumers and the government have come out of this crisis in good shape. Some commentators question the outlook for corporate profitability, arguing that profits are meanreverting and that they can only weaken. We disagree, however, we acknowledge that price pressures are now showing up in import prices, and companies will need to offset these costs with increased prices or improve their productivity
Are Emerging Markets Still
Political unrest in Egypt, Libya, and elsewhere in the Middle East, along with surging food prices around the world, has provided fresh reminders of the inherent risks of investing in emerging markets. Indeed, while the U.S. stock market has been inching steadily upward in recent months, emerging markets have been struggling. Year-to-date through February 28, the MSCI Emerging Markets Index is down -3.79%, while the S&P 500 Total Return Index has gained 5.88%.
January?s Employment Situation Report Generates More Questions than Answers
The conflicting trends in the January Employment Situation report has forced all labor market observers to wait for February?s report in hopes of discerning some clearer trends. Generally speaking, the underlying trends are positive, as we?ve shown using the JOLTS data. On the other hand, things are not nearly as strong as the .8 percentage point drop in the official unemployment rate over the past two months would suggest. And that rate will likely rise again in the short term before it begins a long-term trend back to levels consistent with full employment and a healthy economy.
2011 Outlook: Private Equity
As a result of the financial crisis, for the latter part of 2008 and all of 2009, very few new private equity transactions were completed and portfolio company monetization was minimal. However, the operating performance of existing private-equity portfolio companies was better than generally expected and investment returns were superior to public equity benchmarks. Although some of this outperformance can be attributed to the resistance of some private equity firms, we believe the majority of the outperformance was the result of effective cost cutting, cash conservation and debt reduction.
Responding to the Stubbornly Steep U.S. Treasury Yield Curve
Disciplined, active investment managers are constantly on the lookout for capital market extremes, which can provide value-adding opportunities for investors. One such market extreme has been developing in the U.S. Treasury market for the past three years, reaching historic levels in 2010 and earlier this year. We?re talking about the very wide, stubbornly persistent gap between short- and longer-maturity U.S. Treasury yields.
US and State Default Risk
The US stock market has been on a tear lately, but default risk for the country has remained stubbornly high. Granted, default risk for the US is very low compared to most countries, but it is currently near 1-year highs. Below is a chart highlighting US default risk using 5-year CDS (credit default swaps) price in Euros. While risk is nowhere near as high as it got during the financial crisis in late 2008 and early 2009, it is more than 100% higher than where it was in late 2009.
The Housing Market Remains a Weak Link in the Current Recovery
Recent data on single family home selling prices for the 20 largest metropolitan areas in the U.S. indicate that prices in most markets continue to decline. The monthly decline for the Case-Shiller Home Price Index was -0.5% in November, which marks the 5th consecutive monthly decline. So while other measures of our economy such as GDP growth (3.2% annualized increase for the fourth quarter of last year) or corporate profit growth continue to show solid progress, home prices?which are important in affecting consumer confidence and spending?continue to exhibit vestiges of deflation.
Odds for the 2012 Elections, Health Care Repeal, and an NFL Lockout
The current Intrade odds for the Democratic Party to maintain the Presidency in 2012 stand at 62.5%. The contract for Republicans to control the Senate after 2012 last traded at 69 (or 69% odds). The odds are 50/50 for which party will control the House after the next set of elections. Odds are at 12% for the Supreme Court to rule the individual mandate unconstitutional by October 31st, 2011.
Deconstructing the Current Inflation Conundrum
As the old saying goes: ?The best time to buy flood insurance is when the river is still running low.? We suggest not waiting until inflation pressures increase further before making sure you have some inflation insurance in your portfolio.
Fourth Quarter Letter
In spite of Bernanke?s objective to put a floor on asset prices, including equities, we remain conservatively positioned. Equity and credit markets appear overvalued. In addition, with the U.S. and most developed-market economies significantly more leveraged than in the last 50 years, economic growth will likely be more volatile. Further, many potential exogenous forces could negatively influence public markets: over-leveraged municipalities, the PIIGS, and continued issues in the US housing market to name a few. Finally, there is no evidence that monetary policy can create real growth.
World Bank Says Developing Countries Driving Global Growth
During the recent Great Recession, developing countries such as China and India played a key role in sustaining global economic growth, while developed economies struggled to cope with issues such as the subprime market meltdown, sovereign debt issues, and soaring unemployment numbers. In the coming years, developing nations will continue to play an increasingly important role in driving the global economy.
December?s Unemployment Report Masks Lingering Challenges
On January 7, the U.S. Bureau of Labor Statistics (BLS) issued its Employment Situation report for the month of December. On the surface, the news appeared very good: The national unemployment rate dropped 0.4% from 9.8% to 9.4%. That is the lowest rate of unemployment we?ve experienced in nearly two years (April 2009 was the last month unemployment that was under 9%). And nonfarm payroll employment increased in December by 103,000. However, financial markets reacted with some pessimism that day. Overall, the S&P 500 declined 0.2% while broader indices also registered slight declines.
Equity Investment Outlook
During the fourth quarter, the stock market staged a strong rally, reflecting both growing evidence of a sustained economic recovery and the reversal (thanks to the Republican victory in November) of the seriously anti-business tone in Washington. These two factors enabled investors to begin thinking not just of a recovery from the recent crisis and recession, but of a more sustainable and enduring expansion. As a result, they were able to bet on a longer stream of favorable corporate earnings.
Fixed Income Investment Outlook
As for our strategy, we continue on a steady course of balancing major risk aversion while opportunistically seeking returns. Although there are no longer any soft pitches like there were in late 2008 and early 2009, we feel that there are still enough bond issues from well-run companies that offer reasonable returns without going too far out on the risk or duration curves. We do not believe it is prudent to lower quality standards or to take excessive duration exposure at this time in order to increase returns. We believe there will be better opportunities for that in the future.
A Near Perfect Pair: The Markets and Obama
President Obama has quietly maintained his position as one of the equity market?s most well loved Presidents. As the data show, the 47.6% gain in the DJIA since he took office ranks as the third best first two years for any President since the start of the 21st Century (FDR 90.5% and Coolidge 52.6%). Whether or not you give the President credit for the market?s performance will undoubtedly depend on your political views, but strictly at face value, the numbers don?t lie.
Inflation a Growing Concern for Emerging Market Countries
As a group, emerging market countries have rebounded from the Great Recession in much better shape than developed economies. And driven by higher commodity prices, robust domestic consumption, and a growing middle class with buying power, the emerging market asset class appears poised for more growth heading into 2011. While investors have been focusing on the European debt crisis, however, many emerging market economies have been getting a little overheated from the rapid pace of growth, and inflationary fears are quietly becoming a daily reality.
Global Outlook and Strategy
After being challenged in November by renewed Eurozone sovereign debt concerns, global risk markets ended 2010 on a strong note. The key to the late-2010 and early-2011 optimism was the potential for the two biggest engines of global growth ? the US and Chinese economies ? to pull together this year.
A Rare and Dying Breed
Despite the rapid ascent of index funds and ETF investing during the past decade, we contend that carefully researched and selected active strategies offer the best opportunities for our clients to achieve their investment objectives while taking the least amount of risk possible. Our conviction is based on past experience, and our analysis of manager performance in the context of "active share", an objective new measure introduced by Yale School of Management's Cremers and Petajisto in a 2006 academic paper discussed below.
Not As bad As You Might Think: State Revenues Q3 2010
We found that compared to Q3 of 2009, 42 of the 50 states saw revenue increases in the third quarter while only eight saw declines. On the positive side, nine states saw their revenues increase by more than 10%, with Alabama leading the way. Looking at the list of states with declines, the more notable aspect of that list may be the notable names that are absent. California, Illinois, New Jersey, and New York are generally considered to be the states that have the worst finances, but of those four only New Jersey saw a decline in revenues during the quarter.
2011 Outlook: Fixed Income
Entering 2011, there is no shortage of potential issues that could ignite periods of extreme market volatility. While short-term market gyrations are unsettling for both novice and experienced investors alike, for the year as a whole, we believe the outlook for the economy and the fixed income market is generally positive. In particular, certain non-Treasury sectors have compelling fundamentals going into the New Year. In our opinion, these areas could benefit generally from an increased risk appetite, should investors seek incremental yields given a continued low interest rate environment.
Demographics and Sovereign Debt
Events surrounding what the press calls the European Sovereign Debt Crisis have been in the news for much of the past year. Unfortunately, this label masks an underlying major contributing factor: demographics. The combination of long life expectancies, relatively early retirement ages, generous retirement benefits and a shrinking base of workers to support the growing proportion of retirees in the population will put tremendous burdens on the budgets of these countries.
Encouraging Signs of Life from the U.S. Consumer
Early data from the start of the 2010 holiday shopping season indicate this could shape up to be the best year for consumer spending (and retailers) since 2005. Some have attributed this simply to consumer psychology based on pent-up demand and frustration after nearly three years of relative austerity. However, there are other indicators suggesting that consumer finances are at least on the mend.
'Shadow' NAVs for Money Funds Available
In January 2011, so-called "shadow" net asset values (NAVs) for money market funds (MMFs) will become available publicly for the first time. They will be posted by the SEC on their Web site 60 days after they are filed monthly with the commission by fund management companies, including American Century Investments(R). As one of the investment industry's MMF pioneers, American Century Investments supports the new regulations and manages five MMFs.
Bond "Bubble" Fears Overblown
In this paper, we consider the argument that there is a bond ?bubble? in the context of current economic and market conditions. We examine academic literature for commonly accepted characteristics of speculative bubbles, finding little evidence to support the notion that the bond market is currently experiencing a ?bubble.?
Global Tensions Rising Over Fed's QE2 Initiative
QE2 represents a dramatic intervention in the capital markets, and its ultimate impact is hard to predict at this point in time. Critics of the plan, including some Fed members, believe that too much monetary stimulus might lead to runaway inflation, which in turn could derail economic growth or even create future asset bubbles. Alternatively, a weaker dollar could create incentives for other countries to implement capital controls and foreign exchange interventions that negatively impact global trade.
Bullish Sentiment Sees Largest Drop in Nearly Two Years
Large swings in bullish sentiment once again highlight the 'drive by' mentality and lack of conviction that investors have in the current market environment. When the headlines are positive, they get bullish, but the slightest hint of any negative news sends investors scurrying for cover.
Education, Employment and Earnings
American Century Investments analyzes salary growth, real wages, and unemployment levels as a function of education levels to conclude that education plays a crucial role in our economy and in determining the opportunities for employment, the risks of unemployment and the level and growth of wages within our society. This was true 70 years ago when earning a high school diploma put one in a minority of workers, and it is even truer today when earning a bachelor?s degree or more is one of the best options a young adult can pursue to ensure a prosperous future.
Latest GDP Growth Report Points to Continued Economic Weakness
After one quarter of robust gross domestic product (GDP) growth late last year - characteristic of an economy snapping out of a recession - the trend that has followed has been very uncharacteristic, with a substantial downward shift in GDP growth. American Century Investments investigates quarterly shifts in consumer spending and investing and other factors that effect GDP.
Advance 3Q Bank Delinquencies
Final figures for the third quarter 2010 are not due until late November, but based on earnings reports and call report filings from many smaller banks, Foresight Analytics offers its advance estimates of what final 3Q 2010 real estate and business loan delinquency results will be.
November Economic Update
We have enjoyed the recent rally, but we expect volatility to continue. Investors should remain cautious. It is not necessary to chase stocks higher as buying opportunities are expected to present themselves throughout the next year. If Bill Gross is right, government bonds may not be the safe investment they once were. To reduce risk, broad diversification across many asset classes is the best strategy during these uncertain times.
Grey Owl Q3 Letter
Uncertainty abounds and all broad asset classes are beginning to look expensive again. Unemployment shows few signs of improvement and business confidence is low, yet the stock market continues to climb the 'wall of worry.' Frankly, we have little confidence in the economy or in the broad stock market. However, we continue to find pockets of value in out-of-favor names across industries and market capitalizations. Macro uncertainty may continue to drive the market for some time, but eventually the weighing machine will win out.
'Bubble' Bashing Does Not Imply a Risk-Free Bond Outlook
The present bond environment still doesn't fit previous 'bubble' profiles. We are, however, in a period of historically low interest rates and Treasury bond yields, with more room to rise than fall. Future bond price declines are a realistic expectation, but these declines are unlikely to rival other post-bubble, extended price plunges. Bonds continue to provide a cushion for equity exposure in diversified portfolios and a source of steady income for those who need it.
Have the Financial Markets and the Real Economy Become Disconnected?
There are solid and logical reasons why equity markets have been up substantially since the start of the third quarter. The U.S. economy remains in a fragile situation and the global financial system is far from healthy. Nonetheless, progress is being made and, barring any new crises or setbacks, the case for the market's recent rise can be justified. What's different this time is that two sectors that have traditionally led economic recoveries in the U.S. - consumer spending and real estate - will remain on the sidelines for the foreseeable future.
What Lack of Innovation?
In a recent address at the home of Google executive Marissa Meyer, President Obama implied that there has been a lack of innovation in the American economy in recent years. As Bespoke illustrates in a chart provided, however, the number of U.S. patent applications granted has increased steadily each year since 2000, with the exception of 2005. In fact, many have argued that it has never been cheaper for someone with an idea to spread and develop it.
The World According to TARP
Taken together, initiatives enacted under the Troubled Asset Relief Program will provide up to $45.6 billion in home mortgage foreclosure relief. Proponents of these programs argue that if they finally stabilize the housing market and pricing, all homeowners will benefit. Opponents believe they create a huge problem of moral hazard in the residential housing market. They also point out that stabilizing home values above what may be a lower floor based on market supply may preclude other individuals from being able to enter the market and purchase a home they can afford.
Fixed Income Investment Outlook
Low yields, high corporate debt issuance, increased monetary stimulus and the rising dollar do not mean that growth will accelerate any time soon; the outlook of a slow and meandering recovery still holds. Corporations continue to rebuild balance sheets and margins at the expense of hiring and investment. While this bodes well for future debt repayment, the outlook is not rosy for job seekers. When the job outlook does change, however, and the economic pulse quickens, the era of low interest rates could end quickly.
Equity Investment Outlook
Housing is still deflating, but commodities are mixed. The concern longer term is that the Fed is printing money in order to stimulate the economy. At some point, all this liquidity in the system could cause inflation to accelerate, perhaps to a level that the Fed cannot contain. We are not forecasting either serious deflation or serious inflation. On the other hand, we do not regard the probability of a negative outcome as trivial.
The Great Depression, the Great Recession and Lessons from 1937-1938
While much shorter and less severe than the Great Depression, the recession of 1937-1938 added approximately three years to the recovery period. It is extremely unlikely that we will see a repeat of this type of recession. However, depending on the outcome of elections in November, there could be substantial shift in the fiscal and taxation policies of the federal government away from Keynesianism and toward fiscal discipline and supply side economics.
Dem Turnaround Yet to Happen
The Intrade odds for the Republican Party to win the House of Representatives have been well above 50 percent for some time now (currently at 75 percent), but the Democratic Party has been favored to retain the Senate throughout the Intrade contract's entire history. Today, however, that contract fell below 50 percent for the first time, and the odds are currently at 47.5 percent for the Democratic Party to keep a Senate majority.
Challenges and Solutions for Income-Seeking Investors
The Fed's prediction that it will keep its short-term interest rate target at 0-0.25 percent for 'an extended period' continues to affect the near-term game plan for risk-averse investors and savers. A period of potentially heightened uncertainty and low absolute returns means that maximizing risk-adjusted returns is crucial to investment success over time. An optimized mix of fixed income holdings with a variety of different risk levels can add value to investor portfolios in this low-yield and low interest rate environment.
Claims of the 'Death of Stock Picking' Are a Good Sign for Value Investors
A recent Wall Street Journal article highlights the macro-driven nature of today?s stock market. Long-time value investors lament the current environment where stocks appear to trade in unison based on unemployment data or European bank stress test results. If stocks are driven by macro factors instead of company fundamentals, stock pickers can?t get an edge. We think stock-picking is very much alive. Call us contrarian, but we couldn?t think of a better sign that fundamentally-driven, bottom-up stock-picking is likely to make a comeback sooner rather than later.
The U.S. Oil Glut
Although U.S. oil inventories declined by 475,000 barrels in the latest week, the decline was less than the forecasted decline of 700,000 barrels. As shown in charts provided, oil inventories in the U.S. are currently right near their highest levels of the year relative to the historical average. Since oil stockpiles peaked earlier in the year, inventories have declined by 2 percent. In an average year, however, oil stockpiles are down 6 percent from their seasonal high by this time.
Is Deflation Still a Risk?
Last Friday's Consumer Price Index report found that prices rose 1.1 percent on an annual unadjusted basis in August. Because the U.S. Federal Reserve Open Market Committee noted in last week's statement that inflation is currently at levels somewhat below what it judges to be consistent with long-run price stability, some have suggested that the central bank is still concerned about deflationary pressures in the economy. Whatever happens, one thing is clear: As long as the residential housing crisis drags on without resolution, the risk of deflation should remain a concern for investors.
American Century Investments
Among the first items the U.S. Congress is likely to deal with after the midterm election are the federal budget deficit and taxes. The accepted wisdom is that markets prefer the more incremental change based on political compromise brought by divided governments. However, median returns data looking back 60 years do not provide any strong support for this. Indeed, if a divided government leads to intransigence and gridlock, then it will take another two years and the next general election before key issues can be addressed.
Japan Invervenes to Bail Out America.com
This week the Japanese government decided to intervene in the foreign exchange market, initiating a vigorous campaign to buy U.S. dollars, thereby stemming the rise of the yen and pulling up the greenback. The effects were immediate, with the yen falling an astonishing 3 percent on the day of the announcement. The media spin doctors cast the Japanese decision as an attempt by the island state to prop up its own fragile economy. The intervention was actually done to help American consumers buy more cars and electronics from Japan.
The Woody Hayes Economy
By preventing additional redistribution policies, the split government that will likely emerge from the November U.S. midterm elections will probably loosen some purse strings to invest, hire and grow. However, we probably will not see any policies that will meaningfully change the overall economic condition or the outlook for equities as an investment. The next two years will thus most likely bring a Woody Hayes economy - 'Three yards and cloud of dust'- meaning we will have some renewed economic activity, but not the sustained, robust growth to be expected coming out of such a long slump.
Results 1,901–1,950 of 2,106 found.