Results 251–287 of 287 found.
ECB Stimulus: A Desperate Move?
I wrote the other day about the next crisis and why it might well come from Europe. The news from the European Central Bank this morning reinforces my convictions. Although markets seem to be cheering the announcement of more stimulus, to me it looks like one more sign of increasing systemic stress.
Economic Risk Factor Update: March 2016
Once again, it’s time for our monthly update on risk factors that have proven to be good indicators of economic trouble ahead. After flashing a yellow light for the last several months, the change in consumer confidence indicator has declined even further, moving closer to the worry zone. Some signs of weakness are also appearing in other areas, such as the yield curve indicator.
Market Thoughts for March 2016
Brad McMillan, Commonwealth Financial Network’s chief investment officer, discusses the markets and economy in February, which was turning out to be a scary month before a late rally left the market flat. Why did the pullback happen, what caused the recovery, and what does the future hold? From fears about the global economy, to signs of resurgence in consumer spending and income, Brad offers his thoughts on the macro environment and suggests that maybe we aren’t facing as much downside risk as we were just a few months ago. Follow Brad at blog.commonwealth.com/independent-market-observer.
The Presidential Election and the Market
I don’t normally write about politics. Although it’s an essential part of market and economic analysis, the connections are indirect and take time to show up, making daily or even monthly commentary not very relevant.
Opportunities in Adversity: The Dollar
In yesterday’s post, we discussed how the common perception of the oil price decline is significantly out of line with reality. It is just this kind of mismatch that has, historically, created opportunities. Another mismatch situation—with the dollar—offers similar potential.
Opportunities in Adversity: Oil
Following up on last week’s post about real risks and the opportunities that could arise from them, let’s take a look at the energy industry. With oil prices dropping to multiyear lows, companies and countries struggling to stay in business and pay their bills, and new suppliers like Iran reentering the market, the industry has been in better shape.
More About Negative Interest Rates
My post the other day about negative interest rates in Japan sparked some questions from readers, so let’s dig a bit deeper. (We’ll return to our analysis of global risks and opportunities next week.) This actually isn’t a new topic. My own discussions of negative rates go back to mid-2014, when the European Central Bank first introduced them. In a sign of how quickly strange things get normalized, I didn't comment on negative rates again until a year ago. Although I wouldn’t say that negative rates are now normal, there’s no question that they’re much less abnormal than they used
What the Heck Is Going On in the Markets?
When I woke up this morning, I checked the markets as I usually do, and my first thought was—paraphrased—what the heck? What happened last night to drive Asian and particularly European markets down that hard?
Bear Market Ahead?
As I’ve said many times lately, I do not believe we’re heading for a repeat of 2008–2009. A number of factors—a stronger U.S. economy, a less leveraged financial system and consumer, and an absence of imbalances like we saw with housing—suggest that we’re not in for a 2008-style collapse. Although the economy may be entering a slowdown, growth is likely to continue.
Negative on Japan’s Negative Interest Rates
One of the most interesting (and surprising) pieces of news on the economics front has been the Bank of Japan’s decision to take rates to negative levels—in other words, to charge depositors to keep their money in the bank. This is not an unprecedented move, as negative rates have been in place for a while in some European countries, but it’s still somewhat unusual.
Market Thoughts for February 2016
Brad McMillan, Commonwealth Financial Network’s chief investment officer, discusses January market performance, which was the worst we’ve seen since the financial crisis. Why did it happen, is it likely to get worse, and what can we do about it? Brad answers these questions, and more, and explains why he thinks this is all quite normal. Follow Brad at http://blog.commonwealth.com/independent-market-observer.
A Look Back at 2015: Lessons Learned
The first sentence of my market update for last January went like this: “U.S. stock markets dropped across the board in January, as investors reassessed their risk tolerances.” Sound familiar? I went on to note that the primary concerns were slow earnings growth, caused by weakness elsewhere in the world, and a strong dollar. Again, does that ring a bell?
Low Oil Prices Hammer Markets
Oil prices continue to fall and are bringing markets down with them. We talked about why oil prices are dropping last week, so today, let’s take a look at why markets are getting hammered—and whether that is likely to last.
Market Plunges Deeper, but No Recession in Sight
I’ve written over the past couple of days that it's not time to panic, and I still believe that's true. But it appears there may be more short-term damage than I initially thought. Now, the question is, how much worse might it get, and what does that mean for us as investors?
Why Oil Prices Are Declining
Now that the equity markets seem to have stabilized a bit, let’s return to what underlies much of the current turmoil: the market for oil. The conversation usually centers on the price of oil, but the price is merely a symptom, not the cause.
Market Thoughts for January 2016
Brad McMillan, Commonwealth Financial Network’s chief investment officer, looks back at 2015, which was actually the worst year for the markets since the financial crisis, but a solid year for the ongoing economic recovery. In addition to explaining the reasons behind this disconnect, he also discusses what we might expect in 2016, including a couple of headwinds for the markets (low oil prices and a strong dollar) that might disappear. Follow Brad at http://blog.commonwealth.com/independent-market-observer.
Rising Interest Rates, Part 3: What About Investments?
As this is the final post in my series on interest rates, it’s time to talk about what everyone is probably thinking: What happens to investments when interest rates rise? This question is especially pertinent given yesterday’s decision by the Federal Reserve on a rate hike.
Rising Interest Rates, Part 2: Exploring the Gap
In part 1 of this series, I explored what interest rates would look like if they returned to their natural level and determined they would be approximately 5 percent on a nominal basis (assuming 2-percent inflation). As the Federal Reserve (Fed) has determined that 2 percent is the target inflation rate, this approximation of the natural rate seems reasonable. Current interest rates, however, are well below 3 percent, resulting in an obvious gap between where the rate is now and where it should be.
Rising Interest Rates, Part 1: Return to the Natural Level?
Although economic growth appears to be slowing, stocks continue to hit new highs. This may lead one to ask, “How does the market retain its strength?” In fact, much of this strength seems to result from the low interest rates provided by the Federal Reserve (Fed). And although it can’t be said exactly when the Fed will raise rates, expectation is currently high that it will happen on December 16.
Yuan Becomes Reserve Currency
This post is a follow-up of sorts to one I wrote a couple of weeks ago, “U.S. Dollar Still Failing to Collapse.” As expected, the International Monetary Fund (IMF) decided to add (as of next October) the Chinese currency to the list of reserve currencies. Also as expected, the world is not ending just yet.
Are We at a Market Peak?
The question that seems to be occurring to more and more people is, “Are we at a market peak?” It has been a multiyear bull market, stock prices have tripled from the base, profit margins have been at record highs for years, and now interest rates are going up. It’s not a crazy thought.
The 2016 Outlook: 3 Important Issues
I’m working on my 2016 outlook right now—yes, a couple of months before it actually gets here—and am struggling to focus on what will be most important. Developing an idea about the future requires first identifying the most important issues, then making some decisions about how they are likely to evolve, and finally trying to tie them all together.
The Fed Surprises Again—But with a Treat, Not a Trick
As I wrote on Monday, no one expected anything of substance from the Federal Reserve. But, once again, the Fed surprised us. The September meeting was a trick, when it chose not to raise rates. But the October meeting looks like it may end up being a treat. I don’t mean in a policy way (rates remained unchanged, as expected). Instead, the Fed has very explicitly ruled out economic risks to the extent that a rate increase for December—which most had written off—is back on the table.
Earnings Vs. Revenue: What to Look for This Earnings Season
I have talked about valuations quite a bit recently, and, as I have noted, they are certainly important. Valuations, however, are largely subjective and change over time; there is little you can do to manage or react to them.
The Failure of Politics
Sometimes, I really hate being right. A few weeks ago, I wrote that the Washington, DC, political environment had deteriorated and that the current go-round on the debt ceiling was likely to be even more contentious than the last one, two years ago. Sure enough, with the resignation of Speaker John Boehner—and the withdrawal yesterday of his heir apparent—the House appears ungovernable. Without some type of Republican internal agreement on at least whom to elect as speaker, it’s hard to see any resolution to the debt ceiling debate, which is likely going to hit in the next couple of week
Will She or Won’t She . . . Raise Rates, That Is?
The big news this week is the Federal Reserve’s rate-setting meeting tomorrow and Thursday. This is one of eight meetings held each year, approximately every six weeks. The remaining ones in 2015 are in October and December. The reason this matters is because, once again, the Fed has to decide whether to start raising rates or not. I have argued before that, economically, it doesn’t really matter that much, but from an investor confidence perspective—and thus for the markets—it does.
With Further Market Declines Likely, Keep the Long Run in Mind
August was the worst month for U.S. markets in more than three years, so say the headlines. I suspect it was also the worst month in at least that long for many international markets as well. And, as today’s numbers show us, we aren’t done yet. As I write this, U.S. markets are down about 2.5 percent, and European markets closed down around 3 percent.
China and the U.S. Stock Market
Now that things seem to have calmed down a bit, it’s a good time to discuss why the past week has been so turbulent. The usual explanations—the Chinese currency devaluation and stock market crash—are certainly valid, but there’s more to the story. Let's take a closer look at the connection between the news from China and U.S. stock prices.
China’s Stock Market Plunges Again (But Not to Worry)
It turns out that China’s stock market remains a market after all, despite the Chinese government’s best efforts. Prices on the Shanghai Composite Index fell 8.5 percent on Monday and another 1.7 percent Tuesday, stripping away more than half of the gain since the last bottom.
U.S. Stock Market: Should You Be Worried?
Yesterday wasn’t a good day for the stock market—anywhere. When I wrote yesterday’s post, the U.S. markets were only off by a bit. But the drop later in the day looked like it might be a bad sign; at a little over 2 percent, it was the largest one-day dip in some time.
What Do Rising Interest Rates Mean for the Housing Market?
Today, I want to revisit a post I wrote just over two years ago. I’ve updated some of the data, but the concerns and the conclusions remain timely. In keeping with one of my recurring themes, this is also an example of how rising interest rates won’t mark the end of the world but, rather, a return to a more normal environment.
Europe in the Next Five Years
Yesterday, I talked about several major trends that are poised to at least pause (and quite possibly reverse) over the next couple of decades. One major area we didn’t discuss is Europe, which is likely to see more change in the next 5 years than it has in the past 20.
Results 251–287 of 287 found.