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2013-05-23 ING Fixed Income Perspectives May 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

How do you like them apples? By pointing out some Excel blunders in the data of Harvard economists Reinhart and Rogoff, a UMass-Amherst grad student appears to have gotten their number and in the process discredited their seminal work touting the merits of austerity. Though Good Will Hunting fans may be amused to see a couple of Harvardians get their comeuppance, you don’t need the titular character’s wicked smarts to deduce that harsh government spending cuts may not be the best way to pick up your economy.

2013-05-10 Countries Should Be Careful Not to Overstimulate Their Housing Markets by Team of Northern Trust

Countries should be careful not to overstimulate their housing markets. Credit extension is improving, but remains modest.

2013-05-04 The QE Sandpile by John Mauldin of Millennium Wave Advisors

Sell in May and go away? What about "risk off?" And ever more QE? Today’s letter is a quick note and a reprise of a popular letter from yesteryear (with a bit of new slant), as I am at my conference in Carlsbad.

2013-04-19 F.I.R.S.T.: Bond Market Outlook by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

Amid heightened political uncertainty in Europe and subdued global growth expectations, global investors owe Hiroki Kuroda a big domo arigato for his pledge to inject about $1.4 trillion into the moribund Japanese economy by the end of 2014. The newly appointed BOJ governor’s unprecedented plan to buy Japanese government bonds,

2013-04-19 The Pharaoh's Dream by Andrew Bosomworth of PIMCO

As yields on assets decline, central banks’ ultra-loose monetary policies are effectively forcing investors further out the concentric circles into lower quality, more illiquid sectors in search of positive yielding assets after deducting inflation. In order to achieve 6%-7% returns in the future, investors may be required to take on more risk. Allocating part of a portfolio away from “middle circle” asset classes into assets with higher return potential as well as assets offering liquidity is the right strategy in our opinion.

2013-04-02 Bernanke’s Motives Behind Quantitative Easing by Paul Franchi (Article)

We are at a turning point: away from one global monetary standard, to a yet-to-be-determined new form.

2013-02-22 Finding What's Real in Real Estate by Team of Franklin Templeton Investments

The U.S. financial crisis in 2008-2009 left many investors with a reluctance to take investment risks, particularly those related to any of the world's wilted housing markets. However, as your local real estate agent would likely tell you, the market in one location can be vastly different than it is in another. Wilson Magee, co-manager of Franklin Global Real Estate Fund would agree that the adage "location, location, location" applies not only to individual home buyers and sellers, but to investors seeking opportunities in the commercial real estate sector, too.

2013-02-15 China's New Year for Shopping by Sherwood Zhang of Matthews Asia

This week's Lunar New Year celebration, also known as the Spring Festival in China, is not only a time of tradition for families during which they reunite over a feast, it is also one of the busiest shopping seasons of the year. As with Christmas in the West, the Spring Festival is a time of gift giving for friends and relatives. Children receive money in red envelopes as part of the tradition and stores often hold large-scale holiday sales to attract shoppers.

2013-02-06 Focus on Fixed Income by Steve Van Order of Calvert Investment Management

Last week Administration officials, including the President, clearly ruled out using extraordinary legal measures to avoid defaulting on Treasurys financial obligations in the absence of a debt ceiling hike by Congress. The two legal measures most discussed, going back to the summer 2011, were invoking the 14th Amendment and minting a trillion dollar platinum coin. The coin idea was dismissed as Fed officials commented that the central bank would not honor the coin as a deposit, and the amendment idea has been shelved a number of times.

2013-02-01 2013 Economic & Capital Market Outlook by Gregory Hahn of Winthrop Capital Management

It took our country 229 years to accumulate $8 trillion in federal debt. It only took the next eight years to double it to $16 trillion. History shows that when a country accumulates debt at this rapid pace, economic growth languishes. Not surprisingly, Congress is pursuing policies that attempt to inflate the economy. Five years after the Financial Crisis, we really havent fixed much. Instead, we've issued more debt in order to pay our bills and sustain a quality of life society cannot afford long term.

2013-01-16 The Rise of Asia's REITs by Sherwood Zhang of Matthews Asia

Real estate investment trusts (REITs) in Asia are following in the footsteps of their U.S. counterparts as they become an increasingly important asset class attracting investors looking to gain exposure to a diversified pool of real assets and relatively high yields. In the past decade, REITs have become a growing force in the regions investment universe. This month Sherwood Zhang, CFA, takes a look at just how far Asia's REIT markets have come, and what new opportunities as well as risks may still exist.

2013-01-15 New Year's Vantage Point: Christopher Molumphy by Christopher Molumphy of Franklin Templeton Investments

For a view on the U.S. and global fixed income market and potential opportunities therein, we turn to Christopher Molumphy, CFA, chief investment officer of Franklin Templeton Fixed Income Group.

2012-11-16 The REIT Stuff: How REIT Investors Have Benefited from the Real Estate Recovery by Steve Benyik of Lord Abbett

In an otherwise slow-growth economy, real estate investment trusts' (REITs) strong returns and yields have attracted considerable investment in recent years. Steve Benyik, Lord Abbett REIT analyst, provides perspective on the sector's key trends.

2012-10-19 Not by Housing Recovery Alone by Team of T. Rowe Price

Strong August-September housing starts are a clear bricks-and-mortar response to reports of rising buyer traffic, confirming a broad-based cyclical recovery in new housing construction. This trend will contribute 0.4 percentage points (pp) to real GDP growth directly through in construction activity, and perhaps another 0.2 pp indirectly through the consumer purchases of those newly employed in housing-related industries and via wealth effects related to the nascent recovery in house prices.

2012-10-15 Seven Varieties of Deflation by A. Gary Shilling of Gary Shilling & Associates

Inflation in the U.S. has historically been a wartime phenomenon, including not only shooting wars but also the Cold War and the War on Poverty. That's when the federal government vastly overspends its income on top of a robust private economyobviously not the case today when government stimulus isn't even offsetting private sector weakness. Deflation reigns in peacetime, and I think it is again, with the end of the Iraq engagement and as the unwinding of Afghanistan expenditures further reduce military spending.

2012-09-28 The Permanent Portfolio Turns Japanese by Adam Butler, Mike Philbrick of Butler|Philbrick|Gordillo & Associates

Our last few articles dealt with the Permanent Portfolio, a widely embraced static asset allocation concept proposed by Harry Browne in 1982. To review, the simple Permanent Portfolio consists of equal weight allocations to cash (T-bills), Treasuries, stocks and gold to ward against the four major financial states of the world.

2012-09-19 Farmland: The New Gold? by Randy Bateman of Huntington National Bank

Yes, it's just 'dirt', but life on this planet wouldn't exist as it does today unless it didn't comprise a third of the world's surface. Unfortunately much of that 'dirt' is in areas too wet, dry, rocky, salty, devoid of nutrients, or covered by snow for agricultural production. With only 14 percent of the world's landmass considered fertile, and that shrinking at a significant pace, there's a realization that increased farm production is essential to satisfy the increasing demand for food products.

2012-09-14 All Signs Pointing to Gold by Frank Holmes of U.S. Global Investors

So, gold investors, if you havent put in your orders, consider getting them in quickly, because the bulls are buying. Credit Suisse saw 'massive inflows' into gold exchange-traded products in August after experiencing significant outflows compared to crude oil and the broader market in March, April, May and July. August shows a clear preference toward gold.

2012-09-12 On Uncertain Ground by Howard Marks of Oaktree Capital

I'm going to devote this memo to the uncertainty in the world and the investment environment and then offer my take on the appropriate strategy response. This will require me to touch on a large number of topics, but I will try to dwell less than usual on each of them.

2012-09-10 The Case for Real Estate by Jeff Kolitch, David Baron, David Kirshenbaum of Baron Funds

We believe we are in the early stages of a multi-year real estate recovery fueled by improving cash flows, rising demand, a scarcity of new development projects, improving credit availability, and generationally low interest rates. We believe the outlook is promising for both residential and commercial real estate.

2012-09-06 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital

Pessimism about the next administration's impact on the emerging markets is held in check by the likely convergence of US and Chinese economic interests. More than ever, Ms. Smith needs Ms. Wong. To borrow a recent Financial Times headline, "Obama should pray that China overtakes the US." To us, Indonesia and Malaysia look pretty promising by this standard. Other stories include a look at timber and an update on Bahrain's economy.

2012-08-28 Real Estate Resiliency: the REIT Model Proves its Mettle by Josh Olazabal, Amit Arora of PIMCO

REIT unsecured debt has been one of the best-performing sub-sectors in the entire investment-grade credit area. When insurance companies began to look at REIT unsecured debt, they asked for the same type of covenants associated with property-level mortgages. These requirements have coalesced into a standard REIT covenant package. We believe low default rates and relatively high recovery rates make the sector attractive over the long term particularly for buy-and-hold investors.

2012-08-22 The Faustian Bargain by Scott Minerd of Guggenheim Partners

In Goethe's 1831 drama Faust, the devil persuades a bankrupt emperor to print and spend vast quantities of paper money as a short-term fix for his country's fiscal problems. As a consequence, the empire ultimately unravels and descends into chaos. Today, governments that have relied upon quantitative easing (QE) instead of undertaking necessary structural reforms have arguably entered into the grandest Faustian bargain in financial history.

2012-08-17 How Change Happens by John Mauldin of Millennium Wave

This is an encore appearance of the letter that is clearly the most popular one I have ever written, updated with a few thoughts from recent times (it was also part of a chapter in Endgame). Numerous reviewers have stated that this one letter should be read every year. As you read, or reread, Ill be enjoying a week off.

2012-08-01 Real Estate Portfolio Construction for Individual Investors by Casey Frazier of Versus Capital Management

Commercial real estate is an asset class that includes many different strategies and approaches. Investors segment real estate investments into a few categories. This segmentation is done by several key factors including income profile, leverage, operational risk and potential returns. The most important segmentation is core versus non-core, or properties with stable income versus properties that have unstable or no income.

2012-06-13 U.S. Commercial Real Estate: A Technical Affair by John Murray of PIMCO

We believe attractive investment opportunities will arise in sectors of CRE that haven't yet caught the eye of technicals-driven capital. Demand for CMBS arguably comes from a lack of alternatives as opposed to any sort of inherent belief in rental fundamentals. Fickle technical factors are not the only headwinds: Deleveraging, regulatory uncertainty and weak fundamentals add further pressure.

2012-05-22 The Case for Community Banks by Ryan Issakainen of First Trust Advisors

The most difficult decisions for investors often involve overriding the emotional residue of past mistakes, and reconsidering the merits of a stock or industry with which one has had negative experiences. This was the case for many investors following the bursting of the technology bubble in the early part of the last decade, as they avoided or severely underweighted tech stocks, and ultimately missed out on the tremendous growth experienced by the sector over the last decade.

2012-05-18 U.S. Real Estate Securities Review & Outlook for April 2012 by Team of Cohen & Steers

We have a generally favorable view of key office markets, including life sciences, technology and media, as well as NY offices broadly. We have decreased our allocation to apartments based on valuations and the prospects for more direct and indirect (housing rentals) competition. We continue to favor prime retail owners, while staying cautious toward health care properties, suburban offices and secondary retail.

2012-05-02 Investments vs. Outvestments by Andrew J. Redleaf of Whitebox Advisors

This is a great time to invest. But you have to make sure you really are investing and not accidentally outvesting. The market is currently sorting credit into about four big categories. Three of those categories are priced roughly in reference to Treasuries (outvestments). Those are the categories in which we are not interested. The first category, obviously, is Treasuries themselves. Next, short-term paper of super-blue-chip firms. Third, bonds that are just on the border of being investments. Finally, all domestic bonds whose prices are detached from Treasuries.

2012-04-20 Small Cap Outlook 1Q12 by 1492 Investment Team of 1492 Capital Management

While weve seen the markets advance nicely, we think the market could gain more than 25% this year as the U.S. economy continues to move ahead and the rest of the world is in stimulus mode. Most importantly, there are still plenty of bears calling for recession, despite an ongoing barrage of better economic statistics. No doubt the remainder of the year will give the stock market plenty to ponder like the U.S. Presidential election, ongoing European debt crisis fallout and concerns about Chinas economic growth. Read on to understand why were so bullish on the U.S. stock market.

2012-04-20 U.S. Real Estate Securities Review and Outlook, First Quarter 2012 by Team of Cohen & Steers

We have a very favorable view of specific office markets, including life sciences, technology and media, as well as New York offices broadly. We also continue to like prime retail and self storage owners, which are seeing very strong fundamentals. In contrast, we remain cautious toward health care properties and secondary retail. We have also reduced our allocation to apartment REITs on the margin following their strong run in 2011.

2012-04-10 Allocating to Real Assets: Why Diversification Matters by Cohen & Steers (Article)

One way to extend the long-term purchasing power of a traditional stock and bond portfolio is through an allocation to real assets. But individually, categories like commodities, natural resource equities and REITs can be volatile. Cohen & Steers meets the challenge with a focus on broad asset-class diversification.

2012-03-26 Monthly Investment Commentary by Team of Litman Gregory

We recently spoke with portfolio managers from two fund management teamsChris Davis and Ken Feinberg of Clipper and Selected American Shares, and Pat English of FMIwho have historically exhibited different views toward banks and financial services firms. In addition to providing insight on current risks and opportunities in the financial sector, the interview touches on a number of topical subjects including the Federal Reserve, the European debt situation, and the housing market.

2012-03-23 A Random Walk Through the Data Minefields by John Mauldin of Millennium Wave Advisors

We are once again to a point in Europe where there are no good choices, only very bad ones. But this time it is with a country that actually makes a difference. (No slight intended to Greece, but you are just small.) Spain has no good way to cut its deficit without things getting worse. But Europe must be willing to then fund Spanish debt, even if "only" through more LTRO actions by the ECB.

2012-03-23 Where is the Unemployment Rate Headed? by Mike "Mish" Shedlock of Sitka Pacific Capital Management

I have a pretty cool interactive map below that will let you graph the unemployment rates based on parameters that you can choose. First let's take a look at the current unemployment rate and a discussion of the parameters that define it.

2012-03-20 The Wages of Denial by Michael Lewitt (Article)

Europe is insolvent, and hopelessly so. Her procurer - the European Central Bank (ECB) - can front her some money for a while, but in the end she is either going to have to repay him or suffer a very rough consequence. In the meantime, however, she can continue to entertain her customers, in this case those willing to extend her credit in one form or another. Sooner rather than later, however, these creditors are going to grow tired of her tricks and turn their attention otherwise. At that point, she will be left to deal with the ECB because nobody else will have her.

2012-03-09 Earning Real Income With Real Estate by Team of Emerald Asset Advisors

The oldest mantra about investing in real estate holds that the key to success is location, location, location. While there is always the chance that real estate investments will produce capital gains (or losses), we believe a better reason to consider real estate investments is for income, income, income. That's especially true in today's ultra low rate environment. While the words "real estate" conjure images of the woeful state of the residential real estate market, the commercial real estate market is in much better fundamental shape.

2012-02-07 Inflection Point: The Start of a New Cycle in Real Estate? by Joel Beam, Ian Goltra, and Michael McGowan of Forward Management

Commercial real estate markets appear to be entering an extended cycle of recovery. The recovery is expected to play out unevenly across U.S. and international markets, with the first wave focused on knowledge-based, gateway cities and technology corridors. Commercial real estate is currently inexpensive by historical standards. Unlike residential markets, commercial real estate markets appear healthy, with rising liquidity and transaction levels. Institutional and private-equity funds are ratcheting up their real estate commitments, seeking 6.5%-8% returns in line with historical averages.

2012-01-27 Global Real Estate Securities Investment Commentary - Full Year 2011 by Team of Cohen & Steers

Our macro outlook has turned more positive given the global shift toward monetary easing as well as U.S. economic data confirming steadily improving growth. However, we expect the fiscal crisis plaguing Europe to remain an overhang, as the region is likely heading into recession, making a long-term resolution increasingly difficult. Despite these challenges, we believe fundamentals for global real estate securities will continue to improve broadly, with the lack of new supply coupling with growing demand and effective expense reduction to generate meaningful cash flow growth.

2012-01-27 International Real Estate Investment Commentary - Full Year 2011 by Team of Cohen & Steers

We remain materially underweight Europe and Japan, and overweight Asia Pacific (ex-Japan). We have selective allocations to well-established companies in emerging markets whose business models are positioned to benefit from secular growth in consumer spending among emerging middle classes. We are overweight high-quality retail and offices in major city centers globally, where tenant demand has been more resilient and supply more constrained. Finally, we have allocations in property sectors and geographies where stronger cyclical recovery is emerging as a driver of outsized cash flow growth.

2012-01-23 Debt and Deleveraging: A Five-Pronged Solution by Mike "Mish" Shedlock of Sitka Pacific Capital Management

Citing the latest report on "Debt and Deleveraging" by the McKinsey Global Institute, Ambrose Evans-Pritchard proclaims a light at the end of the tunnel and that America overcomes the debt crisis as Britain sinks deeper into the swamp. However, there is a big difference between alleged "light at the end of the tunnel" and "America Overcomes Debt Crisis" as Pritchard claims. US consumers may be one-third of the way through, but US debt-to-GDP ratios are low only because unsustainable government spending has taken up the slack.

2012-01-17 On the Fed, Stocks, the Election & More on the 1% by Gary D. Halbert of Halbert Wealth Management

We look at the Feds latest Beige Book report that came out last week, which showed that the economy improved in all 12 Fed Districts. We also ponder the question of whether the Fed is ramping up to do a QE3. Next, with everyone wondering if were facing another roller coaster ride in the stock market this year, I will bring you some interesting facts about what stocks have historically done in presidential election years. Finally, I dug a little deeper over the last week to find some fascinating information on the so-called Top 1% of wealthiest Americans.

2012-01-09 Structurally High Unemployment for a Decade by Mike "Mish" Shedlock of Sitka Pacific Capital Management

Since 2008 I have been stating the US would have "Structurally High Unemployment for a Decade". Indeed, based on historical trends in labor force growth, the expected unemployment rate for the number of jobs created during the recovery would be well north of 11%. Yet, the unemployment rate is currently an artificially "low" 8.5% (not that 8.5% is anything to brag about). To show how difficult it will be to bring that rate down, let's take a look at job growth (or losses), for the last three decades (numbers in thousands).

2012-01-05 Finding Real Value in Real Estate Investing: REITs by Team of Managers Investment Group

REITs are not an asset class that investors typically consider for their portfolios. Yet REITs offer many benefits that make them attractive. In this paper, we explore what REITs are, the many advantages they bring, and why you should consider them for your portfolio.

2011-12-28 Debt, Default, and Delinquency by Milton Ezrati of Lord Abbett

This column looks at how the household and business sectors have lightened their debt burdens and how delinquency rates have improved as a result. The record is plain. As the 2008 crisis broke, the American private sector moved dramatically to reduce its dependence on debt. From mid-2008 to the quarter just ended, the household sector cut its overall debt burden by a cumulative $689 billion or about 5%. Mortgage debt, naturally, fell the most, in part because of foreclosures, but also because households voluntarily reduced their exposure.

2011-12-27 Vitaliy Katsenelson on Krugman’s Missed Call by Robert Huebscher (Article)

Vitaliy Katsenelson is the chief investment officer at Investment Management Associates, a Denver-based money management firm, and the author of two highly acclaimed books on value investing. In this interview, he identifies what Paul Krugman failed to see with regard to China, discusses the prospects for the European and domestic economies, and explains why Microsoft is a grossly undervalued stock.

2011-12-23 Outlook 2012: Living In Interesting Times by Victoria Marklew, Asha G. Bangalore, James A. Pressler, and Ieisha Montgomery of Northern Trust

Setting aside the debate over the appropriateness of various policy directives, this Outlook considers which countries or regions are vulnerable as we head into 2012. Not surprisingly we start off with Europe, then go through the U.S., industrialized Asia, and Latin America, finishing with a brief discussion of the political powder keg that is the Middle East.

2011-12-23 Global Real Estate Investment Commentary by Team of Cohen & Steers

Our macro outlook has turned more positive given the recent shift toward monetary easing in Asia Pacific and emerging markets, as well as U.S. economic data confirming slow but positive growth. However, Europe is likely to remain an overhang, as the region appears to be heading into recession, making a resolution to its debt crisis considerably more difficult.

2011-12-23 Closed End Funds Investment Commentary by Team of Cohen & Steers

With interest rates likely to remain near historical lows for an extended period, we believe that attractive spreads should continue to benefit the income-generating potential of leveraged closed-end funds. As for new closed-end fund issuances, we believe the IPO window will remain open, but not to the degree that could pressure pricing in the secondary market or impede discount narrowing as investors bid for above-average income.

2011-12-09 You Can't Print More Gold by Frank Holmes of U.S. Global Investors

As central banks print money and increase supply, currencies become devalued. Whereas in the recent past, one currency may be reduced in value compared with other currencies, this time there is global competitive devaluation as excess liquidity is put into the system. Historically, this excess liquidity has made its way to riskier assets, i.e. stocks and commodities. Gold is generally a benefactor of this flight to riskier assets as many investors see it as a store of value. This chart illustrates the interconnectivity of gold and global money supply growth.

2011-11-01 The Questions to Ask about Non-Traded REITs by Robert P. Seawright (Article)

The attraction of high yields comes at the expense of higher risk, a time-worn lesson that should be an ongoing focus for investors in non-traded REITs.

2011-10-28 How China Drives the Global Economy by Frank Holmes of U.S. Global Investors

The Chinese economy is not a bubble, but that does not mean a significant slowdown wouldnt affect the global economy, especially natural resources. This is because Chinas economic transformation over the past few decades has cast the country into the forefront of demand. PIRA Energy Group says that, in 1990, Chinas share of oil and GDP was less than 5 percent; its share of world energy was just under 10 percent. Since then, Chinas share of energy, GDP and oil has risen dramatically, with each expected to be approximately 28 percent, 21 percent and 16 percent, respectively, by 2025.

2011-10-24 Beige Book Should Leave Investors Less Blue by Kristina Hooper of Allianz Global Investors

The Feds Beige Book, which provides a more holistic view of the economy than any individual data point, confirmed what weve seen in recent economic reports: the U.S. economy grew slightly in September and the first week of October. Also positive were the latest industrial production numbers: U.S. industrial production increased for the third straight month helped by rising demand for autos, planes and electronics. This offers further evidence of a disconnect between sentiment and dataone that could spell opportunity.

2011-10-21 How to Succeed at Auctions by Herbert Abramson and Randall Abramson of Trapeze Asset Management

We believe weve suffered more from the illiquidity and greater volatility of many of our smaller cap holdings, but thats where we are finding the best values with the greatest potential. When the markets recover, that same illiquidity should boost performance on the way up. Maybe sooner than is believed.

2011-10-12 Employment and Unemployment by Mike "Mish" Shedlock of Sitka Pacific Capital Management

The irony is that the better the economy the more people will be tempted to come back into the labor force and the more upward pressure on the participation rate and unemployment rate as well. Therefore, we cannot assume that 158,000 jobs per month will necessarily take the unemployment rate to 7% by 2017. Should the economy slip back into recession, and I think it already has, either employers shed more jobs, corporate earnings plunge, or both. I suggest both. On that basis, earnings growth is not sustainable and stocks are certainly not cheap.

2011-10-07 Can Markets Find the Road Back to Positive Territory? by Frank Holmes of U.S. Global Investors

Can markets find the road back to positive territory? This week, wed like to point out three reasons investors should consider remaining in equities or reassessing whether to sit on the sidelines: 1. Investor sentiment is signaling the market is overextended to the downside. 2. Stocks are trading well below historical valuation trends. 3. S&P 500 dividend yields are higher than the 10-year Treasury yield.

2011-09-26 Not Over by a Longshot by John P. Hussman of Hussman Funds

Unless we observe a robust improvement in market internals from current levels, which appears doubtful given further confirmation of oncoming recession, the broad ensemble of data we observe doesn't offer much latitude to establish a constructive position based on, say, weak technical reversals or other scraps that the markets might toss out in the near term. The first 13 weeks of a recession are among the most predictably hostile periods for equities in the data. We'll take our evidence as it comes, but the primary risks - recession, default and global credit strains - continue to increase.

2011-09-16 An Analysis of the Obama Jobs Plan by Mark Zandi of Moodys Economy.Com

In the current political environment, it is less than likely that most of the presidents plan will pass Congress. Our current baseline outlook assumes that the payroll tax holiday for employees is extended for only one more year. There is a fighting chance that broader payroll tax cuts for employees and employers could become law, but the odds arent high enough at this time to change our baseline assumptions.

2011-09-06 Byron Wien Reflects on His List of Surprises by Laurence B. Siegel (Article)

Byron Wien is a senior managing director and vice chairman of Blackstone Advisory Partners, the largest alternative investment firm in the world with $140 billion under management. Each year, for the last 26 years, he has published a list of 10 'surprises' investors should expect in the capital markets and the economy. In this interview, he reflects on his list for 2011 and what see sees ahead.

2011-08-29 Banks Lending at Last by Milton Ezrati of Lord Abbett

Amid the many signs of economic weakness, the recent rise in bank lending stands as a welcome contrary indicator. Policy makers at the Fed no doubt see the news as significant. Certainly, a willingness among banks to lend actively to companies and to individuals does much to build confidence that the economic expansion can continue. Bernanke has on many occasions identified bank lending as a crucial sign that past stimulative policy has gained traction. Growth in bank loans should give the Fed comfort about its past efforts to exercise patience with a QE3.

2011-08-19 The Silver Lining for Markets and the U.S. Economy by Frank Holmes of U.S. Global Investors

There is a silver lining: Despite all the negative news out there, the global economy will continue to grow. In fact, the U.S. economy has had several positive developments recently. The four-week average for unemployment claims dropped to 402,000 during the week ending August 13. There is still a large chunk of America unable to find a job, but that group has shrunk 13 percent since August 2010 and is about 40 percent of peak 2009 levels.

2011-07-25 Quarterly Letter by Team of Grey Owl Capital Management

We remain concerned about the global economy and suspect of broad asset class valuations.However, in a world of tens of thousands of securities there are always opportunities.Absent a significant market correction, we are likely to continue to hold cash or dry powder.We also continue to look to hold assets that can perform well in an inflationary environment, as dollar debasement seems to be the political path of least resistance out of our current problems.The politicians appear happy to solve the problems maana. We on the other hand are happy to make hay when the sun shines.

2011-07-16 Commodities 2011 Halftime Report by Frank Holmes of U.S. Global Investors

Commodities don’t all perform in the same way. In any given year, a particular commodity will go gangbusters and outperform the group. However, that commodity will typically come back to Earth and underperform the following year or the year after that. This is why active management is important when investing in commodities. Active managers can benefit from rotating from winners to laggards or by investing in the companies which produce, farm or mine commodities most effectively.

2011-07-07 Exit Interview: FDIC Chairman Sheila Bair by Team of Institutional Risk Analyst

This week in The Institutional Risk Analyst, we feature a conversation with FDIC Chairman Sheila Bair as she nears the end of her term. Bair has been in and out of public service for three decades, including working for Congress, the Treasury and lastly the FDIC. She spoke to IRA co-founder Chris Whalen before the July 4th break.

2011-07-05 The Chinese Black Swan by Vitaliy Katsenelson (Article)

Party rulers in China are trapped in a position that chess players deeply fear - zugzwang - where any move make puts you at disadvantage. In China, the cost of both action and inaction is potential economic collapse.

2011-06-30 Sunlight on U.S. Banks by Mark Kiesel of PIMCO

Among global banks, we believe U.S. banks are in a stronger position to absorb deterioration in the macroeconomic environment in Europe. U.S. banks also look attractive given their profitability, improving asset quality and capital position. Global banks vary dramatically in their asset quality and ability to meet capital requirements over time. As a result, we believe financial markets will continue to reward the strongest and safest banks and penalize the weakest. While we remain cautious on the U.S. housing market, U.S. banks appear to have the resources to manage further weakness.

2011-06-28 Extending the Extended Period of Volatility by Chris Maxey of Fortigent

Personal income and consumer confidence will start the week with expectations of slightly higher numbers. On Tuesday, Case-Schiller data is expected to show moderate declines in home prices for April relative to March. The Treasury will follow its regular auction schedule this week with auctions of $35 billion worth of 2-yr notes, $35 billion of 5-yr notes and $29 billion of 7-yr notes. All eyes will be on Greece on Wednesday and Thursday, when Parliament will vote on the latest austerity plan. Greece noted that they will default if a new loan tranche is not available by mid month.

2011-06-08 The Economy: When Will Happy Days Be Here Again? by Team of Knowledge @ Wharton

The latest economic reports show the U.S. recovery has faltered. But someday, surely, there will be a real recovery. What forces will drive that upturn? And will the healthy economy of the future look different from those of the past -- establishing a "new normal?" Two intertwined factors are critical to any rebound, according to many experts: Home prices must stop declining and begin to rise, and consumers must spend more freely.

2011-05-25 Global Mergers and Acquisitions Activity Continues to Rise by Team of American Century Investments

Mergers and acquisitions activity is on the rise worldwide. In the U.S. this increase has been accompanied by the return of mega-deals ($10 billion+) driven primarily by large multi-national corporations flush with cash. These deals (and the anticipation of more to come) have helped drive markets up in the first quarter of this year. But the question on the minds of many investors is whether acquiring companies are at risk of overpaying for acquisitions that—while deemed “strategic”-may only end up transferring (not creating) value from shareholders of the acquiring to the acquired companies.

2011-05-24 Robert Shiller: I'm Betting the Farm by Robert Huebscher (Article)

Yale's Robert Shiller, the economist who foresaw the implosions of the tech bubble in 2000 and the housing market in 2007, is now closely watching a different asset class. This time, however, it is one that is in an early stage of bubble formation, not of collapse.

2011-05-17 The Smooth Illusion by Michael Lewitt (Article)

In retrospect, the Federal Reserve's interminable zero-interest policy and its quantitative easing programs are likely to be seen not only as ineffective but damaging to the prospects for sustainable long-term economic growth. A number of asset classes are beginning to exhibit bubble-like behavior, something that would be far less likely to occur were interest rates normalized.

2011-05-16 Ally Financial + ING Bank? Richard Alford on Lessons Forgotten at the Greenspan/Bernanke Fed by Team of Institutional Risk Analyst

This week in The Institutional Risk Analyst we feature a comment from Dick Alford on the lessons forgotten by the Fed when it comes to financial regulation. Showing his considerate nature, Dick even uses the official histories of past crises prepared by the FDIC as the timeline to make it easier for some of our former colleagues at the Fed to follow along. But first, let's have some fun with one of the toys developed for The IRA Bank Monitor, namely our pro forma M&A analysis tool.

2011-04-29 Quarter 1 Letter by Team of Grey Owl Capital Management

QEII is set to end no later than June 30th. Prominent money managers disagree on the impact. PIMCO’s Bill Gross thinks yields are bound to rise as the largest net buyer of Treasuries moves to the sidelines. Gross has sold all of the US Treasury holdings in the flagship Total Return Fund. Jeff Gundlach, formerly of Trust Company of the West and now with DoubleLine Capital, believes the opposite. According to him, yields will fall in the short term because quantitative easing is inflationary. When QEII stops, bond buyers will require lower yields as future inflation expectations recede.

2011-04-29 Coal Use in China Shines Light on Growth by Frank Holmes of U.S. Global Investors

International coal prices hit $124 per ton this week, the highest levels in five months, as strong demand from reconstruction projects in Japan and reduced supply from flood-ravaged Australia has made coal supply tight. The floods in Queensland, Australia cut the country’s output of coal by 15 percent and other big coal producers such as Indonesia, South Africa and Colombia are experiencing similar production cuts due to floods of their own.

2011-04-26 Portfolio Strategy by Bradley Turner of Chess Financial

At the outset of the second quarter, the major trends that have shaped our portfolio strategy since last summer remain largely intact. These include: A global economy that is experiencing a two-track recovery. Growth in the developed markets is generally subdued while growth in the emerging markets is more robust. Inflationary pressures continue to build as evidenced by price increases in many commodities, notably food and oil. Interest rates have begun to move higher, either due to central bank actions (e.g., China, India) or specific country risks (e.g., Portugal).

2011-04-16 Will China's Economy Overheat? by Frank Holmes of U.S. Global Investors

China’s GDP growth continued at a blistering pace during the first quarter of 2011, rising 9.7 percent from the previous year. Once again this outpaced many forecasts and reignited the discussion of China’s overheating economy. While its robust growth may raise a few eyebrows, the economy isn’t in danger of “red-lining.” Andy Rothman points out that the first quarter growth figures “[aren’t] dangerously high given the GDP growth rate and strong income growth” After rising nearly 8 percent during 2010, inflation-adjusted urban incomes rose 7.1 percent during the first quarter.

2011-03-15 Running on Empty by Michael Lewitt (Article)

Despite the increasing undercurrent of negative news creeping into the financial markets, the stock market remains strong. HCM expects equities to continue to perform well for the foreseeable future (i.e. through the end of June) although most of this letter will discuss the reasons why it shouldn't. In some ways, this market is a lot like Charlie Sheen. It pretends to have tiger blood and the powers of a warlock, but deep inside it is suffering from an addiction to a substance (i.e. debt) that will ultimately kill it.

2011-03-07 Who Gets Credit For the Recovery? by Brian S. Wesbury and Robert Stein of First Trust Advisors

What’s the opposite of a double dip? Whatever it is, that’s where we are. Remember commercial real estate, re-setting ARMs, foreclosures, muni-bond defaults, Greece, Ireland, Egypt, Tunisia, Libya, high unemployment, more savings, or just plain old government debt? At least one of these, or maybe all of them, was going to make recovery impossible, or end any recovery prematurely. But none of it happened. The double dip turned out to be a figment.

2011-02-07 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Perversely, while only 36,000 new non-farm payroll jobs were reported, the unemployment rate fell to 9%. I say perversely because everyone knows that our economy needs to create upwards of 150,000 net new jobs on a monthly basis just to keep the unemployment rate from falling. So, what is going on here? The government is constantly changing its estimate of who is unemployed. In this way you can lower the unemployment rate without creating net new jobs and that is what is occurring.

2011-01-10 The Key Asset Classes For 2011 Will Be: Oil, Gold, And Stocks by Monty Guild and Tony Danaher of Guild Investment Management

Investors are moving from bonds to stocks and the huge cash balances at money market funds will likely find their way into stock and commodity markets in 2011. This means inflation and commodities prices are likely to rise faster than wages, and those living on fixed incomes or bond interest will be affected the most, due to the fact that their money buys them less of everything; both luxuries and necessities. However, the ramifications of this inflationary trend are also serious for wage-earners. In every inflationary period in recorded history, wages have risen more slowly than inflation.

2011-01-07 Shadow Lot Supply by John Burns of John Burns Real Estate

In the last 4 years, the public builders have reduced their land holdings from 2.2 million to 700K lots, and only built on about 200K of them during that time period. What happened to the remaining 1.3 million lots?

2010-12-29 2011 Here We Come! by Monty Guild and Tony Danaher of Guild Investment Management

There are two major trends in place that set the stage for world economics in 2011. The first is China’s continued rise. Although the U.S. remains the most powerful economic force on earth, China will soon be replacing Europe as the second most powerful economic force. China’s power is not built on sheer size alone: indeed, China’s statesman-like behavior during the current economic crisis in U.S. and Europe has highlighted its maturity and greatly enhanced its image. The second major trend going into 2011 is the rise of inflation.

2010-12-23 Where Are the All the Bad Bank Loans? by John Burns of John Burns Real Estate

To kickstart construction, banks need to see nonperforming construction loans and REO at a price that makes development feasible. It is very clear to us that the regulators and auditors have allowed many banks to defer taking losses, which is probably the right decision for the FDIC, bank shareholders, and taxpayers. When the banks start selling these loans and REO, construction will increase.

2010-12-10 Interim Update and Comment by Van R. Hoisington and Lacy H. Hunt of Hoisington Investment Management

Federal Reserve Chairman Ben Bernanke said in a recent television interview that economic growth was not “self sustaining.” This description also applies to an economy that is in a classic growth recession. A growth recession is characterized as an economy where GDP grows but the unemployment rate also moves higher. A close look at the U.S. economy bears out Chairman Bernanke's description.

2010-11-09 Chinks in the Armour by David A. Rosenberg of Gluskin Sheff

Nobody thought a year ago that things would have weakened to such an extent that we would have needed QE2 or the extension of Bush tax cuts. The Fed is doing $600bln in quantitative easing, which is about one-third what it did last year. I’m not convinced that it alone will prevent the economy from weakening, even if contraction risks have abated. Now what will it take to turn me more positive? Well, a sustained job creation for one and if we can get initial jobless claims down to 400k that would be huge. But I have to admit, QE2 does not do it for me.

2010-11-05 Advance 3Q Bank Delinquencies by Team of Foresight Analytics

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.

2010-11-01 Big Week Ahead in the U.S. by David A. Rosenberg of Gluskin Sheff

After Tuesday's elections, there is little question that the GOP will take the House with a 1994-type landslide. Once in control, the GOP will not support more fiscal initiatives. We are therefore likely about to see a pronounced slowdown in the pace of economic activity; outside of government intervention and inventory accumulation, catalysts for growth are few and far between. Unlike during the soft patches of the mid-1980s and mid-1990s, the economy today is just a shock away from slipping back into contraction mode.

2010-10-21 North America Losing Some Serious Momentum by David A. Rosenberg of Gluskin Sheff

The U.S. economy may in fact be contracting again. The monthly data from Macroeconomic Advisers showed that real GDP contracted 0.6 percent in August. While this did follow a red-hot +1.25 percent gain in July, this marks the third decline in real activity in the past four months. Maybe the bond market does not need the Fed's help after all — the super-soft economic environment is all the Treasury bond market really needs to sustain the downward trend in yields.

2010-10-09 The Ride of the Keynesian Cowboys by John Mauldin of Millennium Wave Advisors

Mauldin reviews the just-released employment statistics, concluding that the "job picture is terrible." Add to that forecast weak GDP growth, lack of consumer spending, and feeble credit demand, and the Fed is left with one more "bullet" - QE2 - which is advocated by "Keynesian Cowboys" at the Fed. Others at the Fed, though, have warned about the unintended consequences of a possible QE2, and Mauldin doubts it will "work."

2010-10-06 Deflation Economics: Quantitative Easing and the Portfolio Balance Channel by Thomas Fahey of Loomis Sayles

The level of assets on central bank balance sheets has been relatively stable since the initial burst of quantitative easing in late 2008 and early 2009. As growth slows, however, money and credit numbers could drop significantly. Central banks could still do more to spur a more complete economic recovery. Until then, bond yields should remain low. Perhaps 10-year Treasury yields below 3 percent are low enough to reverse the real demand for money and force portfolio rebalancing. Investors will need to watch the corporate sector for signs of cash hoarding and hiring as evidence of that.

2010-10-05 QE II Set To Sail, But How Soon? by Scott Brown of Raymond James Equity Research

In its September 21 policy statement, the Federal Open Market Committee indicated that it was 'prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.' The key part of that phrase is 'if needed.' Growth and inflation are both too low for the Fed's comfort, but are they low enough to force the Fed's hand? Most officials appear to be leaning in the direction of further quantitative easing, but it's unclear when it will happen.

2010-10-02 The Morality of Chinese Growth by John Mauldin of Millennium Wave Advisors

Mauldin provides highlights from a recent conference. John Hofmeister is the former president of Shell Oil. He paints a very stark (even bleak) picture of the future of energy production in the US unless we change our current policies. David Rosenberg argues that GDP growth has been helped largely by inventory rebuilding, which is not sustainable. The analysts at GaveKal discuss the tension between Chinese policies toward economic growth and the social welfare it provides for its citizens.

2010-09-28 Stan Druckenmiller is Leaving by Bill Gross of PIMCO

The economic drivers that once pumped up asset prices and favored the production of paper over commodities are now retrograde. The reality during Stan Druckenmiller's 'old normal' was that prosperity and overconsumption were driven by asset inflation that in turn was correlated with leverage and interest rates. Investors are now faced with bonds yielding 2.5 percent and stocks staring straight into new normal real growth rates of 2 percent or less. There is no 8 percent there for pension funds. There are no stocks for the long run at 12 percent returns.

2010-09-18 The Chances of a Double-Dip by John Mauldin of Millennium Wave Advisors

This commentary features a letter from Gary Shilling on the chances of a double-dip recession. Shilling notes that investors early this year believed that rapid job creation and the restoration of consumer confidence would spur retail spending. A funny thing happened, however, on the way to super-charged growth. In April, investors began to realize that the euro zone financial crisis, which had been heralded at the beginning of the year by the decline in the euro, was a serious threat to global growth. Stocks retreated, commodities fell, Treasury bonds rallied and the dollar rose.

2010-09-15 Ten Questions: USA vs. Japan by Asha Bangalore and James Pressler of Northern Trust

The combination of lackluster growth and disinflation in the U.S. has led to comparisons with Japan's dire experience following the collapse of asset prices in the 1990s. A frequent question is whether Japan's 'lost decade' will play out in the United States. The Q&A included in this commentary identifies similarities and differences between the experiences of the two countries, with an emphasis on the recovery path. It appears that the U.S. is unlikely to mimic the economic path of Japan in the 1990s.

2010-09-13 The Fed Outlook: No Good Choices by Scott Brown of Raymond James Equity Research

In his semiannual monetary policy testimony to Congress in July, Federal Reserve Chairman Ben Bernanke said that the Fed 'remains prepared to take further policy actions as needed.' In his Jackson Hole speech on August 27, he outlined possible steps the Fed could take, including expanding its holdings of longer-term securities, but cautioned that 'the expected benefits of additional stimulus from further expanding the Fed's balance sheet would have to be weighed against potential risks and costs.'

2010-09-01 No Chance of a V-Shaped Recovery by Nouriel Roubini of RGE Monitor

Given political and fiscal constraints and banks' unwillingness to lend, it is doubtful that policy can prevent a double-dip. Even if a new round of monetary and quantitative easing can provide limited stimulus, the real issue facing the U.S. is the need for balance sheet deleveraging and repair, and that will be a multi-year process. The U.S. must brace itself for a long period of below-potential growth.

2010-08-18 Zombie Love: Do Fannie and Freddie Provide Any Benefit to the U.S. Economy? by Christopher Whalen of Institutional Risk Analyst

This commentary features a piece from Achim Duebel at Finpol Consult in Berlin criticizing U.S. fiscal intervention in the housing market. Duebel's comment was first written in 2003, when its publication in a housing finance journal was blocked by government-sponsored enterprise lobbyists. The striking thing about it is that almost nothing about the structure of the housing market has changed since it was first written. Christopher Whalen also comments on the current status of the housing sector, and double-dips both real and imagined.

2010-08-12 Asset Allocation: Volatility, Correlations and Returns in the New Environment by Tom and Rob Boeckh of Boeckh Investment Letter

Slow growth, high unemployment and weak inflation will keep interest rates very low in the short term. Rising government debt levels and heavy reliance on monetary ease from the Federal Reserve, however, suggest rising risks of price inflation later on, possibly much later. The current period of low long-term interest rates should thus be thought of as an extended base-building period for higher rates down the line. Investors should maintain a diversified portfolio, shifting equity exposure to defensive, non-cyclical sectors, and build positions in cash and safe sovereign debt.

2010-07-12 Misallocating Funds by John P. Hussman of Hussman Funds

The relative abundance of physical and educational capital has been a driver of U.S. prosperity for generations, and is the main reason why American workers earn more than their counterparts in the developing world. Neither advantage in capital, however, is intrinsic to American workers, and it will be impossible to prevent a long-term convergence of U.S. wages toward those of developing countries unless the U.S. efficiently allocates its resources to productive investment and educational quality.

2010-07-09 Potholes in the Recovery Road – Reduce Speed Ahead by Paul Kasriel of Northern Trust

The second-half GDP growth forecast has been lowered to 1.8 percent and Q4/Q4 GDP growth in 2011 will be 3.2 percent. This is a business cycle unlike any other in the post-war era. In prior cycles, as the Fed raised the funds rate, growth in bank credit slowed. In the current environment, even with the Fed holding the funds rate at less than 25 basis points, bank credit continues to contract. Thus, we are going to utter the six most dangerous words in economic forecasting: This time it might be different.

2010-07-06 Animal Spirits and the Economic Outlook by Scott Brown of Raymond James Equity Research

Near-term economic expectations have softened over the last few months and the risks to the growth outlook have become tilted more to the downside. There's nothing to suggest that a double-dip recession is imminent or even likely over the next few quarters. However, the one element that's hard to get a handle on is psychology. Fears of a double-dip could become self-fulfilling if enough firms stop hiring.

2010-06-29 Timber as an Asset Class: If a Tree Falls in the Forest, Should you Buy It? by Charlie Curnow (Article)

"If the sun shines and it rains, the trees grow about on schedule," wrote Jeremy Grantham, chairman of Boston-based investment firm GMO, in his quarterly newsletter in April 2007. Grantham's enthusiasm for timber, which remains true to this day, may be excessive, despite the fact that, on the surface, historical data seems to support his optimism. If a tree falls in the forest, should you buy it?

2010-06-29 Market Insights by Christian Thwaites of Sentinel Investments

Christian W. Thwaites takes a deeper look at some of todays big issues. He answers the question Inflation or Deflation, investigates the Eurozone collapse and explains the plight of the U.S. consumer. As the summer begins, Thwaites gives his outlook on the market and some simple rules to follow for a strong financial future.

2010-06-24 No Surprises from the Fed by Liz Ann Sonders of Charles Schwab

The Federal Open Market Committee surprised no one with its decision to keep the Fed funds target rate in a range between zero and 0.25 percent, where it's been since December 2008. The new statement marked the first time since the economic recovery began last summer that the Fed had to slightly dial back its language about the pace of the recovery. Stocks rallied immediately after the announcement, but in light of rampant intraday volatility lately, it's way too soon to judge if there will be any longer-term impact.

2010-06-15 Bank Profile: Capital One Financial by Christopher Whalen of Institutional Risk Analyst

This commentary features a profile of a profile of Capital One Financial, a multibank holding company that specializes in subprime credit cards and consumer banking. COF has a stress score for loan defaults that is more than two times the industry average. The bottom line for COF is that while it has a large and sophisticated treasury operation that includes hedges of its own assets and liabilities and has no Wall Street trading operation. In that sense, COF is more like a regional bank than a money center.

2010-06-14 Double Dip, Anyone? by David A. Rosenberg of Gluskin Sheff

The data suggest that we are now seeing the consumer sputter with what looks like a very weak handoff into the third quarter. The housing sector is collapsing again. The export-import data are pointing to a sudden deceleration in two-way trade flows. Commercial real estate is dead in the water. Bank credit is in freefall right now. A double-dip is not yet a sure thing, however. Not only are the economists calling for 3 percent real growth, but the consensus among equity analysts is that we will end up seeing over 30 percent operating EPS growth to a new high of $95.59 for 2011.

2010-06-11 Schwab Sector Views: Why Sectors? by Brad Sorensen of Charles Schwab

Views on the S&P 500 sectors.

2010-06-10 April 2010 Commentary by Bill Middleton of Sound Portfolio Advisors

Perhaps the most encouraging signs in markets today are general pessimism and lowered expectations. Mass expectations tend to be dead wrong, and are therefore excellent contra-indicators. The first- and second-best performing asset classes of the past 10 years, gold and real estate, were so ill-regarded prior to 2000 they weren't even included in the data provided by the Wall Street Journal in January of that year. The best performing asset class for the 1995-1999 period, science and technology, was by far the worst performing for the following 10 years.

2010-06-07 Decoupling by John Petrides of Advisors Capital Management

The investment community is fixated on the tangled fiscal and monetary web within the European Union and losing sight of the recovery underway in the U.S. economy. One might say the U.S. and Asian economies are decoupling from European markets. In 2007 and 2008, decoupling allowed the global economy, led by Brazil, Russia, India, and China, to grow without the U.S. Now it appears that the European economy has decoupled and is mired in its own recession apart from the rest of the world.

2010-05-28 The Recovery Marches On... by Scott Brown of Raymond James Equity Research

Real GDP rose at a 3.0% annual rate in the revised estimate for Q1, down from 3.2% in the advance estimate, although the story didn't change much. This was the third consecutive quarterly increase in real GDP. More importantly, the economy appears to be transitioning to a more sustainable recovery, less reliant on the shift in inventories and the government's fiscal stimulus, and supported more by consumer and business demand. Job growth, a key element in a sustainable economic recovery, has returned. Unfortunately, the economy still faces a number of headwinds in the near term.

2010-05-27 Sentiment Deteriorates - But Still Not Enough by David A. Rosenberg of Gluskin Sheff

Bullish sentiment, as per the latest Investors Intelligence survey, fell again to 39.3 percent from 43.8 percent; the bear camp rose to 29.2 percent from 24.7 percent. This means bearish sentiment has risen to July 2009 levels and bullish sentiment has declined to February 2010 levels. It can be argued that at real lows, the bull camp gets to 26 percent (historical average) while the bear camp gets to 49 percent, so we may well have further to go before sending the all-clear signal out.

2010-05-20 Shiller P/E Ratios, Deflation, and FOMC Notes by David A. Rosenberg of Gluskin Sheff

During the past 130 years, whenever the Graham/Dodd/Shiller normalized P/E ratio goes above 20.6x (it is 21x today), the market experiences a significant correction - a correction of 31 percent on average over the next 16 months. It never fails. Rosenberg also examines new evidence of deflation from the labor market, and statements from the Federal Reserve suggesting that the central bank will not consider raising interest rates until 2012.

2010-05-19 Review of First Quarter 2010 by James F. Keegan of Ridgeworth

The recovery to date has largely consisted of an inventory correction and a response to various government stimulus programs; very little of it will prove to be organic or sustainable. Consumer spending has proven more resilient than anticipated, but this has come at the expense of savings. The consumer remains over-leveraged and the balance sheet repair process can't rely again on asset appreciation; hence, further gains in spending are unlikely. Meanwhile, capital expenditure plans remain tepid, and the tailwind from the stimulus plan is also diminishing.

2010-05-14 Schwab Sector Views: Sea Change? by Brad Sorensen of Charles Schwab

Market volatility has heated up during the past couple of weeks as more eyes have turned toward the debt problems plaguing Europe. After a nice run in equities, it's certainly not surprising to see some sort of pullback, especially in areas of the market that may have outperformed to start the year. The United States is entering a time of more-steady growth, with flattening leading economic indicators, which typically represents a shift in sector leadership. The information technology sector, for example, should outperform the market, while materials should underperform.

2010-05-11 Two 'Takes' on the Latest GDP Growth Figure by Team of American Century Investments

Overall, the preliminary report of first quarter GDP growth was good news for consumers, businesses and investors seeking to finally put the Great Recession in the past. Consumer spending and business investment are both showing healthy signs of growth, which is to be expected during the early phases of a recovery. Concerns are now focused not on whether we are in a recovery phase, but whether the recovery will be strong enough to pull us out of the large hole the recession created.

2010-05-07 The Big Picture, the Investment Landscape, and Our Portfolio Strategy by Team of Litman Gregory

Debt reached binge levels during the past decade. Money to reduce the debt will have to come from somewhere, and much of it will come from reduced spending. Spending cuts could produce a sluggish economy, possibly for many years to come. There are some positives that could contribute to a better outcome, however, including continued strength from emerging economies. Domestically, we could see stimulus spending, low rates, and inventory rebuilding create a virtuous circle in which businesses with strong balance sheets add jobs, and consumer and business confidence builds and feeds on itself.

2010-04-30 U.S. GDP, Reflecting on the Market Rally, and Unemployment by David A. Rosenberg of Gluskin Sheff

While many economists will undoubtedly rejoice over the strongest headline GDP results in six years, today’s Q1 2010 number actually came in a tad light relatively to expectations, not to mention the fact that it was a very mixed performance, from a sector standpoint. Real GDP expanded at a 3.2 percent annual rate versus the 3.4 percent rate that the consensus had penned in, and once again the mathematics of a renewed inventory build was responsible for half the GDP growth last quarter.

2010-04-27 Recovery U.S.A.? by David A. Rosenberg of Gluskin Sheff

Nobody would dispute that the U.S. government has spent the economy into some sort of statistical recovery. Look at the largesse - a 0 percent policy rate, a $2.3 trillion Fed balance sheet loaded up with mortgages, a $1.4 trillion fiscal deficit loaded with bailouts and freebies and accounting changes that have allowed the banks to mark-to-model their way back towards earnings heaven. The time gap between recessions is shortening, however, and growing government debt loads mean that next time the policy response will just not be there to turn things around.

2010-04-27 Gary Shilling: America’s Lost Decade by Robert Huebscher (Article)

The US faces 10 years of slow growth and deflation that could rival Japan's "lost decade" - two words which Gary Shilling did not utter but which unmistakably characterize his forecast. Shilling is founder and President of the New Jersey-based economic consulting firm A. Gary Shilling & Co.

2010-04-27 The Four Horsemen of Growth: David Kelly’s Guide to Markets by Katie Southwick (Article)

With unprecedented volatility now largely behind us, J.P. Morgan's Chief Investment Strategist David Kelly believes that the economy is entering a period of recovery. To move forward, we must abandon our negative mindsets and focus on opportunities for expansion.

2010-04-25 Playing With Fire (A Possible Race to the Old Highs) by Jeremy Grantham of GMO

Is there a new bubble on the horizon in the US? Having shot through GMO’s fair value estimate of 875, Jeremy Grantham's first quarter letter asks whether current policies and conditions are pushing the S&P to approach its old highs. Included in the letter is a link to a video of an interview about investment bubbles, done with Jeremy by the Financial Times on April 19. The Letters to the Investment Committee XVI is part one of a speech given by Jeremy discussing the Potential Disadvantages of Graham & Dodd-type Investing.

2010-04-20 Unconventional Wisdom: An Interview with Robert Shiller by John Heins (Article)

"Few macroeconomic prognosticators have been as publicly right as Yale's Robert Shiller,whose first and second editions of the book Irrational Exuberance laid bare, with remarkable timing, the speculative bubbles forming first in the Internet-crazed stock market and next in residential real estate," writes the highly regarded newsletter Value Investor Insight in its preface to this interview with Shiller and excerpt from his latest book. Value Investor Insight, which bills itself as the "Leading Authority on Value Investing, offers a no-obligation, one-month free trial subscription.

2010-04-19 No Free Lunch by David A. Rosenberg of Gluskin Sheff

The fiscal mess will not be fixed through spending restraint because spending is increasingly being dominated by locked-in mandatory entitlement spending and interest costs on the rapidly rising stock of public debt. In addition, the fact that the Goldman Sachs revelation came at a time when bank earnings are being reported and showing that these guys are now making money hand-over-fist (mostly via trading and recoveries) thanks to the government's help is potentially huge from a political standpoint, especially since financial reform is front and center right in Congress right now.

2010-04-16 Our Quarterly Review by Jonathan A. Shapiro of Kovitz Investment Group

With only a few temporary setbacks, the stock market has continued its move higher since touching its most recent low in early March 2009. Much hand wringing has been done over the S&P 500's approximately 75 percent move since that time, but lost in translation is the fact that prices last March implied a pending financial and social breakdown. These panic-driven prices bore little resemblance to actual or going concern business values, and measuring from that point clearly overstates and exaggerates the return. The worries facing the U.S. and many other regions are still prevalent.

2010-04-09 Portfolio Strategy by Bradley Turner of Chess Financial

Three first principles of preserving and growing capital deserve our attention at this juncture in financial markets: Never own too much of any one investment, keep only those investments that offer the prospect of a reasonable return, and accept that financial markets will behave in a way that confounds the majority of people. These first principles speak to the importance of portfolio diversification, maintaining reasonable expectations and avoiding the latest fads. Turner also discusses prospects in the bond, stock, commodity and commercial real estate markets.

2010-04-03 Is This a Recovery? by John Mauldin of Millennium Wave Advisors

"We will likely see a reduction in government spending (from all levels) over the next few years, a really nasty set of tax increases, which will hit small businessmen the hardest, and continued high unemployment, and all of it coming in a weakening economy by the end of the year," says John Mauldin. "I put the odds of a double-dip recession in 2011 at better than 50-50." Mauldin also offers asset allocation advice over a 10-year time frame.

2010-04-01 Construction Lending - 4Q 2009 by Matthew Anderson of Foresight Analytics

Construction loans outstanding contracted by 8.3% during the fourth quarter (vs. 3Q 2009), on par with the 8.1% decline in 3Q 2009, but faster than the 4.6% average quarterly declines in 4Q 2008 through 2Q 2009. All major construction categories we estimate are in decline, including commercial real estate. Delinquency rates for all construction and land loans rose to 18.6% during the fourth quarter, up from 17.9% during 3Q 2009. This rate is closing in on the high of 19.2% in 1Q 1992.

2010-03-29 Bank Profile: First Interstate BancSystem (FIBK); Achim Dübel on Covered Bond Legislation by Christopher Whalen of Institutional Risk Analyst

This post features a comment from international mortgage finance consultant Achim Dubel of German financial think tank Finpolconsult. Dubel says that legislation proposed by Representative Scott Garrett of New Jersey to create a covered bond market in the U.S. needs to be changed if it is to restore investor trust and provide needed new liquidity to real estate markets. Legacy problems with shaky assets of all colors on bank balance sheets should be solved via bad banks and/or bank insolvency and restructuring, not through a new secondary market for bank mortgages.

2010-03-27 What Does Greece Mean to You? by John Mauldin of Millennium Wave Advisors

The potential consequences of the Greece debt crisis can be explained by chaos theory, where a small perturbation in one place (the Greek economy) can cause bigger ripples in the global economy. Greek debt is held by European banks, and a Greek default would weaken the European economy. The real crisis, though, is the impending end of a "60-year debt supercycle," which implies many years of deleveraging and a weak global economy.

2010-03-26 Global Market Management by Monty Guild and Tony Danaher of Guild Investment Management

Investors should focus on exporting companies, food-related companies, raw materials producers, iron ore, oil, coal, technology, and on stocks of other countries, especially countries that can export to fast-growing areas such as India, China and Southeast Asia. Even U.S. financial stocks are enjoying a rally as uncertainty ends. Japanese, European and U.S. stocks that produce products for domestic consumption offer poor prospects. Gold is in a trading range, and investors may want to acquire gold shares as it approaches the bottom of that range.

2010-03-15 Getting Healthy by Charles Lieberman of Advisors Capital Management

Investors expect a slow recovery, partly because they believe that households and firms must rebuild finances and improve their financial health before they can spend once again. Main Street is getting healthier, as household wealth recovers and people pay down debt. Corporate America is far ahead and has already greatly improved its condition. And soon, companies will start hiring, which will enable households to reinforce the economic recovery.

2010-03-11 Market Comment by David A. Rosenberg of Gluskin Sheff

Government stop-and-go policies have fostered an environment of intense volatility for equity markets over the past 12 years. The market has basically been flat for a buy-and-hold investor during this period. While this may make a great case for active portfolio management, chasing performance at this juncture is probably unwise. Housing is the quintessential leading indicator for economic activity, and many realtors still say business is slow. As the Japanese experience shows us, a double-dip recession may come faster than we think.

2010-03-08 Mark-to-Market Accounting: OneWest and WaMu by Christopher Whalen of Institutional Risk Analyst

One year ago, OneWest Bank Group purchased the banking operation of the IndyMac Federal Bank, which was being operated in conservatorship by the FDIC. As with the purchase of Washington Mutual by JPMorgan Chase, the subsidy in these deals came from the write-down of the assets of the failed bank. All of the potential claims against the parent companies of WaMu and IndyMac for rescission of securitized loans are sitting in bankruptcy court, where they will likely remain and die.

2010-03-04 Bernanke Finally Fingers Mark-To-Market by Brian S. Wesbury and Robert Stein of First Trust Advisors

Mark-to-market ideology is affecting the ability of the Federal Reserve to exit its quantitative easing. The mark-to-market rule uses bids, or exit prices, to value assets. Chairman Bernanke signaled that he recognized the problem in February when he said commercial real estate loans should be valued on income from their property, rather than their collateral value. As long as mark-to-market valuation continues to drag on securitization, the Fed will remain hesitant to withdraw its support of the system.

2010-03-01 Bank Credit Still Contracting by David A. Rosenberg of Gluskin Sheff

Outstanding bank credit fell $33 billion during the week of February 17, adding to a seven-week cumulative decline of $150 billion. Bank lending to households and businesses fell at a 12 percent annual rate over the past 13 weeks. As long as bank credit is shrinking, the jury will still be out on Fed rate hikes during the second half of this year and the ability of the economy to sustain above-potential growth. In addition, the revised Q4 GDP numbers indicate a lack of pent-up consumer demand with most spending directed to essentials, reinforcing a bearish, deflationary U.S. economic outlook.

2010-02-26 Focus on the Forest, Not the Trees by David A. Rosenberg of Gluskin Sheff

Despite the reflexive rebound in global equity markets, deflation is still the primary trend for consumer prices and asset values as households rebuild balance sheets and as governments face sovereign default risks. Investors should focus on bonds, hybrids, and dividends with consistent yields as they search for safety and income at a reasonable price.

2010-02-26 The Multiplication of Money by John Mauldin of Millennium Wave Advisors

Mauldin begins with a review of the situation in Greece, highlighting recent social unrest, and concluding that the most likely resolution will be relief from the IMF. Next, he rejects recent reports that hedge funds will short the euro and cause it to decline relative to the dollar. He then argues that the reported expansion of M0, M1 and M2 money supply is inconsequential (for inflation), because it is more than offset by a decrease in the velocity of money.

2010-02-22 DC's Economy Went South, Despite Government Hiring by John Burns of John Burns Real Estate Consulting

Contrary to industry buzz, the Washington, D.C. economy is not on the mend. Local job markets posted solid losses as 2009 progressed. D.C. could be one of the first housing markets to stabilize, however, due to improved affordability, a lack of new home construction and relatively few foreclosures.

2010-02-22 Don't Be An Economic Hypochondriac by Brian S. Wesbury and Robert Stein of First Trust Advisors

There are always things to worry about in the economy. With an accommodative monetary policy and the end of the panic, however, the economy is heading upward. The consensus forecast for economic growth has grown from 2 percent of real GDP to roughly 3 percent. This forecast may continue to grow to 4 percent or more.

2010-02-17 The Return of the Primary Trend by David A. Rosenberg of Gluskin Sheff

If credit, equity prices and the economy are on a downward primary trend this year and 2009 was indeed a counter-trend bounce, then the appropriate course of action is to capitalize off the rally in assets last March and figure out how to still make money on a risk-adjusted basis. Rosenberg also examines February's recovery in the National Association of Home Builders housing market index and fiscal woes at the state level.

2010-02-16 Outlook Report: 2010 Searching for the Afterparty by Robert N. Stein of Astor Asset Management

Markets will grow in 2010, but foreign and domestic gains will be harder to find than they were a year ago. The market's panic and robust recovery suggest a return to growth rates closer to historical norms, with some areas outperforming others. Sectors that performed best during the recession may be the highest performers during the recovery.

2010-02-12 Bernanke Ain't Doin' Nothin' plus Comments on Commercial Real Estate and Employment by David A. Rosenberg of Gluskin Sheff

David Rosenberg of Gluskin Sheff says Federal Reserve Chairman Ben Bernanke won't try to tighten up liquidity conditions until after the deleveraging cycle runs its course. Bank lending to households and businesses shrank $28 billion last week, and is down by $100 billion since mid-January. He also takes a look at declining commercial real estate figures and improving jobless claims numbers.

2010-02-11 Equity Investment Outlook January 2010 by Team of Osterweis Capital Management

In its equity investment outlook, Osterweis Capital Management says it expects the economy to continue expanding this year, but notes that it might face headwinds from a double dip in the housing market and an unwinding commercial real estate sector. Stocks recovered sharply last year in the face of expected profit recovery, but may but may suffer temporary setbacks if the economy disappoints.

2010-02-03 Die Now, Pay Later? by Zises of Family Management Corporation

Family Management Corporation is a large, NY-based wealth manager. In this client-focused letter, Zises comments on a variety of topics, including the estate tax, regulatory reform, and the political climate. "Rough sledding will ensue if the people continue to lose faith in our nation’s leadership,” he says.

2010-01-28 Monthly Investment Commentary by Team of Litman Gregory

When the dust settled on one of the most eventful and upended years in memory, investors had generous gains in stocks and certain segments of the bond market to salve the wounds of a disastrous 2008 a

2010-01-28 Making Sense of Obama's Bank Reform Plans by Acharya & Richardson of VoxEU

Obama's sweeping proposal for financial regulation took the world by surprise. Here two of the world's leading professors of finance explain why it is step in the right direction from the standpoint

2010-01-25 Bears Rejoice by Chris Maxey of Fortigent

“Some pundits saw fit to blame China for the recent pullback [in US equity markets], as a result of the monetary tightening occurring in that country, but such an accusation is unfounded in our opinio

2010-01-19 G7 Weekly Economic Perspectives: 1/15/10 by Christopher Probyn of State Street Global Advisors

This week’s data were generally disappointing. They were not bad enough to believe that the recovery is in danger, but rather that despite a potential fourth-quarter growth “blip” caused by the invent

2010-01-19 John Cochrane on the Dangers of Current Economic Policies by Dan Richards (Article)

John Cochrane is a professor of finance at the University of Chicago and the incoming president of the American Finance Association. Cochrane is also author of the widely-circulated article, How did Paul Krugman get it so Wrong?. In this interview, Cochrane identifies the shortcomings and dangers of current economic policies.

2010-01-19 A Market for Contrarians by Robert Huebscher (Article)

Along with Steve Leuthold, Rob Arnott, Doug Kass and DoubleLine co-founder Joe Galligan were among the speakers at Fortigent's conference. These three speakers' bearish sentiment extended across a wide range of asset classes, opening lots of possibilities for those who prefer contrarian bets.

2010-01-16 Q1 2010 Newsletter by Bradley Turner of Chess Financial

It is our expectation that the returns of the major assets classes will generally be lower and less correlated in the year ahead. We reach this conclusion based on several factors, the first of which

2010-01-14 Domestic REITs by Team of Litman Gregory

At current valuations, we believe REITs are overvalued. We think REIT investors are anticipating a quick and meaningful rebound in cash flows/dividends. Our dividend growth assumption over the next ye

2010-01-11 One Overvalued Market, Fiscal Drag?, and Other Topics by David A. Rosenberg of Gluskin Sheff

2010-01-06 Construction Lending Activity by Anderson of Foresight Analytics

2009-12-30 10 for 2010 by Nouriel Roubini of RGE Monitor

2009-12-28 I'll Get Back in When the Market Corrects by John Petrides of Advisors Capital Management

2009-12-22 Staggered Return to Global Growth by Paul Kasriel of Northern Trust

2009-12-19 The Age of Deleveraging by John Mauldin of Millennium Wave Advisors

2009-11-24 Gary Shilling's Version of the New Normal by Robert Huebscher (Article)

A dramatic reduction in consumer spending has doomed the US economy to slow growth and deflation, according to Gary Shilling. America's 25-year spree of profligate spending is over, and it will be supplanted by a decade-long retrenchment that will ultimately bring the consumer savings rate from 4% to double-digits, where it has not been since the mid-1980s, he said.

2009-10-06 Green Shoots and Head Fakes in Housing by Robert Huebscher (Article)

The greenest of all green shoots - the recent rise in housing prices - is little more than a mirage, according to Whitney Tilson, founder and CEO of T2 Partners, a New York-based hedge fund and mutual fund manager. "It's likely the news of home price stabilization will turn out to be the mother of all head fakes," Tilson said. He spoke to a group of financial analysts in Boston last week.

2009-09-15 Mohammed El-Erian: We Have Not Reached Escape Velocity by Robert Huebscher (Article)

Kicking off this year's Schwab Impact conference in San Diego, Mohammed El-Erian told an audience of nearly 1,000 advisors on Sunday night that the US financial system has not fully emerged from the financial crisis. El-Erian and his co-presenter, Larry Fink of Blackrock, addressed a range of topics, including the safety of the financial system, the future of regulation, and the outlook for inflation.

2009-09-15 The 'Cash For Clunkers' Economy by Michael Lewitt (Article)

We are once again privileged to offer the latest edition of the HCM Market Letter, edited by Michael Lewitt, titled The 'Cash for Clunkers' Economy. Lewitt examines the drivers behind the current market rally, the health of the banking system and the housing industry, the the future for derivatives regulation. If you enjoy this newsletter, we encourage you to subscribe directly though the link provided with our article.

2009-09-08 Are REITs Now Undervalued? by Geoff Considine, Ph.D. (Article)

The last couple of years have been rough for real estate, but there was a time not too long ago when it seemed that this was a 'special' asset class, with REITs providing valuable diversification benefits and consistently high returns. Do today's low valuations represent an opportunity to buy? Can investors expect a return to low correlations for REITs with the major equity market indexes?

2009-08-17 Will Commercial Real Estate Defer Recovery? by Charles Lieberman of Advisors Capital Management

2009-08-11 At the Risk of Repeating Ourselves by Michael Lewitt (Article)

We have said before that Michael Lewitt's newsletter is a must-read, and this edition is no exception. Lewitt questions whether we are witnessing a summer calm before the storm, comments on the secured and unsecured debt asset classes, and opines on the abuses of unregulated dark pools of capital. We encourage you to subscribe to this valuable publication through the link we provide.

2009-06-02 Jeremy Grantham's Warnings to Investors by Robert Huebscher (Article)

Of the thousands of investment letters penned in the industry, only one draws as much readership as Warren Buffet's annual letter to his shareholders: The quarterly commentary written by Jeremy Grantham. Grantham, the Chairman of the Boston-based investment firm Grantham Mayo Van Otterloo, was a featured speaker at Morningstar's Investor Conference last week, and he spoke at two breakout sessions. Those who, like me, attended both were richly rewarded, as he gave two distinctly different talks, addressing many subjects not covered in his commentaries.

2009-05-26 The Big Issues Facing the Hedge Fund Industry by Robert Huebscher (Article)

Last week, the Argyle Executive Forum hosted its 2009 Hedge Fund Leadership Forum in New York. This event attracted more than 200 leaders from the hedge fund industry, with a series of panel discussions centered on the key issues managers now face. Although the sessions were "off the record," we have summarized the key themes from the discussions.

2009-05-12 Will the Commercial Property Market be the Next to Fail? by Robert Huebscher (Article)

If you've read a headline foretelling the next shoe to drop or domino to fall lately, it was probably about commercial real estate. We speak with two experts on this market and analyze the data to uncover the truth about whether investors should brace themselves for a collapse in commercial real estate.

2009-04-28 Gary Shilling – Economic Forecast and Current Market Opportunities by Robert Huebscher (Article)

Gary Shilling is well-known for his forecasting record, having correctly predicted major economic events over the past several decades. Beginning in 2002, he warned his clients that the housing market "has taken on self-feeding, bubble dimensions that will sooner or later collapse," and continued to sound this warning through 2007, when his predictions came true. Dr. Shilling shares with us his current forecast for the economy and the market.