Since the first hint that the Federal Reserve would begin tapering its monthly bond buying program and long-term interest rates began to rise last May, investors have shunned all types of bonds and bond funds.
Market Insight: The FOMC, Morning After
As the final month of 2013 begins, investors have some weekend economic data from Asia to digest: the November PMI manufacturing index from China and the November trade balance report from South Korea.
December Capital Markets Calendar
Strong year-to-date gains in broad-based equity indices are attracting increased media attention, now that interest in the U.S. budget and debt ceiling crises has temporarily waned.
October Nonfarm Payrolls
This morning the Labor Department released the October nonfarm payrolls report. During the month of October the United States government experienced a shutdown from October 1 until October 16.
Useful Capital Markets Charts
The following charts and tables are part of a capital markets presentation Joe recently gave to a group of financial advisors.
Comprehensive Weekend Reading
November has arrived, bringing with it the return of multiple economic data releases and an important central bank meeting in Europe.
SPX Earnings & Technical Update
Last Friday, October 25, the S&P 500® Index (SPX) (Figure 1) established both a new all-time closing high of 1759.77 and an intraday high of 1759.82.
September Nonfarm Payroll Report
Thanks to the D.C. dysfunction, the September nonfarm payroll report was released 18 days later than expected. Accordingly, the October report has been pushed back one week from Friday, November 1, to Friday, November 8.
Market Consequences of D.C. Dysfunction
Over the past few weeks, whether writing commentary or presenting to some of our clients, I have argued that the optimal strategy for investors was to largely ignore the D.C. dysfunction.
SPX Q3 Earnings 100/500
Markets head into Friday’s trade at historic highs and further bolstered by the overnight China Q3 GDP print of 7.8% growth, finally accelerating after Q2’s disappointing 7.5% print.
SPX Q3 Earnings, Transcript Highlights
Bank loans proved to be very resilient during this summer’s Treasury volatility and remain a leading fixed income sector for the year, returning 3.53% through September (S&P/LSTA Leveraged Loan Index).
China Trade Balance, CPI
Heading into Q4, some of the recent economic data points out of China have suggested that the slowdown in growth which began in Q2 2012 could reaccelerate.
The S&P 500 (SPX) closed at 1701.84 on Monday, September 23, extending late last week’s weak trade with a 0.47% decline.
While we normally point to the persistence of momentum across asset classes, geography, and history as evidence that it must be an innate factor within market participants, I came across an interesting New York Times article from 2007 about a study that exhibited momentum in a very different field.
FOMC Supports Emerging Markets
Stores may have started displaying their Halloween specials, but for closed-end fund investors, it’s beginning to look a lot like Christmas.
For those of us travelling on the highways and local roads in recent days, it certainly appears that the school year is “officially back.” It also appears, given the considerable traffic jams, that rising gasoline prices are not dampening demand. So much for price elasticity.
"Sell What in May and Go Away" Chart Work
Each year as the calendar approaches the month of May, many in the investment community suggest it is time to "sell equities in May and go away." However, in 2013, the optimal investment strategy aligned with "sell in May and go away" was to sell U.S. Treasuries.
August Labor Report
On Friday morning, September 6, the Department of Labor released its August labor report. Overall, the report did not meet consensus estimates and the prior month’s previously reported numbers were revised lower.
Strong Global Manufacturing Readings
While major U.S. equity exchanges were closed Monday in observance of the Labor Day holiday, several global manufacturing readings were released.
September Capital Markets Calendar
Late Monday, August 26, U.S. Secretary of State John Kerry alerted Syria that it would be held accountable for using chemical weapons. Subsequent price action for the S&P 500® Index (SPX) (Figure 1) has reversed the market’s attempt to restore July’s bullish momentum.
The MSCI Emerging Markets Index (MXEF) declined 2.65% this past week and is now down 11.6% for 2013. The MXEF declined on the week despite the late week stabilization for U.S. equity markets.
Five Charts to Watch
Since the release of my third quarter playbook “State of Confusion” in early July, it seemed as though the Fed-driven market confusion that began in late May had given way to clarity in the early stages of the third quarter.
Dual Mandate: Labor and Inflation
Thursday, August 15, presents a strong roster of economic data to give investors further insight into the potential for the FOMC to initiate tapering at its September 17-18 meeting.
Weather Report for Closed-End Funds
It has been a turbulent summer for closed-end funds, and the investment climate is still quite unsettled. The following is our take on the current weather and forecast for changing conditions, along with where we think investors can take advantage of climate change.
SPX CQ2 EARNINGS SUMMARY
As Friday August 9, 2013 second quarter calendar earnings have been reported for 447 out of the 500 S&P 500 Index (SPX) companies.
Checking the Technicals
Global capital markets have experienced a strong start to the third quarter pushing many indices to new all-time highs.
July Nonfarm Payrolls
For five years, the global economy has been suffering from the terrible impact of the greed of major investment banks in the USA and Europe.
As of last night, global capital markets had experienced roughly one month’s worth of frustrating trading activity, highlighted by the S&P 500® Index (SPX) declining from an all-time high of 1687.18 on May 22 to a trough of 1560.33 on June 24.
Because there is an inverse relationship between bond prices and interest rates, the recent rise in rates has triggered a decline in bond prices, hitting closed-end funds particularly hard. In fact, closed-end funds have suffered from two forms of overreaction.
Q3 Playbook Supplement – Part 1
It’s been two weeks since Federal Reserve Chairman Ben Bernanke announced on June 19 that the FOMC anticipates softening its unprecedented stimulus program, and hinted at plans to scale back its $85 billion-a-month bond purchases...
Market Complexity Magnitudes
At Newfound, we argue that for models to be successful and robust in uncertain environments, they must be based on simple heuristics tied to a fundamental or economic concept, not based on complex decision rules.
First of the Month U.S. Economic Data
This month, there might be some trepidation as the Federal Open Market Committee (FOMC) has made it clear that its intention to taper monthly bond purchases will be data dependent.
European & Asian Economic Data
May and June to date has been a challenging period for REITs and other income-producing asset classes, driven by concerns that the Federal Reserve might start tapering its asset purchases later this year.
Q2 Ready to Close
In the wake of Wednesday’s FOMC meeting the S&P 500 Index (SPX) resumed the corrective behavior of the past few weeks.
Japanese Yen & the Nikkei
On May 22, 2013, the Japanese yen (Figure 1.1) traded to 103.74, its lowest level since October 3, 2008.
FOMC Meeting Expectations
Even with last week's Fed-led jitters, the S&P 500 has managed to stay above 1600 since breaking through four weeks ago.
On Wednesday morning, May 29, the yield on the 10-year U.S. Treasury touched 2.2318%, its highest level since April 2012. Keep in mind, it was the late March 2012 price action that precipitated a larger, prolonged sell-off below 2% throughout 2012 and early 2013.
End-of-Week Economic Data
In the wake of Wednesday’s FOMC minutes release, increased speculation regarding when the FOMC will begin tapering its monthly asset purchase program has taken center stage in the business media.
AN UGLY SPX REVERSAL
A key advantage of closed-end funds over open-end mutual funds is that portfolio managers are free to trade underlying holdings when they see fit.
Updated SPX Technical Formation
The S&P 500® Index (SPX) traced out another new all-time high yesterday at 1632.78. Over the past five days, leadership within the index has transitioned to year-to-date laggards: industrials, materials, and energy. I would also offer that an uptick in bullish sentiment seems far more present over the past week than at the beginning of the second quarter.
Last evening, the Reserve Bank of Australia (RBA) reduced its interest rate 0.25% to a now record 2.75%. Governor Glenn Stevens joins his central bank counterparts from the United States, Europe, and Japan in adopting easier monetary policy to carefully lower the value of his domestic currency. Keep in mind, historically the RBA favors higher rates relative to other developed economies in order to attract capital inflows to offset a 30-plus year streak of account deficits. read more....
Job Gains Suggest A Shift To Cyclicals?
On Friday morning, May 3, the Department of Labor released the nonfarm payroll report for the month of April. Over the past few days, a disappointing construction spending figure and a weaker than forecast ADP private payroll report reduced consensus estimates for monthly job gains. However, the surprise this past Friday morning was to the upside as a much stronger than forecast report was released.
First of the Month U.S. Economic Data
The FOMC concluded its two-day meeting this afternoon with a 2:00 p.m. statement that it will maintain its current pace of QE purchases at $85 billion per month. However,
April China Manufacturing PMI
Throughout 2013, the investment community has looked upon the world’s second largest economy, China, to present evidence of a sharp rebound in growth.
May 2013 Capital Markets Calendar
As of Friday, April 26, 2013, 270 S&P 500® (SPX) companies had reported earnings for the first calendar quarter of 2013. Last week’s 170 companies reporting completed the largest earnings week of the season.
ECB Rate Cut is Priced In
An interesting rebuke to the oft-quoted 2010 paper “Growth in a Time of Debt”1 by Carmen Reinhart and Kenneth Rogoff was recently announced.
As of Friday, April 19, 102 S&P 500® (SPX) companies have reported earnings for the first calendar quarter of 2013.
Whether you have attended an investment conference at which I presented, or read my blogs and quarterly commentaries, you certainly understand my viewpoint on the allocation of gold in a portfolio.
CHINA GDP & SPX
Sunday evening, April 14, 2013, first quarter GDP for China (Fig 1.1) was reported at 7.7%, below consensus estimates for 8% growth and the 7.9% reported for the fourth quarter of 2012.
Joe Terranova's 2nd Qtr Playbook is available
In his book The Signal and the Noise: Why So Many Predictions Fail — but Some Don’t, Nate Silver discusses the many subtleties of developing and utilizing predictive models.
Q2 Begins With China PMI & U.S. ISM
The second quarter begins today with much caution for a potentially similar market and economic slowdown experienced in each of the prior three years during Q2.
April 2013 Economic Calendar
The late December reintroduction of the global carry trade, with the Japanese yen assuming the funding currency role, remains one of the strongest tailwinds for the current S&P 500® Index (SPX) appreciation.
Part 1 of our special two-part series presented common misconceptions about investing in closed-end funds. In Part 2, we dig a little deeper, testing your knowledge about some of the choices frequently facing closed-end fund shareholders that may be unfamiliar, even confusing.
15 Years of SPX Data
Last Wednesday, February 20, the S&P 500® Index (SPX) traced out an intraday reversal lower (Figure 1.1) that ever so faintly rang the “pause in appreciation” bell.
Updated Earnings & Performance Tables
The second week of the earnings season is set to close out. Below is the reported EPS and revenue growth by sector as well as....
Global Currency Indicator
The greatest challenge to investors right now is to remain committed to a portfolio strategy that is working well year to date. Unfortunately...
Yesterday, the Energy Information Administration reported that stockpiles (Figure 1.1) of domestic natural gas fell 148 billion cubic feet to 3.168 trillion.
Earnings to date, Financials
Over the past month, I have often stated that it works in favor of further S&P 500® Index (SPX) (Figure 1.1) appreciation to...
China Trade Data
Overnight markets have a strong bid, potentially positioning the S&P 500® Index (SPX) to challenge the current high for the year from January 4 at 1467.94. The catalyst is the China...
Touchdown on the Opening Drive
In our view, interest rate risk deserves as much attention as credit risk when investing in fixed income markets. Investor demand for yield and, in the case of investment grade corporate bonds and Treasuries, “safety” has driven bond prices to all-time highs and yields to corresponding lows.
The Debt Ceiling Strategy
As expected, D.C. policy makers passed legislation to avoid a fiscal drag of $600 billion due to the expiring Bush era tax cuts and pending automatic spending cuts.
2013 Capital Markets Stat Sheet
n preparation for the markets’ opening in 2013, below is a summary and charts of 2012 performance for select world equity indices, treasuries, currencies, commodities, and sector ETFs.
Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.