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2013-05-17 Making the Most of Equity Allocations by Andrew Pyne, Sabrina Callin of PIMCO

We believe slowing global growth and deleveraging are likely to result in lower long-term returns for equities. Traditional approaches to building equity portfolios may not be enough for investors to meet their return goals. We have found three complementary ways investors can enhance equity return potential: fundamental indexes, index-plus strategies and high active share stock selection approaches.

2013-05-17 Weekly Economic Commentary by Team of Northern Trust

Predictions of an American manufacturing renaissance may be premature. Does the Fed have to worry about deflation? The U.S. fiscal deficit is narrowing rapidly.

2013-05-17 Finding Opportunity Far and Near by Frank Holmes of U.S. Global Investors

Would it surprise you to learn that a vast majority of equity valuation models state that stocks should head much higher over the next five years?

2013-05-16 Investors Living in Emerging Markets are a Bullish Bunch! by Mark Mobius of Franklin Templeton Investments

Part of my job involves putting myself out on a limb at times, and I have taken the risk of being subject to contrary (sometimes enthusiastically so) viewpoints. I’ve even been accused of being too optimistic about emerging markets, perhaps partly because my views often represent a stark contrast to dramatic news headlines. So when I took a look at the findings of Franklin Templeton Investments’ 2013 Global Investor Sentiment Survey (GISS),1 I was pleased to discover my longstanding optimism about emerging markets seems to be spreading among investors.

2013-05-16 The Dow Hits All-Time Highs, But The Truth Is It Remains Cheaply Valued by Chuck Carnevale of F.A.S.T. Graphs

The Dow Jones industrial average sits above 15,000, an all-time high. But don’t be fooled, this doesn’t mean that stocks are expensive. I understand that it seems logical to assume that

2013-05-15 Things My Mother Told Me and Some She Didn't by Jerry Wagner of Flexible Plan Investments

Today the phrases I’m most likely to hear are very different. A couple of them are well worth heeding. They’re all well known on Wall Street but they never passed over my mother’s lips.

2013-05-15 Dissecting the Rally: What Sectors Look Attractive? by Russ Koesterich of BlackRock Investment Management

The current rally has been fueled by investors looking for relatively "safe" areas of the market. As such, the classic defensive sectors, such as utilities, consumer staples and healthcare, have been outperforming. This trend may be changing, indicating that sectors such as energy and technology are growing more attractive.

2013-05-15 Is Japan\'s Sun Rising Again? by Kenichi Amaki of Matthews Asia

Japan’s stock market continues to rise while its currency heads in the other direction. Its new leaders, now enjoying high approval ratings, are battling deflation and trying to jump-start its economy with a new determination. This month Kenichi Amaki takes a look at what, if anything, is different this time.

2013-05-15 Yen Weakness: Buffett\'s \"Shot Heard Round the World\'\" by Bill Smead of Smead Capital Management

We returned recently from the Berkshire Hathaway Annual Shareholder Conference. The most exciting and profound comment to us was what Warren Buffett said about the unprecedented actions the last three years by the Federal Reserve Board. Buffett was asked about the risks of the Federal Reserve’s current plan to buy Treasuries to keep interest rates very low.

2013-05-15 How to Take Advantage of the Great (Sector) Rotation by Russ Koesterich of iShares Blog

The real Great Rotation may just be a shift to cyclical sectors from defensive ones rather than a move to bonds from stocks. Russ explains and offers 3 ways to play this rotation.

2013-05-15 Pacific Basin Market Overview by Team of Nomura Asset Management

Pacific Basin equity markets continued to rally in April, led by Japan where the central bank announced that it intends to double the monetary base and inject liquidity into the markets. The MSCI AC Asia Pacific Free Index including Japan gained 4.9% while the MSCI AC Asia Pacific ex Japan Free Index closed 2.6% higher in April. (All performance figures are based on MSCI indices in U.S. dollar terms with dividends included unless otherwise stated.)

2013-05-14 Mohamed El-Erian: The Three-Speed Global Economy by Robert Huebscher (Article)

The global economy is operating at three distinct speeds, according to Mohamed El-Erian, and investors need to understand the implications of the divergent paths that key countries are following. Japan and most European countries are going backward, he said, and could continue in that direction for decades. The U.S. is “healing,” but not quickly enough to get to “escape velocity.” Certain emerging markets, meanwhile, are adapting technology and innovation and are growing rapidly.

2013-05-14 Nassim Taleb on the Anti-Fragile Portfolio and the Benefits of Taking Risks by Ben Huebscher (Article)

As we recover from the most recent financial crisis, how we can we learn from the mistakes to best prepare for the future? Nassim Taleb tackled this very question in his latest book, Antifragile: Things That Gain From Disorder, which built off his previous works and applies the lessons learned to today’s biggest challenges. Taleb examined how small doses of volatility can help systems handle larger disruptors in the future.

2013-05-14 New Normal ... Morphing by Mohamed El-Erian of PIMCO

The New Normal has morphed to include consequential elements of a "stable disequilibrium." In the midst of notable multi-speed dynamics, the global economy as a whole is muddling along a road that will give way over the next three to five years to one of two stark alternatives: either sustainable global growth, institutional and political renewal in the West and safe deleveraging; or growth shortfalls that cause financial instability, fuel greater social tensions, accentuate political dysfunctions and complicate debt traps.

2013-05-13 Skills, Education, and Employment by John Mauldin of Millennium Wave Advisors

It is graduation time, and this morning finds me swimming in a sea of fresh young faces as a young friend graduates, along with a thousand classmates. But to what? I concluded my final formal education efforts in late 1974, in the midst of a stagflationary recession, so it was not the best of times to be looking for work. It turned out that I had a far different future ahead of me than I envisioned then. But I would trade places with any of those kids who graduated today, as my vision of the next 40 years is actually very optimistic.

2013-05-13 Investment Bulletin: Global Equity Strategy by Team of Bedlam Asset Management

Equity markets remained strong and the portfolio continued to outperform well, with a monthly gain of 3.2% vs 0.6% for the index. After two decades of policy torpor, Japan’s government has rapidly adopted a trio of policies to kick start the economy: monetary and fiscal stimulus, plus a weak yen. This is shock and awe’ relative to GDP, being far greater than any experiment in any developed country since the Second World War.

2013-05-13 Americas: Regional Economic Review 1Q 2013 by Team of Thomas White International

Weaker global demand and prices for energy and commodities, as well as softer than expected domestic consumption have restricted the growth outlook for most economies in the Americas region during the first three months of the year. Fewer monthly job additions in the U.S. have dented consumer confidence, and growth for the current year is now forecast to be moderately lower than earlier expectations.

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.

2013-05-10 3 Reasons to Explore the Frontier by Russ Koesterich of iShares Blog

Though frontier markets have outperformed developed and emerging markets so far this year, it’s not too late to explore the frontier. Russ offers three reasons to consider having a small strategic allocation to “pre-emerging” world equities.

2013-05-09 China's Building, but Will They Come? Ghost Cities by Mark Mobius of Franklin Templeton Investments

Some of you may have heard or read about the current state of the real estate market in China, often covered in a sensationalistic way, with talk of “ghost cities” and “bubbles” ready to burst and so forth. These types of reports can cause quite a jolt in the market, which is what we saw happen, probably not coincidentally, after a popular US television newsmagazine aired a somewhat negative report in March. But as I’ve said many times before, there’s often more to a story; important parts can end up on the cutting room floor.

2013-05-09 Equity Market Distortions Create Big Payback Potential by Joseph Paul, Kevin Simms of AllianceBernstein

Even after this year’s equities rally, market imbalances created by the financial crisis in 2008 have not disappeared. When these distortions unwind, we expect deep value stocks to rapidly recover.

2013-05-08 Europe (and Italy's Rivals) Appear on Road to Recovery by Par Rostom of Franklin Templeton Investments

When Europe’s debt disease spread to Cyprus, accompanied by bank runs and public unrest, some doubted the European Central Bank’s (ECB) ability to contain the contagion. And, even more recently, Slovenia turned up sick, warning of escalating debt problems and faltering banks. But with the setbacks have come some surprising steps forward, too, including progress in Italy, which recently formed a new coalition government.

2013-05-08 Germany Under Pressure To Create Money by John Browne of Euro Pacific Capital

Currently, central banks around the world are walking in lock step down a dangerous path of money creation. Led by the Federal Reserve and the Bank of Japan, economic policy is driven by the idea that printed money can be the true basis of growth. The result is an unprecedented global orgy of currency creation. The only holdout to this open ended commitment has been the hard money bias of the German-dominated European Central Bank. However, growing political pressure from around the world, and growing dissatisfaction among domestic voters have shaken, and perhaps cracked, the German resolve.

2013-05-08 US Economy Should be \"Good Enough\" for Stocks by Russ Koesterich of BlackRock Investment Management

The April employment report confirms that the US is on a slow-but-positive course of economic growth. This environment should be conducive to further gains in equity prices. Europe, in contrast, continues to struggle and investors should approach that region with caution.

2013-05-08 6.7 Million “Missing Workers” Where Did They Go? by Gary Halbert of Halbert Wealth Management

Today we will touch several bases. We begin with last Friday’s unemployment report which was hailed by the mainstream media, but had a lot of bad news to go with the good. From there we look at the estimated 6.7 million “missing workers” in this economy and ponder if they’re permanently gone from the employment rolls.

2013-05-07 Mutual Fund Companies Need to Prepare for a Changing Environment Fund Industry Turbulence Ahead by Paul Franchi (Article)

The mutual fund industry grew explosively from the 1980s on a rare tonic of a low-inflation credit expansion powered indirectly by international trade flows. That run reached a peak in 2008 when the application of quantitative easing (QE) served to prevent industry collapse with a softer form of transition, which continues today but must end when inflation returns.

2013-05-07 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Financial markets got the news they wanted last week as Europe cut interest rates, while here at home the Federal Reserve hinted they might do even more when it comes to money printing. To top it off, Friday’s employment report showed improvement from March although the details caused most to discount the excitement.

2013-05-07 Attractive Dividends? Earnings Growth? A Way to Get Both by Team of Lord Abbett

International equities provide broader opportunities for combining appealing divided yields and earnings growth.

2013-05-07 Syria and the Red Line by Bill O'Grady of Confluence Investment Management

On Thursday, April 25, Secretary of Defense Hagel acknowledged that evidence that chemical weapons exposure occurred in Syria was probably accurate. This news dominated the Sunday talk shows, mostly because President Obama had indicated that Syrian military use of chemical weapons would be a “game changer” and a “red line” that would trigger a U.S. and international response. Now that it appears that somehow chemical weapons exposure did occur, the world awaits to see what exactly the president meant by a “response.”

2013-05-06 Dispelling Dollar Doubts by Milton Ezrati of Lord Abbett

Will the U.S. dollar, almighty no longer, be supplanted as the world’s reserve currency? Not anytime soon.

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.

2013-05-03 Job Creation May Be More Robust Than Official Statistics Suggest. by Team of Northern Trust

Job creation may be more robust than official statistics suggest; U.S. employment situation; Central bank meetings

2013-05-02 Gold Recovers Amidst Uncertainty by John Browne of Euro Pacific Capital

The selloff in gold that captured the world’s attention in mid-April has revealed some truths about how the market trades and the sentiments of many of the investors who have piled into the trade over the past few years. While the correction does highlight a higher degree of uncertainty than many of the most ardent gold advocates had anticipated, it does not represent the historic "end of an era" reversal that the many in the media have so gleefully suggested. In many ways, the market has shown a resiliency that its detractors do not understand.

2013-05-02 In Treasuries, the Risks Outweigh the Rewards by Russ Koesterich of BlackRock Investment Management

The 1Q GDP report was mixed, but the lack of income growth remains troubling. Oil prices are likely to remain range-bound, but that should be good enough to help energy stocks. While yields could decline further in the near-term, Treasuries look quite unappealing.

2013-05-01 May 2013 Commentary by Team of Sadoff Investment Management

The slow growing economy will cause the Federal Reserve to stay the course with continued stimulus via low interest rates and Quantitative Easing (QE) for some time. This environment continues to be bullish for stocks.

2013-05-01 Weekly Market Review Notes by Team of Tuttle Tactical Management

he mixed economic numbers we have been seeing lately----higher than expected consumer confidence and home prices vs. lower than expected Chicago PMI---might be confusing to some. One number shows the economy improving while another shows the economy contracting. However, for investors this is actually good news as the data continues to confirm that we are in a Goldilocks economy, not too hot, not too cold.

2013-04-30 Implementing Behavioral Portfolio Management by C. Thomas Howard, PhD (Article)

Behavioral portfolio management is based on the notion that if the advisor can redirect his or her emotions and mitigate the impact of client emotions, it is possible to build superior portfolios by harnessing market emotions. This article describes how this can be done and presents evidence of the superiority of focusing on investor behavior when constructing and managing portfolios.

2013-04-30 The Boston Marathon Bombing by Bill O'Grady of Confluence Investment Management

In this report, given the extensive media coverage of the event, we will not go into much detail on the attack itself except to illustrate points about the origins of the act. We will discuss why we think the Boston Marathon Bombing was the work of grassroots amateurs and what that means for the nation’s security. We will touch on how humans become radicalized and how managing that condition challenges democracies. As always, we will examine the ramifications of this event on the financial and commodity markets.

2013-04-30 Beyond Gold: 4 Reasons to Think Energy by Russ Koesterich of iShares Blog

While the sell-off in gold has dominated headlines lately, another commodity oil has also experienced price declines in recent months. But despite crude’s drop, Russ is still a fan of energy stocks for four reasons.

2013-04-29 High Yield in a Rising Rate Environment by Team of AdvisorShares

We have all witnessed a major move in Treasury rates over the last couple months, causing concern for many that we may be in the early stages of a rising interest rate environment. The traditional thought is that as interest rates rise, bond prices fall. But looking at history, the high yield market has defied this widely held notion. This paper from Peritus Asset Management examines the main reasons why high yield bonds have historically performed well during times of rising interest rates.

2013-04-29 When Rich Valuations Meet Poor Economic Data by John Hussman of Hussman Funds

Given the full set of market conditions that we observe, including the persistent overvalued, overbought, overbullish syndrome that has developed in recent months, our concerns about stocks are not dependent on the direction of the economy over the coming quarters. An economic downturn would simply add immediacy to those concerns.

2013-04-27 The Cashless Society by John Mauldin of Millennium Wave Advisors

A cashless future might be farther off than we either fear or hope. Not only is it farther away than some think, we are actually seeing an increase in the use of cash all over the world (and this is not just a US phenomenon). We will look at some interesting factoids that make for thought-provoking discussions, but when we couple them with research on the rise of the unreported economy (aka the underground economy) and the number of people who get some form of government assistance, we may find problematic consequences resulting from hidden incentives that work in unintended ways.

2013-04-26 The Return of the Asian Tigers: Guinness Atkinson Asset Management Asia Brief by Edmund Harriss, James Weir of Guinness Atkinson Asset Management

Often overlooked by international investors, South East Asia encompasses some of the world’s best performing equity markets in recent years, putting the more established emerging markets in the shade. This performance is backed by good economic results and the favourable demographics of some of these countries, with youthful populations ready to improve productivity and increase consumption. One catalyst for future growth is the Association of Southeast Asian Nations (ASEAN) free trade area, which will bring down trade barriers between the South East Asian nations.

2013-04-26 Asia\'s Reverse Innovation Trend by Beini Zhou of Matthews Asia

In recent years, the rate of acquisitions of local Asian firms by multinational companies has generally increased, particularly in China. This has happened across many industries such as industrials, medical devices and consumer staples. In many cases, if the multinational firms are not acquiring an entire company outright, they are taking a controlling stake, rather than a minority stake as a passive shareholder.

2013-04-26 The Sustainability of U.S. Interest Rates Rising by Paresh Upadhyaya of Pioneer Investments

Investors are growing concerned, with good reason, we think, that yields have bottomed for the 10-year Treasury and will surge as the economy gains strength. Prices, which move inversely to yields, would fall, and the question is whether rising rates in 2013 could trigger a bond bear market along the lines of the Great Bond Bear Market of 1994. We don’t think so.

2013-04-26 The Race of Our Lives by Jeremy Grantham of GMO

Our global economy, reckless in its use of all resources and natural systems, shows many of the indicators of potential failure that brought down so many civilizations before ours. By sheer luck, though, ours has two features that might just save our bacon: declining fertility rates and progress in alternative energy. Our survival might well depend on doing everything we can to encourage their progress. Vested interests, though, defend the status quo effectively and the majority much prefers optimistic propaganda to uncomfortable truth and wishful thinking rather than tough action.

2013-04-26 No Escape by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Global economic growth has weakened, while the US economy hasn’t reached "escape velocity." US stocks have held up relatively well. With few other attractive alternatives, domestic equities appear to be the best house in a rough neighborhood. With the Fed committed to easing, housing improving, and valuations reasonable, the trend should continue. Risks remain and diversification and some hedging strategies are recommended.

2013-04-25 CASSHing-Out by Russ Koesterich of iShares Blog

Russ explains why he’s no longer advocating the concept of investing in certain smaller developed countries known as the CASSH countries.

2013-04-25 Murkier Prospects for Merkel by Milton Ezrati of Lord Abbett

An anxious German electorate may make it harder for the chancellor to continue her pro-cooperation approach to Europe’s fiscal crisis.

2013-04-25 Value Investing and the Philosopher's Stone by Kevin Simms, Joseph Paul of AllianceBernstein

When J.K. Rowling finished her first manuscript of Harry Potter and the Philosopher’s Stone in 1995, she submitted it to 12 publishers, who all rejected the book. In time, those publishers would regret missing the chance to back an unknown author who would later take the world by storm. Like the publishers who passed over Harry Potter, we believe that many investors today risk missing a historic opportunity to invest against the grain in attractively valued stocks across the globe.

2013-04-25 Q1 2013 Market Commentary by John Prichard of Knightsbridge Asset Management

The country now in the news is tiny Cyprus, which received a bailout for its banks from the European Union (EU), but only after agreeing to steep losses for those banks’ large depositors. Hitting up bank deposits represents a new dimension to the European debt crisis and illustrates how in a crisis, leaders can and often will resort to whatever means are necessary. When the Cypriots first requested a bailout from the EU and were told their depositors had to suffer, they balked and said that was unacceptable...

2013-04-24 The 2030 Non-state World by Bill O'Grady of Confluence Investment Management

Several weeks ago we started looking at the alternative world scenarios as projected by the National Intelligence Council (NIC). The NIC issues a long-term strategic outlook every five years and projects a forecast from this analysis for the following 15-20 years. In the most recent report, Global Trends 2030, the NIC proposes four alternative world scenarios. We are now turning to the last projected outlook, the Non-state World. Under this scenario non-state actors aided by emerging technologies will have increasing influence, as the importance of traditional nation-states decays.

2013-04-24 Will Abenomics' Ensure Japan's Revival? by Team of Thomas White International

According to a World Bank (WB) report, global growth in 2013 will remain sluggish as economic recovery in the developed nations is likely to be slow. Lower business and consumer confidence, government spending cuts, as well as high rates of unemployment may delay the recovery, the report says. The report has also noted that developing nations may experience slower growth due to structural and monetary policy challenges.

2013-04-24 An Awesome Gift For Your Kids, Grandkids, or You by Gary Halbert of Halbert Wealth Management

This week, I veer from our usual economic and investment themes to tell you about what I believe is one of the greatest gifts you can ever give your children, grandchildren or others who are dear to you (or maybe even yourself). What I am about to describe is something that has literally changed the lives of dozens of my friends and relatives over the last 30+ years.

2013-04-24 Weekly Market Review Notes by Team of Tuttle Tactical Management

Bulls and Bears continue to fight it out around the S&P 500 record high. There is a lot to worry about at this point----earnings and economic numbers have been somewhat disappointing, terrorism fears are back (Boston Marathon, Canada, fake Twitter posts, etc), and we continue to see a divergence between riskier areas of the market and less risky areas. On the plus side there is still nowhere else to go except for stocks. As we have said before, volatility around an all time high is normal and to be expected.

2013-04-24 What's Behind China's Economic Slowdown? by Weili Huang of Columbia Management

China’s economy grew by 7.7% year over year (yoy) in the first quarter of 2013, against the market expectation of 8.0% yoy and a prior quarter’s 7.9% yoy. Gross domestic product (GDP) expanded 1.6% quarter on quarter (qoq), with an annualized growth rate of 6.6%, a step down from the 2.0% qoq and 8.2% annualized growth seen in 4Q 2012.

2013-04-24 Growth From the Ground up in Iskandar by Mark Mobius of Franklin Templeton Investments

Our emerging markets team isn’t too keen on following crowds. Part and parcel of Templeton’s contrarian approach is traveling to places others aren’t, and thinking about the long-term potential in specific industries and companies that may not be on others’ radar screens. One place we’ve had our eye on for several years now is Iskandar, Malaysia, which has recently been attracting more investor attention. I think it could be viewed as an example of the potential we see in Southeast Asia.

2013-04-24 Indian Milk Helps Quench Thirst for Emerging-Market Growth by Tassos Stassopoulos of AllianceBernstein

Evolving trends in emerging markets are not always driven by macro-economic policies or demographics. Sometimes, something as simple as a fridge can change millions of people’s lives and re-define an entire industry.

2013-04-23 The New Challenges to Reinhart and Rogoff by Robert Huebscher (Article)

Advocates for debt reduction and austerity have had no more authoritative sources than Carmen Reinhart and Ken Rogoff. But last week, these two professors had to defend claims that errors in their research – ranging from a typo in a spreadsheet to the failure to include data from New Zealand – invalidated their much-acclaimed findings.

2013-04-23 Looking Back at Peak Oil: The Coming Crisis in Energy Supplies by Richard E Vodra, JD, CFP® (Article)

Peak Oil – the maximum sustainable rate of global oil production – happened in 2012. That’s one of the main conclusions of a new report, Fossil and Nuclear Fuels – The Supply Outlook, released in March 2013 by the Energy Watch Group. This event will have profound long-term implications for how advisors should manage clients’ portfolios, and how clients should plan their future expenses.

2013-04-23 Enforcing an Office Dress Code by Beverly Flaxington (Article)

Is it too much to ask of my staff members to be dressed well when clients come into our office? I may be old school but the disregard for professionalism is annoying to me.

2013-04-23 Middle East/Africa: Regional Economic Review by Team of Thomas White International

According to a World Bank (WB) report, global growth in 2013 will remain sluggish as economic recovery in the developed nations is likely to be slow. Lower business and consumer confidence, government spending cuts, as well as high rates of unemployment may delay the recovery, the report says. The report has also noted that developing nations may experience slower growth due to structural and monetary policy challenges.

2013-04-23 Ugly Week All Around Bombings, Explosions and Selloffs by John Buckingham of AFAM

It was a miserable week, what with the Boston bombings, lockdown and shootout, the horrific fertilizer plant explosion in Texas and the ricin-laden letters sent to elected officials providing vivid reminders that we still live in a dangerous world. True, the week ended about as well as it could as Friday night’s incredible drama in Watertown brought some closure in Boston and the come-from-behind victory for the Red Sox on Saturday was right out of Hollywooda three-run go-ahead home run after Neil Diamond leads Fenway Park in a rendition of Sweet Caroline!

2013-04-23 The Next Steps For the Euro: What Is Needed to Ensure Its Survival? by Keith Wade of Schroders Investment Management

The near term outlook for the Eurozone remains bleak, with the latest International Monetary Fund (IMF) forecasts showing 2013 as another year of falling output for the region. Better growth is desperately needed and there is a case for more cyclical support through easier monetary policy, but there are also structural obstacles to stronger growth. Unless these are addressed, any pick-up in growth will ultimately flounder. In this Talking Point I look beyond the near term cyclical challenges and consider what the Eurozone needs to do to ensure its long term viability.

2013-04-22 And That\'s the Week That Was by Ron Brounes of Brounes & Associates

The end to another tax season; a hectic week on the earnings calendar; a number of key domestic economic releases; and ongoing developments on the global economic frontand yet, much of the country (and world for that matter) was focused on the events in Boston and the aftermath of the bombing that led to a massive manhunt and a shootout with police. Early in the week, the celebrated Boston Marathon came to an abrupt halt as terror again reigned throughout the country and nearby residents were sent into lockdown mode.

2013-04-22 Emerging Europe: Regional Economic Review by Team of Thomas White International

The European Bank for Reconstruction and Development (EBRD) was established in 1992 to help Russia and former communist states such as Poland, Hungary, and Czech Republic among others in their transition to market-based economies. In its January forecast, the London-headquartered bank sounded optimistic over the economic prospects of most of the countries covered in this review, which also include Turkey.

2013-04-20 Austerity is a Consequence, not a Punishment by John Mauldin of Millennium Wave Advisors

Austerity is a consequence, not a punishment. A country loses access to cheap borrowed money as a consequence of running up too much debt and losing the confidence of lenders that the debt can be repaid. Lenders don’t sit around in clubs and discuss how to “punish” a country by requiring austerity; they simply decide not to lend. Austerity is a result of a country’s trying to entice lenders into believing that the country will change and make an effort to restore confidence.

2013-04-19 Fast Emerging Asia by Taizo Ishida of Matthews Asia

Over the past 20 years, Asia has come a long way to evolve into an asset class in itself. China and India have famously led the way as symbols of emerging nations. But when I think about seeking growth in Asia, I am particularly drawn to the region’s smaller equity markets as attractive hunting grounds for investment opportunities. Asia continues to change at a rapid pace, and this change is not restricted to China’s ever-changing landscape, but to many other areas that may see fewer media headlines.

2013-04-19 Quarterly Review and Outlook by Van Hoisington, Lacy Hunt of Hoisington Investment Management

“The Federal Reserve is printing money”. No statement could be less truthful. The Federal Reserve is not, and has not been, “printing money” as defined as an acceleration in M2 or money supply. A review of post-war economic history would lead to a logical assumption that the money supply would respond upward to this massive infusion of reserves into the banking system. The reality is just the opposite. Printing money? No.

2013-04-19 Global Economic Overview - March 2013 by Team of Thomas White International

Global economic trends turned softer during the month of March as indicators from Europe showed further declines and U.S. consumer sentiment moderated on labor market uncertainties, government spending cuts, and tax increases. Continuing weakness in European demand has somewhat dulled the export outlook for emerging economies, while government policies to prevent excessive asset price inflation have led to concerns about domestic consumption growth in these countries.

2013-04-19 India\'s Gas Sector Dilemma by Siddharth Bhargava of Matthews Asia

In India, the fertilizer sector has long depended on gas as a key input. Over the last decade, several power plants that run on gas have been set up as well. Demand has grown 10% each year since 2002 while supplies, largely managed by state-owned enterprises (SOEs), have failed to keep pace. Inefficient capital allocation, lack of incentives and populist policies aimed at maintaining low prices have led the country to import 25% of its gas needs. This has further exacerbated India’s current account deficit, which now stands at 6.7% of GDP.

2013-04-19 Japan Steps into the Void by Peter Schiff of Euro Pacific Capital

In the years following the global financial crisis, economists and investors have gotten very comfortable with very high, and seemingly persistent, government debt. The nonchalance may be underpinned by the assumption that globally significant countries that can print their own currencies can’t get trapped in a sovereign debt crisis. However, it now appears that Japan is preparing to put this confidence to the ultimate stress test.

2013-04-19 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust

The world’s public debt is much larger than it may appear. The lines have been drawn in the U.S. budget debate. Rates of disability are affecting labor force participation.

2013-04-19 Gold Buyers Get Physical As Coin and Jewelry Sales Surge by Frank Holmes of U.S. Global Investors

Even with the gold price dropping, why are gold coins selling at a premium? It’s Economics 101: The coin supply is limited and the demand is high. This buying trend isn’t only occurring in the U.S. In Bangkok, Thailand, for example, crowds of buyers were filling stores, eagerly waiting in multiple lines to purchase gold jewelry and coins.

2013-04-17 In the Category of Sign Spinners by Blaine Rollins of 361 Capital

If you thought the plunge in Gold prices was tough on those long the precious metal, wait until you see the upcoming hit to the April Non-Farm Payrolls in the category of Sign Spinners...

2013-04-17 What\'s Driving Emerging Markets? by James McDonald, Daniel Phillips, Phillip Grant of Northern Trust

Emerging market (EM) equities have historically outperformed as the global economy gained momentum, as shown in Exhibit 1. After a great catch-up rally in the second half of 2012, the stocks finished the year as global outperformers only to lose that momentum in the first quarter of 2013. What is behind the recent underperformance, and what does it say about the outlook? Our research points to a number of contributors to the recent weakness.

2013-04-17 Emerging Markets Equity Commentary by Team of Thomas White International

Emerging market equities corrected for the second successive month in March, on concerns that continuing weakness in European demand could hurt export growth for several countries in Asia and Latin America. These economies had seen a revival in their export fortunes during the second half of last year as U.S. consumer demand turned healthier. However, the moderation in U.S. consumer sentiment during March has somewhat dulled the optimism.

2013-04-16 Michael Pettis - Can China Save Itself? by Robert Huebscher (Article)

Most analysts predict China’s growth will slow; they disagree only as to the depth and timing of its eventual recession. A rare exception to that group is Michael Pettis. Pettis, who describes himself as a skeptic, believes China can rebalance its economy.

2013-04-16 Will Germany Lead the World’s Energy Revolution? by Michael Edesess (Article)

Germany’s energy plans lie between Scylla and Charybdis: fossil fuel-generated carbon dioxide emissions on the one hand and potentially catastrophic nuclear energy on the other. With strong motivation to avoid both, Germany has been left with only one alternative. The direction of energy policy in the U.S. – and the rest of the world – may rest on whether Germany succeeds in its ambitious plan to embrace renewable sources.

2013-04-16 Gold in the Crosshairs by Peter Schiff of Euro Pacific Capital

In the opening years of the last decade, most mainstream investors sat on the sidelines while "tin hat" goldbugs rode the bull market from below $300 to just over $1,000 per ounce. But following the 2008 financial crisis, when gold held up better than stocks during the decline and made new record highs long before the Dow Jones fully recovered, Wall Street finally sat up and took notice.

2013-04-16 High Yield Market Overview by Team of Nomura Asset Management

The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, was up 1.03% for the month of March, as the high yield market continued to benefit from stable U.S. economic growth and steady asset reflation driven by the Fed and global central banks.

2013-04-16 The Asian Economic Crisis and the IMF by Bill O'Grady of Confluence Investment Management

In May 1997, a speculative run against the Thai baht became the first clear signal that a problem was developing in Asia. Over the next three years, Asia and other emerging markets, including Russia and Brazil, were rocked by a historic financial crisis. These nations recovered strongly in the following eight years and generally made it through the 2007-09 global financial crisis in relatively good shape. However, the impact of the Asian economic crisis remains a major factor in the behavior of these emerging nations.

2013-04-12 Asia\'s E-Commerce Evolution by Michael Oh of Matthews Asia

Korea and Japan have been trailblazers in terms of making the virtual marketplace platform, through which merchants and manufacturers of all sizes can sell goods to consumers, an e-commerce model in Asia. Unlike in the U.S. and Europe, where many retailers sell directly to customers from their own websites and handle the details of commerce themselves, most Asian e-commerce takes place on “megasites” or virtual markets.

2013-04-12 How a Landslide Shifts Copper Supply by Frank Holmes of U.S. Global Investors

The U.S. mining industry was dealt a devastating blow as Kennecott Utah Copper’s Bingham Canyon Mine experienced a pit wall failure causing a massive landslide with rocks and dirt covering the bottom of the mine pit. It’s a miracle no one was hurt due to the vigilance of its owner, Rio Tinto. The landslide is just one example of how quickly and unexpectedly the supply and demand factors facing the red metal can shift, which underscores the need for nimble active management.

2013-04-12 Everyone Wants More Financial Stability, But at What Cost? by Carl Tannenbaum of Northern Trust

For all the good intentions, there is no guarantee that the rush to re-regulate will be successful. The next crisis may look nothing like the one just past, and the political will to take tough preventative steps during good times cannot be taken for granted.

2013-04-12 Soft Patch - Part Four? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Stocks continue to trade at all-time highs, but concerns are rising over a possible pullback and downturn in economic growth. A consolidation of gains is likely, but trying to trade around a pullback can be quite difficult. A potential tapering of Fed asset purchases continues to be discussed, but the Fed also appears nervous over the potential for a spring downturn. Cooler heads appear to be gaining traction in Washington and at least some marginal progress is being made. Economic improvement is gaining traction in Japan, raising hopes of sustainable change, while Europe continues to suffer.

2013-04-11 Bank of Japan Surprises Market and Yen Reacts by Team of Nomura Asset Management

We recently indicated on March 14, 2013 that we believed the Yen would remain range bound near the level of PPP (purchasing power parity), which we estimated to be between 90 to 95 Yen/USD. We wrote at the time that though currency movements will be affected by various factors, the monetary policies of both Japan and the U.S. are the most important.

2013-04-11 Patton, the Pope, and Skylar by Michael Kayes of Willingdon Wealth Management

In the powerful opening scene to the movie, "Patton," the famous general stands before his troops and boldly states, "Americans love a winner, and will not tolerate a loser." It’s hard not to stand a little straighter when you hear a line like that. We do like to think about ourselves as the greatest country in the world. Certainly in economic terms the United States has accomplished more than any other civilization known to man.

2013-04-11 The Bright Lights of Big Oil by Frank Holmes of U.S. Global Investors

Texas has seen incredible changes in oil production because of advancements in shale technology. From one 200-mile view at night, you can easily spot the urban areas of Dallas, Houston, San Antonio and Austin, but the strip just south of the Alamo City and U.S. Global Investors’ headquarters illuminates something else entirely: the bright lights of big oil generated by the Eagle Ford shale formation.

2013-04-10 Surprising Surge!! by Jim Tillar, Steve Wenstrup of Tillar-Wenstrup

Momentum from 2012’s surprisingly strong performance continued into the first quarter of 2013 with stocks rising sharply. Our portfolios did well but lagged behind our benchmarks in the quarter. Taking a little longer view, over the trailing 12 and 36 months we mostly matched the double-digit gains of our benchmarks, which we are very pleased with since we usually underperform during strong market advances. So far this year small- & mid-capitalization, value, and domestic stocks were the market leaders, while international, growth, commodity stocks and Apple were laggards.

2013-04-10 Pacific Basin Market Overview by Team of Nomura Asset Management

Supportive U.S. economic data drove most markets higher during the first quarter of 2013. China underperformed the region amid concerns that the economic recovery may not be as robust as previously expected, while the National People’s Congress in March failed to provide any incentives to the equity market given the absence of pro-growth policies. The MSCI AC Asia Pacific Free Index including Japan gained 5.5% while the MSCI AC Asia Pacific ex Japan Free Index closed 2.0% higher during the quarter.

2013-04-10 Financial Markets Review and Outlook First Quarter 2013 by Team of Managers Investment Group

Risk-based assets rallied sharply during the first quarter on the heels of a fiscal tax-cliff compromise that overhung the market in the latter half of 2012. U.S. equities posted their best quarterly returns since 1998, with both the Dow Jones Industrial Average and S&P 500 Index reaching all-time highs. While the equity market rally extended abroad, returns overseas were muted by a strengthening U.S. Dollar. Bond markets, with the exception of high-yield investments, failed togenerate anything beyond middling returns, as investors’ risk appetites started the year strong.

2013-04-10 Weekly Market Review Notes by Team of Tuttle Tactical Management

The market continues to experience volatility around the new record high. Again, this is to be expected as this is a very psychologically important level so we shouldn’t expect the market to blow through this and never look back. There is still a lot of background "noise" in the markets. Last week’s jobs numbers were disappointing, we have had some weaker economic numbers, Cyprus, etc. None of this looks like it can change the fact that money has nowhere else to go but stocks at this point, but the economic numbers bear watching.

2013-04-09 MLPs: Winning Streak Broken, Growth Story Intact by Sponsored Content from Legg Mason ClearBridge
by Chris Eades, Portfolio Manager (Article)

After an off year clouded by investors’ concerns about future tax policy, ClearBridge’s outlook for MLPs is again brightening. Oil and natural gas production are both ahead of estimates and the resulting infrastructure build-out is continuing.

2013-04-08 The Theology of Inflation by John Mauldin of Millennium Wave Advisors

We begin this week with a simple pop quiz. Is inflation good or bad? Answer quickly. I’m sorry your answer is wrong. Or rather, we can’t know if your answer is right or wrong because we are not sure what is meant by the question. We may think we know and we may be right but we can’t be sure, because the word inflation has different meanings for different people in different places and different times. In fact, even the same people in the same place and time can’t agree on a precise definition.

2013-04-05 Could Consumers Change Japan\'s Tide? by Team of Matthews Asia

This year, investor attention has focused on Japan and its macroeconomic policy with hopes that rising inflation expectations might spur businesses to invest and consumers to spend. Since Prime Minister Shinzo Abe and Japan’s ruling Liberal Democratic Party (LDP) regained power late last year and proposed more aggressive monetary policies, including an ambitious inflation target, the yen has weakened more than 20% against the U.S. dollar and more than 15% against the euro.

2013-04-05 Ask Russ: All About Emerging Markets by Russ Koesterich of iShares Blog

Russ answers more client and reader questions this time about emerging market equities and debt.

2013-04-04 Teachings from Recovered Markets by Richard Michaud of New Frontier Advisors

Domestic indices’ all-time record highs indicate that U.S. domestic equity markets have largely recovered from the 2008 Great Recession. It may have taken four years but it still seems a remarkable achievement given the Dow’s low of 6620 in March 2009. It is worth noting that prior highs were attained in an era with a poor savings rate and wide use of levered strategies. The last four years were widely characterized by a “low return” market mantra and fear of equities stoked by many doomsayers, pundits, and strategists who greeted every upturn with pessimism.

2013-04-03 Spring Economic Commentary by Larry Maddox of Horizon Advisors

The Fiscal Cliff We loudly went over the cliff and received a largely quiet and unexpected market reaction? Risk of rising interest rates After a 30 year period of declining interest rates, caution is in order. Our thoughts on portfolio fixed income positioning. The heightened awareness of uncertainty Despite lingering uncertainty investors should be committed to long term well diversified porftolios.

2013-04-03 F.I.R.S.T.: Made in the U.S.A. by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

Not just the preamble for the “machine-wash-in-cold-water-and-eat-celery-only” instructions on the inside of your skinny jeans, “Made in the U.S.A.” is a brand in vogue these days as the Stars and Stripes looks to dawn a manufacturing renaissance to go with that snazzy new housing recovery everyone’s been talking about.

2013-04-03 Weekly Market Review Notes by Team of Tuttle Tactical Management

After hitting a record close last week the market is showing some warning signs, which is to be expected. You don’t typically break through an important resistance point without testing it and re-testing it so some volatility around a record high is normal. We are also slightly concerned that small and mid cap stocks have drastically underperformed the S&P 500 over the past two days.

2013-04-01 Currency and Emerging Markets: What Can We Expect? by Giordano Lombardo of Pioneer Investments

Currency markets are making headlines again after taking a low profile amid the crises and the turmoil in financial markets of the last five years or so. I asked Greg Saichin, Head of High Yield and Emerging Markets Fixed Income Portfolio Management here at Pioneer, to provide his views about what is going on, and what he sees as the drivers of investment flows into emerging markets.

2013-03-29 China on the Move by Stephen Roach of Project Syndicate

After six years of weighing the options, China is now firmly committed to implementing a new growth strategy. But it will take courage and sheer determination to tackle the biggest obstacle of all deeply entrenched local and provincial power blocs.

2013-03-29 Learnings From the Cyprus Saga by Carl Tannenbaum of Northern Trust

There are important differences between the situation in Cyprus and the challenges other southern European nations face that should limit the transfer of financial trauma. The hope remains that the ECB’s promise to do whatever it takes to solve the sovereign debt crisis will ultimately settle markets. But access to certain types of ECB support requires reaching agreement on restructuring with the same European officials who have handled the situation in Cyprus so maladroitly.

2013-03-29 Market Resilience by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

After a stellar first quarter performance from US stock markets, which showed impressive resilience to continued headwinds, a pullback is certainly possible but we don’t suggest investors who need to add to allocations wait. In a relative world, the US stock market continues to look like an attractive place to invest, although there may also be opportunities in Japan and Europe as well. The upcoming earnings season could tell the story for the market over the next couple of months, but we continue to advocate a long-term point of view and maintaining a diversified portfolio.

2013-03-28 Emerging Markets Investment Bulletin by Team of Bedlam Asset Management

The increases in the portfolio’s net asset value continue easily to beat the hardly exacting returns from the index. The fund has gained 10.4% gross for the year to date (to 22 March), vs. a 3.0% rise for the MSCI Emerging Index. This outperformance (replicated over rolling 1- and 3-year periods) has been achieved by choosing investments irrespective of index country or sector weightings or where they are listed, so long as they derive the majority of income and profits from developing countries.

2013-03-28 2 Factors Keeping a Lid on Interest Rates by Russ Koesterich of iShares Blog

Investors have been expecting interest rates to rise, but with the yield on the 10-year Treasury bond back below 2%, Russ explains two structural factors that are slowing the rate rise.

2013-03-28 Whatever It Takes in Japan? It Takes an 'Audacious' Monetary Policy! by Richard Clarida and Tomoya Masanao of PIMCO

The BOJ will have to make some key monetary policy decisions soon, given Kuroda’s sincere but ambitious desire to achieve 2% inflation within two years. The BOJ has lagged far behind other major central banks in the deployment of its balance sheet since the onset of the financial crisis. Expect Japan’s monetary policy to be more aggressive and experimental as it shifts toward reflating the economy. For global investors, this may mean a modest economic growth contribution from Japan, at least over a cyclical horizon, as well as additional central bank liquidity pouring into global m

2013-03-27 Weekly Market Review Notes by Team of Tuttle Tactical Management

The continuing mess in Cyprus and the S&P 500 nearing a record close dominated the news this week. As I said last week, Cyprus is insignificant, the only important aspects of what is going on is timing. If the crisis hit the news during a time when the market was oversold and due for a rally then it would have little, if any, impact. The fact that that market has rallied this year without much of a selloff gives traders an excuse to use something like this to take profits.

2013-03-27 You Can't Be Serious by John Mauldin of Millennium Wave Advisors

I admit to being surprised by Cyprus. Oh, not the banking crisis or the sovereign debt crisis or the fact that its banks were eight times larger than the country itself or even the fact that the banks were bloated with Greek debt that had been written down. I wrote about all that a long time ago. What surprised me was that all the above was apparently a surprise to European leaders.

2013-03-26 A Cry for Help from Income Investors by Legg Mason Global Income Survey (Article)

Confronted with the stark realities of income investing now, affluent investors all over the world are rethinking their approach, notes Legg Mason’s just-released Global Income Survey. Yet the Survey also found income investors hungry for more knowledge and ideas -- creating opportunities for savvy financial advisors.

2013-03-26 North Korea's Problem by Bill O'Grady of Confluence Investment Management

In December, North Korea launched a satellite into orbit, which was a violation of U.N. resolutions against ballistic missile tests. Last month, it carried out its third nuclear test, which was apparently more successful than the previous two attempts. The U.N., with Chinese approval, approved additional sanctions on the regime.

2013-03-25 Energy: Perilous Present, Promising Future by Milton Ezrati of Lord Abbett

For oil and gas, an era of abundant supplies and lower prices awaits. But investors will have to weather a tricky geopolitical situation before it arrives.

2013-03-22 Is Plan B for Cyprus an Exit from the Euro? by Michelle Gibley of Charles Schwab

Having rejected an initial bailout package that would have imposed a levy on bank deposits, Cyprus now faces some difficult choices in exchange for continued emergency bank funding.

2013-03-22 The Success of Central Bank Policy Is Not Measured By The Revenue It Generates by Team of Northern Trust

The success of central bank policy is not measured by the revenue it generates. Cyprus is a small country that could cast a long shadow. The U.S. dollar’s fortune is changing

2013-03-21 Cyprus as a Pandora’s Box by Scott Minerd of Guggenheim Partners

The attempt to levy a deposit tax on Cypriot accounts has the potential to further destabilize the European Union, with contagion risk elevating for other peripheral member states.

2013-03-20 Weekly Market Review Notes by Team of Tuttle Tactical Management

The banking crisis in Cyprus dominated the news this week as the market sold off 3 days in a row after being up 10 days in a row. The selloff was blamed on what was going on in Cyprus but that was not the real story. Globally Cyprus is pretty insignificant, most people probably don’t even know where it is. The real story is that markets just don’t go up for 10 straight days without needing a breather from time to time, Cyprus was just an excuse to take some profits.

2013-03-20 The Most Important US Economic Number Now by Russ Koesterich of iShares Blog

Wondering about the outlook going forward for the US economy? Russ shares the economic number that may give you a clue.

2013-03-19 Putting GMO’s Ideas to Work: Protected Leveraged Investing by Geoff Considine (Article)

Fears of market overvaluation lead many advisors to seek to protect against downside movements while retaining as much upside potential as possible. Recent research from GMO illustrates a low-cost way to accomplish this: decreasing equity exposure and concentrating that allocation in high-beta securities.

2013-03-19 Rising Political Risk and Ongoing Economic Weakness Challenge a Difficult Journey to Recovery by Andrew Balls of PIMCO

Looking ahead, it will continue to be a very bumpy journey as we anticipate economic contraction in the eurozone by -0.75% to -1.25% over the next year, hampered by growing political risk and fiscal tightening. Although we expect the pace of contraction in the eurozone to diminish over 2013, the duration of the recession is likely to be longer than consensus forecasts.

2013-03-19 Why Are Emerging Markets Struggling in 2013? by Ryan Davis of Fortigent

Despite one of the sharpest rallies in US equities in recent memory, emerging market equities have been left curiously behind in 2013. Through last Friday, the market segment was down 1.0%, compared to an S&P 500 index that was up 10.0%. This seems to violate the regime that investors have gotten used to over the past 10 years, whereby the emerging markets equity index served as a high beta proxy for the US equity market.

2013-03-18 Outlook for the Yen by Team of Nomura Asset Management

For several quarters ahead, we estimate that the Yen will remain range bound near the level of PPP (purchasing power parity), which is estimated to be between 90 to 95 Yen/USD. Though currency movements will be affected by various factors, we think the monetary policies of both Japan and the U.S. are the most important.

2013-03-18 Investment, Speculation, Valuation, and Tinker Bell by John Hussman of Hussman Funds

The most important questions investors should be asking are these: what do they know that can be demonstrated to be true; and what do they believe that can be demonstrated to be untrue. It is best to make these distinctions deliberately, lest the financial markets clarify these distinctions for investors later, against investors’ will, and at great cost.

2013-03-15 Emerging Markets Equity Commentary by Team of Thomas White International

Emerging market equities saw a moderate correction in February, broadly similar to the rest of the world. Prices reacted negatively to renewed concerns of a worsening European fiscal crisis as the results of the recent Italian elections turned out to be inconclusive.

2013-03-15 What’s Next, Mr. Finance Minister? by Sudarshan Murthy of Matthews Asia

Every February, India’s federal government releases its annual budget to outline revenues and spending plans. In the years following India’s independence in 1947, when government-owned enterprises dominated the economy, the budget was of utmost importance to market watchers. With the country’s economic liberalization in the early 1990s, the significance of this annual budget process diminished somewhat. However it is still meaningful, and this year’s budget exceeded US$300 billion in expenditures.

2013-03-15 High Yield Market Overview by Team of Nomura Asset Management

The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 0.46% in February, as the high yield market finished on a positive note, after experiencing heightened volatility throughout the month.

2013-03-15 China\’s Next Stop by Frank Holmes of U.S. Global Investors

Would it surprise you to discover that China is planning to add 800 miles to its subway system over the next two years? That’s the distance equivalent to building a network from Dallas to Chicago in less time than the U.S. Congress can resolve a budget!

2013-03-15 Finally!! Now What? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Surprise! We don’t know what’s going to happen in stocks over the next few weeks. But we are seeing an environment that we believe can foster further gains in the US as economic data remains generally positive, the Fed maintains its accommodative stance, and small progress is being made in the fiscal realm. Investors concerned about a pullback may want to hedge their portfolios, but maintain adequate exposure to equities.

2013-03-14 Weekly Market Review Notes by Team of Tuttle Tactical Management

The Dow continues to make new highs but the rate of climb has slowed considerably this week. This is normal as markets have to take a breather after large moves.

2013-03-14 Newsletter by Harold Evensky of Evensky & Katz

In the latest edition of his client newsletter, Harold Evensky highlights a number of interesting bits of news, including a must-see destination for your friends, your kids and your grandkids, some advice from Warren Buffett, a tip from Albert Einstein and the latest data on hedge fund performance.

2013-03-14 DC Plan Sponsors: Now's the Time to Get More From Bonds by Stacy Schaus of PIMCO

Long on equities and light on bonds, today’s DC plan lineups may expose participants to extreme market risks. Plan sponsors could potentially improve retirement outcomes by trimming choices for stocks and considering additional options for bonds. The inclusion of active fixed income strategies with global exposure or additional income opportunities could help participants reach their retirement goals.

2013-03-14 Tightening the Noose: Can the SEC and Its New Chairman Be Tougher on Wall Street? by Team of Knowledge @ Wharton

Although the SEC has always been the federal government’s chief guardian of integrity in the financial markets, critics have a long list of grievances, including claims that the agency is too unsophisticated and too soft on wrongdoers. Assuming she is confirmed as the new SEC chairman, Mary Jo White will need almost superhuman skills to make the SEC more effective. Can she -- or anyone, for that matter -- accomplish this?

2013-03-14 Global Currency Battles: A Waiting Disaster or a Win for All? by Team of Knowledge @ Wharton

To many, Japan’s recent moves to devalue the yen looked like the spark that could ignite a global currency war -- a series of competitive devaluations that, last century, helped plunge the world into the Great Depression. Until now, central bankers have been resisting the urge to politicize exchange rates. However, while currency skirmishes can be dangerous and require monitoring, they are also necessary for establishing equilibrium in markets and will help in the global economic recovery, some experts say.

2013-03-14 3 Reasons It's Not Too Late to Consider Emerging Market Bonds by Russ Koesterich of iShares Blog

After the recent rally in emerging market bonds, is it too late to allocate to this asset class? Not for long-term investors, says Russ and he offers 3 reasons why.

2013-03-13 Argentina on Sale by John Mauldin of Millennium Wave Advisors

(From Cafayate, Argentina) There are some who worry whether the path that Argentina has taken to monetary ruin on multiple occasions (and that it seems intent on taking again) is one that the US may also find itself on. That worry has crossed my mind a few times, I must confess. Today we will look at Argentina more in depth. From a monetary perspective, it deserves attention. And once again there will be opportunity.

2013-03-12 Pacific Basin Market Overview February 2013 by Team of Nomura Asset Management

Monthly returns for February 2013 were somewhat mixed, but the Pacific Basin regional markets generally ended in positive territory this month. Outside of Asia, political instability in Italy and concerns that the Federal Reserve might begin to scale back its monetary stimulus in the U.S. led to weaker investor sentiment. Economic data from China was weak, largely due to the effect of the Chinese New Year.

2013-03-12 U.S. Dominates World Markets for the Trifecta by Douglas Cote of ING Investment Management

While large-cap indices get all the headlines, mid and small caps have continued to excel. Frontier markets have picked up the slack as major emerging markets stumble. Global risks persist, though U.S. fundamentals appear solid. The move toward U.S. energy independence should soon result in a trade surplus, boosting GDP.

2013-03-12 The 2030 Increasing Inequality Scenario by Bill O'Grady, Kaisa Stucke of Confluence Investment Management

Last month we started looking at the 2030 alternative world development scenarios as laid out by the National Intelligence Council (NIC). The NIC forecasts the likely paths that are either currently underway or are forecast to occur in the future. In its most recent report, the NIC projects four possible global political and economic states based on expected trends. Last time, we presented the most likely best case scenario. This week, we will explore the third scenario, under which the world gets wealthier as a whole, but inequalities increase.

2013-03-12 After Last Week's US Rally: Proceed with Caution by Russ Koesterich of iShares Blog

While last week's rally was supported by better-than-expected economic data and improving investor sentiment, the magnitude of US stocks' advance is starting to cause some indicators to flash yellow. Russ explains.

2013-03-11 Italy: Welcome to the Bungle by Milton Ezrati of Lord Abbett

Results of the recent election increase the likelihood of a eurozone breakupand disruptions to financial markets.

2013-03-08 The Hustle of Hong Kong by Colin Dishington of Matthews Asia

The strength of the retail environment in Hong Kong has been well documented, but the scale of shopping malls sprawling through large parts of the city is somewhat staggering. In the more central districts, product offerings tend to cater to the high-end crowd with luxury international brands apparent on every street corner.

2013-03-08 Spasmodic Stupidity: The Wile E. Coyote Congress by Cliff Draughn of Excelsia Investment Advisors

I predict the Ides of March will find us in a continued sequestration, and Congress will use the time between now and the debt ceiling deadline on March 27th to debate the merits of true tax reform as opposed to governing by crisis. In the end, though, the reform conversation will revert to governance by crisis, with another stop-gap measure to avoid government shutdown during Holy Week and Easter, which will tide us over to the elections of 2014. Do you expect any different?

2013-03-08 Labor Policy Needs to Help, Not Hinder Employment. by Team of Northern Trust

Labor policy needs to help, not hinder employment. The U.S. employment report surprised on the upside. Watch the shadows behind China's official credit measures

2013-03-08 How to Keep Calm and Invest On by Frank Holmes of U.S. Global Investors

The market noise of today will not be going away. However, investors can gain confidence in the following wisdom of the crowd. As famous investor Benjamin Graham said, "The individual investor should act consistently as an investor and not as a speculator. Keep calm and invest on.

2013-03-07 Weekly Market Review Notes by Team of Tuttle Tactical Management

Yesterday saw a new record close on the Dow Jones Industrial Average and a renewal of the panic buying we saw earlier in the year. While it is great to see that the Dow has retraced all of the losses from the 2008 decline I am concerned about what message will be directed towards individual investors. The asset allocation/buy and hold crowd will use this milestone to "prove" that markets always come back so that their approach is still valid. This is true, but it ignores the fact that it took the market almost 6 years to come back and the lost opportunity cost associated with that.

2013-03-07 Gentlemen, Start Your Presses by John Browne of Euro Pacific Capital

In his Congressional testimony last week in Washington, Fed Chairman Ben Bernanke took time to downplay the significance of the few dissenting voices on the Fed's Open Market Committee (FOMC). Those statements, combined with an even more dovish statement by Fed Vice Chairman Janet Yellen earlier this week, clearly reaffirm the Fed's indefinite commitment to $85 billion of monthly quantitative easing.

2013-03-07 Guanxi, Mianzi, and Business: The Impact of Culture on Corporate Governance in China by David Smith of Aberdeen Asset Management

There are two key cultural and sociological issues of particular importance when evaluating Chinese companies: guanxi (relationships and networks) and mianzi (face). When analyzing the potential of a Chinese company, it's important to understand how guanzi and mianzi affect transactions, board composition and deliberations, and shareholder engagement, among other issues.

2013-03-07 US Manufacturing Restores Competitive Vigor by Joseph Carson of AllianceBernstein

The US manufacturing sector has repeatedly figured out how to reinvent itself when faced with competitive threats. In recent years, American companies have become much leaner, regaining an edge in global markets that should lead to a bigger role in economic growth.

2013-03-06 U.S. Sequester: How Significant is it for the Global Economy? by Team of Thomas White International

Since the U.S. has been one of the brightest spots in the current global economic environment, any negative development that restricts activity in the U.S. could have a magnified impact on the economic prospects for the rest of the world.

2013-03-05 What Economists can Learn from Downton Abbey by Robert Huebscher (Article)

Economists warn that the U.S. economy could be heading toward one of two catastrophes: the two-decade long stagnation that has befallen Japan, or the hyperinflation that struck Zimbabwe and the Weimar Republic. Such cautionary tales alert policymakers to the failed efforts of their predecessors. But the most relevant comparison is rarely cited – to Great Britain in the 1920s, as depicted in the highly popular PBS series Downton Abbey.

2013-03-05 Selecting Truly Active Equity Funds by C. Thomas Howard, PhD (Article)

In a recent Advisor Perspectives article, Joe Tomlinson reported evidence showing that 401(k) plan sponsors add value in selecting funds, but their risk-adjusted alpha is not enough to beat a comparable index portfolio. Tomlinson then pointed out the need for additional research to help advisors improve upon the fund selection process. As a step in this direction, I will report on research conducted by my firm and other academics.

2013-03-05 Is Now the Time to Diversify? by Chris Maxey, Ryan Davis of Fortigent

The use of global diversification in constructing client portfolios has come under fire in recent years due to the underperformance of many risk assets. Traditionalists who stuck to their familiar S&P 500 and BarCap Aggregate Bond index blends generally outperformed their diversified peers in 2011 and 2012, as historic risk premiums failed to materialize and various alternative investment strategies faced headwinds.

2013-03-05 Reflections on Sequester by Bill O'Grady of Confluence Investment Management

Over the past several weeks, the notion of sequester, a plan of across the board spending cuts, has been dominating the news. The sequester was a program designed to never go into effect. In the dark days of 2011, when the debt ceiling debate threatened to cause the U.S. to default on its debt, the administration and the House GOP made a deal. In return for a higher debt ceiling, one high enough to ensure that it would not be hit before the 2012 presidential elections, a commission was tasked to make significant cuts to fiscal spending.

2013-03-05 The Magic of Compound Interest by Jeffrey Saut of Raymond James

When compound interest works in your favor, it is a blessing. When it works against you, it's a curse! That is a "Jeffreism" I learned the hard way back in the bear market of the early 1970s when I was working for a $100 per week in this business and consequently had my credit cards levered to the "max." The interest rate at the time was 18%.

2013-03-01 Is It Time to Get Back into Stocksor Too Late? by Seth Masters of AllianceBernstein

After five years of fleeing stocks for the perceived safety of bonds, US mutual fund investors became net buyers of stock funds in January. While some see the return of the retail investor as a negative indicator for stocks, we say, "Better late than never."

2013-03-01 3 Reasons Market Volatility Has Returned by Russ Koesterich of iShares Blog

In the last week, stocks have pulled back and volatility has once again spiked. Russ outlines the 3 factors that hindered the rally and explains the implications for investors.

2013-03-01 Critical Juncture? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Headwinds have reemerged and investor concern is heightened yet again. We still believe stocks can run further, but a pullback is more likely in the near-term. The sequestration is now in affect but that doesn't necessarily mean it's here to stay and more budget fights loom, particularly in advance of the potential government shutdown on March 27. Meanwhile, some members of the Fed are in favor of scaling back its quantitative easing (QE) program, rattling markets a bit.

2013-03-01 Greetings from Istanbul! by Frank Holmes of U.S. Global Investors

As I travel around Turkey, I am reminded how vital good government policies are to the health of a nation. Following a decade of fiscally responsible actions, Turkey is the picture of a growing prosperity. Perhaps Americas elected officials could take a tip from this vibrant country overseas.

2013-02-28 What Italy's Election Result May Mean for the Markets and Your Investment Portfolio? by Team of Thomas White International

Global equity and bond markets have reacted sharply to the outcome of Italy's elections on February 24-25. The poll result is inconclusive, with no clear winner. And apparently, Italians have voted against the austerity measures and reforms that are widely believed to have improved international confidence in Italy last year.

2013-02-28 Jeremy Siegel on Why Stocks Are -- and Will Remain -- the Best Bet by Team of Knowledge @ Wharton

Though stock market volatility continues to rattle investors' nerves, the future looks bright for equities in the U.S. and many emerging markets, according to Wharton finance professor Jeremy Siegel. That's not so for bonds, which could become money-losing investments as rising interest rates drive bond prices down. In an interview with Knowledge@Wharton, Siegel says that investors should think about reducing their bond holdings, buying more stocks and keeping just enough cash for a rainy day and other liquidity needs, since interest rates on cash are near zero.

2013-02-27 The Difficult Transition to Democracy by Bill O'Grady of Confluence Investment Management

The Arab Spring has turned into something of a disappointment. In Tunisia, the recent assassination of Shokri Belaid, a secularist opposition leader, has increased tensions. S&P recently downgraded the countrys sovereign risk due to rising political turmoil. In Egypt, protests have returned, this time against the Muslim Brotherhood-led government. Yemen remains in chaos. Syria is essentially in a civil war. Unrest continues in Bahrain but the minority Sunni leadership remains entrenched, mostly due to military support from Saudi Arabia.

2013-02-27 Weekly Market Review Notes by Team of Tuttle Tactical Management

For a while it was obvious that the market had become overbought and was due for a selloff, all traders needed was an excuse, this past week they got two of them. First, the Fed hinted that QE might end and then Italian elections sparked uncertainty in Europe. Add those things in with the looming sequester and you have all the ingredients for a profit taking selloff. At this point this is all part of normal market machinations. The market doesn't go up in a straight line and it doesn't go down in a straight line.

2013-02-26 Five Ways to Improve Your Investing Decision Making by Robert Huebscher (Article)

Successful investing requires a contrarian mindset; anything else is, at best, a recipe for mediocrity. This is especially true for an investment committee, the core of an advisory firm's decision-making process. Five prominent advisors – Harold Evensky, John Hill, Steve Cassaday, Steve Kaye and Berk Nowak – are embracing unconventional approaches to ensure that their investment committees operate in the most effective ways possible.

2013-02-26 Global Investment Review First Quarter 2013 by Team of Bedlam Asset Management

At the beginning of last year the prospects for capital markets were grim yet the results surprisingly good: positive returns and modest economic growth. The cause was central banks in developed countries acting as a backstop for sovereign and other large debts, through direct purchasing funded by accelerated money printing. This also ensured low interest rates. Subsequently, mountainous debt problems are slowly being tackled, even as they appear to increase.

2013-02-26 Looking For A Reason To Sell-Off by Christian W. Thwaites of Sentinel Investments

Markets were looking for a reason to correct. Risk assets had outpaced themselves since mid November and in the first seven weeks the S&P[1] had outperformed the US Treasury 10-year note by 12% and the 30-year bond by 15%. The markets will lumber through the sequester and face the next test on the debt ceiling and first quarter results. Below the surface, the outlook is mildly optimistic. Why the qualifier? Because everything, in Europe, US and Japan, must be set in the context of the asset deflation and deleveraging going on and that will go on for some years.

2013-02-22 Emerging Markets Outlook: Will Emerging Markets Continue Their Run in 2013? by Scott Klimo of Saturna Capital

A number of times we have been asked whether emerging markets will continue their run in 2013. Our response typically begins with the following clarification: "Emerging markets" may be a handy way to refer to the countries that constitute a generally recognized asset class, but this group is far from monolithic. Widely differing levels of development, economic drivers, opportunities to invest, and returns exist under the emerging markets umbrella. For this reason it's not entirely correct to imply that "emerging markets" had a run in 2012.

2013-02-22 Frontier Markets: Today's Models of Fiscal Prudence by Paul Herber of Forward Management

Say you are evaluating the markets of two countries in a search for investment growth opportunities. One country's sovereign debt is 120% of its gross domestic product (GDP), while the other has outstanding sovereign debt that represents only 11% of its GDP. Saddled with sovereign debt, the first country faces painful fiscal austerity measures, inflationary ones, or bothany of which will no doubt stifle economic growth.

2013-02-22 Central Banks Are Factoring Financial Stability into Their Decision Making by Team of Northern Trust

Central banks are factoring financial stability into their decision making. The FOMC is taking a critical look at its asset purchase strategy. Don't look now, but the sequester is coming.

2013-02-22 Is it Time to Review Your European Investment Strategy? by Team of Thomas White International

A sharp equity and bond market reaction is likely expected in response to the outcome of Italy's February 24-25 general elections, several media sources such as THE GLOBE AND MAIL have reported. While the poll result is uncertain, these reports indicate that in the event of a clear victory for Silvio Berlusconi's political party, buying interest in equities and lower-quality debt may be affected.

2013-02-22 The 4 New Defensive Strategies by Russ Koesterich of iShares Blog

Waiting for a market correction? Wondering how to potentially protect your gains? Forget merely opting for traditional defensive sectors. Instead, consider Russ' four suggestions.

2013-02-21 Tapping China's Growth via Dividends by Yu Zhang of Matthews Asia

When the long-term historical performance of global equity markets is considered, investors can see that the contribution of dividends to total return is significant. In this regard, China has been no exception. Between 1999 and 2012, 46% of the total return of the MSCI China Index was derived from dividends received and reinvested. This month, Yu Zhang, CFA, explores the ways in which a dividend-investing approach can be an effective investment strategy in China.

2013-02-20 Event Driven Investors Receive Their Wish by Chris Maxey, Ryan Davis of Fortigent

For several years, investors have wondered why M&A activity has been so benign.Corporate management teams cited uncertainty about the economic outlook as a primary reason for the depressed activity.With the latest round of tax increases and revenue cuts determined, companies finally appear willing to free their animal spirits and embark on the path of acquisition.

2013-02-20 The 2030 Most Likely Best Case Scenario by Bill O'Grady Kaisa Stucke of Confluence Investment Management

Two weeks ago we started looking at the 2030 alternative world development scenarios as laid out by the National Intelligence Council (NIC). The NIC forecasts the likely paths that are either currently underway or are forecast to occur in the future. In its most recent report, the NIC projects four possible global political and economic states based on these expected trends. Last time, we presented the most likely worst case scenario. This week, we will explore the most likely best case scenario.

2013-02-20 Weekly Market Review Notes by Team of Tuttle Tactical Management

Markets continued to move up this week in spite of looming Fiscal Cliff budget cuts. Everyone still expects a selloff but money continues to flow into the market as it has nowhere else to go.

2013-02-20 Two New Country Views for a Two-Speed Global Economy by Russ Koesterich of iShares Blog

The global economy is stuck in a two-speed regime: Developed markets like Europe, Japan and the United States are stalling, while China is re-accelerating. Russ explains what this divergent growth landscape means for his country outlooks.

2013-02-19 Alan Greenspan on the Market and the Global Economy by Adam Jared Apt (Article)

During his six-decade-long career in financial services, Alan Greenspan was a central figure in seminal events that drove investment markets, from the savings-and-loan crisis to the dot-com bubble to the housing crisis. Now, nearing 87, he rarely speaks in public. But he did so last week, offering his forecasts for the U.S. and European economies.

2013-02-19 The Siren's Song of the Unfinished Half-Cycle by John Hussman of Hussman Funds

If there is one fatal siren's song of investing, it is the belief that an unfinished half of the market cycle will remain unfinished.

2013-02-19 Too Great Expectations by Richard Golod of Invesco

Global investors entered the year with newfound enthusiasm. Across the board, global equities traded higher in January, and retail money flows into global equities were the best in 17 years. Media reports about a "Great Rotation" from fixed income into equities are raising expectations about the possibility of a new secular bull market. However, I believe a little perspective is in order.

2013-02-19 On Competitive Devaluations by Scott Brown of Raymond James

Aggressive monetary policy moves in recent years have been accompanied by a growing fear of a currency war. In a currency war, or competitive devaluation, countries attempt to weaken their currencies to boost exports, but each devaluation leads to counter devaluations. That's not what's going on now. However, whether a country is purposely devaluing its currency or is merely pursuing accommodative monetary policy is irrelevant, the consequences are the same. The recent meeting of G-20 finance ministers and central bankers highlights the lack of coherent policies to boost growth.

2013-02-16 Seeing the Forest by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Equity markets continue to be resilient and investor confidence is elevated in various sentiment indices, suggesting a near-term pullback is possible. But there are longer-term trends developing that give us hope that the US economy's expansion and market's rally are sustainable. Federal spending cuts via the "sequestration" appear sure to happen, but there will continue to be debates about the nature and size of the cuts. Similarly, questions are increasing as to the potential unwinding of current Fed policy with regard to timing and rapidity.

2013-02-16 Euro Relief: The Epic Fail That Wasnt by Team of Franklin Templeton

What a difference a year makes! Early in 2012, the eurozone appeared to be on life support and market prognosticators were busy weighing the odds of a breakup. At the time, the proposition that European stocks would actually post a positive performance for the year seemed almost absurd, but of course thats just the sort of fertile environment value-hunters such as Philippe Brugere-Trelat like. Brugere-Trelat found select opportunities in Europe that were ripe for the picking. While the debt crisis in Europe is far from over, he thinks the picture looks brighter for Europe this year.

2013-02-16 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust

The recent energy dividend is not likely to last. Crafting a single monetary policy for Europe is challenging.

2013-02-15 High Yield Market Overview January 2013 by Team of Nomura Asset Management

The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 1.38% in January, as the high yield market continued to rally into the new year.

2013-02-15 International Equity Commentary January 2013 by Team of Thomas White International

International equity prices sustained the uptrend in January, helped by data releases that supported the growing optimism over healthier global economic growth. Though the U.S. and U.K. economies declined unexpectedly during the fourth quarter of last year, the pace of growth improved in several Asian countries, including China, during the period.

2013-02-15 Hyperinflations, Hysteria, and False Memories by James Montier of GMO

In the past, Ive admitted to macroeconomics being one of my dark, guilty pleasures. To some value investors this seems like heresy, as Marty Whitman1 once wrote, Graham and Dodd view macro factors...as crucial to the analysis of a corporate security. Value investors, however, believe that macro factors are irrelevant. I am clearly a Graham and Doddite on this measure (and most others as well).

2013-02-14 Pacific Basin Market Overview January 2013 by Team of Nomura Asset Management

Improving expectations for global economic growth underpinned a solid start to 2013 for the Asia Pacific equity markets. In Asia, interest focused on China, as economic data showed further signs of recovery. On the other hand, the depreciating Japanese yen drew concerns that Asia's main exporters, which include Korea and Taiwan, will become relatively less competitive. The MSCI AC Asia Pacific Free Index including Japan gained 3.0% while the MSCI AC Asia Pacific ex Japan Free Index closed 2.6% higher during the month.

2013-02-14 How Not to Run a Pension by John Mauldin of Millennium Wave Advisors

For all the focus on the unfunded liabilities of Social Security and Medicare, there is another unfunded crisis brewing, and this one is in your own back yard. It's coming to you even if you live outside of the US; it just might take a little longer to get there. I wrote ten years ago that state and local pension funds might be underfunded by as much as $2 trillion. It turns out that I was being overly optimistic. New government research suggests that the figure might be as high as $3 trillion. But what if you take into account that retirees are living longer?

2013-02-13 Weekly Market Review Notes by Team of Tuttle Tactical Management

After a decent selloff earlier in the month the market has continued to move up, but in very small increments. Most people seem convinced that we are due for another selloff, which seems to be tempering upside enthusiasm. On the other hand, there also doesn't seem to be any enthusiasm to sell.

2013-02-12 Iran's Blues by Bill O'Grady of Confluence Investment Management

When the last U.S. troops officially left Iraq on December 17, 2011, it seemed Iran was the big winner. Iraq was being ruled by a Shiite coalition. Its military was weak and no longer a threat to Iran. Along with its ally in Syria and its proxy Hezbollah in Lebanon, there was growing talk of a "Shiite Arc" that ran from Iran to the Mediterranean Sea. Although Western sanctions were in place, Iran had become adept in working around them.

2013-02-12 Fixed-Income Insights: When High Yield Loses Some Height by Zane Brown of Lord Abbett

If one sought an indication of how monetary policy and historically low interest rates can influence investor behavior, the high-yield bond market could provide some perspective. In 2012, investors' ongoing demand for income was reflected by the high-yield market's 15.6% return, the $32 billion that flowed into the asset class, andas several headlines pronouncedthe market's record-low yields of less than 6%.

2013-02-12 Don't Just Do Something, Sit There. by Jeffrey Saut of Raymond James

"Don't Just Do Something, Sit There" is the title of a book written by Sylvia Boorstein. I was reminded of the title when I received the following email from a financial advisor at another firm last week...

2013-02-11 Solving the Profitability Puzzle by Vadim Zlotnikov of AllianceBernstein

Companies around the world enjoyed especially high profit margins in late 2012. But can this trend be maintained or is profitability poised for a collapse that might threaten stocks this year?

2013-02-11 Shall We Dance? by John Hussman of Hussman Funds

My impression is that the worst investment outcomes have typically followed appeals to the idea that "this time is different," and "you've got to dance as long as the music is playing."

2013-02-11 When to Worry About Inflation by Russ Koesterich of iShares Blog

Though the Fed continues to flood the US economy with money, Russ explains why inflation isn't likely to be a problem until 2014 and what investors can do in the meantime to prepare.

2013-02-08 World War C: Neosho Capital On The Currency War by Chris Richey of Neosho Capital

This summer, Brad Pitt will star in a new film called "World War Z", an action-horror film about a post-zombie apocalypse Earth, hence the "Z" in the title. Zombie films are not our cup of tea at Neosho (we thought the genre was dead), so it is debatable whether we will see this film, but one thing is clear to us, we are perched on the precipice of "World War C", where "C" stands for "currency".

2013-02-08 A More Savvy Insurance Market by Tarik Jaleel of Matthews Asia

During my last visit to Hong Kong, I attended a conference to discuss various opportunities in financial services along with industry experts and executives from both Asian and global institutions. The key theme that emerged from the event was how Asia is typically viewed as the world's primary growth market in this important sector, particularly given the slowdown in Europe and the regulatory environment in the U.S.

2013-02-08 Out With the Dragon In With the Snake by Frank Holmes of U.S. Global Investors

Over 2013, we expect the Chinese government to continue its accommodative efforts, which should reinforce the equity rally. In addition, the new pyramid of power is focused on growth, as it seeks to improve and reform policies that will provide its residents with opportunities and social security, increase incomes and raise standards of living, which should encourage domestic consumption. Growth is set to be considerable over the next several years.

2013-02-07 U.S. Companies Sense Great Opportunities in Shale Oil and Gas Boom by Team of Thomas White International

Thanks to the newfound sources of energy, the U.S. is forecasted to become self-sufficient in energy by 2035.

2013-02-07 From QE to Queasy: Fiscal Policy and the Risk of Inflation by Jason Hsu of Research Affiliates

Quantitative easing does not directly cause inflation. Rather, by enabling the government to issue low-cost debt, it fosters undisciplined spending, says Jason Hsu, CIO of Research Affiliates, LLC in this commentary. This spending, in turn, generates inflation, transferring wealth from future taxpayers to the current generation. Hsu argues that Americans are more likely to follow the European model of insufficient saving than to imitate the Japanese practices of private sector belt-tightening, high savings rates, and international lending.

2013-02-06 GDP Report Tanks - Is A Recession Looming? by Gary Halbert of Halbert Wealth Management

We will cover a lot of ground today. We begin with a new report from Goldman Sachs which argues that the US economy will remain the strongest in the world for many more years. The report rebuts claims that America is a nation in decline. Quite the contrary, say Goldman analysts who claim that there is a growing"awarenessof the key economic, institutional, human capital and geopolitical advantages the U.S. enjoys over other economies."

2013-02-06 Market Commentary by Matthew Tuttle of Tuttle Tactical Management

The long awaited sell off finally came this week as the market suffered its worst day since November. The decline seems to have somewhat solved the overbought situation as the market rallied back the next day.

2013-02-05 Letters to the Editor by Various (Article)

A reader responds to Joe Tomlinson's article, Predicting Asset Class Returns: Recommendations for Financial Planners, which appeared last week, and another reader responds to Dan Richards' articles.

2013-02-05 In Uncertain Environment, Jobs Grow Tepidly by Chris Maxey, Ryan Davis of Fortigent

For the 35th consecutive month, private payrolls registered positive growth. It was hardly the robust report economists would prefer, but the labor market continues to mend. However, there are still plenty of reasons to be concerned, especially with sequestration on the horizon.

2013-02-05 The 2030 Outlook by Bill O'Grady, Kaisa Stucke of Confluence Investment Management

Over the next several weeks we will look into the more distant future, to the year 2030. We will explore the long-term strategic alternative world development scenarios as laid out by the National Intelligence Council (NIC) and present our views regarding the developments. The NIC forecasts the likely paths that are either currently underway or are forecast to occur in the future. The NIC projects four possible global political and economic states based on these expected trends.

2013-02-05 Fourth Quarter 2012 Equity Market Review by Natalie Trunow of Calvert Investment Management

With the excitement of the QE3 announcement wearing off in the fourth quarter, market participants refocused on the less-than-stellar earnings season in the U.S. and uncertainties surrounding the U.S. presidential election and impending fiscal cliff, while the negative impact of Hurricane Sandy further dampened investor sentiment. Despite a double-dip recession in the eurozone, there was some progress on the European policy front and China's economy continued to show signs of stabilizing, which helped international stocks outperform their U.S. counterparts.

2013-02-05 Eurozone: Divorce, Italian Style? by Milton Ezrati of Lord Abbett

The upcoming election may determine whether Italy continues its austerity and reform programs. The fate of the currency union may hang in the balance.

2013-02-04 Our Outlook: Very Bullish for the Stock Market by Team of Sadoff Investment Management

The combined readings of these breakouts, volume strength, significant pivots by a long list of financial stocks and improving commodity prices evidence major trend improvements. Restated, the underpinnings for both the economy and stock market evidence significant strengthening ahead.

2013-02-04 A Gross Underestimate by Jonathan Coleman, Soonyong Park of Janus Capital Group

As we enter 2013, we felt it would be an appropriate time to revisit one of last years most controversial predictions of future equity performance. We acknowledge that equities in general may not continue to deliver the same real rate of return they have over the last century; however, we believe the glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross' pessimistic prediction.

2013-02-04 Shifting Sentiment? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

Is investor sentiment shifting in favor of equities, which could help to continue the recent rally?

2013-02-04 The Bernanke Shock by Peter Schiff of Euro Pacific Precious Metals

The financial world was shocked this month by a demand from Germany's Bundesbank to repatriate a large portion of its gold reserves held abroad. By 2020, Germany wants 50% of its total gold reserves back in Frankfurt - including 300 tons from the Federal Reserve. The Bundesbank's announcement comes just three months after the Fed refused to submit to an audit of its holdings on Germany's behalf. One cannot help but wonder if the refusal triggered the demand.

2013-02-04 A Reluctant Bear's Guide to the Universe by John Hussman of Hussman Funds

In recent years, I've gained the reputation of a "perma-bear." The reality is that I'm quite a reluctant bear, in that I would greatly prefer market conditions and prospective returns to be different from what they are. There's no question that conditions and evidence will change, unless the stock market is to be bound for the next decade in what would ultimately be a low-single-digit horserace with near-zero interest rates. For my part, I think the likely shocks are larger, and the potential opportunities will be greater than investors seem to contemplate here.

2013-02-01 Feasting in a Time of Famine: The South African Consumer by Maria (Masha) Gordon, Richard Flax of PIMCO

South Africa's consumer sector has been on a strong run for the past several years, but there are signs the consumer is now coming under pressure. For all the challenges that have faced the South African economy, most listed consumer companies have enjoyed a great run since 2008. However, a combination of factors strong growth in retail sales and credit along with the rise in consumer debt levels and weak employment growth suggest the South African consumer sector may have pulled consumption forward in a way that could prove ultimately unsustainable.

2013-02-01 Monthly Investment Bulletin by Team of Bedlam Asset Management

Financial discipline is collapsing and with it, trust in the value of money. Many heavyweight thinkers in America, such as Nobel laureate Paul Krugman have suggested that a solution to avoid national debt ceilings imposed by Congress would be to mint a trillion dollar platinum coin. Meanwhile, heavyweights close to policy makers in Britain and Japan have been musing whether their central banks should write-off the mountains of government bonds they have bought recently.

2013-02-01 2 Major Threats Facing the US Economy by Russ Koesterich of iShares Blog

While markets cheered the House of Representatives' recent vote to temporarily suspend the debt ceiling, the US economy isn't out of the woods yet. Russ highlights the two major risks it still faces.

2013-02-01 The Biggest Loser by Peter Schiff of Euro Pacific Capital

For the past few generations Switzerland has enjoyed some of the strongest economic fundamentals in the world. The country boasts a high savings rate, low taxes, strong exports, low debt-to-GDP, balanced government budgets, and prior to a few years ago one of the most responsible monetary policies in the world. These attributes made the Swiss franc one of the world's "safe haven" currencies. But in today's global economy, no good deed goes unpunished.

2013-02-01 Weekly Economic Commentary by Team of Northern Trust

Is the world engaged in a currency war? Januarys job report had some pleasant surprises, but more progress is needed. Purchasing managers surveys suggest growth in the US, retreat for Europe

2013-02-01 A Gross Underestimate by Jonathan Coleman and Soonyong Park of Janus Capital Group

The glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross pessimistic prediction.

2013-01-31 Making Sense of Low Volatility Investing by Feifei Li of Research Affiliates

Why do low volatility stocks outperform riskier ones over time? Dr. Feifei Li, our Head of Research and my long-time collaborator, has focused on understanding the theoretical foundation underpinning the low volatility anomaly and documenting the strategy's risk-return characteristics in developed and emerging markets. In this issue of Simply Stated, our newsletter focusing on investor education, she summarizes the literature on the low volatility effect as well as provides additional insights from her own research based on an expanded global data set.

2013-01-31 Hasenstab: Little Value in U.S. Treasuries Right Now by Team of Franklin Templeton Investments

The financial markets may have let out a collective sigh of relief on January 1 when U.S. politicians managed to avoid falling off the fiscal cliff, but the fact is the fundamental issue plaguing the U.S. still hasn't been addressed mounting debt. As a result, Dr. Michael Hasenstab, co-director of the International Bond Department and portfolio manager for the Templeton Global Bond Fund, says he doesn't see much value in U.S. Treasuries right now. He does see it elsewhere in the world, though, including Ireland and select emerging markets where fiscal houses appear in much better order.

2013-01-30 Rethinking IPOs by Ryan Issakainen of First Trust Advisors

In the wake of the Facebook IPO last spring, and the ensuing public relations debacle, many investors have become more wary of newly minted stocks. Even before this event, the public perception regarding IPOs was heavily influenced by the IPOs of the late 1990s that helped fuel the dot-com bubble. For many, the primary motivation for investing in IPOs has been the potential to receive a short-term surge in price, irrespective of a stock's longer term potential for success or failure.

2013-01-30 Weekly Market Commentary by Matthew Tuttle of Tuttle Tactical Management

The market continued to "melt up" this week. Everybody is expecting some sort of correction, but just like every time there is a consensus on something it never tends to happen. It is hard to envision the market having a massive continuation of this rally without some pullback, but we could easily continue to inch up for a while.

2013-01-30 Expanding Horizons: The Most Difficult Environment for Generating Income in 140 Years by Ehren Stanhope, Travis Fairchild of O'Shaughnessy Asset Management

In the most difficult environment for generating income in 140 years, we survey the landscape of income-generating options, review lessons from the previous bond Bear Market, and demonstrate why we believe global, dividend-paying equities deserve a prominent role in investor portfolios.

2013-01-29 Strategies for Speculating on the Crisis in Japan by Simit Patel (Article)

Bears on Japan are finally, after nearly two decades of being on the wrong side of the market, getting some vindication. The end of 2012 was marked by a significant decline in the Japanese yen and a rise in the yield on 30-year Japanese Government Bonds (JGBs). Should those trends continue, the conventional wisdom is that investors will do best by shorting JGBs. But a superior strategy is to short the yen itself.

2013-01-29 Emerging Europe: Regional Economic Review 4Q 2012 by Team of Thomas White International

As the 2012 year closed, the emerging economies of Europe joined their cousins in the developed world for their share of woes, and in particular, were impacted by the debt crisis in the Euro-zone, their primary trading partners. Though Russia, the biggest of these economies, finally managed to become a member of the World Trade Organization, the resource-dependent economy recorded slowing growth during the third quarter as both household consumption and state spending expanded at a slower pace.

2013-01-29 How Much Help from Housing? by Alan Levenson of T. Rowe Price

We expect the ongoing recovery in new housing construction from unsustainably low levels to contribute roughly percentage point to real GDP growth this year, and emphasize the risks to the upside of this forecast. Imminent employment growth in housing-related industries will provide an important channel for secondary "multiplier" effects of the housing recovery. Applying recent house price increases to the entire stock of owner-occupied housing overstates their likely wealth effect on consumer spending.

2013-01-29 Investment Basics by Michael Kayes of Willingdon Wealth Management

I've always been curious about how famous people would have done had they pursued completely different careers. Some of our former presidents make excellent examples. For instance, Abe Lincoln towered over his contemporaries. I wonder how he would have fared as a basketball player had the game existed during his life. Our heaviest president, William Howard Taft weighed well over 300 pounds. Had football risen to prominence a few decades earlier, could gridiron greatness have been part of his resume?

2013-01-29 In Japan We Trust by Chris Maxey, Ryan Davis of Fortigent

In fewer than 60 days, one country has made a splash larger than all the others. No, we are not referring to the US, where Barack Obama was re-elected to a second term. Nor are we referring to China's recent transition of power. Instead, the country we reference is Japan. After decades of malaise, Japanese officials moved to embrace policies previously only accepted by Western officials.

2013-01-28 Capitulation Everywhere by John Hussman of Hussman Funds

The bears are gone, extinct, vanished. Among the ones remaining, many are people whom even I would consider to be either permabears or nut-cases. And yet, the historical evidence for major defensiveness has rarely been stronger.

2013-01-25 Americas: Regional Economic Review 4Q 2012 by Team of Thomas White International

The outlook for most economies in the Americas region improved during the fourth quarter as domestic consumption growth was sustained and the anticipated revival in global demand has lifted the prospects for export growth this year. Partly helped by fiscal and monetary policy measures introduced since 2011, consumer demand has held up across most countries in the region.

2013-01-25 The Case for Japan with a Caveat by Russ Koesterich of iShares Blog

While Im optimistic that Japanese stocks can move higher in coming months, Id advocate investing in them only if dollar-based investors have the flexibility to hedge the currency effect of a weaker yen (more on that below). So with that caveat out of the way, here are four reasons why I think Japanese stocks can move higher in the near term.

2013-01-24 German Gold Claw Back Causes Concern by John Browne of Euro Pacific Capital

Last week the Bundesbank (the German central bank) surprised markets around the world by announcing that it will repatriate a sizable portion of its gold bullion reserves held in France and the United States. To many, the news from the world's second largest holder of gold signaled a growing, if clandestine, mistrust among central banks, possibly fueled by diverging policy goals. The Germans have attempted to tamp down the alarm by highlighting the myriad of logistical, practical and historical reasons that qualified the announcement as unremarkable.

2013-01-24 Searching for Growth in a Low-Growth World by Austin Graff of PIMCO

We believe corporate profit growth will fall short of sell-side consensus estimates. But companies with inflation-linked revenues and supply side advantages to drive revenue growth, and those with ample cost levers to improve margins, are positioned for sustained earnings growth in the New Normal.

2013-01-24 Get Your Funk Out by Jim Goff of Janus Capital Group

I manage investment professionals for a living. When an analyst gives me the positives on one hand and the negatives on the other hand, but offers no conclusion, I want to cut one of those hands off. The best analysts understand all the issues but come to well-founded views.

2013-01-23 High Yield Market Overview December 2012 by Team of Nomura Asset Management

The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 1.59% in December, as the high yield market rallied on the perceived benefits of a fiscal compromise in the U.S.

2013-01-23 Economic Backdrop Supports Stocks, Credit Sectors and Munis by Russ Koesterich of BlackRock Investment Management

Thanks to solid earnings, some decent (if mixed) economic news and indications that the debt ceiling debate may be delayed slightly, stocks posted additional gains last week, continuing their strong start to 2013. For the week, the Dow Jones industrial average climbed 1.2% to 13,649, the S&P 500 index advanced 1.0% to 1,485 and the NASDAQ composite rose 0.3% to 3,134. Bonds have remained relatively steady, with the 10-year Us treasury closing the week at a yield of 1.84%, two one-hundredths lower than the previous Friday close.

2013-01-23 Gun Control & How To Play Upcoming Debt Battles by Gary Halbert of Halbert Wealth Management

Ever since the tragedy on December 14 at Sandy Hook Elementary School in Newtown, Connecticut occurred when Adam Lanza senselessly murdered 26 people (20 children and six staff) and then himself there has been a growing cry from millions of Americans for some kind of new gun controls. And the current occupant of the White House is all too happy to oblige. Last week, the president unveiled the most sweeping new gun control laws since the so-called Brady Bill was passed in 1993, requiring background checks on firearm purchasers in the US. Obama's proposals go much further as I will discuss.

2013-01-22 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company

2012 was a year of mixed results on the economic front, but generally good investment returns as measured by the S&P 500 Index. Some progress was made in Europe and China, and some clarification in direction was made in the U.S. We presented our thoughts on these topics at our December 6 seminar; an archive will be available on our website.

2013-01-22 Consumer Staples: Don't Overpay for Safety by Russ Koesterich of iShares Blog

Many investors have flocked to the perceived safety of defensive sectors over the past few years, including consumer staples. But Russ gives three reasons they might want to think twice about the sector now.

2013-01-22 Puppet Show by John Hussman of Hussman Funds

What's fascinating is that in the presence of what are not thin strings, but massive cables supporting the economy like a puppet, the only response that Wall Street can muster is "Hey! He's walking!" as if the puppet is capable of motion without being propped up to a nearly reckless extent.

2013-01-18 Middle East/Africa: Regional Economic Review 4Q 2012 by Team of Thomas White International

According to the International Monetary Fund's Regional Economic Outlook report, countries in the Middle East and North Africa region are expected to grow at different rates. Oil exporting nations are cashing in on high energy prices and production, and are projected to expand 6.6 percent in 2012 before tempering in 2013. On the other hand, oil importers such as Jordan, Morocco and Tunisia among others are expected to clock growth just over 2 percent as the slowdown in the world economy and political tensions continue to hinder expansion for some of these countries in transition.

2013-01-18 The Allure of Panda Coins by Teresa Kong of Matthews Asia

While I waited in another long line in San Francisco International Airport recently, I struck up a conversation with the gentleman behind me. It turned out we were both returning from research trips in China. But rather than being an investor of securities as I am, this fellow traveler was an investor in Chinese coins, specifically, panda coins.

2013-01-18 Fixed Income Investment Outlook by Team of Osterweis Capital Management

We continue to feel that the mismatch between yield and interest rate exposure means that investment grade bonds are less attractive compared with the non-investment grade universe, especially in shorter maturities. Treasury, investment grade corporate and high yield bonds have yields and effective durations that are virtually unchanged compared to levels three months ago. Yields on short-dated high yield paper have actually risen a bit and are still, in our opinion, the most attractive sector we look at in terms of interest rate risk.

2013-01-17 International Equity Commentary December 2012 by Team of Thomas White International

International equity prices made robust gains in December, as further improvement in economic trends across most regions lifted the outlook for 2013. Policymakers in the U.S. managed to put together an agreement at the last minute and averted the 'fiscal cliff', one of the major risks that had restricted investor sentiment during earlier months. In Europe, though economic signals remain largely weak, the further fall in bond yields of the troubled countries has helped sustain optimism about resolving the region's fiscal crisis this year.

2013-01-17 Investing in Africa: Misconceptions and Realities by Mark Mobius of Franklin Templeton Investments

It's easy to fall prey to misconceptions and generalizations about places we've never been: to assume everyone in the United States drives big cars, all the French love croissants and all Canadians play hockey. There are many misconceptions about investing in developing markets, and Africa certainly has its fair share, but it's dangerous to make sweeping generalizations.

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 Demographics and the Decline of Equity Mutual Funds by Paul Franchi (Article)

Until the last few years, mutual fund flows followed performance. Recently, however, money has flowed disproportionately into bond funds and out of US equity funds despite a strong rally in the equity markets. Changing demographics explain this shift, which has important implications for advisors and the mutual fund industry.

2013-01-15 The Nothing That Is by Michael Lewitt (Article)

The world is awash in money. But money isn't what it used to be. I would point to two characteristics of modern money that should be keeping portfolio managers up at night (they certainly keep me up at night).

2013-01-15 Declaring Victory at Halftime by John Hussman of Hussman Funds

Present overvalued, overbought, overbullish, rising-yield conditions fall within a tiny percentage of market history that is associated with dismal market outcomes, on average. Its true that we've observed extreme conditions since about March 2012 with little resolution aside from short-term declines. But the S&P 500 remains only a few percent from its March 2012 high, and if history is any guide, the extension of these unfavorable conditions is not likely to reduce the depth of the market loss that can be expected to resolve them.

2013-01-15 What's Behind the Buyback Binge? by Milton Ezrati of Lord Abbett

The pace of stock repurchases says much about equity valuationsand companies' expectations for economic growth.

2013-01-15 From Cliff to Ceiling! by Jim Tillar, Steve Wenstrup of Tillar-Wenstrup

When it was all said and done not much happened in the final quarter of 2012. Anxiety picked up immediately after the election as the bickering over the fiscal cliff escalated. In the end, the worst-case scenario was avoided at least for a couple of months and stocks ended about where they began the quarter.

2013-01-14 The More Things Change... by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

One crisis averted...another one on the way? Of course, but we're still positive on the US economy and stock market.

2013-01-14 The 'Dark Continent' is Shining Bright by Team of Thomas White International

From a recipient of aid, Africa has transformed itself into a magnet attracting capital and investment.

2013-01-11 Thanks, Everybody...We'll be Right Back! by Colin Moore of Columbia Management

The Washington Comedy Club has taken a brief intermission and will be back in session shortly to resume the show. Please enjoy the facilities of this great country, free of charge, while you wait. Ignore the "Nero" character in the far corner playing the fiddle. Apparently, he isn't part of the show. Economic uncertainty emanating from fears of the U.S. fiscal cliff has been deferred but not avoided.

2013-01-11 2 Reasons to Stick With Emerging Markets by Russ Koesterich of iShares Blog

Think emerging markets equities have run their course? Not so fast despite recent strong performance, Russ explains why there's room for further EM gains in 2013.

2013-01-11 Abe's Return May Prod Japan Forward by Kenichi Amaki of Matthews Asia

Japan's politics have entered 2013 with a mixed freshness. Former Prime Minister Shinzo Abe has clinched a rare second shot at the prime minister's post. His first term, which began in late 2006, lasted only about a year and ended with his sudden resignation. But following its landslide victory last month, his Liberal Democratic Party (LDP) has secured a two-thirds majority in the 480-seat Lower House, giving it the constitutional power to override Upper House opposition, where no single party holds a majority, on almost all issues.

2013-01-11 Pacific Basin Market Overview - December 2012 by Team of Nomura Asset Management

Equity markets ended the year on an upbeat note, shrugging off concerns over the impending "fiscal cliff" while focusing on better economic data from the U.S. and China. In Japan, expectations of a higher inflation target and a depreciating yen brought some overseas investors back to the Tokyo stock market. The MSCI AC Asia Pacific Free Index including Japan gained 5.6%, while the MSCI AC Asia Pacific ex Japan Free Index also closed 5.6% higher in the October-December quarter of 2012.

2013-01-11 Invest In Equities: Your Future Self May Thank You by Frank Holmes of U.S. Global Investors

Investors have had an illusion about the stock market since the financial crisis. With the barrage of negative headlines and abhorrence toward risk, investors seemed to feel that equities would not improve going forward. This turned out to be a mistaken belief.

2013-01-10 Market Perspectives Q4 2012: Politics vs. Economics by Richard Michaud of New Frontier Advisors

The major news of the quarter was that a fiscal cliff deal passed in the final hours of the 112th Congress and was signed by President Obama. The deal averts tax increases on most Americans and prevents large indiscriminate cuts in spending in many government programs. It also averted, by nearly universal consensus among macroeconomists, tipping the American economy into recession with attendant global implications.

2013-01-10 A New Years Vantage Point: Michael Hasenstab by Michael Hasenstab of Franklin Templeton Investments

As we ring in a new year, it's a good time to gain some perspective on where we've been, and where we might be headed. In the first few weeks of January, Beyond Bulls & Bears will be featuring a series of investment commentaries from select Franklin Templeton investment management teams. These professionals provide their insights on the market ups and downs of 2012, and the potential challenges and opportunities that may lie ahead from their respective vantage points. Today we hear from Michael Hasenstab, portfolio manager and co-director of the International Bond Department.

2013-01-08 3 Key Dates to Watch After the Fiscal Cliff Deal by Russ Koesterich of iShares Blog

After last week's partial deal, Russ explains when investors should expect more market volatility and another round of late-night drama from Washington.

2013-01-08 Early 2013 Looks to Feature Slow Growth and Ongoing Fiscal Drama by Russ Koesterich of BlackRock Investment Management

Stock markets started 2013 off with a bang, as investors expressed relief over the down-to-the-wire agreement on the fiscal cliff that came on January 1. For the week, the Dow Jones industrial average jumped 3.8% to 13,435, the S&P 500 index rose 4.6% to 1,466 and the Nasdaq composite advanced 4.8% to 3,101. Although the deal reached last week was good news for the markets, Washington's fiscal soap opera is far from over. Although the deal reached last week was good news for the markets, Washingtons fiscal soap opera is far from over.

2013-01-08 Another Lost Year for Active Management by Chris Maxey, Ryan Davis of Fortigent

There is no doubt that 2012 will be remembered by many investors, for reasons both good and otherwise. One group less likely to remember the good of 2012 is active managers. Across the universe of hedge funds and mutual funds, relatively few were able to outperform their comparative benchmarks. This continues a long running trend of active managers lagging their less active counterparts and raises many questions about the efficacy of active management.

2013-01-07 It's the Bond Vigilantes Stupid by Martin Pring of Pring Turner Capital Group

Most people are looking to the politicians in Washington to reign in the deficit by bringing spending under control. Based on their record this optimism seems severely misplaced. Nevertheless, the technical position of the bond market is suggesting that a more disciplined and powerful force is waiting in the wings. After a long 31-year vacation it may be time for the bond vigilantes (skeptical global bond investors who vote with their money) to return to town. The President has said a deal over the debt ceiling is non- negotiable but the non-partisan bond vigilantes may have a different view.

2013-01-04 Ring in the New by Mark Mobius of Franklin Templeton Investments

The "year of the dragon" in 2012 certainly didnt disappoint, as the global markets battled one financial dragon after another. From the Eurozone's sovereign debt crisis to persistently high unemployment in the U.S. and a mayday call from many who worried that China's growth rate was headed for a "hard landing," 2012 certainly was interesting. As we turn the calendar page to 2013, the Eurozone seems to be in less-critical condition and China's economic growth still appears to be flying but as of this writing, the U.S. debt problems still haven't been solved.

2013-01-04 Newsletter by Harold Evensky of Evensky & Katz

As always I hope you will enjoy this issue, as much as I have enjoyed putting it together. Most important though I wish one and all a very happy, prosperous and healthy new year!

2013-01-04 In 2013, Resolve to Follow the Money by Frank Holmes of U.S. Global Investors

During these first days of January, many adopt an out with the old, in with the new, approach to shed bad habits or extra pounds. Washington opted for its same ol strategy when averting the fiscal cliff, as the addictive nature of can-kicking is a transatlantic sport, according to The Economist. The short-term fix did nothing to control the unsustainable path of entitlement spending on pensions and health care nothing to rationalize Americas hideously complex and distorted tax code... and virtually nothing to close Americas big structural budget deficit.

2013-01-03 Outlook 2013: Fiscal Cliff Remains Unresolved, but Opportunities Still Exist by Russ Koesterich of BlackRock Investment Management

As we look ahead to 2013, it is impossible to make any sort of forecast without first turning our attention to the still-unresolved fiscal cliff debate. We have long said that unless we were to see significant movement on the issues of tax rates and entitlement spending, the most likely outcome would be some sort of bare-bones deal. At the time of this writing, congress and the President were still negotiating, but our analysis suggests that such a bare-bones resolution remains the most probable result, even if it does not come before the January 1 deadline.

2013-01-03 High Yield Market Overview December 1, 2012 by Team of Nomura Asset Management

The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 0.74% in November, as high yield investors focused on the fiscal cliff and the risk that the U.S. government fails to negotiate a resolution.

2013-01-03 5 Investment Ideas for a Post-Fiscal Cliff Deal World by Russ Koesterich of iShares Blog

As discussed in previous posts, Congress kicked off the New Year with a bare bones deal to avert (or at least delay) the fiscal cliff. Though markets responded positively to the news Wednesday morning, the euphoria isn't likely to last.

2013-01-02 Is Fracking a ‘Happy Solution’ to our Energy Needs? by Richard Vodra, JD, CFP (Article)

A few weeks ago, John Mauldin called fracking a 'happy solution' that will produce jobs, potentially solve our trade deficit and generate new tax revenue, though energy prices may rise in the process. But how excited should we be about the 'shale revolution'?

2013-01-02 Washington Squanders its Gift of Time by John Browne of Euro Pacific Capital

As the clock winds down on 2012, the Fiscal Cliff is all anyone seems capable of discussing. Right now it appears that some sort of narrow deal has just emerged that will include raising tax rates on family income over $450,000 a year, increasing the estate tax rate, extending unemployment benefits for one year, and delaying spending cuts. But the prospect of higher taxes and the great uncertainty that has surrounded this fiscal fiasco has been acting like sand in the gears of the complex but sputtering U.S. economy.

2013-01-02 Emerging Markets Outlook by Armando Armenta of Invesco

There are a number of factors effecting the flows into emerging market economies. I'd like to review several of them in the medium term outlook and let you know why I doubt they will recede soon.

2012-12-26 Assessing ISG's "Ten for '12" by Investment Strategy Group of Neuberger Berman

Earlier this year, we offered a forward-looking view of 10 macro themes that we anticipated for 2012. These ideas were meant not to be "surprises" but rather guideposts within the context of a longer-term strategic allocation. At year-end, we are pleased to note that seven of our 10 themes fully materialized. We provide a brief look below.

2012-12-26 Why China is a Reason for Optimism by Robert Horrocks of Matthews Asia

"China has taught me how to think about growth. Consider its stable political environment: it has gone from revolutionary upheaval to smooth (almost boring) transitions of power."

2012-12-24 Aspirin for a Broken Femur by John Hussman of Hussman Funds

The Federal Reserve under Bernanke is like a bad doctor facing a patient with a broken femur. Being both unable and unwilling to restructure the broken bone, he announces that he will keep shoving aspirin down the patient's throat until the bone heals.

2012-12-21 Republican Sellout Invites Stagflation by John Browne of Euro Pacific Capital

While it may not be a surprise that the Republicans are preparing to yield on their vow to oppose tax hikes, it should raise investor concerns the world over that an upcoming budget agreement will likely involve a Congressional surrender of its authority to set the federal debt ceiling. In exchange for this, it appears that the Republicans have simply done nothing to halt, or even curb, the dangerous federal spending trajectories or the current drift towards greater state control of the economy.

2012-12-21 Egypt's Arab Winter by Mark Mobius of Franklin Templeton Investments

It's been almost two years since the "Arab Spring" swept North Africa and the Middle East, and with it, grand hopes for change. Sometimes, change doesn't happen as quickly as the people would like, and oftentimes it can be a messy process. That is certainly true in Egypt right now, a country that is still in the throes of shaping its future. The ousting of Hosni Mubarak in 2011 didn't instantly transform the nation into a model of democracy, and the country is currently deliberating the best way forward via public debates, protests and the election process.

2012-12-21 "Frack and Slack" Put U.S. Trade in the Black? by Milton Ezrati of Lord Abbett

Could it be that the U.S. trade balance is headed into the black? At first blush, the prospect looks dubious. This country's trade deficit has drifted deeper into the red for so many decades now that few can even conceive of lasting improvement. Even so, that is what seems to be in prospect.

2012-12-21 Lights, Camera and Action in China by Winnie Phua of Matthews Asia

More than a decade ago, China reached a turning point in its film industry with the co-production of its first internationally acclaimed movie hit, "Crouching Tiger, Hidden Dragon." The film, directed by Academy Award winning Taiwanese American director Ang Lee, raked in more than US$213 million globally, and became the highest grossing foreign language film in U.S. history. Pretty good for a movie made in China on a US$17 million budget.

2012-12-21 The Japanese Economy: The Result of the Lower House Election by Team of Nomura Asset Management

The Liberal Democratic Party (LDP) reclaimed power in a landslide victory. Together with coalition partner, the New Komeito Party, the LDP secured 325 seats giving it two-thirds of the total seats, which allows them to pass legislation by using the supermajority position in the lower house. This will enable them to overrule the upper house where no party currently holds an overall majority, otherwise requiring the LDP to consult with opposing parties. In addition, on an individual case by case basis, the LDP would be able to seek cooperation from the third party Japan Restoration Party.

2012-12-20 Japan: Abundant Opportunities Despite Debt-Induced Deleveraging Cycle by David Nadel, Dilip Badlani of The Royce Funds

Over the last two decades, Japan has suffered under the malaise of deflationary deleveraging after its stunning growth between the 1960s through the end of the 1980s. In 1991, economists were predicting that Japan would overtake the U.S. as the world's largest economy by 2010. Instead, Japan's GDP has stayed largely stagnant over this time period as the country has been trapped in a debt-induced deleveraging cycle.

2012-12-19 Imagine...a Better Future by Liz Ann Sonders of Charles Schwab

After a weekend of sadness and reflection, I wanted to write something more optimistic we'll go back to the future to learn and unlearn.

2012-12-19 PIMCO Cyclical Outlook for Europe: Policy Developments Will Shape Growth Prospects and Risks by Andrew Balls of PIMCO

Policy developments in particular, the European Central Banks acceptance of its role as a lender of last resort have helped to normalize European financial markets but been insufficient to promote decent growth. Eurozone leaders recently laid out a long-term roadmap to achieve stability, but the plan faces great execution risk, technically and politically, and in cross-border coordination. We continue to take a cautious approach and underweight European credit risk and European financials in general, looking for specific opportunities rather than broad exposure.

2012-12-19 ING Fixed Income Perspectives December 2012 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

While all the good little boys and Cindy Lou Whos dream of sugar plums and new iPhone 5s in blue, the adults in our modern-day Christmas story can't sleep but a wink, as visions of getting Scrooge'd by the fiscal cliff are making hearts sink. No matter if this political humbug cease or persist, down the chimneys of a recuperating housing market Ol' Saint Bernanke-olas will continue to gift $85 billion of Treasury and MBS purchases per month or more until the labor market can finally get over the hump and deliver 6.5% unemployment and inflation of 2.5% and no more.

2012-12-19 The Consumer Catalyst in Asia's Emerging Markets by Andrew Sleeman of Franklin Templeton Investments

There may be no better evidence of the economic power of the consumer than the spending frenzy that occurs this time of yearthe sparkling lights, the must-have gifts and gadgets, the indulgent meals. Whether online, brick and mortar, big box or mom-and-pop, retailers count on the year-end consumer boom.

2012-12-18 Energy Face-Off: North American Energy Independence vs. Canada's Export Plans by John Devir of PIMCO

President Obama's November 2011 postponement of a decision on whether to permit an oil pipeline from Canada's oil sands to the U.S. Gulf Coast caused a barrage of protests and negative press in Canada. Canada's new focus on building capacity to sell to Asia-Pacific could hinder U.S. ambitions of energy independence from overseas oil, since the U.S. imports roughly 30% of its crude oil from Canada. We see investor opportunities in rail transportation and pipeline systems that possess excess capacity.

2012-12-17 I'm Dreaming of a Green Christmas by Jeffrey Saut of Raymond James

While last week, and this week, often see distortions in individual stock prices due to tax loss selling, Santa Claus tends to arrive the following week. Indeed, the last week of the year, into the first two days of January, has a pretty good track record on the upside with a rally coming about 65% of the time. As stated in previous missives, I expect the same Santa rally this year driven by a "staged in" solution to the fiscal cliff. Most readers know that I have lived in the D.C. Beltway and have a good working knowledge of how our system works.

2012-12-17 Fiscal Cliff Deadlines Draw Near by Russ Koesterich of BlackRock Investment Management

In addition to the seemingly never-ending focus on the fiscal cliff, markets turned their attention to last week's Federal reserve meeting and the corresponding announcement of the central bank's continuation of its bond-purchase program. Following a very brief rally after the announcement, however, stock prices fell and ended the week marginally lower. For the week, the Dow Jones industrial average declined 0.2% to 13,135, the S&P 500 index fell 0.3% to 1,413 and the NASDAQ composite dropped 0.2% to 2,971.

2012-12-15 Looking Back to Look Ahead by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Markets have been more focused on short-term forces; not least being Washington and the fiscal cliff negotiations. But taking a step back and gaining some longer-term perspective can help investors better weather short-term volatility. Even beyond the fiscal cliff, Washington and fiscal policy will likely remain in focus next year. Monetary policy is also front-and-center with the Fed maintaining its extremely accommodative policy and targeting specific economic conditions instead of providing calendar guidance. Europe managed to make it through the year, but challenges and risks remain.

2012-12-15 The Cost of Viewing the US as a Safe Haven by Russ Koesterich of iShares Blog

Since exiting the recession in mid-2009, US stocks have significantly outperformed international markets. But can the United States still be viewed as a safe port in a storm? Russ K explains why it might be time for investors to consider raising their allocation to international stocks.

2012-12-14 2013: A Year in Global Equities by Virginie Maisonneuve of Schroders Investment Management

Global equities are very attractively valued and we are positive for their prospects in 2013 as the global economy normalises. Progress in Europe, the end of China's growth slowdown and continued momentum in the US economic recovery will support global equities. Longer-term investors must position themselves for a growth-saturated world in which sustainability and innovation will be even more important.

2012-12-13 Investors Vote for Equities as Japanese Elections Near by Takeo Aso, Nicholas Davidson of AllianceBernstein

Current bearishness on the yen is reigniting investors' interest in Japanese equities. In our view, yen weakness is likely to continue and may help boost the Japanese equity market, with undervalued companies poised to benefit most.

2012-12-13 3 Potential Scenarios for 2013 by Russ Koesterich of iShares Blog

Despite getting lucky in 2012, many of the major risks that economies and markets faced this year remain. With the current environment in mind, Russ K shares his 3 potential scenarios for 2013 along with potential investment strategies for each.

2012-12-13 Pacific Basin Market Overview - November 2012 by Team of Nomura Asset Management

Asian equity markets ended higher this month, although they were heavily influenced by events elsewhere. Improved economic data from Germany, coupled with expectations that Greece will receive a further round of financial support from the European Union (EU), helped to lift sentiment. Meanwhile, investors were paying close attention to the American congressional budget negotiations to avoid the looming year-end "fiscal cliff" risk to the economy, although U.S. economic data was generally positive.

2012-12-11 Fine Wine - Why it's for More than Just Drinking by Mark E. Ricardo, JD, LLM, AAMS (Article)

For many investors, an ideal asset class would combine superior long-term absolute and risk-adjusted returns with a hedge against inflation and stock market volatility. There's a way to get all of that, in an asset class you might never have thought of until now: fine wine. Investment-grade wine deserves careful consideration, particularly now that - unlike other collectibles, such as art and rare books - it can be traded on a regulated exchange.

2012-12-11 New York, New York by Jeffrey Saut of Raymond James

I have loved New York since working on Whitehall Street in the early 1970s. Every year I return around this time of the year to attend Minyanville's Festivus event to raise money for the financial education of underprivileged children. Last week I spent time attending said event, seeing institutional accounts, doing media, and renewing friendships. I was surprised, however, to see pumps still sucking water out of the subway.

2012-12-11 PIMCO Cyclical Outlook: At Policy Crossroads by Saumil Parikh of PIMCO

The maturation of the global cyclical growth phase suggests we look to a handoff to more secular drivers of growth. But strong secular drivers remain elusive due to the continuation of New Normal headwinds.Policies are at important crossroads in every major economy. 2013 will be the year of policy change, with policymakers in major economies challenged to enact structural changes that spur private sector growth before government-balance-sheet-led growth is exhausted.

2012-12-10 Russia's WTO Entry a Big Boost to World Economy by Team of Thomas White International

The WTO's 156th entrant is the world's ninth largest economy and Europe's biggest.

2012-12-07 3 Implications of a Fiscal Cliff Tax Hike by Russ Koesterich of iShares Blog

From the outside, its hard to find much evidence that Washington is getting closer to a fiscal cliff deal. Perhaps there is more going on behind the scenes than the headlines suggest, but as of today it is hard to find much evidence that the odds of a deal have risen. As the potential for fiscal drag rises, it is worth reiterating why this is so dangerous. From my perspective, the biggest risk to the economy, and to financial markets, comes from the tax side of the equation.

2012-12-06 Meet the New Boss by Bill OGrady of Confluence Investment Management

On November 14th, the new Politburo Standing Committee (PSC) was unveiled. The composition of this new group had been anxiously awaited for months. Although most of the members (all men, by the way) had been anticipated, there were some surprises. This committee is the most powerful group in China; it is essentially the legislative and executive branch of the country. And, given that the judiciary is not really independent, the PSC effectively rules China.

2012-12-05 Market at Mercy of Fiscal Cliff Until Resolution by Liz Ann Sonders of Charles Schwab

Politics and the fiscal cliff are dominating market action and adding to the uncertainty factor. Sentiment is better, technicals are mixed and valuation is reasonable, but until we get past the cliff, fundamentals won't matter a lot. There are some coiled springs forming that could help offset any fiscal-cliff related contraction next year.

2012-12-05 Waiting for Signs on the Fiscal Cliff and From the Fed by Russ Koesterich of iShares Blog

Investors are stuck between a rock and a hard place: Theyre trying to plan for the end of 2012, while also looking ahead to 2013. Its being reflected in the questions Im getting from clients right now, who are worried both about the fiscal cliff and the outlook for interest rates in 2013. As we saw last week, the markets are focused on every utterance out of Washington on the fiscal cliff. For better or worse, this is unlikely to change until we have a deal. And in terms of getting to one, the truth is we did not see much progress last week.

2012-12-05 Headline Roulette by Christian W. Thwaites of Sentinel Investments

That Fiscal Thing dominated the week. Every twitch out of Washington was greeted with over analysis by the press and us. Less so the markets. Truth is, markets are not very good at discounting political uncertainty. Sure, a tax scare here and a debt ceiling impasse there might lead to a sell-off but ultimately it's about earnings, corporate health and outlook and on those metrics, nothing last week really upset the markets in a major way. The bond market tends to get this right.

2012-12-04 Strawberry Fields Forever? by Bill Gross of PIMCO

As John Lennon forewarned, it is getting harder to be someone, and harder to maintain the economic growth that investors have become accustomed to. The New Normal, like Strawberry Fields will take you down and lower your expectation of future asset returns. It may not last forever but it will be with us for a long, long time.

2012-12-04 How to Build a Time Machine by John P. Hussman of Hussman Funds

With industrial production, capacity utilization, real disposable income, real personal consumption, real sales retail and food service sales, and real manufacturing and trade sales uniformly declining in their latest reports, coincident economic indicators having generally peaked in July are now following through on the weakness that weve persistently observed in leading economic measures. We continue to believe that the U.S. economy joined a global economic downturn during the third quarter of this year.

2012-12-01 A Fresh Start (Hopefully) by Howard Marks of Oaktree Capital

For years I kept these memos away from anything related to politics. But more recently I began to discuss issues facing the US, and this has required some mention of policy and thus of politics. Ive tried very hard to be non-partisan, with a goal of not having readers know my leanings. I hope Ive succeeded; at least no one has complained. Because I found Americas recent presidential election and especially the results so fascinating, Im going to move explicitly to the field of politics, but with the same goal of non-partisan expression.

2012-12-01 The Significant Impact of U.S. Oil Production by Frank Holmes of U.S. Global Investors

The Eagle Ford shale formation lies south of our headquarters in San Antonio, Texas, giving the U.S. Global investment team a firsthand, tacit perspective on the oil and gas industrys growing natural resources phenomenon. Weve witnessed how the oil activity is boosting the local economy with solid-paying jobs, a healthy housing market and strong consumer sentiment, as oil giants such as Schlumberger and Halliburton take a bigger stake in the area.

2012-12-01 Weekly Economic Commentary by Team of Northern Trust

Many nations are being reminded that when times are tough, so is budgeting. Americas energy picture is changing for the better. The EU took an "extend and pretend" strategy with Greece.

2012-12-01 The How Matters by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Market focus has clearly been on fiscal cliff negotiations. An agreement that averts the cliff would likely ignite a further near-term rally, but the ultimate solution and its components could have longer term consequences that may not be as market-friendly. US economic data has been impacted by Hurricane Sandy, but it appears modest growth is continuing; although business investment has fallen off. Housing continues to provide support and the Fed is staying the course. There are some signs of growth stabilization globally, notably in some of the emerging economies, including China.

2012-11-30 Fiscal Cliff Countdown: Templeton Perspectives by Team of Franklin Templeton Investments

The U.S. "fiscal cliff" clock is ticking loudly, and so far U.S. politicians havent been able to cooperatively silence it. A sweeping roster of automatic spending cuts and tax hikes remain set to go into effect at year-end with what could be detrimental economic consequences.

2012-11-30 3 Reasons to Hold Off on Holiday Sales Celebrations by Russ Koesterich of iShares Blog

Is the US consumer saying goodbye to the Great Recession and hello to a heady holiday season? Initial holiday sales results may paint a rosy picture, but Russ K explains why investors shouldn't be prematurely uncorking the New Year's champagne.

2012-11-30 Postcard from a Tier 4 City by Sherry Zhang of Matthews Asia

On my recent trip to China, I got a firsthand glimpse into one of the country's smaller cities. Classified as a "Tier 4" city, Baoji, in western Shanxi province, is 100 miles from the city of Xian, the famed home of the Terracotta Warrior statues. Baoji and its environs have a population of 3.7 million, of which approximately 2 million are urban residents. That equates approximately to the populations of Paris, France or Houston, Texas.

2012-11-29 Greece Still Needs a Long-Term Growth Plan by Darren Williams of AllianceBernstein

Even by the standards of the sovereign-debt crisis, the provisional agreement reached yesterday by euro-area finance ministers and the International Monetary Fund (IMF) on a second Greek rescue package looks like a messy fudge. It is clear that Greece's euro-area partners are determined to avoid a near-term euro-area exit, but a long-term solution will require a much more effective growth strategy.

2012-11-29 Small-Caps Pack Big Punch in Emerging Markets by Frank Holmes of U.S. Global Investors

In October, the International Monetary Fund painted a gloomier picture for global investors, as it projected slower growth due to slumping world trade and uncertainty in the West. Despite the forecast, big gains can still be unlocked in the faster-growing emerging markets. We believe the smaller stocks are holding the key.

2012-11-28 On The Economy & Capitalism vs. Socialism by Gary Halbert of Halbert Wealth Management

Today we look at a Pew Research Center survey that polled Americans for their feelings about capitalism versus socialism. The survey included all races, different ages and various income groups. I think it's safe to say, this survey will SHOCK YOU!

2012-11-27 Capital Formation and the Fiscal Cliff by John Mauldin of Millennium Wave Advisors

In today's economic environment, we often complain about volatility and uncertainty, but there is one thing I think we can be fairly certain of: taxes are going up. I constantly try to impress upon my kids, most of whom are now adults, that ideas and actions have consequences. In todays letter we will look at some of the consequences of an increase in taxes. Please note that this is different from arguing whether taxes should rise or fall. For all intents and purposes that debate is over

2012-11-27 Fiscal Perdition by Marie Schofield of Columbia Management

Fiscal consolidations are underway across the developed world, and many require large adjustments. At a minimum, countries need to bring their primary budgets into balance in an effort to stabilize growing debt-to-gross domestic product (GDP) ratios. Many are looking at trimming deficits totaling 5% of GDP or more. This will require both spending cuts and tax increases which often work counter to stabilizing debt ratios, as this can brake GDP growth and undermine both the fiscal position and the political fortitude for action.

2012-11-26 Deja Vu All Over Again by Tony Crescenzi, Andrew Bosomworth, Lupin Rahman, Ben Emons of PIMCO

If the eurozone is to endure, it will require reduced economic differences among countries and larger common fiscal capacity. Emerging market central banks are likely to remain in wait-and-see mode while looking to the U.S. for clarity on the fiscal negotiations and domestic macro prints for signs of moderation in both inflation and activity. While central banks in advanced economies have not traditionally used explicit policies to target exchange rates, the European debt crisis may change all that.

2012-11-26 Monetary and Fiscal Policy in Early 2013 by Scott Brown of Raymond James

The fiscal cliff refers to a substantial tightening of fiscal policy in 2013. Monetary policy cannot offset the cliffs negative effect on the economy. However, it would be surprising if a deal were not reached, if not by the end of this year, then in early 2013. Due to concerns about the long-term budget picture, some of the cliff is almost certain to get through.

2012-11-26 Buying Treasuries and Avoiding Stocks Not the Way to Go by John Buckingham of AFAM

While we know better than to make too much out of a low-volume rally, especially during a holiday-shortened trading week, it was interesting to hear what The Wall Street Journal had to say one week ago at this time. As the publication helped ready investors for the week ahead, one story advised folks to head toward the safety of U.S. Treasury securities: "Expect safe-haven Treasurys to draw demand at the expense of stocks in the coming weeks, bucking a seasonal trend that has often favored riskier assets."

2012-11-22 Emerging Asias Rising Productivity by Robert Horrocks of Matthews Asia

Per capita GDP in China has tripled in purchasing power parity terms in the last decade yet Chinese workers still likely have their most productive years ahead of them. Asia as a whole has seen consumption increase by a third since the global financial crisis, even as the West has languished. This month, Robert Horrocks, writes about what is key to the emerging opportunities in Asia: Productivity.

2012-11-20 Fix the Debt! by Team of Franklin Templeton Investments

In the "normal" course of a U.S. election, investors typically breathe a sigh of relief when the results come in, with at least one layer of market uncertainty removed. This time around, the political squabbling hasn't ended with the close of the polls on November 6. The debate about the "fiscal cliff," a combination of spending cuts and tax hikes set to go into effect on January 1, 2013, has heightened. Market volatility since the election seems to have heightened, too.

2012-11-20 Euro Crisis: Major Implications For Investors by John Browne of Euro Pacific Capital

The euro crisis has begun to feel like an everlasting steeplechase with high hedges and water obstacles blocking the path to economic resurgence on the Continent. Each time a hurdle has been cleared another problem emerges to potentially block the track. The latest developments involve ugly anti-austerity riots across the southern tier and open rifts emerging among the creditors, most notably between the International Monetary Fund and northern nations.

2012-11-20 Bumpy End To The Year by Christian Thwaites of Sentinel Investments

Europe would like to have America's problems. Here we have declining public spending, increasing receipts, falling debt to GDP ratios and unemployment 3% below the European average. This puts the Fiscal Cliff (and I was so hoping to avoid that clich) debate somewhat in context. It's serious enough to draw the attention of corporate CEOs, put a heavy dampener on business confidence, which we saw in the recent NFIB report, and postpone hiring plans and capital investment, which showed up in last week's Empire and Philly Fed surveys.

2012-11-20 Favoring France: The Newest Bright Spot in Europe by Russ Koesterich of iShares Blog

Europe may be stabilizing, but it's not out of the woods yet. One bright spot on the continent? France. Russ explains why he would now overweight the country's equities.

2012-11-20 Syria: The Problem of Intervention by Bill O'Grady of Confluence Investment Management

The situation in Syria continues to deteriorate. The rebels, though divided, are acquiring heavy weapons (there have been reports they have some tanks), mostly by taking them from the regime. Apparently, the rebels are also attracting former soldiers who can operate such weapons. Still, there is nothing to suggest that either side is about to dominate the other and so the current civil conflict will likely continue.

2012-11-19 4 Reasons Not to Taiwan On by Russ Koesterich of iShares Blog

Russ K shares four reasons hes downgrading his view of Taiwan from overweight to neutral and shares potential single country solutions he prefers instead.

2012-11-19 Monetary and Fiscal Policy in Early 2013 by Scott Brown of Raymond James

The fiscal cliff refers to a substantial tightening of fiscal policy in 2013. Monetary policy cannot offset the cliff's negative effect on the economy. However, it would be surprising if a deal were not reached, if not by the end of this year, then in early 2013. Due to concerns about the long-term budget picture, some of the cliff is almost certain to get through.

2012-11-17 Election Dividends by Sean Bonner of Carne Capital

As the market continues to sell off, these are names to keep an eye on. The performance of high dividend paying stocks can be expected to remain volatile for the near future, both to the upside and downside. The selling may continue to feed on itself, but if a deal on dividend tax rates can be reached these names may at least revert to the mean and outperform the broad market.

2012-11-16 China's New Guard by Robert Horrocks of Matthews Asia

The Chinese Communist Party has selected a new leader. Actually, it has anointed a new leader that it already selected some time ago. We have known for at least a year that the new leader would be Xi Jinping, son of a reformist-minded early communist revolutionary, who held power in China's southern state of Guangdong as it led China's charge to create a market-based economy open to the rest of the world. Xi's pedigree, therefore, is assumed to be pro-reformist.

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.

2012-11-16 Fed Balance Sheet Expands, Reward-Risk Clarity Fades by Alan Levenson of T. Rowe Price

While the minutes of the October 23-24 FOMC indicated a lack of consensus regarding whether to initiate a new asset purchase program to replace the Maturity Extension Program (MEP) upon its year-end conclusion, we believe that the Committee will announce at the conclusion of its December 11-12 meeting that the Fed will begin open-ended purchases of Treasury securities at a pace close to the $45 billion per month in the MEP.

2012-11-16 Weekly Economic Commentary by Carl Tannenbaum, Asha Bangalore of Northern Trust

The focus on the fiscal cliff cannot be overstated. It is very hard for the world's central banks to set rules governing monetary policy. The troika charged with addressing Greece has some internal disagreement.

2012-11-15 Russia and China's Neighborly Interests by Mark Mobius of Franklin Templeton Investments

Whether our neighbors are as close as the airplane seat next to us or across a national border, most would probably agree that while we may not see eye to eye, peaceful cooperation makes more sense than tense relations. China and Russia share some 4,000 miles of common border, and their neighborly relationship has certainly had some ups and downs. But it's clear to me that the opportunities for cooperation between these two nations have enormous potential mutual benefits, particularly in the trade of natural resources.

2012-11-15 Rediscovering the Golden Beauty of Myanmar by Frank Holmes of U.S. Global Investors

Myanmar has been called "probably the best investment opportunity in the world right now," by legendary international investor Jim Rogers. In an interview with The Myanmar Times, he compared the country formerly known as Burma to China in the 1970s, when it started opening up to the world. "In 1962, Burma was the richest country in Asia. Then they closed and [now] it is the poorest."

2012-11-15 Pacific Basin Market Overview - October 2012 by Team of Nomura Asset Management

Equity markets derived support this month from improved U.S. economic data and an impression that China's economy might be bottoming out. In addition, the Euro Area Industrial Production numbers came in above consensus. The MSCI AC Asia Pacific Free Index including Japan declined by 0.39% while the MSCI AC Asia Pacific ex Japan Free Index gained 0.44% in October 2012.

2012-11-14 The Sun Also Rises by James Hunt of Tocqueville Asset Management

In his latest "Insights" piece, James Hunt, portfolio manager of Tocqueville International Value Fund, explains why Japanese equities, despite the country's poor demographics, huge public debt and weak growth prospects, still harbor some excellent opportunities. Mr. Hunt writes: "Everyone thinks Japan is sinking into obscurity and this negative sentiment provides us with the opportunity to buy what I consider to be excellent global franchise businesses at knock down valuations."

2012-11-13 The Downside to Socially Responsible Investing by Robert Huebscher (Article)

Who wouldn't want a cleaner environment or a more just society? We can all agree these are worthy goals. But it's an established fact that pursuing them through one's investing is costly; environmental-, social- and governance-based investing (ESG) does fine on a gross basis, but loses money net of fees. Now, a recently published paper argues that that ESG is basically a waste of time.

2012-11-13 Europe: Opportunity of a Generation by David Marcus of Evermore Global Advisors

A difficult political and economic backdrop is masking exceptional opportunities in European markets for discerning, long-term oriented investors. Evermore believes that there is a generational opportunity to build significant wealth by selectively investing in catalyst-driven, deep value European securities, trading at depressed valuations.

2012-11-13 Central Bank Insurance by John Mauldin of Millennium Wave Advisors

"If you want to enjoy life, go to Buenos Aires. If you want to do business, go to Sao Paulo," the saying goes. It is hard to get an impression of a country by going to a city of 20 million people. It is like visiting New York City and thinking you can understand the United States. But I never fail to enjoy myself in Brazil.

2012-11-13 Scotland: The Same, Only Better? by Bill O'Grady, Kaisa Stucke of Confluence Investment Management

As the Eurozone countries are trying to find the functional balance between national sovereignty and Eurozone-wide central control on the national level, fractures are also appearing within the nation states themselves. Additionally, the Northern European countries are questioning the extent to which they should be expected to bail out the Southern countries, while the wealthier regions of the nation states reason that they would be more efficient in managing their internal fiscal budgets.

2012-11-13 Seeking Shelter from the Storm? Consider Mega Caps by Russ Koesterich of iShares Blog

Russ Koesterich discusses how mega cap stocks are attractively valued and may be more resilient to the impact of the potential fiscal cliff.

2012-11-12 After the Election, Fiscal Cliff Outcome May Surprise by Libby Cantrill, Josh Thimons of PIMCO

Our base case for a fiscal cliff resolution continues to be a lame-duck mini-deal that would reflect about 1.5% of GDP in fiscal contraction in 2013 (vs. nearly 5% without a deal). But the dynamics of polarization and partisanship that played a role in past dysfunctional negotiations may have gotten worse. On a more optimistic note, it is widely known that second-term presidents are largely interested in their legacies spearheading noteworthy, bipartisan and lasting accomplishments for the history books.

2012-11-12 What If US Economic Growth Is Over? by Russ Koesterich of iShares Blog

A new research paper argues that investors may be grossly overestimating how fast the United States is likely to expand in the coming decades. Could this be the case? Russ K weighs in.

2012-11-12 Lopsided Risks by John Hussman of Hussman Funds

The recent sequence of overvalued, overbought, overbullish, technically exhausted setups followed by a clear technical breakdown is of greatest concern here, because we often observe that sequence at the beginning of deep and extended market losses.

2012-11-12 Surveying the Post-Election Landscape by Team of Lord Abbett

Of all the uncertainties facing investors over the past few years, the U.S. presidential election was among the most significant. And now that the election is over, asset managers are assessing the opportunities and riskssuch as the looming fiscal cliffwithin their respective markets. Indeed, the direction of fiscal policy remains investors' foremost concern, according to a recent survey of nearly 600 financial advisors conducted on Lord Abbett's postelection Web conference.

2012-11-09 Americas: Economic Review 3rd Quarter 2012 by Team of Thomas White International

Economic trends in most countries across the Americas region saw a moderate recovery during the third quarter, though the pace of growth remains subdued. Slower global demand due to the ongoing European recession and the slower expansion in Asia continues to restrict exports from the Americas. At the same time, domestic consumption growth has been relatively more robust than expected and has helped most regional economies prevent a deeper slowdown.

2012-11-09 Chart of the Week: Gold and an Ever-Growing Balance Sheet by Frank Holmes of U.S. Global Investors

While Americans were still submitting their ballots, gold rallied on the possibility of a President Barack Obama reelection. With presidential results confirmed, it appears that Ben Bernanke's job of hovering over the economy and dropping parachutes of money out of his helicopter is secure. "Gold could not have asked for a better outcome," with a second term for Obama, a Democratic Senate and Republican House, says UBS Investment Research.

2012-11-09 With the Election Over, Get Ready for the Fiscal Cliff by Russ Koesterich of iShares Blog

Russ Koesterich discusses how the close election could translate into more gridlock on the fiscal cliff, as well as longer-term tax and entitlement reforms.

2012-11-09 Roots of Economic Karma by Vivek Tanneeru of Matthews Asia

I'm a strong believer that bad governance (yes, bad) is a natural part of the process of socio-political empowerment, and one that is actually necessary at times in order for some democracies, such as India, to achieve faster economic growth. Typically, during times of great socio-political transformation economic governance takes a backseat as newly empowered segments of society view redistribution of power and patronage as the first order of business. Their attention turns to good economic governance only after they feel fully assimilated. Allow me to explain.

2012-11-09 Looking Past the Election by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

The election results are in, removing at least one area of uncertainty from the equation. For the near term, economic data in the United States may take a back seat. Growth around the world appears soft, but some pockets are more encouraging than others.

2012-11-09 Two Policy Instruments, Two Labor Market Thresholds by Alan Levenson of T. Rowe Price

Despite understandable post-election focus on the resolution of the looming fiscal cliff, there is persistent interest in the conditions under which the FOMC will end the asset purchase program initiated in September ("QE3"). The economic projections and monetary policy expectations submitted for the September 12-13 FOMC meeting indicate that a consensus for rate hikes begins to build as the unemployment rate approaches 7.0%.

2012-11-09 A Portrait of Two Presidents by Frank Holmes of U.S. Global Investors

On Friday, President Obama addressed the two topics that have been on many equity investors minds since election night: the economy and the dreaded fiscal cliff. In his speech, he delivered his familiar plan to combine spending cuts with increasing revenue by raising taxes on the wealthiest Americans. Thats how we did it in the 1990s, when Bill Clinton was president, says the president.

2012-11-09 What If US Economic Growth Is Over? by Russ Koesterich of iShares Blog

A new research paper argues that investors may be grossly overestimating how fast the United States is likely to expand in the coming decades. Could this be the case?

2012-11-08 Overcoming the Brake Light Shockwave by Christian Thwaites of Sentinel Investments

Big democratic breakthroughs, say Egypt, Tunisia are halting and fall far short of the hopes they embodied. Technology is a race over mobility and brevity but hardly elicits the same wonder from years past. Governments are polarized. The US had almost no voting overlap in recent years so big ideas are on the wane. In Europe, the supra-national organizations like the EU are swift to talk and slow to act. No we're not reactionaries. We think all this is explained by the deepest drop in output in the post-war period and the slowest recovery.

2012-11-08 Make Way for Debt Mutualization in Europe by Scott Minerd of Guggenheim Partners

Hurdles and hold-ups are inevitable but recent policy developments in Europe indicate that the ECB and the Bundesbank are cooperating and greater federalization is likely.

2012-11-08 Emerging Asia Pacific: Economic Review 3rd Quarter 2012 by Team of Thomas White International

Emerging Asia Pacific economies faced a challenging third quarter in 2012 as exports to key developed markets such as the Euro-zone came under pressure. As the austerity policies implemented by many of the countries in the Euro-zone caused a significant slump in demand, emerging market economies, which serve as the workshop of the world faced significant difficulties. Almost all major export-dependent nations like China, South Korea, Taiwan and Malaysia faced pressure to export growth. Still, most of the economies possessed both monetary and fiscal ammo to overcome the slowdown.

2012-11-08 Japanese Carmakers Can Surmount Backlash from China Dispute by Takeo Aso, Atsushi Horikawa of AllianceBernstein

The territorial dispute between China and Japan is clouding the outlook for Japanese automakers. But we think that bilateral business pragmatism will eventually trump the current political tensions.

2012-11-07 October 2012 Monthly Commentary by David Kelly of J.P. Morgan Funds

A light flashed on in my car this morning, telling me that it was due for service. When I take it in, the mechanics will presumably check both the engine and the brakes before deciding on exactly what it is that I need to repair, replace or adjust. For investors, after nine months of ups and downs in markets, an investment strategy checkup is in order.

2012-11-07 Report Raises Questions About Central Bank Gold Holdings by John Browne of Euro Pacific Capital

For years I have cautioned that changes in the ownership of gold held in the vaults of key central banks around the globe may not have been accurately reported. A report issued last month in Germany has once again brought these issues to the fore. In today's environment of rampant money creation and questioning of central bank activities, such uncertainty is bound to spark the curiosity of an increasing number of investors.

2012-11-06 Lacy Hunt on Our Economic Future by Robert Huebscher (Article)

Last week I spoke with Lacy Hunt, an unequivocal advocate of deficit reduction. Hunt defended – as persuasively as few others can – the need to address our fiscal imbalances. But equally respected economists are advocating for the other extreme, and he shares some common ground with them.

2012-11-06 ClearBridge Advisors - Market Commentary Q312 by Harry “Hersh” Cohen (Article)

Vibrant end demand is missing, as consumers have neither the wherewithal nor the will to spend as they did in prior periods.

2012-11-06 The Prize for the Fiduciary Standard: Global Market Leadership by Stephen Winks (Article)

Tough times in the brokerage business are about to get tougher. A difficult investment environment and damage to its reputation are threatening the industry, and now it faces regulatory challenges under Dodd-Frank as it evolves from its current sales-driven culture to a professional services culture focused on advice and the fiduciary standard. Bold leadership will be necessary to navigate this challenge; without it, the brokerage industry and their clients will suffer.

2012-11-05 Stream of Anecdotes by John Hussman of Hussman Funds

Analysts who interpret economic data as a stream of unconnected anecdotes are likely to find recent data encouraging, and will easily dismiss any concern about a U.S. recession on that basis. For our part, the internals of the economic picture new orders, backlogs, real income growth, and even the employment components of prominent economic surveys continue to deteriorate. Based on dozens of economic variables and methods that account for leading/lagging relationships (e.g. unobserved components estimates) our view remains that the U.S. economy has already entered a recession.

2012-11-05 3 Reasons to Consider Russia by Russ Koesterich of iShares Blog

With US investors largely focused on domestic matters these days, it can be easy to miss potential opportunities in international investing. Here, Russ K discusses the pros and cons of one such opportunity Russian equities.

2012-11-02 World's Economies Come of Age by Mark Mobius of Franklin Templeton Investments

As we grow and age, our needs and habits often change. The same is true of economies, which grow and change along with their people. Short-term statistics that impact a country's economic growth rate, such as consumer spending, exports and the like are certainly important, but there are also long-term shifts that can have significant economic implications for the future. Changing demographics is one of them. As a long-term investor, I have to look not only at today's opportunities, but also plan for tomorrow's developments.

2012-11-02 What's Troubling India? by Kenneth Rogoff of Project Syndicate

Just a couple of years ago, India was developing a reputation as an attractive investment location, with heads of state virtually tripping over one another to meet business leaders in Mumbai and pave the way for further trade and investment. Now their interest has faded, along with India's macroeconomic numbers.

2012-11-02 Of Varied States: Cyclical, Storm-Tossed and Swing by Alan Levenson of T. Rowe Price

The latest readings on employment growth and household formation show a firm underpinning for moderate growth, with the household sector gathering momentum toward the emergence of positive feedback loops. Despite the immense human cost of Superstorm Sandy, the adverse impact on measured economic activity is likely to be short-lived, with a compensating rebound to emerge before quarter-end. Next week's general election results should bring clarity to the route that policy makers will take to avoid the year-end fiscal cliff.

2012-11-02 Who Will Lead America Over the Next Four Years? by Frank Holmes of U.S. Global Investors

If President Obama is reelected, it could be a negative for certain energy companies involved in natural gas fracking, says International Strategy & Investment (ISI). Conversely, a Governor Mitt Romney win could be significant for energy companies. In its Romney Portfolio ISIs rationale is that Romney and the GOP will try to do more to promote traditional forms of energy, including offshore drilling, approving the Keystone pipeline, and exploiting the nations coal resources.

2012-11-01 Invesco Fixed Income Investment Insights: October 2012 by Darren Hughes, Scott Roberts of Invesco

High yield bond mutual funds have received $38.9 billion of inflows year-to-date through August, the second largest net inflow in the US retail bond category as measured by Lipper. Given known search activity and anecdotal evidence, we believe institutional flows into the asset class have been strong as well. Given this backdrop, we'd like to provide some insight into what's driving these flows, the likelihood of this continuing and the value in the asset class.

2012-10-31 US Stocks Facing a Bumpy Ride by Russ Koesterich of iShares Blog

The US stock exchanges are slated to reopen for trading on Wednesday, after Hurricane Sandy prompted the longest weather-related closure of the New York Stock Exchange since 1888. What can investors expect when trading resumes? Russ K explains.

2012-10-30 Building Portfolios that Beat their Benchmark: Measuring Nanometers with a Yardstick by Bob Veres (Article)

Using tools he co-developed with the Nobel-prize winning economist Bill Sharpe, one advisor has found that he can reliably outperform an appropriate benchmark. His work proves it is possible to build a portfolio knowledgably. You just need the right tools to get the job done.

2012-10-30 The Yield Hunt by Michael Lewitt (Article)

The high-yield market is not in danger of imminent collapse as some have argued. As long as defaults remain relatively low, and interest rates remain invisible, investors will continue to chase yield. But a few things could cause a sharp sell-off in the near future.

2012-10-30 Weekly Update: Commentary and Statistics by Team of ING Investment Management

U.S. equity markets fell back into decline during the week, as earnings reports and more specifically, forward outlooks inspired investor caution. Meanwhile, a potential "Frankenstorm" has the East Coast on edge for the coming week.

2012-10-30 A Bombing in Lebanon by Bill O'Grady of Confluence Investment Management

The larger issue is related to Syria's civil war and the growing potential for the conflict to regionalize. In this report, we will offer a short history of Lebanon and Syria, examine the current state of the conflict in Syria and discuss the potential for the Syrian civil war to become a regional conflict. As always, we will conclude with potential market ramifications.

2012-10-29 Distinction Without a Difference by John Hussman of Hussman Funds

In recent weeks, market conditions have fallen into a cluster of historical instances that have been associated with average market losses approaching -50% at an annualized rate. Of course, such conditions don't generally persist for more than several weeks the general outcome is a hard initial decline and then a transition to a less severe average rate of market weakness (the word "average" is important as the individual outcomes certainly aren't uniformly negative on a week-to-week basis).

2012-10-29 The White Hurricane by Jeffrey Saut of Raymond James

I revisit The White Hurricane this morning because it potentially looks like another 100-year storm is heading pretty close to Manhattan. So in addition to dealing with the Benghazi scandal, Syrian atrocities, Euroquake, the "fiscal cliff," a stalled U.S. economy, softening earnings momentum, waning revenues, a dysfunctional government, the nastiest campaign I have ever seen, and who Taylor Swift should date next, Wall Street now has to contend with the potential of being flooded out.

2012-10-29 Narrowing It Down: Single Country vs. Broad Exposure by Russ Koesterich of iShares Blog

With the number of exchange traded products continually growing (globally, there are now more than 4700 ETPs and counting), an interesting debate has arisen about whether investors should gain access to international equity markets through a fund that tracks a broad benchmark or through more granular regional or country exposures. Typically choice is a positive thing, but it's understandable that the size and scope of the ETP market can add a layer of complexity to an investor's selection process.

2012-10-29 The Shifting Investment Environment: Picking Growth Stocks in a "Saturated" World by Virginie Maisonneuve, Katherine Davidson of Schroders Investment Management

Is the global economy close to reaching a tipping point? The impacts of our key themes (demographics, climate change and the emerging market supercycle) are combining with the ramifications of the global financial crisis to create an environment where growth is reaching a point of "saturation". In this world, focusing on the sustainability of growth becomes more important than ever. This is important for investors as the global economy painfully adjusts to new realities and follows a rocky path to normalization.

2012-10-26 The China Debate by Robert Horrocks of Matthews Asia

It seems to me that pretty much the only thing you can get Democrats and Republicans to agree on these days is that China is bada job-destroying exporter of cheap goods. And indeed, at the most recent two presidential debates, both candidates spoke of the trade deficit with China and described China as a rule-breaker, including the way it has managed its currency. They phrased their views as if trade were a competition between nations and that exports are obviously superior to imports. U.S. manufacturers might agree but consumers may demur.

2012-10-26 Of Irish and Fiscal Cliffs by Team of Franklin Templeton Investments

Dr. Michael Hasenstab, Templeton Global Bond Fund portfolio manager and co-director of Franklin Templeton Fixed Income Group's International Bond Department, doesn't prescribe legislative answers, but he can relate the fiscal challenges the U.S. faces to the experiences of a country with its own dramatic cliffs: Ireland.

2012-10-26 Will South Africa's Struggles Overshadow its Potential? by Mark Mobius of Franklin Templeton Investments

Africa is a continent many investors bypass, but from my perspective as a long-term investor, I think that's a mistake. South Africa has faced some struggles recently, but I think they can be overcome, and a brighter future could be ahead there for its people. South Africa is the largest economy in Africa, and is the only country on the continent where I think the "frontier" market label doesn't apply. Some have added an "S" to the end of the "BRIC" acronym to include South Africa in the grouping of emerging market economies of Brazil, Russia, India and China.

2012-10-26 Don't Fear a Normal Gold Correction by Frank Holmes of U.S. Global Investors

Dont let the short-term correction fool you into selling your gold and gold stocks. The dramatic increase in money suggests that monetary debasement will continue, and in addition to all the above drivers, these are the positive dynamics driving higher prices for gold and gold stocks.

2012-10-26 What Now? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

The market appears to be in a "wait-and-see" mode in advance of the elections, but looking beyond November 6th is important for investors. The election is only one piece of the puzzle, and certain aspects of the political landscape likely won't be much clearer after Election Day. Earnings season has been somewhat disappointing, even though there was a relatively low bar to hurdle. We see more signs that the slowdown in the United States may be ending, however, with strength in housing particularly noteworthy.

2012-10-26 Weekly Economic Commentary by Carl Tannenbaum, Asha Bangalore and James Pressler of Northern Trust

Fiscal policy is a matter of multiplication. US GDP growth accelerated in the third quarter, but remains less than ideal. Recent reports out of China reassured the markets, but underlying trends are not so promising.

2012-10-25 In or Out? The Case for - and Against - the Stock Market by Team of Knowledge @ Wharton

Given ongoing volatility in the stock market, it's no surprise that investors are increasingly bearish on the market's prospects, beset by a lack of confidence in its institutional underpinnings and a general pessimism about the direction of the economy. But is that distrust misplaced? Wharton experts are mixed about the future fortunes of the stock market, with some saying that investors are withdrawing at the worst possible time and others noting that many people had entrusted too much of their retirement savings to the fate of equity markets.

2012-10-25 Renminbi on the International Stage by Mark Mobius of Franklin Templeton Investments

For more than a decade, China's currency, the Renminbi (RMB), had been on a path of appreciation, but some weakness this year generated renewed talk about whether the currency is fairly valued against global currencies. As global equity investors, we are constantly faced with currency changes. This is an important factor when considering our investments, because currency movements impact companies' earnings and operations.

2012-10-23 The Perils of the Fiscal Cliff by John Mauldin of Millennium Wave Advisors

In today's letter we'll peek over the Fiscal Cliff and see what economic models can tell us about government spending. And if we have time we'll quickly look at an interesting study that uses economics to predict the outcome of this US presidential election.

2012-10-22 The Data-Generating Process by John Hussman of Hussman Funds

For anyone who works to infer information from a broad range of evidence, one of the important aspects of the job is to think carefully about the structure of the data what is sometimes called the "data-generating process." Data doesn't just drop from the sky or out of a computer. It is generated by some process, and for any sort of data, it is critical to understand how that process works. In the financial markets, the data-generating process is often very misunderstood.

2012-10-22 Politics, Cliff Watching Take Priority in the Short-Term by Bob Doll of BlackRock Investment Management

The US elections are only two weeks away, and the recent polls show a very tight race. There are significant differences, both perceived and real, in the policies of the two candidates and the impact they might have on financial markets.

2012-10-22 Chinese Stocks Looking Like a Bargain by Frank Holmes of U.S. Global Investors

With negative sentiment toward China reaching an extreme in recent months, patient investors have been rewarded with recent news of improving data from the Asian giant.

2012-10-22 The Little Country That Could by Bill O'Grady, Kaisa Stucke of Confluence Investment Management

In this geopolitical report we will take a brief look at Estonia's history, its economy after the break-up of the Soviet Union, its remarkable economic growth in the 1990s and early 2000s, and the ensuing downturn in 2008. The country stands out for choosing a different path to deal with the recession than many other European countries.

2012-10-22 Lessons from Black Monday by Peter Schiff of Euro Pacific Capital

25 years ago, on another Monday in late October, the financial world seemed to disintegrate in a heartbeat. Though the 205 point drop in the Dow last Friday (the technical anniversary of the '87 Crash) was somewhat reminiscent of its 108-point drop on Friday, October 16, 1987, the real action in '87 was on the Monday that followed. And while this Monday is not nearly as black, it is important that we use the opportunity to recall the circumstances that nearly sent the stock market into cardiac arrest.

2012-10-22 3 Investment Strategies for the New World by Russ Koesterich of iShares Blog

No doubt about it the investment climate has changed, and it's unlikely to change back anytime soon. Russ K gives 3 possible solutions for investors seeking to adjust to the new investment world.

2012-10-19 International Equity - Monthly Product Commentary: September 2012 by Team of Thomas White International

International equities made strong gains in September as aggressive policy action from central banks in Europe and the U.S. helped offset concerns over moderating economic growth across the globe. The European Central Bank (ECB) announced a program to buy unlimited quantities of debt issued by troubled countries such as Spain, Portugal, and Greece, provided they adhere to a strict fiscal adjustment timetable.

2012-10-19 House of Mirrors by Jeremy Boynton of Laureate Wealth Management

Did you ever try to navigate the "House of Mirrors" as a kid at your local carnival? You know the one I mean ---- where you walk through a labyrinth of mirrors designed to confuse your orientation while mocking you with various distortions of your body? If you were particularly skilled, you could use the mirror to your own advantage. What a compelling metaphor for the current state of the financial markets.

2012-10-19 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company

In his latest quarterly letter, Ron Muhlenkamp, president and portfolio manager of the Muhlenkamp Fund, re-examines Europe, China, and U.S. Politics as the major drivers of the markets. On September 7, 2012, Muhlenkamp published a Market Commentary, headlined "Threat of European Banking Crisis Recedes." In it, he discusses the Outright Monetary Transactions program, introduced by the European Central Bank. Mr. Muhlenkamp thinks this program makes credible the ECB's promise to do all it can to keep the Eurozone together.

2012-10-19 Blurring Lines: Positioning for Developed and Emerging Market Realignments by David Fisher, Julie Salsbery of PIMCO

The demographic, financial and political lines separating developed and emerging countries are increasingly blurred, and we believe bond investors will need to adapt. Not only do investors need to take a more holistic approach to analyzing and investing in sovereign debt, they also need to reconsider their strategic thinking regarding benchmarks and their tactical approach to seeking returns. PIMCO Global Advantage Strategy utilizes a GDP-weighted benchmark and capitalizes on PIMCO's global resources to create a portfolio designed to reflect the evolving international opportunity set.

2012-10-19 Educating India by Siddharth Bhargava of Matthews Asia

India has long been a country where entrepreneurs have stepped in to fill gaps in the market, and their role in primary education has been no different. Over the last decade, an estimated 300,000 low-cost private schools have sprung up across India. And as counterintuitive as it seems, many poor parents are willing to pay for their children's schooling to avoid the country's free education system.

2012-10-19 Beyond Borders: Currency Considerations for Investing by Russ Koesterich of iShares Blog

As more international assets are finding their way into investment portfolios, it's important for investors to recognize the effect that currency exposure may have on their portfolios.

2012-10-19 Stealth Mode by Stephen J. Taddie of Stellar Capital Management

After more than 30 years of declining rates, a reversal that started a longer term trend of higher interest rates, like that experienced from the late 50s to early 80s could be devastating to bond investors. In addition, interest rate increases have not treated many other income investments like fixed rate preferred stocks very well as many of these issues have extremely long maturities, and/or are perpetual. This makes stretching for yield in this type of environment both challenging and hazardous.

2012-10-19 Chinese Stocks Looking Like a Bargain by Frank Holmes of U.S. Global Investors

This appears to be a good time to be investing in China, as stocks are historically cheap. Chinese stocks are also cheap compared to emerging markets.

2012-10-18 Quarterly Review and Outlook - Third Quarter 2012 by Hoisington and Hunt of Hoisington Investment Management

Entering the final quarter of the year, domestic and global economic conditions are extremely fragile. Across the globe, countries are in outright recession, and in some instances where aggregate growth is holding above the zero line, manufacturing sectors are contracting. The only issue left to determine is the degree of the downturn underway.

2012-10-18 Investment Outlook 2013: "ABCD" Investing: Anything Bernanke Cannot Destroy by Cliff Draughn of Excelsia Investment Advisors

The Ben Bernanke and Mario Draghi concert gave the markets a double shot of their love in the month of September by promising to print as much money as needed to finance the debts of their respective countries. Ever since the financial fraternity party ended in 2008 and the world began deleveraging its massive credit hangover, the global markets have been hooked on the next shot of love from the central bankers.

2012-10-18 As Global Growth Falters, Consider Emerging Markets by Russ Koesterich of iShares Blog

Global growth this year is forecast to lag that of both 2011 and 2010, and the outlook for 2013 isn't much better. These sobering forecasts are bolstering Russ K's view that investors should consider being overweight emerging market stocks.

2012-10-18 Macro View: Europe's Glacial Move To Federalization by Scott Minerd of Guggenheim Partners

Uncertainty continues to weigh on European markets but the continent is still drifting toward federalization. Recent trends and political developments are constructive for an eventual return to growth for the region.

2012-10-17 Fuzzy Math from the Continent of Peace by Christian Thwaites of Sentinel Investments

Whoops! The IMF made two announcements last week that caught our attention. But to set up the joke in all this, it's worth remembering that for decades the IMF preached austerity economics to any country that needed balance of payments assistance.

2012-10-17 Banks Punished For Central Bank and Political Errors by John Browne of Euro Pacific Capital

In recent decades politicians have increasingly followed the Keynesian prescription of economic growth through continued government borrowing and the creation of undreamt of amounts of fiat money by central banks. To facilitate this process, the larger commercial banks have acted as the central banks' de facto distribution system, and as a result have grown ever larger while accepting progressively greater risks.

2012-10-17 Emerging Europe: Third Quarter 2012 Economic Review by Team of Thomas White International

In its recent economic assessment, the European Bank for Reconstruction and Development (EBRD) said it expects growth to slow down during the year in member countries such as Russia, Poland, Hungary, and Turkey as the effects of the Euro-zone crisis spills over. The bank said many of these countries have already seen lower growth, but Russia especially is affected by falling commodity prices. Striking a similar note, the International Monetary Fund in its World Economic Outlook said emerging economies of the world are at risk should the developed economies experience a continued slowdown.

2012-10-16 The ABCs of China's Share Markets by Mark Mobius of Franklin Templeton Investments

A shares, B shares, H shares. Chinese equity listings can be confusing to global investors. I'm often asked what I think about a particular share market in China, why one is outperforming others, and which to invest in. I can't tell you what to invest in, but I can give you some information which I hope will help you discern what choices make sense for you.

2012-10-15 The United States: Stability or Complacency? by Alan Levenson of T. Rowe Price

The International Monetary Fund's updated World Economic Outlook foresees a modest pace of U.S. economic expansion in 2012-2013, emphasizing significant downside risks emanating from the euro area crisis and from the domestic fiscal cliff. Weakness in the euro area and slower growth in a secularly-restructuring Chinese economy are weighing on U.S. export trends, but sturdier growth in Canada and Mexico is providing an important offset.

2012-10-15 Should We Bail Out (of) Europe? by Joni Clark of Loring Ward

The troubling headlines from Europe just keep on coming, and the seemingly-never-ending string of economic summits has failed so far to develop a comprehensive solution. This has led some investors to wonder if they should reduce their exposure to investments in the eurozone.

2012-10-15 Lender of Last Resort Move Crucial to Regional Stability by Andrew Balls of PIMCO

While the ECB's engagement as a lender of last resort is crucial, Europe's big four governments must provide political commitments supportive of ECB policy to counter the lingering threat of a Greek exit, address convertibility risk, and build a more stable union. However, this will require sustained growth. Faced with capital flights from the periphery and lowered credit ratings, the key challenge remains crowding-in private and foreign official investors to buy peripheral sovereign debt.

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.

2012-10-15 Passed Pawns by John Hussman of Hussman Funds

I've long been fascinated by the parallels between Chess and finance. Years ago, I asked Tsagaan Battsetseg, a highly ranked world chess champion, what runs through her mind most frequently during matches. She answered with two questions "What is the opportunity?" and "What is threatened?" At present, I remain convinced that the key opportunity lies in closing down exposure to risk.

2012-10-15 Economic Singularity by John Mauldin of Millennium Wave Advisors

There is considerable disagreement throughout the world on what policies to pursue in the face of rising deficits and economies that are barely growing or at stall speed. Both sides look at the same set of realities and yet draw drastically different conclusions. Both sides marshal arguments based on rigorous mathematical models "proving" the correctness of their favorite solution, and both sides can point to counterfactuals that show the other side to be insincere or just plain wrong.

2012-10-15 And That's the Week That Was by Ron Brounes of Brounes & Associates

Though investors seemed to overlook the negative earnings projections for the third quarter, the initial releases finally brought out the sellers. While the naysayers had been drowned out by the optimism of the Fed moves, the early results and management warnings prompted investors to sell (and sell and sell) as the major equity indexes each plunged over 2% in what was considered the worst week since June. Heck even a "cheery" Joe Biden couldn't save the markets this week.

2012-10-15 ProVise Bullets by Ray Ferrara of ProVise Management Group

Some recent research by InvesTech Research shows that the performance of the Dow Jones Industrial Average can indicate who will win the White House. James Stack, President of InvesTech recently released a study that showed in elections since 1900 90% of the time the Dow has correctly predicted the outcome of the election based on its returns from Labor Day until Election Day. If the Dow posts a positive return during this time period, the party in power keeps the White House and if the return is negative, they do not

2012-10-12 China's Thousand Talents by Christian Halvorsen of Matthews Asia

Employment is one of many paradoxes of mainland China. The country has been adding approximately 6 million new college graduates annuallymore than any other country. Despite the fierce competition for entry-level work, China faces the additional challenge of attracting enough skilled labor in many key industries. Compounding this problem is the fact that China has for years experienced a severe brain drain, often with Chinese citizens staying abroad after completing their overseas studies.

2012-10-12 Teetering on the Edge? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

Concerns about a possible US recession remain elevated in light of the pending "fiscal cliff," resulting in some lackluster stock market action. The fiscal cliff and uncertainty around tax and regulatory policy appear to be influencing business decisions to the detriment of economic growth. While worst-case scenarios for Europe may have been taken off the table by the ECB, Spain's reluctance to ask for aid is causing consternation. And although we see continued weak growth in China, signs indicate the global slowdown may be turning around.

2012-10-12 Chinas Pyramid of Power by Frank Holmes of U.S. Global Investors

We've been able to witness Chinas incredible growth, with GDP averaging 10 percent per year and more than 500 million people moving out of poverty over the past 30 years. Now after three decades of tremendous expansion, this new generation of leaders will have to carefully maneuver the country into the next decade, towing the line between maintaining the stability created during the previous Hu-Wen administration and continuing the political and economic reform necessary to adjust to the countrys slowing growth.

2012-10-12 Should We Bail Out (of) Europe? by Joni Clark of Loring Ward

Though the eurozone has its share of ongoing challenges and uncertainty, this doesn't mean investors should exit Europe entirely.

2012-10-12 U.S. Economic and Interest Rate Outlook - October 2012 by By Carl Tannenbaum and Asha Bangalore of Northern Trust

Budget negotiations in the US and Europe are attempting to balance austerity, prosperity, and posterity. US exports and imports are showing the strains of sluggish conditions overseas. Our updated economic forecast reflects some "cliff" effects, but not a renewed recession.

2012-10-11 Inflation Regime Shifts: Implications for Asset Allocation by Nicholas Johnson, Sebastien Page of PIMCO

Investors who are concerned about inflation should focus on increasing their exposure to asset classes that provide a positive beta to changes in inflation. We believe that asset prices are much more sensitive to inflation surprises than actual inflation levels themselves. Given the current macro environment, investors face the possibility that low growth and high inflation may coexist. Commodities provide a levered response to inflation. Investors can hold a relatively small amount of commodities to hedge a much larger portfolio.

2012-10-11 When Averting Loss Can Lead to Averting Gains by Team of Franklin Templeton Investments

Think about something you'd really hate to lose, something of value to you such as a treasured possession. Now imagine you're told that if you lay that object on the line in a bet, you have a good shot at doubling its value, but there's also a possibility you'll lose it. How low would the chance of loss have to be before you'd be willing to take the risk? Maybe 10 percent? Less than that? The answer may lie in a behavioral economic theory called "loss aversion."

2012-10-10 Will South Africas Struggles Overshadow its Potential? by Mark Mobius of Franklin Templeton Investments

Africa is a continent many investors bypass, but from my perspective as a long-term investor, I think that's a mistake. South Africa has faced some struggles recently, but I think they can be overcome, and a brighter future could be ahead there for its people. South Africa is the largest economy in Africa, and is the only country on the continent where I think the "frontier" market label doesn't apply. Some have added an "S" to the end of the "BRIC" acronym to include South Africa in the grouping of emerging market economies of Brazil, Russia, India and China.

2012-10-10 Pacific Basin Market Overview by Team of Nomura Asset Management

Regional equity markets remained largely directionless and volatile during the third quarter amid the summer trading lull. Government policy action towards the end of the quarter triggered the biggest market moves. However, the euphoria was short lived following the announcements of the European Central Bank's Outright Monetary Transactions and the Federal Reserve Board's third round of quantitative easing.

2012-10-10 Infectious Ideas for a Connected World by Frank Holmes of U.S. Global Investors

With a greater international exchange of ideas, goods, services, and talent today, our world has never been more wired and connected. Globalization has wholly transformed how people across continents absorb information and interact with each other. I believe it also has subtly changed how we think and act as individuals.

2012-10-09 Is Gluskin's David Rosenberg Right about Utilities? by Geoff Considine (Article)

They're not the sexiest property on the Monopoly board, but in today's market, there's plenty of evidence mounting that utilities are a great source of income. Indeed, Gluskin Sheff's David Rosenberg made the case for utilities in a recent commentary.

2012-10-09 Dividend Income: Music to Our Ears by ClearBridge Advisors (Article)

The hunger for income among investors is helping put dividends in the spotlight, say Hersh Cohen and Mike Clarfeld of ClearBridge.

2012-10-09 Expect Economic Sluggishness to Persist by Bob Doll of BlackRock Investment Management

Although the economy does seem to have improved a bit in recent months compared to where it was in the second quarter, growth levels in both the United States and around the world will likely remain subpar at least through the middle of next year. The base case for the United States appears to be the economy continuing to grow at around 2% (perhaps a notch higher) over the course of 2013. This growth level would be contingent on avoiding the full force of the fiscal cliff and would be underpinned by a recovery in housing and a pickup in capital spending levels.

2012-10-09 This Fortress built by Nature for Herself by Dennis Gibb of Sweetwater Investments

It has been some time since I have taken keyboard in hand in any attempt to inform anyone of my thoughts on the world of investing. I am taking the time to write now because we are embarked on some events that are, in my humble opinion, truly historic. As these events play out the United States may not be a fortress built by nature for herself. So hang on this could get rough and as usual it will be opinionated with a different perspective.

2012-10-08 Number Five by John Hussman of Hussman Funds

Examine the points in history that the Shiller P/E has been above 18, the S&P 500 has been within 2% of a 4-year high, 60% above a 4-year low, and more than 8% above its 52-week average, advisory bulls have exceeded 45%, with bears less than 27%, and the 10-year Treasury yield has been above its level of 20-weeks prior. While there are numerous similar ways to define an "overvalued, overbought, overbullish, rising-yields" syndrome, there are five small clusters of this one in the post-war record.

2012-10-08 China: Towering Ambitions by Team of Thomas White International

The proposed Sky City will have schools, hospitals, homes, stores, and offices.

2012-10-08 Easing Labor Pains for Europe? by Milton Ezrati of Lord Abbett

The Continent sees the first stirrings of needed job-market reforms.

2012-10-05 Rare Earths Could Be Pawn in Island Spat... Again by Heiko Ihle of Euro Pacific Capital

As China and Japan continue to ratchet up tensions over a group of disputed islands in the East China Sea, many investors may be wondering how the dispute could affect the marketplace. One potential area for fallout is the market for rare earth elements (REEs): the futuristic sounding group of 17 minerals with unpronounceable names that play a critical role in everything from hybrid cars to flat screen TVs.

2012-10-05 When Do You Ignore Your Gut? by Team of Franklin Templeton Investments

Anyone who took an introductory psychology class probably remembers the classic study in which different people witnessing the same crime each report a different take on what happened. Though each presumably sane, sober person witnessed the events with his or her own two eyes, individual expectations and biases influenced how they perceived what happened. Sure, you say, but what does this have to do with investing? Well, it turns out that our individual expectations and biases influence how we view investments, too.

2012-10-05 Harmony and Turmoil by Sherwood Zhang of Matthews Asia

Since Japan's recent purchase of the disputed Diaoyu/Senkaku Islands a few weeks ago, anti-Japan protests erupted in various Chinese cities, with some turning violent and targeting Japanese shops, cars and factories.

2012-10-03 Circle the Wagons on GLD by Bill Smead of Smead Capital Management

We spoke to two small groups in Spokane on September 21st, 2012. For better or worse, when I think of Spokane I think of my cousin Gary. It was 1981 and yours truly was a young stockbroker at Drexel Burnham Lambert. Gold had been in a wonderful bull market ride in the prior five to ten years. Gary was interested in participating in gold through a gold-mining stock traded on the Spokane Stock Exchange. Spokanes proximity to the Northern Idaho mining towns and closeness to the Canadian border made it a natural place for commodity traders and mining enthusiasts to gather to transact business.

2012-10-03 Stocks Are Taking a Breather from the Rally by Bob Doll of BlackRock Investment Management

To at least some extent, the pause in the rally we have seen over the past couple of weeks can be attributed to some profit-taking on the heels of a significant multi-month uptrend (US stocks rose close to 6% in the third quarter). It is also likely, however, that investors are coming to grips with the fact that the world continues to face some serious risks and are recognizing that not all of the world's problems can be solved by central bank action.

2012-10-03 Where are the Global Winners? by Louie Nguyen of Soledad Investment Management

In today's ber-dreary and volatile global market condition, it can be difficult to imagine how the various markets around the world will eventually right themselves. It is worth noting, however, that the global market has righted itself before, from predicaments that seem just as, if not even more, dire than what we face today. Think Thailand and Korea in 1997, Mexico in 1994 and the Dot-Com Bubble in 2000. The following is the latest in our annual Global Price to Earning (P/E) analysis. It is part of our on-going effort to find compelling investments from around the world.

2012-10-03 Don't Bring Me Down: Not Swayed by Pessimism at BCA Conference by Liz Ann Sonders of Charles Schwab

We present highlights, key takeaways and perspective on the recent BCA Research Investment Conference. The eurozone crisis and China's slowdown remain risks, but are somewhat offset by optimism about US markets. Politics will remain a force underpinning uncertainty and volatility.

2012-10-02 Confronting the Unemployment Crisis by Robert Huebscher (Article)

Policymakers seeking a path to economic recovery must first answer one crucial question: Is our persistently high unemployment structural or cyclical? If it's cyclical, then monetary and fiscal measures designed to boost consumer spending will restore the US to full employment in due course. But if we face a structural problem, then quick fixes won't work until we correct deeper imbalances that have left 12.5 million Americans without jobs.

2012-10-02 Lessons from Scandinavia by Kaisa Stucke, Bill OGrady of Confluence Investment Management

During the late 1980s and early 1990s, Scandinavian nations suffered through balance sheet recessions. Commentators have suggested that U.S. policymakers could use the Scandinavian response to their crises as a roadmap for resolving the current U.S. situation. As part of our own analysis, we have studied several earlier events to understand the underlying similarities and differences to develop insights into the current event.

2012-10-02 Damages by Bill Gross of PIMCO

How could the U.S. not be the first destination of global capital in search of safe (although historically low) prospective returns? Studies by the CBO, IMF and BIS (when averaged) suggest that we need to cut spending or raise taxes by 11% of GDP and rather quickly over the next five to 10 years. Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow, and the dollar would inevitably decline.

2012-10-02 Are Markets Ready for a Correction? by Chris Maxey, Ryan Davis of Fortigent

Entering the final quarter of 2012, many investors may find themselves apprehensive about the outlook for markets and the broader economy. While the pace of economic disappointment appears to have slowed down and actually reversed according to the Citigroup Economic Surprise Index actual data levels continue to suggest an anemic economic state.

2012-10-01 Leap of Faith by John Hussman of Hussman Funds

Both the economy and the financial markets will do fine in the longer-term, but to imagine that there will not first be major challenges and disruptions is a leap of faith and a leap over a century of economic and financial history that screams otherwise.

2012-10-01 Chile: Lithium Adds More Energy to Export Growth by Team of Thomas White International

The world's largest producer and exporter of lithium has added another lucrative segment to its commodity fortunes.

2012-10-01 Dont Be Fooled By September's Market Rally by Russ Koesterich of iShares Blog

September has historically been the worst month of the year, but this time around it did not play to script. The surprising rally distracted complacent investors from signs of increasing volatility. Russ K explains.

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.

2012-09-28 Schwab Market Perspective: Disrespected RallyCan It Continue? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

US equities are trading near five-year highs but numerous measures show investors remain skeptical. The enthusiasm following the Fed's announcement of more quantitative easing was short-lived, although the summer rally in stocks could be at least partially attributed to anticipation of more stimulus. The enthusiasm following the Fed's announcement of more quantitative easing was short-lived, although the summer rally in stocks could be at least partially attributed to anticipation of more stimulus.

2012-09-28 Commodity Stocks: Improving Returns With No Extra Volatility by Frank Holmes of U.S. Global Investors

Not every investment is the same. Even within the commodities space, when looking at measures such as correlation, performance and risk, two indexes can have very different effects on a portfolios results.

2012-09-27 Gold Stocks or Apple: Which Holds a Place in Your Portfolio? by Frank Holmes of U.S. Global Investors

In a battle between the largest gold exchange traded fund and the biggest tech stock, which investment would get your vote? Would you choose gold because of the macroeconomic factors supporting the rise of the precious metal? Or do you put your money on Apple because of its overwhelming popularity?

2012-09-27 Reality Check for Europe by Carl Tannenbaum of Northern Trust

Over the past two years, the markets have gone through cycles of escalating concern about Europe punctuated by brief periods of calm.

2012-09-27 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital

The investment outlook for large swaths of the Islamic world may actually strengthen, because of or in spite of, events of recent weeks. Stock-price buoyancy on the Egyptian and Karachi exchanges, amid continuing public outrage, may presage coming improvements. Also this week, we take a look at Turkey, given the exceptional gains seen on the Istanbul Stock Exchange.

2012-09-27 PIMCO'S Cyclical Outlook for Asia: Structural Slowdown Shaping Near-Term Growth Dynamics by Tomoya Masanao, Robert Mead, Ramin Toloui of PIMCO

Rather than a hard landing for China, we foresee a structural downshift that could be called a "New Normal with Chinese characteristics." Australia has considerable scope for additional rate cuts and more expansionary fiscal policy to address regional weaknesses. The Japanese economy will be affected by weak economic growth in China, which will add more pressure for the Bank of Japan to respond.

2012-09-26 Are BRICs Hitting a Growth Wall? by Mark Mobius of Franklin Templeton Investments

A global pattern of easing economic growth in the first half of 2012 has impacted the "BRIC" nations Brazil, Russia, India and China. However, I don't think the BRIC economies have hit a brick wall. While some market participants have been waiting impatiently for governments to undertake further stimulus measures, others have wondered whether something more fundamentaland less within governmental controlmight be at work.

2012-09-25 How to Build a Portfolio by Adams Jared Apt (Article)

This is the first of a set of three articles intended for the educated layman, in which I will combine the core ideas presented in my preceding articles into a comprehensive description of how to put together a portfolio. In this one, I'll explain what is often called Modern Portfolio Theory.

2012-09-25 Stocks Should Overcome Hurdles to Continue the Bull Market by Bob Doll of BlackRock Investment Management

Although global economic data has been relatively weak in recent years, risk asset prices have nonetheless advanced. We would attribute this trend to the fact that weak economic growth does not, by itself, limit the potential for risk assets. In our view, the liquidity-driven reflationary policies of the world's central banks have been a more important factor for asset prices than economic growth levels have been.

2012-09-24 And That\'s the Week That Was by Ron Brounes of Brounes & Associates

These days, the various central bankers keep trying to outdo themselves with new stimulus deals. This week, Bank of Japan followed the Fed leads with an expanded bond buying program. Perhaps the moves will reap dividends and the global economy will surge to higher highs in the not so distant future. (Or perhaps the "easy money" strategies will have little impact long-term and lead to periods of inflation and asset bubbles.) Apple's latest "new new" thing remains in hot demand (but can supplier keep up?).

2012-09-24 Eating the Future by John Hussman of Hussman Funds

Every security on Earth works like this. The higher the price you pay for a given set of expected future cash flows, the lower your prospective future rate of return. Higher prices essentially take from future prospective returns and add to past returns. Conversely, lower prices take from past returns and add to future prospective returns.

2012-09-24 Trade Winds Shifting in America's Favor by Milton Ezrati of Lord Abbett

The improvement in the U.S. trade balance can be traced to the dollar's relative weakness and increasing domestic energy production.

2012-09-24 ECB Throws Euro a Life Preserver by Philippe Brugere-Trelat of Franklin Templeton Investments

A few short months ago, the euro appeared to be in critical condition. The crushing weight of debt, particularly in Southern Europe, seemed to be sucking the life out of the European Union. Now that the European Central Bank has announced that it stands ready to provide some life support to the euro, the contagion fears seem to have ebbed, and one might even say predictions of its death were perhaps greatly exaggerated.

2012-09-24 Alice in Euroland by Giles Conway-Gordon of Cogo Wolf Asset Management

If you have a taste for make-believe, fantasy and unreason the shifts and contortions of the European elite in the face of the Eurozone (EZ) crisis, culminating in the latest plan for the European Central Bank (ECB) to purchase unlimited quantities of the bonds of EZ members in financial difficulties, have left you spoilt for choice over the last few months.

2012-09-21 Testing Indonesia's Coal Boom by Xin Jiang of Matthews Asia

On a recent trip to Indonesia, small talk with my taxi driver led to an interesting proposal: an offer to buy a coal mining license. I wasn't in the market for one but it just goes to show how much Indonesia's coal mining industry has grown in recent years. The country's rapid and significant development in this area has been due partly to privatization efforts, but more so to a sharp uptick in demand from countries like China. Nearly 80% of the output from Indonesian mining firms is exported, with China as the largest individual importer.

2012-09-21 The Ramifications of a Robin Hood Tax by Frank Holmes of U.S. Global Investors

Could a transaction tax have unintended consequence for American banks? While the jury is still out on that answer, Hungarys example is a reminder to policymakers to comprehensively consider the rewards of collecting a Robin Hood tax along with the risks. Profits and bank credit growth rates across Hungary plummeted due to the hefty bank levies imposed.

2012-09-21 About That Swiss Neutrality by Russ Koesterich of iShares Blog

Swiss stocks still merit a positive long-term outlook but on a short term basis, Russ is changing his allocation to underweight from neutral.

2012-09-19 Power Struggles and Progress in Romania by Mark Mobius of Franklin Templeton Investments

Bordering the Black Sea in Southeastern Europe, Romania offers visitors a variety of beautiful and dramatic landscapes concentrated in a relatively small land area, including modern cities and medieval villages, sweeping mountain vistas, broad plains and sandy beaches. Romania may also be one of the more attractive investment destinations in emerging Europe today, but its political environment has been characterized by some power struggles as dramatic as its scenic views.

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.

2012-09-18 Campaign Rhetoric and Our Energy Future by Michael Edesess (Article)

At their respective conventions, both President Obama and Mitt Romney spoke to a centrally important topic for America and the world: energy. Their positions – political posturing aside – are broadly similar. But rather than a coherent, sustainable vision for the energy future of the United States, both men's rhetoric reflected the usual exercise in political base-touching, apple pie-polishing, and third-rail avoidance. And two important, perhaps crucial, pieces of the energy puzzle were hardly mentioned at all.

2012-09-18 Recognize the Relative Advantages of Natural Resource Equities vs. Commodities by RS Investments (Article)

This RS Investments research brief examines how shifts in commodity fundamentals presents the case for employing natural resource equities as a means to benefit from favorable long-term secular trends, while achieving superior risk-adjusted returns, similar diversification benefits, and more reliable inflation protection relative to commodities.

2012-09-18 $4 Gas Could Put Brakes on Growth by Milton Ezrati of Lord Abbett

Reaction to the recent climb in gasoline prices appears surprisingly muted, but a sustained rise could result in a significant drag on U.S. growth.

2012-09-18 Federal Reserve Actions Help the Rally to Continue by Bob Doll of BlackRock Investment Management

The headline news last week was the US Federal Reserve's announcement of a new round of quantitative easing in which the central bank plans to purchase $40 billion of mortgage-backed securities on a monthly basis (without a predetermined end date). The Fed also pushed back the timeframe on how long it will maintain its current zerointerest-rate policy, indicating that the current level of rates should be in effect through the middle of 2015.

2012-09-18 Complex Structures for Investing in China by Hardy Zhu of Matthews Asia

China's Variable Interest Entities (VIEs) have long allowed foreign investors to be able to partake in the growth of some industries in China, such as education and the Internet, restricted to foreigners. VIEs have come under increasing scrutiny. But are they inherently more risky? This month Hardy Zhu takes a look.

2012-09-17 Low-Water Mark by John Hussman of Hussman Funds

As of Friday, our estimates of prospective return/risk for the S&P 500 have dropped to the single lowest point we've observed in a century of data. There is no way to view this as something other than a warning, but it's also a warning that I don't want to overstate. This is an extreme data point, but there has been no abrupt change; no sudden event; no major catalyst. We are no more defensive today than we were a week ago, because conditions have been in the most negative 0.5% of the data for months.

2012-09-17 The Philosophy of Tops by Jeffrey Saut of Raymond James

The call for this week: To me the only question is if the stock market is going to correct its current overbought condition by going sideways, or if it is going to correct back to the 1400 - 1422 support. In either event I have been pretty confident that the Fed has already begun printing money. That has been eminently evident by the overall action in the commodity markets, the dollar, and the fact that stocks were unable to correct in the normal timing band for a daily cycle low. Indeed, I actually expected an easing of monetary policy out of last month's Fed meeting.

2012-09-17 Emerging Markets Equity Monthly Product Commentary: August 2012 by Team of Thomas White International

Emerging market equities saw a marginal price correction during the month of August, as concerns about growth moderation in these economies persisted. The economic downturn in Europe, one of the largest markets for export-oriented emerging market countries, continues to force policy makers in emerging economies to come up with programs to support domestic growth. However, renewed optimism over aggressive policy action to stem the fiscal crisis in Europe helped the emerging markets in.

2012-09-17 The 9/11 Lessons for Terrorists by Bill O'Grady of Confluence Investment Management

In this report, we will outline potential lessons learned over the past 11 years by terrorist groups. By doing this, we hope to outline how terrorists might act in the future. As always, we will conclude with potential market ramifications.

2012-09-14 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital

The prominent US trade mission has been in Cairo at a particularly challenging moment politically. At-hand circumstances will remind these business leaders just how volatile the country can be, especially in the absence of growth. Egypt is probably the largest emerging market with the most uncertain economic direction, at least for the time being. We also take a closer look this week at Turkish-Iranian trade relations and policy developments in Indonesia.

2012-09-14 Central Banks Take Center Stage by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Accommodative central banks have traditionally been good for equities and stocks have responded positively to recent action. However, each market reaction to US Fed action has been shorter in length and challenges persist. Although recent economic data has been beating relatively low expectations, it is still not meeting the Fed's hopes. We appreciate the sentiment of wanting to stimulate growth, but the Fed's power is limited. It's down the street in Washington where the real power to stimulate growth lies.

2012-09-12 Pacific Basin Market Overview - August 2012 by Team of Nomura Asset Management

Pacific Basin equity market performances were mixed during August 2012 and generally underperformed markets in Europe and North America, largely due to the drag caused by concerns surrounding Chinas slowing economic growth rate. Numerous statements made by European leaders to support the Euro helped to allay fears and brought yields on sovereign bonds lower during the month.

2012-09-12 Will America Be Greece in Four Years? by Gary Halbert of Halbert Wealth Management

The US national debt topped $16 trillion last week, and it was almost as if no one paid attention. At the rate we are going, the national debt will top $20 trillion just four years from now in 2016. In my August 21 E-Letter, I pointed out just how mind-boggling a trillion dollars is. Lets revisit that analogy of a trillion in terms of time.

2012-09-12 Investing is Like Duck Hunting by Pamela Rosenau of HighTower Advisors

The discussion of additional monetary easing by the Federal Reserve has been the topic du jour in recent weeks. As a result of potential additional monetary stimulus, the US dollar has experienced a decline. Also, after a weaker than expected jobs report last week, US treasuries initially rallied given an increased expectation of Fed action. However, as pointed out by the market commentators at Sober Look, the Treasury curve has begun to steepen with the "30-year bond and other longer dated treasuries steadily selling off."

2012-09-11 Ponzi Games by Michael Lewitt (Article)

Whatever schemes the European Central Bank may cook up over the next few months will only prove short-term liquidity relief to what are long-term insolvency problems. Like any Ponzi scheme, the last money in is going to be hurt the worst when the charade comes to an end. In the meantime, investors proceed at their own risk.

2012-09-11 The Winds of Market Change by Mark Mobius, Michael Hasenstab of Franklin Templeton Investments

As we cross the mid-way point of the year, you might say the equity and fixed income markets have been a lot like the recent weather in much of the world: uncertain, and tending toward extremes. The perception of a stormy economic climate has driven some equity valuations to extremely low levels, particularly in Europe, and investors have been pouring into fixed income despite extremely low yields.

2012-09-11 Dividend Focused ETFs Don't Offer a Free Lunch, but They Let You Snack along the Way by Kane Cotton of Bellatore Financial, Inc.

There is no free lunch in investing! These words ring true, on average, over time for most investors. After all, investing is a trade off between growth and price as well as risk and return. The higher the expected future growth of a stock, the more likely it will be that investors have to pay a higher price (P/E) to get a piece of that future growth.

2012-09-11 Rally Should Continue, but Look for More Volatility by Bob Doll of BlackRock Investment Management

Despite a relatively disappointing jobs market report for August, stocks rose last week as investors focused on the European Central Banks (ECB) announcement of its longawaited plan to buy bonds in the secondary market. The ECB program represents an important step in terms of lowering volatility and providing a cushion for Europes debttroubled countries to make some longer-term improvements in their fundamentals.

2012-09-11 US Stock Market Sentiment in a World of Wide Asset Allocation by Bill Smead of Smead Capital Management

Our long-time readers are aware that we are stingy when it comes to trading and big believers of keeping trading costs low at Smead Capital Management. Despite these natural inclinations, we do try to keep the pulse of sentiment in the US stock market.

2012-09-10 Late-Stage, High-Risk by John Hussman of Hussman Funds

The market conditions we observe at present are very familiar from the standpoint of historical data, matching those that have appeared prior to the most violent market declines on record (e.g. 1973-74, 1987, 2000-2002, 2007-2009).

2012-09-10 As the Euro Tumbles, Spaniards Look to Gold by Peter Schiff of Euro Pacific Precious Metals

The unremitting deterioration of the eurozone's sovereign debt landscape continues to fuel uncertainties about the longevity of the euro as a strong currency. Such uncertainties are not only leading to capital flight from the EMU's periphery to the core and destabilizing markets worldwide, but they are also beginning to frighten southern European savers into seeking refuge outside their 10-year-old currency.

2012-09-10 Russia: Riding on the Fast Lane by Team of Thomas White International

The fall in oil and natural gas prices has prompted the Russian government to turn its attention to the country's hitherto ignored manufacturing sector.

2012-09-10 When Bad Is Good by Kristina Hooper of Allianz Global Investors

Faith in the Fed is growing more devout. Despite another disappointing jobs report, stocks drifted higher Friday to close out a strong week for the major averages as investors pinned their hopes to an imminent policy move from central bankers. It is becoming more apparent every day that the U.S. economy is sputtering. While housing appears to have stabilized, jobs and manufacturing are areas of concern.

2012-09-08 Why Germany Should Lead or Leave by George Soros of Project Syndicate

If Europe is to escape its crisis, its leaders must awaken Germany to the misconceptions that are guiding its policies. At this point, that will not happen unless they persuade Germany to make a choice: become a benevolent hegemon or exit the eurozone.

2012-09-07 Eating Las Vegas' Lunch by Satya Patel of Matthews Asia

Since opening its casino industry to international companies in 2002, Macau has become a global gaming center. In 2011, Macaua special administrative region of Chinabrought in US$33.5 billion in gaming revenue, more than five times that of the Las Vegas Strip. Gaming operators have gladly built multibillion dollar facilities in Macau because each new casino seems to attract increasing mass market and VIP gamblers.

2012-09-07 Chinas Next Act by Frank Holmes of U.S. Global Investors

World markets may not have to wait much longer for Chinese policymakers to act, as the government recently announced new infrastructure projects. According to Bloomberg, China approved 25 new subway construction projects, with related investments estimated to be more than 840 billion yuan. Railway, subway and construction stocks in China increased on the news. China is in much better shape than the rest of the world. A powerful rebalancing strategy offers the structural and cyclical support that will allow it to avoid a hard landing.

2012-09-06 September 12th Looms Large for Germany by John Browne of Euro Pacific Capital

The German economy is undoubtedly the powerhouse of Europe. As a result, an understanding of the developments within Germany can offer a strong indication of the path that the rest of Europe is likely to take. Until recently, Germany stood as a bastion of sound money against those Keynesian led regimes in the developed nations that favor continual currency debasement as an economic panacea.

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.

2012-09-04 Postcard from India: Taking Frugal Engineering to the World by Team of Thomas White International

The first 25 ton truck that rolled out of Daimler's new Indian manufacturing plant in June this year was similar in most respects to other trucks the company sells across the globe. Even on a closer look, the only major difference seemed to be the name and logo on the front grill. The iconic Mercedes three pointed star logo had been replaced by a new round logo and brand name, BharatBenz.

2012-09-04 An Upgrade of UK Equities by Russ Koesterich of iShares Blog

With UK economic growth showing signs of stabilization, the downside of investing in the region now appears more balanced versus the potential benefits. Russ believes it's time to upgrade equities from the United Kingdom to a neutral status.

2012-09-01 Schwab Market Perspective: Back to Work by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

As summer winds down, we expect things to heat up as policymakers get back to work, resulting in a challenging investment environment.

2012-09-01 The Consequences of Easy Monetary Policy by John Mauldin of Millennium Wave Advisors

We heard from Bernanke today with his Jackson Hole speech. Not quite the fireworks of his speech ten years ago, but it does offer us a chance to contrast his thinking with that of another Federal Reserve official who just published a paper on the Dallas Federal Reserve website. Bernanke laid out the rationalization for his policy of ever more quantitative easing. But how effective is it?

2012-08-31 Prepare Now for the Looming Fiscal Cliff by Russ Koesterich of iShares Blog

The general election season is finally upon us, and investors should begin shifting their focus from theoretical discussions about the impending fiscal cliff of potential tax hikes and spending cuts to more concrete action plans of what to do about it.

2012-08-31 While Everyone Worried About Europe by Robert Horrocks of Matthews Asia

We all do it. We all refer to Asia as an export-driven economy. It's one of those seemingly useful bits of shorthand. Unfortunately, I believe it has come to do more harm than good. Along with "emerging economies," I would like to banish the phrase to the ranks of outlawed jargon.

2012-08-30 Opportunity Cost: Emotions by Matt Lloyd of Advisors Asset Management

Emotions may be keeping your clients in cash, putting their long-term goals at risk. Taking a snapshot of headlines and it is not hard to discern where investors' predispositions lay.

2012-08-30 The ESM: Saviour, Super SIV or End of the Road? by Andrew Bosomworth of PIMCO

So long as the fundamental issues about the future of the eurozone remain unsolved, the extra supply of ESM bonds will likely drive up the borrowing costs of its weaker stakeholders. Without a cap on or exit clause from additional capital calls, the ESM could lead northern eurozone countries down a difficult and unsustainable path.

2012-08-29 International Real Estate Securities: Review and Outlook by Jon Cheigh, Rogier Quirijns, Gerios Rovers, Luke Sullivan of Cohen & Steers

We would like to share with you our review and outlook for the international real estate securities market as of July 31, 2012. The FTSE EPRA/NAREIT Developed ex-U.S. Real Estate Index had a total return of 5.2% for the month (net of dividend withholding taxes) in U.S. dollars. By comparison, U.S. REITs returned 2.0% for the month, as measured by the FTSE NAREIT Equity REIT Index. Year to date, the indexes returned 21.3% and 17.2%, respectively.

2012-08-29 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital

The Non-Aligned Movement summit in Tehran is probably the most important conference hosted there since the 1979 revolution. Iran is doing its best to use the forum as an opportunity to assert its position in world affairs. In market activity, we think fundamentals in India call for less exuberance in gold than some would suggest. Our outlook for South Asia meanwhile recognizes valuation opportunities in the smaller markets of Sri Lanka and Bangladesh.

2012-08-28 Policymakers Hold the Key to Confidence by Bob Doll of BlackRock Investment Management

The Dow Jones Industrial Average fell 0.9% to 13,158, the S&P 500 Index slid 0.5% to 1,411 and the Nasdaq Composite lost 0.2% to close the week at 3,070. As August draws toward a close, US equities have hit four-year highs, corporate bond yields touched multi-year lows and many risk assets can look back on a pretty good summer. But despite plenty of investment and central bank activity, we continue to see a shortage of economic and financial market confidence.

2012-08-28 Behavior Modification by Kendall Anderson of Anderson Griggs

The last few years have caused a number of us to modify our financial behavior. It is hard to believe that the financial crisis is over five years old. According to S&P Case-Shiller, the good times ended in June of 2006 when home prices peaked. By April of 2007 the big subprime mortgage lender New Century Financial Corporation filed for bankruptcy.

2012-08-28 Permanent Portfolio Shakedown Part 2 by Adam Butler and Mike Philbrick of Butler|Philbrick|Gordillo & Associates

In our Permanent Portfolio Shakedown Part 1 we investigated the history of the approach, tracing it back to Harry Browne in 1982. The company he helped to found, The Permanent Portfolio Family of Funds, has been running their version of the strategy in a mutual fund for almost 30 years, with fairly impressive results. Harry's thoughts about the portfolio are worth repeating in this second installment.

2012-08-27 U.S. Real Estate Securities: Review and Outlook by Jon Cheigh, Thomas Bohjalian of Cohen & Steers

We would like to share with you our review and outlook for the U.S. real estate securities market as of July 31, 2012. The FTSE NAREIT Equity REIT Index had a total return of 2.0% for the month, compared with a 1.4% return for the S&P 500 Index. Year to date, the indexes returned 17.2% and 11.0%, respectively.

2012-08-27 FPA Crescent: Steve Romick's Semi-Annual Report by Steven Romick of FPA Fund

FPA Crescent Fund has released its Semi-Annual report on the state of the fund and its investments. The piece also delves into portfolio manager Steve Romick's market outlook and thoughts regarding the fund's positioning moving forward.

2012-08-24 Half the Sky in China by Sherry Zhang of Matthews Asia

I was recently asked what it's like to be a woman working in a male-dominated field, particularly since my job involves traveling throughout China and meeting mostly male corporate managers. Since women are still typically treated as inferior to men in many Asian societies, some people may assume that I frequently experience uncomfortable situations. But in truth, I have rarely noticed. I think many may have misconceptions about China's attitude toward women.

2012-08-24 Gold: First Mover Advantage by Frank Holmes of U.S. Global Investors

This week, gold bugs were rewarded with the long-awaited positive momentum in the yellow metal, and on Friday, bullion rose to about $1,670. After falling below the 200-day moving average, gold had been stuck in quicksand for several months. With the jumps in the price this week, bullion swiftly rose above this critically important long-term moving average.

2012-08-23 Early Retirement for the Eurozone? by Nouriel Roubini of Project Syndicate

Germany and the ECB are now relying on the hope that large-scale liquidity will buy time to allow the adjustments needed to restore growth and debt sustainability in the eurozone periphery. But, if a eurozone breakup can only be postponed, delaying the inevitable would merely make the endgame worse much worse.

2012-08-23 The Emerging Story in Europe by Mark Mobius of Franklin Templeton

There's a unique and often overlooked story coming out of some of Europe's emerging markets that interests me more. While much of developed Europe is still struggling to get its fiscal house in order, much of emerging Europe already has. Some of the emerging markets in Europe deserve to be a greater part of the European story, and in my view, can offer compelling investment opportunities at attractive valuations.

2012-08-22 What Will it Take for the Rally to Continue? by Bob Doll of BlackRock Investment Management

One of the factors underlying the upturn in stock prices over the past couple of months has been a modestly improving trend in US economic data. Last week, retail sales advanced 0.8%, well ahead of expectations. This was the first increase in four months, which suggests that while households remain generally cautious, spending levels are beginning to tick higher.

2012-08-22 The Bullish Case for Energy Stocks by Russ Koesterich of iShares Blog

Lower crude oil inventories and less spare capacity among OPEC oil producers are just two of many reasons why I continue to be bullish on energy and energy stocks over the long term. As I've been writing about for months, oil supply remains tight by historical standards. Among the reasons I gave in a post early this summer, I expect crude prices to rebound in the long term...

2012-08-22 Relative Value by Bill Smead of Smead Capital Management

Everyone wants to wait for the perfect time to buy into the stock market or into any major investment market. They want to enter at historically cheap prices or at "absolute values". We at Smead Capital Management believe that these people are kidding themselves and everybody else. At the time of historical lows and "absolute value" those same folks are too mortified to pull the trigger and always come up with the reason that "it's different this time". Inertia rules the day.

2012-08-22 Reflections: Frenzy and Illusion by John Gilbert of GR-NEAM

The insolvency of Lehman Brothers was a fault line in financial history. The failure of the U.S. government to act as lender of last resort in Lehmans insolvency was a deflationary shock unlike anything in decades. Now, in Europe, there is a growing risk of a second large deflationary shock in just five years, if Germany were to disavow contingent liability for deeper Eurozone union. The result is that there is a developing craze for safety underway.

2012-08-22 Mistrust Fuels Continued Gold Demand by John Browne of Euro Pacific Capital

In the face of growing fears of a renewed global plunge into economic depression and a climate of low apparent price inflation, investors might expect commodities and precious metals to be falling in price. Instead, gold continues to hover around a relatively high $1,640 an ounce and silver at $29. At the same time, central banks - including those of the ever more important China, Russia and India - continue aggressively to buy gold.

2012-08-21 Anniversary Weaks by Christian Thwaites of Sentinel Investments

A couple of anniversaries last week: five years since the start of the credit crunch and one year since the US downgrade. The ramifications of both are still evident daily, of course. We're still living the consequences. So this is as good a time as any to take stock.

2012-08-20 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stock prices have been supported by strong profits permitting buybacks and rising dividends as well as the absence of negative news from Europe. In fact, with all the leaders there taking vacations it has allowed rumors and leaks of possible steps, which have produced lower borrowing costs in Spain and Italy. This has allowed for a reflex rally there that has served as a catalyst for the continued rally in our domestic markets.

2012-08-17 My (Government-subsidized) China Vacation by Christian Halvorsen of Matthews Asia

As part of my month-long stay in mainland China and Hong Kong, my wife, three daughters and I embarked on a five-day tour of Shanghai, Hangzhou, Nanjing, Suzhou and Wuxi. This part of our trip, which was partially subsidized by the Chinese government, included three meals a day and stays at luxury hotels. The price tag? An amazingly low US$49 per person.

2012-08-17 Groundhog Day: Will Septembers Sell-off Repeat? by Russ Koesterich of iShares Blog

Investors might feel they are trapped in their own version of Groundhog Day this year as Russ K expects September, which has historically been the worst month of the year for capital markets, to once again fall victim to its well-documented negative seasonal bias.

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.

2012-08-15 "Curiosity" - Return of American Exceptionalism by Gary Halbert of Halbert Wealth Management

The IRS regularly issues something called Individual Tax Identification Numbers to people living in the US, but who are not eligible for a Social Security number. These illegal aliens working in the US received $6.8 billion in tax refunds last year by filing. A number of IRS employees recognized that this is/was tax fraud. We could end $2.5 billion in government waste like paying almost three times that much in tax refunds to illegal aliens to pay for invaluable missions like Curiosity.

2012-08-15 Early Retirement for the Eurozone? by Nouriel Roubini of Project Syndicate

Whether the eurozone is viable or not remains an open question. But what if a breakup can only be postponed, not avoided? If so, delaying the inevitable would merely make the endgame worse much worse.

2012-08-14 Blind Faith by Michael Lewitt (Article)

Central banks are facing political and practical obstacles that will render it very difficult for them to deliver anything more than anodyne words and actions as summer moves into the always dangerous August holiday season. IPhones should be kept on alert at the beach through Labor Day.

2012-08-14 Maybe This Time is Different by Andrew Redleaf of Whitebox Advisors

This Time Is Different, the catchy title of the popular book by economists Carmen Reinhart and Kenneth Rogoff, has also become a catchphrase summing up the world-weary wisdom of our time. Reinhart and Rogoff, in recounting eight hundred years of financial follies and investment bubbles, gleefully point out that in every case experts offered plausible arguments for dispensing with traditional rules of valuation, i.e., "this time it's different."

2012-08-14 India: Good Growth, Bad Growth by Sunil Asnani of Matthews Asia

It goes without saying that areas of growth attract investors. But in a blind chase for growth, it is easy to forget that only growth accompanied by economic profits creates value. This month Sunil Asnani takes a look at some of the once-celebrated, top-down investment ideas that did not live up to expectations, comparing them to some less exciting ideas that actually did deliver.

2012-08-13 Thinking about Treasuries? 2 Reasons to Think Again by Russ Koesterich of iShares Blog

The Fed will soon own more long-term Treasuries than the entire private sector. Russ explains the implications of this milestone for US long-dated debt and shows investors where to look for more attractive alternatives.

2012-08-13 Which Way Will the Pendulum Swing for Gold? by Frank Holmes of U.S. Global Investors

One of the most fascinating aspects when watching a sporting event like the Olympics is the historical statistics highlighting the tremendous advances in athleticism over the years. In the spirit of the events this summer, BTN Research compared gold's advancement from the beginning of the games in Beijing to the London Olympics.

2012-08-13 Begging for Trouble by John Hussman of Hussman Funds

Investors remain so addicted to the temporary high of monetary intervention that they are practically begging to be shot, mauled by dogs, and diced by a Veg-O-Matic so they can get their next fix of pain-killers.

2012-08-13 Invest with the Best?! by Jeffrey Saut of Raymond James

I have been a "fan" of the astute Claude Rosenberg ever since hearing him speak. Some will remember him as the author of Investing with the Best, which deals with the daunting task of selecting an investment manager. Given the plethora of investment managers, picking a manager is difficult. That's why many individuals' selection process consists of nothing more than looking at a portfolio manager's track record for the past few years. We think such a simplistic approach is a mistake.

2012-08-13 Commodities to Power Emerging Markets Higher by Dawn Bennett of Bennett Funds

In Latin America, Brazil leads as a natural supplier of copper and crude oil, which it is now able to extract and export on competitive terms. Nations rich with natural resources perform well during times of global economic expansion. In particular, countries rich with industrial commodities tend to outperform those without.

2012-08-13 The Fundamental Case for the 20,000 Dow by Seth Masters of AllianceBernstein

While some people deem stocks expensive relative to 10-year trailing earnings, we take a forward-looking approach. It starts with the premise that the stock market is not a casino and stock prices are not pulled out of thin air: they reflect the intrinsic value of companies' future earnings.

2012-08-13 Stocks Look Poised for Continued Gains by Bob Doll of BlackRock Investment Management

Although investor attention seems focused on a number of well-known downside risks (including the European debt crisis, hesitant US economic growth and the pending US fiscal cliff), stocks have continued to climb higher and last week notched their fifth consecutive week of gains.

2012-08-10 Global Telecom Stocks Lose Luster by Russ Koesterich of iShares Blog

As their prices have increased in recent months, global telecommunication stocks have started to lose some of their luster. Russ K explains why factors such as valuation and profitability have prompted him to change his view of the sector.

2012-08-10 Schwab Sector Views: Cautiously Cautious by Brad Sorensen of Charles Schwab

We remain slightly defensive with our sector recommendations but admit that we're a bit concerned over doing so. While we certainly believe this is the appropriate positioning given the continued elevated uncertainty in the market, combined with sluggish economic data, we also acknowledge that some defensive areas appear extended and the possibility of a near-term cyclically-based rally exists.

2012-08-10 2012 2Q Economic - Capital Market Summary by Greg Hahn of Winthrop Capital Management

The single biggest driver for the economy and investment returns is the deleveraging process which we are currently struggling through. Arguably, we have successfully transferred debt from the financial sector to the U.S. government through the Fed's QE programs. As we move through the long process of reducing debt, economic growth inevitably moderates as resources are applied to debt reduction rather than fixed investment and consumption within the economy. As a result, expected returns on financial assets are lower.

2012-08-10 Dividend Taxation and Stock Returns by Team of Neuberger Berman

With bond yields declining globally, stocks with high dividends have become increasingly popular as income seekers face a narrowing set of investment choices. The increased demand has caused dividend-paying stocks to outperform broader markets over the past few years, but as the expiration of the Bush tax cuts looms ever larger heading into year-end, investors are concerned that these stocks might grow less attractive. We explore the potential impact of higher taxes on dividend-paying stocks and how investors should be positioned in the months ahead.

2012-08-10 Dog Days by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

We now appear to be firmly in the dog days of summer. Low volume and little conviction may dominate but investors need to stay vigilant and now is a good time to prepare for the fall. The recent Fed meeting yielded no new action, but policy makers reiterated that they will act if necessary. We are skeptical that more stimulus measures will have a lasting impact. A waiting game has ensued in Europe as investors look for action following hopeful comments from various officials. But despite concerns over corn prices, central banks will continue to ease, helping to support global growth.

2012-08-09 Viva Reforma en Mxico by Mark Mobius of Franklin Templeton

Elections come and go, but the real test of a candidate might be whether the promises made on the campaign trail are actually put into place. Enrique Pea Nieto and his Institutional Revolutionary Party (PRI) emerged victorious in Mexico's July 1 presidential election on the promise of reform and the end to old, "undemocratic" ways.

2012-08-09 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital

India's massive power failure was a gift to both investment bankers and asset managers. There will likely be a surge in infrastructure-related financing and investment activity directed at South Asia. We also look at sovereign wealth fund transparency; the UAE funds rank comparatively well. Our allocation guidelines for North Africa focus on Morocco, where we believe we will see sustained gains for both portfolio and direct investors once the European situation stabilizes.

2012-08-09 Pacific Basin Market Overview - July 2012 by Team of Nomura Asset Management Co.

Most equity markets in the Pacific Basin region recovered somewhat in July after a weak second quarter on expectations of further monetary easing and measures by the European Central Bank to forestall a Euro currency crisis. However, when we examine the sector results, it is hard to conclude that the recovery was accompanied by an improvement in sentiment.

2012-08-08 Monthly Product Commentary: International Equity - July 2012 by Team of Thomas White International

International equities made modest gains during the month of July on repeated assurances from European policymakers that they will explore all possible steps to prevent a collapse of the monetary union and arrest further economic decline. Developed markets in Europe's Nordic region and the Asia Pacific, excluding Japan, as well as select emerging markets in Asia ended with healthy gains for the month.

2012-08-07 Promises, Promises by John Browne of Euro Pacific Capital

In the last week of July, ECB President Mario Draghi attracted investor interest worldwide by saying that he would do "whatever it takes" to solve the Eurozone crisis and, in the process, save the euro. Given the record of Central bankers for encouraging hopes that invariably have proved fruitless, it was surprising how international financial markets appeared to be taken for yet another ride.

2012-08-06 From Resource Curse to Blessing by Joseph Stiglitz of Project Syndicate

New discoveries of natural resources in several African countries including Ghana, Uganda, Tanzania, and Mozambique raise an important question: Will these windfalls be a blessing that brings prosperity and hope, or a political and economic curse, as has been the case in so many countries?

2012-08-06 Global Overview: July 2012 by Team of Thomas White International

Global equity prices made modest gains in July, helped by strong gains in the developed markets in Europe's Nordic region as well as in the Asia Pacific, excluding Japan. Most major emerging markets in Asia also saw price gains during the month, while Spain, Italy, and select other markets in Europe lost further ground. U.S. GDP growth for the second quarter declined below the previous quarter's pace, but was marginally ahead of expectations.

2012-08-06 Yogi Berra by Jeffrey Saut of Raymond James

"It's hard to make predictions, especially about the future." ... Yogi Berra. To be sure, "It's hard to make predictions, especially about the future," and last week was no exception. I began the week noting that there would be a trifecta of potentially market moving news events. The first was the two-day FOMC meeting where I thought the Fed would change its policy statement with a lean toward more accommodation. WRONG.

2012-08-05 Erasers by John Hussman of Hussman Funds

Moderate losses may be a necessary feature of risk-taking, but deep losses are erasers. A typical bear market erases over half of the preceding bull market advance. It is easy to forget - particularly during late-stage bull markets - how strongly this impacts full-cycle returns.

2012-08-03 2nd Quarter Small Cap Newsletter by Team of 1492 Capital Management

The stock market posted a strong start for the year but quickly surrendered most of its gains as the macro environment (European debt concerns and China’s slowing economy) caused near-panic selling pressure until the last week of the quarter.

2012-08-03 Hedging Against (and Profiting From) A Prospective Decline In The U.S. Dollar by Team of Emerald Asset Advisors

The U.S. dollar has remained the world's reserve currency due to several factors: 1. Its large circulation (roughly $1.1 trillion); 2. The denomination of many transactions (especially commodities such as oil and other natural resources) being in USD; 3. The stability of its political system; and 4. The lack of any other viable options. However, that may not always be the case.

2012-08-03 The Race for Resources by Frank Holmes of U.S. Global Investors

The world watched in awe as American swimmer Michael Phelps became the most decorated Olympian of all time. It's inspiring to see the incredible results of his tremendous sacrifice and commitment. Investing in global markets requires the same sort of stamina, especially at times like this week, when the month's reading on the manufacturing industry was not encouraging. The J.P. Morgan Global Manufacturing PMI of 48.4 for July was the lowest since June 2009.

2012-08-02 Mythbusting: How Elections Affect Markets by Russ Koesterich of iShares Blog

Elections do matter for the markets, but not necessarily for the reasons that investors tend to believe. Ahead of the next presidential election, Russ debunks some common myths surrounding markets and elections.

2012-08-01 Welcome to Dystopia! by Jeremy Grantham of GMO

In a new quarterly letter to GMO's institutional clients today, chief investment strategist Jeremy Grantham warns: "We are five years into a severe global food crisis" that in the long term "will threaten global stability and global growth." An accompanying investment commentary by GMO head of asset allocation Ben Inker focuses on risks of eurozone equities, which he describes as "somewhere between fair value and mildly cheap" but not worthy yet of "a table-pounding endorsement."

2012-08-01 Whither Global Stocks? Be Sure to Track This Data by Russ Koesterich of iShares Blog

Sometimes, either weak economic numbers or strong economic numbers can point to a surge in US and global equities. This could be one of those weeks. Russ has his eye on two important economic reports that are being released this week, and he explains why weak data may be positive for global equities.

2012-08-01 Remarks to the NBER-Sloan Conference on the European Crisis by Mohamed El-Erian of PIMCO

We believe that this intersection between what economists and policymakers know - is a critical one to get right, and not only for a long-term investor like PIMCO. You see, unless there is a strong economic anchor, policymakers (and their political bosses) will lack the conviction and foundation needed to take difficult decisions and explain them well to citizens. So it is crucial for both sides to know what is known - and also to recognize, to the extent possible, the known unknowns.

2012-08-01 Italy - The Next Chapter in the Eurozone Debt Crisis by Greg Hahn of Winthrop Capital Management

After recently returning from Italy and France and analyzing the economic data coming out of Italy, we have a higher conviction that Italy will be stuck in a severe recession and has an elevated probability of requiring a bailout. Our main theme, which is similar to our view of the United States, is that Italy has too much public debt and is lacking the political will to make the necessary expense cuts and stimulate its economy to successfully navigate the deleveraging that is required.

2012-08-01 China's Growing Pains by Mark Mobius of Franklin Templeton Investments

Many feel that China is the engine for the world economy and that if it slows down, we may be doomed to a recession or even a depression. Yes, China's growth is decelerating from the double-digits of recent years; various forecasters are predicting a possible GDP growth range of 7-8% this year. However, I think it's important to emphasize that would still represent an impressive pace, and remember that China isn't the world economy's only locomotive.

2012-07-30 No Such Thing as Risk? by John Hussman of Hussman Funds

In the face of present enthusiasm over central bank interventions, one almost wonders why nations across the world and throughout recorded history have ever had to deal with economic recessions or fluctuations in the financial markets.

2012-07-30 Turkey: 'Sick Man of Europe' No Longer by Team of Thomas White International

Despite the invasion of modern retail formats such as supermarkets, corner stores still account for 40 percent of retail sales in Turkey. Since the mid-19th century, Turkey has carried the unfortunate moniker 'Sick man of Europe'. Though still not considered in the same league as the BRICS countries, Turkey has enjoyed healthy economic growth over the last decade.

2012-07-30 The Euro's Survival Requires German Engineering by Milton Ezrati of Lord Abbett

As Europe's paymaster, Berlin faces a tricky task: promoting austerity among economically stressed peripheral nations but not too much. In Europe's seemingly endless debt negotiations, Berlin would seem to hold all the cards. It is, after all, Europe's largest economy, its most powerful, and its most financially sound. But in reality, Berlins options are highly constrained and require a remarkably delicate policy balance.

2012-07-30 Austerity: Damned If You Do, Damned If You Don't! by Fred Copper of Columbia Management

This glib depiction could be applied to most of the developed world. Much of the world's attention is on the debt imbalances within Europe, but too narrow a focus will miss the fact that aggregate debt levels for the region as a whole are still disturbingly high. The same is certainly true of Japan, and to a lesser extent the U.S.

2012-07-30 Looking Past Weak Data; Awaiting Policy Responses by Bob Doll of BlackRock Investment Management

Although last week featured some lackluster economic and earnings news, investors continued to focus their attention on the growing possibility of additional monetary policy action, particularly from Europe. For the week, the Dow Jones Industrial Average climbed 2.0% to 13,075, the S&P 500 Index advanced 1.7% to 1,385 and the Nasdaq Composite rose 1.1% to 2,958.

2012-07-27 Revisiting Malaysia by Lydia So of Matthews Asia

In the market turmoil of recent months, Malaysia's equity market has held up comparatively better than some of its Asian counterparts. The FTSE Bursa Malaysia KLCI Index was up 1.4% during the second quarter in local currency terms. During the previous quarter, Malaysia had seen several large initial public offerings that raised capital totaling more than US$3.3 billion.

2012-07-27 Who is Muhammad Lee? by John Scott of Saturna Capital

Who is this Muhammad Lee? (So named, as these are the most common first and last names in the world.)1,2 Where is he from? How many brothers and sisters will Muhammad Lee have in the future? What are the implications of his arrival for U.S. investors?

2012-07-27 Treading Water by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Stocks seem to be biding time until the action heats back up as summer winds down, but market-moving events can happen at any time. The US economy continues to slow and Bernanke had a relatively dour outlook before Congress. But it appears things would have to get worse before another round of easing is initiated; the effectiveness of which we continue to question. Yields in Spain and Italy indicate action may be needed sooner rather than later, but we did get positive remarks by the ECB, which led to market rallies and a big drop in yields, providing a measure of hope.

2012-07-26 Days of Reckoning - The Potential Impact of the 2012 Elections on the Markets by Russ Koesterich of iShares Blog

Elections can, and often do, matter for markets, but not necessarily for the reasons investors tend to emphasize. For example, there is little historical evidence that markets perform better or worse depending on which party occupies the White House. There is also no concrete evidence that markets do better under divided government, a myth that seems to have taken hold thanks to the bull market of the 1990s.

2012-07-26 Wage Inflation in China: Implications for Inflation and Global Investing by Team of American Century Investments

The transformation of China's economy since the late-1970s when the country opened up to foreign investment and began to take steps to participate fully in the global economy has been nothing short of remarkable. The Asian giant has undergone a dramatic transformation from a comparatively small, underdeveloped, rural economy to a dynamic, urban, manufacturing-based economy that is now the second largest in the world.

2012-07-25 An Attractive Destination for Holidays, and IPOs by Mark Mobius of Franklin Templeton

Many Western investors would likely have little trouble naming this years biggest initial public offering in the U.S., but they probably dont know that two of the top three global IPOs so far this year have been in an island nation probably better known as a holiday destination than an investment one. That country is Malaysia, where an interesting story has been unfolding in the IPO market.

2012-07-25 US Utilities: Don't Overpay for Yield by Russ Koesterich of iShares Blog

As short-term interest rates remain at or close to zero, investors starved for income should be wary of overpaying for yield, particularly when it comes to US utilities. In the search for yield, Russ believes investors have pushed US utilities prices too high. His advice: Don't overpay for yield.

2012-07-25 Top Line Growth Stalling Amid Global Weakness by Chris Maxey, Ryan Davis of Fortigent

At this juncture, positive catalysts seem few and far between. According to FactSet, 18 of 22 companies have already guided lower for the third quarter. Analysts are also ratcheting down forecasts quickly, with flat earnings growth expected in Q3. While growth is expected to pick back up in the fourth quarter, analysts have not cut those estimates aggressively yet. If the economic picture does not improve in the next few months, expect a pattern of downgrades to follow suit.

2012-07-25 Economic Review: Americas - 2Q 2012 by Team of Thomas White International

Among the developed economies in the region, growth forecasts for both the U.S. and Canada have been revised lower. Though the U.S. outlook has weakened, the Mexican economy has so far remained unaffected, as manufactured goods from the country remain competitive in export markets. Brazil is yet to see a recovery even after a series of monetary and fiscal measures taken since the second half of last year to support the economy.

2012-07-25 Caterpillars aQuantive by Bill Smead of Smead Capital Management

One of our eight proprietary criteria for stock selection is shareholder friendliness. Buying another company whose industry has enjoyed unusual prosperity is not shareholder friendly. Recently, as an example, Microsoft (MSFT) admitted what most of us already knew. Microsofts online business is a massive destroyer of capital and shareholder value. They wrote down the value of their acquisition of aQuantive by $6.2 billion.

2012-07-25 If You Own Utility Stocks, Consider Selling The Overvalued Ones - Part 1 by Team of F.A.S.T. Graphs

Recently, I've come across several discussions by dividend growth investors as to whether the utility sector is overvalued or not today. Therefore, I decided to look into the sectors relative valuation as a whole to see what I could find. The only way to efficiently conduct this kind of research is to rely on a broad statistical array utilizing traditional valuation metrics. However, before I report my findings there are some caveats and clarifications that I feel are very appropriate.

2012-07-25 After the Downgrade: German Stocks or Bonds? by Russ Koesterich of iShares Blog

Amid rising uncertainty surrounding Europe, Moody's earlier this week lowered its outlook for Germany. Now, given the likelihood that Europe will continue to be a source of economic risk and investor angst, many investors are wondering whether they should stick with German assets. Should investors stick with German assets? Russ says the answer is yes on German stocks but no on the country's bonds.

2012-07-24 Weaker Headlines by Christian Thwaites of Sentinel Investments

Well, the whole Spanish banking solution from a few weeks ago was not destined to last. Back in late June, the EU welcomed, along with the ECB, EBA and IMF that the EFSF /ESM would provide around 50bn of capital, provided the financial sector gave certain conditions and horizontal restructuring plans. And, even better, the FROB would receive the funds and ensure at the time of the capital infusion, Spain would honor its Excessive Deficits Procedures. Got that?

2012-07-24 Markets Likely to Continue Moving Unevenly by Bob Doll of BlackRock Investment Management

Notwithstanding a pullback on Friday, stocks managed to post gains last week despite a generally negative tone to the economic data. In some ways, the recent trend of relatively weak data has actually been beneficial for stocks in that it has been boosting hopes for additional policy stimulus around the world. For the week, the Dow Jones Industrial Average climbed 0.4% to 12,822, the S&P 500 Index advanced 0.4% to 1,362 and the Nasdaq Composite climbed 0.6% to 2,925.

2012-07-24 A Growing Water Crisis Creates Investment Opportunities in Agriculture by Jon Brorson, Geoffrey Lutz of Mesirow Financial

Water is ubiquitous, the ultimate source for life and the most important commodity for human existence. No less importantly, water is a critical input for food. Yet only a small fraction of total global water less than 1% is usable for food production, due to salinity and glaciers. As a result, water represents one of the single most important determinants of the value of today's investment opportunities in food production and farmland.

2012-07-24 Friday Decline Ruins a Solid Week in the U.S., AAII Flashing a Buy Signal by John Buckingham of AFAM

What was shaping up as a fine week ended with a really crummy Friday that included the horrific movie-theatre massacre in Colorado and, on an entirely different plane, yet another act (the Spanish region of Valencia asked for government help, while Madrid again lowered its economic projections) in the long-playing European sovereign debt crisis that caused yields on the 10-year Spanish bond to move further above the important 7% threshold.

2012-07-23 How Can the Market Possibly Do Well? by Charles Lieberman of Advisors Capital Management

Investors remain rightfully concerned that our leaders have been unable to address major domestic and international issues. Domestic growth is sluggish, job growth is weak, unemployment remains high, the fiscal cliff looms at the end of the year and our politicians can't agree on the time of day. Moreover, none of this is likely to become clarified until after the election, if then.

2012-07-23 Spain's Molasses Jeopardizing Eurozone? by Axel Merk of Merk Funds

Spanish 10-year government bond yields are trading near 7.5% as Spain's central government is expected to bail out its regions and in return may ask for a bailout itself. Guarantees don't make a system safer, quite the opposite: everything is safe until the guarantor itself is deemed unsafe.

2012-07-22 Extraordinary Strains by John Hussman of Hussman Funds

A broad array of observable evidence suggests extraordinary strains in Europe, and abrupt though expected deterioration in U.S. economic activity. The Federal Reserve certainly has policy options, but those options have no material transmission mechanism to the real economy.

2012-07-20 Long Journey, Map Provided by John Gilbert of GR-NEAM

It is almost four years since the Lehman bankruptcy. In the periods of economic contraction that were typical of the postwar period, the clouds would be parting by now. Income growth would have resumed and necessary balance sheet repair would be more or less complete. By any standard, the current episode is a balance sheet recession of historic proportion. Previous downturns were initiated by central bank rate increases, which occurred this time as well.

2012-07-20 July 2012 Newsletter by Harold Evensky of Evensky & Katz

FRANK SINATRA FAN? Mena chided me for starting my last NewsLetter on a negative note so I thought Id repent this time and start with something more positive. Even if youre not a Sinatra fan, this lovely and moving piece of music by Andre Rieu," a renowned Dutch violinist, conductor and composer, and his orchestra is a tribute to Frank Sinatra with My Way on his Stradivarius violin at Radio City Music Hall New York.

2012-07-20 The Evolution of Beijing's SoHo by Gerald Hwang of Matthews Asia

With each visit to New York Citys SoHo art galleries over the past 15 years, I have grown stronger in my suspicion that the freshest, most interesting contemporary art is coming from mainland China. The old guard of expatriate Chinese artists, with their sly indictments of Mao, has been gradually replaced by a new generation who remain in China. Their work is visually exciting and accessible, even for unschooled portfolio managers.

2012-07-20 No Armageddon, but Consequences by Michael Hasenstab of Franklin Templeton

In a time of severe stress and crisis, its easy to come to the conclusion that Armageddon is upon us. Those who believe the European Union is going to split up and Chinas growth will come to a screeching halt are probably building bunkers and sharpening their survival skills right about now. Hasenstab isnt in panic mode. In fact, hes optimistic the eurozone will survive, and that no, China wont move back into the feudal age.

2012-07-20 America's Competitive Spirit by Frank Holmes of U.S. Global Investors

We believe there are many great American companies to invest in. We like those that are growing their top line revenues and paying robust dividends. Currently 47 percent of the S&P 500 stocks pay a dividend yielding more than a 10-year Treasury, demonstrating the resiliency and strength of American enterprises.

2012-07-19 Europe Risk Preparedness by William De Leon of PIMCO

PIMCO's risk management process is dynamic and flexible, allowing us to evolve to understand, quantify and manage risks in broad scope and at the portfolio level. We are particularly focused on preparation for multiple potential scenarios, from a one-country redenomination to a full break-up of the eurozone into 17 separate currencies.

2012-07-19 Developed Asia Pacific: Economic Review 2nd Quarter 2012 by Team of Thomas White International

Developed Asia Pacific economies experienced significant headwinds during the second quarter of 2012. While optimism about business conditions in the Euro-zone helped sustain export growth during the first quarter of 2012, significant challenges from the Euro-zone hampered both investor and consumer sentiment in most developed Asian economies during the second quarter.

2012-07-18 Peaks and Valleys by Carl Tannenbaum of Northern Trust

Second quarter economic activity disappointed on many fronts. The drama in Europe has taken its toll on exports, markets, and confidence. The 2012 election is starting to take shape, amid the approach of a huge fiscal "cliff" at the national and local level. The negativity and uncertainty which often surround Presidential campaigns may hinder economic and market performance. This months special focus is on the Fed's recent Survey of Consumer Finances, and what it means for our economy.

2012-07-17 Global Slowdown: Preparing for a Recession by Russ Koesterich of iShares Blog

While Russ believes that the most likely scenario for the global economy in 2012 is continued slow growth, he explains what's behind the recent global slowdown and what investors may want to consider doing if it grows worse.

2012-07-17 Bull Market Has Been Buffeted, but Remains Intact by Bob Doll of BlackRock Investment Management

During a relatively modest week in terms of trading activity, stocks managed to stage a rally on Friday that helped erase the declines of the previous four days. The stock market gains over the past month can be largely attributed to the perception that policymakers in Europe have been making some progress combatting the ongoing debt crisis. There is a sense of uncertainty over the state of the US economy, and that uncertainty is making investors, companies and consumers wary about the future.

2012-07-17 Impact of ETF Growth on Active Managers by Dmitriy Katsnelson, Ryan Davis of Fortigent

A paradigm shift away from active management has been in place for more than a decade. Active mutual funds held more than 19 times the amount of assets than passive strategies before the SPDR SPY ETF was launched in 1993. As seen below, they have gradually lost market share to passive vehicles, particularly in US Equities.

2012-07-17 The Mystery of Chinese Capital Flight by Bill OGrady of Confluence Investment Management

Capital flight is defined as the rapid withdrawal of assets out of a country for political, economic or geopolitical reasons. Since late last year, there have been steady reports indicating that capital flight has been occurring in China. China restricts its capital account; inflows of foreign capital are carefully regulated and private outflows face significant restrictions. Chinese citizens can legally transfer only $50k per year out of the country.

2012-07-16 The Third Law of Randomness by John P. Hussman of Hussman Funds

Proper investing doesn't rule out randomness and unpredictability, particularly when it comes to individual events. It instead diversifies against randomness both across holdings at each point in time, and across time by repeatedly acting on the basis of averages instead of individual forecasts.

2012-07-16 Pacific Basin Market Overview by Team of Nomura Asset Management

Europe's sovereign debt crisis continued to hound the global equity markets throughout the second quarter, while economic data from the U.S. was also lackluster. Despite a late recovery, the Japanese equity market fell during the April-June quarter, owing to instability in the European financial system, economic distress in Europe, the U.S. and China, and the yens appreciation.

2012-07-16 Still Drifting by Christian Thwaites of Sentinel Asset Management

We are in earnings season. This is a welcome relief from the macro and political world that has dominated markets and sentiment for several weeks. Earnings allow us to look at what companies are seeing and how they're reacting. We know they're operating in world of miserable nominal GDP growth so we will look at margins, sales, pricing power, management and cash positions. But first, why so listless and skittish?

2012-07-13 Moving to Indonesia by Kenichi Amaki of Matthews Asia

I just returned from a two-week trip to Asia, meeting with companies in Japan, Indonesia and Singapore. One notable change I observed in Tokyo - and confirmed in Jakarta - was the emergence of Indonesia as an investment destination for Japanese companies. All of the auto-related companies I met with in Japan were either building or had plans to build new capacity in Indonesia.

2012-07-13 Chile at a Crossroads by Russell E. Hoss of Euro Pacific Capital

Chile's accession to the Organization of Economic Cooperation and Development in 2010 was more than just a confirmation that they'd earned the right to join the world's top ranked economies. As the first South American country to be accepted into the OECD, it was also a symbolic affirmation of several decades worth of market-oriented reforms that transformed the country from an illiberal backwater to what is arguably one of Latin America's most stable and thriving nations. As a result, we feel that Chile qualifies as a good choice for international investment.

2012-07-13 Muddling Through, But for How Long? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Equity markets rebounded from their lows, but the move has been less than enthusiastic and convincing. Earnings season is upon us and corporate commentary and outlooks may take the focus away from the macro world, at least for a time. Muddling through is what's occurring in the US economy. But how long before a break is made, both in the economy and the markets? Any progress made at the most recent EU Summit appears to have been short-lived and any credible long-term solutions remain elusive. Additionally, Chinese growth continues to slow and concerns over a "hard landing" are growing.

2012-07-13 Looking Past Negativity to See Opportunity by Frank Holmes of U.S. Global Investors

Tremendous population growth, changes in government policies, development of new technologies, urbanization trends work the same way. Its what Jeremy Grantham called the great paradigm shift and they have equally dramatic effects on how we invest in commodities, change opportunities and adjust for risk. Smart investors look past the rampant negativity in the media to see these patterns and anomalies to determine where the opportunities and threats lie.

2012-07-12 Bond Market Review & Outlook by James Balfour of Loomis Sayles

The liquidity-driven rush into riskier assets that dominated the first quarter faded during the second quarter. The European sovereign debt and banking crisis was once again the primary catalyst, but softer economic data in the US and China also fed negative investor sentiment. Global liquidity suffered following the end of the European Central Banks (ECBs) long-term refinancing operation (LTRO).

2012-07-12 4 Reasons to Like China by Russ Koesterich of iShares Blog

The Chinese central bank last week announced its second surprise rate cut within a month. The action from the central bank was an acknowledgement that the worlds second largest economy is slowing. Despite Chinas economic slowdown, Russ continues to hold an overweight view of Chinese equities for four reasons.

2012-07-11 The Ascent of South Korea by Michael Oh of Matthews Asia

One country in Asia that seems to attract less attention than it might deserve, considering its modern-day achievements, is South Korea. While index provider MSCI this year (once again) left South Korea classified as an emerging market, both FTSE and Standard & Poors have placed Korea in the developed market camp for several years now.

2012-07-10 Swimming with Black Swans: The Volatile Decade Ahead by Russ Koesterich of iShares Blog

So long smooth sailing. Russ Koesterich explains why he expects the rest of this decade to be characterized by more market volatility and why seemingly out-of-the-ordinary Black Swan events could become more frequent.

2012-07-10 Investing and the Euro Crisis by David Kelly of J.P. Morgan Funds

In the summer of 2012, the Euro Zone crisis continues to dominate financial markets as it has done over each of the past two summers. While the solution to the problem remains relatively straightforward, it requires a level of economic understanding, political courage and communication among policymakers that has been absent thus far. Without this, the crisis is likely to lurch forward with only a very slow and painful resolution.

2012-07-09 What if the Fed Throws a QE3 and Nobody Comes? by John P. Hussman of Hussman Funds

When we look around the globe, we find that the impact of quantitative easing is rarely much greater than the market decline that preceded it. Investors seem to be putting an enormous amount of faith in a policy that does little but help stocks recover the losses of the prior 6 month period, with scant evidence of any durable effects on the real economy.

2012-07-09 Mixed Picture for the Consumer, ISM Numbers Weak Data on Factory and Service Sectors by John Buckingham of AFAM

While the major market averages ended in the red, though only modestly so, there was plenty of volatility in a holiday-shortened trading week that was replete with the release of quite a few economic statistics.

2012-07-09 Germany Loses to Italy, Again by John Browne of Euro Pacific Capital

June was not a particularly good month for Germany. First, she suffered a loss to Italy in the semi-finals of the European Cup soccer tournament. Then, she suffered a more significant blow when Italy's Prime Minister, Mario Monti, extracted important concessions from German Chancellor Angela Merkel at the European Summit. A loss on the soccer pitch can put a dent in the national ego. But a loss on the field of finance can be far more serious.

2012-07-06 Eurozone Slowly Inching Forward by Investment Strategy Group of Neuberger Berman

The European Union (EU) summit last week in Brussels surprisingly yielded some promising outcomes. EU leaders agreed to important short-term measures that can ease the recapitalization of banks but structural issues, such as increasing banking and fiscal integration in the euro area, remain unresolved. Without longer-term measures, the volatile nature of the debt crisis, as evidenced by the Greek elections on June 17, will continue to impact confidence.

2012-07-06 Market Perspectives Q2 2012: A Long Road Ahead by Richard Michaud of New Frontier Advisors

The most important economic news in the quarter occurred in the last two business days. Investors were losing patience with seemingly endless and ineffectual eurozone summitry. But the resolutions by the four major eurozone members at the end of the quarter were different. The agreements allow recapitalization of Spanish banks and purchase of Italian sovereign bonds. The proposals appear to effectively address short- and long-term problems in the eurozone economies.

2012-07-06 Designed in California, Made in Manila by Teresa Kong of Matthews Asia

When I saw the hit animation film The Incredibles a few years ago, little did I know that some of the animation was done by artists in the Philippines. Pixar, the American film studio that outsourced this work to the Philippines, is just one of many global companies to have taken advantage of the island nations thriving business process outsourcing (BPO) industry - contracting out work related to back office operations for cost savings.

2012-07-06 Are You Limited by Linear Thinking? by Frank Holmes of U.S. Global Investors

Dont be limited by linear thinking in your portfolio. As an alternative to low yielding Treasury bonds, consider resources stocks that pay dividends. Weve found that most materials, utilities and energy stocks in the S&P 500 Index pay a dividend higher than the 10-year Treasury: Materials and utilities companies yield an average of 2.3 percent and 4.1 percent, respectively, while energy stocks pay an average yield of 2.2 percent. Nonlinear thinkers have historically benefited from the inclusion of natural resources as part of a balanced portfolio.

2012-07-05 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital

Investors focused on emerging markets may be well positioned to benefit from a "barbell" strategy, favoring sukuk and Southeast Asian equities. While in Afghanistan, were more inclined to tilt toward optimism than despair in the wake of military right-sizing. Both India and some Middle East countries are set to be active there. We offer other comments on high dividend yields in GCC stock markets and emerging trends in Ghanas timber industry.

2012-07-04 What Next For The Euro-Zone? by Victoria Marklew of Northern Trust

The European Union has just completed its 20th make or break Summit in a little over two years, and actually managed to beat expectations. Two key agreements were reached on June 28-29: expanding the remit of the two bailout funds to include sovereign debt purchases and eventually direct banking sector support; and creating a unified banking regulator for the Euro-zone under the auspices of the European Central Bank (ECB).

2012-07-03 Don't Get Emotional by Michael Nairne (Article)

With the developed world mired in slow growth and the eurozone teetering on the brink of disintegration, to many investors the future seems bleak. Some are so disheartened they are abandoning the stock market as a hopeless endeavor. Yet, one of the abiding tenets of investing is that investor sentiment is rarely predictive of the future.

2012-07-03 A Crisis Is Not An Emergency by Christian Thwaites of Sentinel Investments

Some crises linger for years. The sterling crisis began in 1964 and, despite periodic respites, was not solved until the early 1990s. The oil crisis burned for over ten years until the political and economic stars realigned and restored order. Latin America lingered for over ten years before a breakthrough of sorts...not for everyone though, as Argentina's GDP per capita is the same as it was in 1960. A crisis is not the same as an emergency.

2012-07-03 10 Predictions for 2012: Mid-Year Update by Bob Doll of BlackRock Investment Management

At the midway point of 2012, it seems an opportune time to review the predictions we made at the beginning of the year. Although much could change, at this point it appears that the majority of our predictions are on track.

2012-07-03 Gleanings by Jeffrey Saut, Art Huprich, Scott Brown of Raymond James Equity Research

With this Gleanings report, we begin a monthly chart presentation and discussion, which attempts to pull together the separate disciplines of Economics, Fundamentals, Technical analysis, and Quantitative analysis. The report contains what we think are currently some of the most important charts. We will have an overview and then highlight some of the key near-term variables that we believe could have a measurable effect on where the various markets are going.

2012-07-03 Jump: Market Rallies Sharply on EU Summit News by Liz Ann Sonders of Charles Schwab

Friday's sharp rally on better European news is followed by weaker economic news this week, keeping debate alive about what the market's priced in. When markets expect nothing and get something it can be a recipe for a rally. Investors of every ilk have de-risked, unleashing a scramble last Friday. The US economy is at stall speed, but still looks better than much of the world.

2012-07-03 The Next Frontier by Mark Mobius of Franklin Templeton

In a recent interview, I was asked whether I was becoming a frontiersman in my quest for the next big investment opportunity. Its true that many of my recent investment adventures have taken place in frontier markets the smaller, less-developed cousins of the emerging markets.

2012-07-02 Anatomy of a Bear by John P. Hussman of Hussman Funds

The unusually bad outcomes of similar historical precedents help to convey why we retain such a durable sense of doom, even after last weeks scorching risk on advance. A moderate continuation of constructive market action would likely be sufficient to move us to soften our presently hard defense by retreating from a staggered strike option hedge. At present, conditions remain aligned with those that have preceded some of the most negative consequences in market history.

2012-06-29 Winds of Change by Sharat Shroff of Matthews Asia

The Jakarta air felt unusually comfortable as I stepped out of Soekarno Hatta International Airport earlier this month. It was certainly still hot and muggy but cool breezes made the evening a bit more bearable. It brought to mind Europe's economic chill, and I wondered if perhaps Indonesian businesses were facing a gloomier outlook due to global concerns.

2012-06-29 Fat Tails by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Stocks have moved modestly higher and may now be in a relatively large trading range. US economic growth remains sluggish and is drifting dangerously close to stall speed. Policymakers in Europe appeared to make some progress in the most recent summit, but much is left to be done and time is running out. Meanwhile, global growth is slowing and central banks are attempting to stem the decline.

2012-06-29 The Coming Oil Supply Gap by Russ Koesterich of iShares Blog

Prices at the gas pump are falling and slow global growth is expected to keep oil prices down in the near term. But Russ has a handy new chart showing why he expects crude prices to rebound in the longer term: global oil demand is likely to greatly outstrip supply by 2030.

2012-06-29 Unmasking the Asian Giant by Frank Holmes of U.S. Global Investors

China is far from perfect: While actors can perfect their lines and use masks to captivate an audience, smart investors know better to use a wealth of information across numerous sources to guide investment decisions. Weigh the evidence and judge for yourself. As my friend, Investment Strategist Keith Fitz-Gerald recently said in an interview, A powerful China is coming, and we have two choices. Either we're at the table, or we're on the menu. To him this means, Good news from China is good news for the U.S.; bad news from the Chinese economy is bad news here.

2012-06-28 The Counterrevolution in Egypt by Bill OGrady of Confluence Investment Management

In this report we will begin with a geopolitical history of Egypt, concentrating on the unique geography that has historically shaped its governance. We will discuss the role of the military in Egyptian political life, focusing on its self-perception and its goals. We will also detail the role of the MB as an organized political group in the country. Following this analysis, we will offer our forecast for Egypt and its potential effects on the region.

2012-06-27 The Rocky Road Ahead This Year by Russ Koesterich of iShares Blog

Back in February Russ warned that an eerie quiet had settled over the market and investors should prepare for an increase in volatility. Well, four months later that eerie quiet has lifted, and Russ outlines three reasons he expects the second half of this year to be much more volatile than the first.

2012-06-27 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital

Without external support for Egypt, there are few choices for reconfiguring national output. The country is an oil importer; its agricultural industry fragmented and inefficient; private wealth is suspicious. We also look at the growth implications of the fiasco at the G-20 meeting. In Pakistan, foreign names could rally behind exceptional investment-return potential once an election is called and a new government is in place.

2012-06-27 Long-Term Investing in a Short-Term World by Mark Mobius of Franklin Templeton

In this electronic age, news and rumors can spread like wildfire across the globe, heightening market volatility as markets react in real time. It can be difficult for investors to see the forest for the trees as they try to dodge the downdrafts immediately in front of them, sometimes making hasty missteps.

2012-06-26 Jeremy Grantham: US Stocks are Expensive and Bonds are Disgusting by Robert Huebscher (Article)

Jeremy Grantham, who has consistently identified overpricing in the US equity markets - he flagged both the Dot Com bubble and the irrational pricing that preceded the financial crisis, for instance - said last week that US stocks are 'a little expensive' and bonds are 'disgusting.' But his sternest warning to investors concerned the longer-term threat posed by global resource constraints.

2012-06-26 A Top Analyst: North America Heading to Energy Independence by Robert Huebscher (Article)

Ed Morse, a managing director of Citigroup Global Markets, said last week that by the end of this decade the US and Canada will have a surplus of oil, leaving it with 'no room for imports.' But the longer-term picture is far less certain, as extraction moves from conventional wells to newer sources, such as deepwater fields and shale-based oil.

2012-06-26 Where in the World is Risk Today by Russ Koesterich of iShares Blog

With the sovereign debt crisis centered in the developed world, the traditional notion that all developed markets are less risky for investors than all emerging markets doesnt hold up anymore. Today, while developed markets certainly top the list of the least risky countries and vice versa for emerging markets, some developed markets are now just as risky as emerging markets. At the same time, some emerging countries are now just as safe as their developed market counterparts.

2012-06-25 Enter, the Blindside Recession by John P. Hussman of Hussman Funds

The joint evidence suggests that the U.S. economy has entered a recession that will eventually be marked as having started presently. In recent months, our measures of leading economic pressures have indicated the likelihood of an oncoming U.S. recession.

2012-06-25 Emerging Markets Converge With the Developed World by Michael Gomez, Lupin Rahman of PIMCO

We expect to see growth moderating in emerging economies over the secular horizon, but still outpace growth rates in Europe and the U.S. Emerging economies entered this period of global uncertainty with relatively clean balance sheets, reasonably high degrees of policy flexibility, and substantial dry powder in the form of international currency reserves. Emerging markets are likely to be affected by the considerable growth headwinds and uncertainty emanating from the developed world.

2012-06-25 Market Breadth Pretty Good, Save for Thursday by John Buckingham of AFAM

It would have been a nice week if it wasnt for the big plunge on Thursday as that days 250-point drop in the Dow Jones Industrial Average interrupted a solid stretch in which market breadth had been quite favorable. In fact, the other four days last week saw more advancing stocks than declining stocks, looking at the New York Composite Daily Breadth statistics from this weekends Barrons Magazine.

2012-06-25 Markets Vacillate Between Weaker Data and Hopes for Policy by Bob Doll of BlackRock Investment Management

Last week was a modestly negative one for stocks as investors continued to focus on a trend of weakening economic data. Additionally, many were disappointed by what was perceived to be a less-than-robust response from the Federal Reserve following its policy meeting last week.

2012-06-25 Timid Actions, Fearful Times by Christian Thwaites of Sentinel Investments

Since 2010, investors have traveled between optimism and pessimism every three months. It's negative right now. Here's why: A very timid move by the Fed. What was glaring was the entire board revised down their expectations on the economy: i) GDP down by $500bn ii) unemployment up 500,000 and iii) lower core and PCE inflation. Not just for 2012 but next year as well. That takes complacency to a new level.

2012-06-22 Dont Expect A Double Dip This Year by Russ Koesterich of iShares Blog

Renewed fears of a US double dip are making the rounds. While Russ gives four reasons why the United States is not likely to tip back into recession this year, he has a word of caution about a risk looming over 2013.

2012-06-22 An Ending Made For Gold by Frank Holmes of U.S. Global Investors

Hold tight to your convictions, gold investors. Review your allocation to gold and gold stocks to make sure it remains around 5 to 10 percent of your portfolio. That way the precious metal can act as a shock absorber to help protect from any unexpected bumps in the financial system.

2012-06-21 Will Quantitative Easing Lead to Higher Inflation? by Keith Wade, James Bilson of Schroder Investment Management

In certain circles, talk of Quantitative Easing (QE) immediately triggers thoughts of Weimar Germany and Zimbabwe. The only beneficiaries of turning to the printing presses, it is suggested, will be wheelbarrow salesmen. Whilst extreme inflation seems an exceptionally low risk event, there are legitimate concerns over the impact of the huge expansion of the monetary base on future inflation. In this Talking Point, we examine the key signals to watch out for in assessing future inflation risks.

2012-06-21 What Makes Investors Buy High, Sell Low? by Team of American Century Investments

Conventional investment wisdom says: Buy when the price is low, wait for the investment to increase in value, and sell it at the top to realize gains. It seems like a straightforward strategy. So why dont investors follow it?

2012-06-20 Not-So-Indian Summer: 5 Reasons to Underweight India by Russ Koesterich of iShares Blog

Russ elaborates on his underweight view of India with a BlackRock Investment Institute list of five things wrong with the Indian economy, and shares how investors can be positioning portfolios as a result.

2012-06-20 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital

The OPEC meeting in Wien came-and-went, masked by bigger problems. Perhaps Iran, Iraq, and Venezuela decided that they would do injustice to their international standing if they aimed to tighten output quotes as Europe was on the cusp of imploding. We also look at how inexpensive emerging markets appear to be, while we consider the implication of Arab-market uncertainty on Turkey. Ghana may be an attractive story for the specialist investor.

2012-06-19 Will Policy Response Follow Policy Rumor? by Bob Doll of BlackRock Investment Management

The past two weeks have been better for stocks, with the major indices up in consecutive weeks for the first time in more than a month. Europe remains stuck in a cruel cycle of recession, a banking system in need of life support, frozen policymakers, too much debt and a downward confidence spiral. In the United States, economic growth slowed this spring (likely due to poor weather and the earlier spike in gasoline prices), but remains intact.

2012-06-19 Syria: Descent into Civil War by Bill OGrady of Confluence Investment Management

In March of last year, small scale protests began in Syria. As protests spread, the response escalated to the point where now it appears Syria may be on the brink of a civil conflict. In this report we will begin with a geopolitical history of the country. Following this analysis, we will describe current conditions and our concerns about the breakdown of social order in Syria, concluding with a summary of how outside powers are trying to manage the direction of any changes in Syria.

2012-06-19 Rising Tensions in the South China Sea by Bill OGrady of Confluence Investment Management

Right now, the most critical geopolitical risk to the financial markets remains Europe, with the Persian Gulf probably the second most important concern. However, there is value in analyzing situations which may become problematic, even if it is in the distant future. By doing so, it allows investors to become aware of potential situations long before they become issues. We believe it is better to have some familiarity with geopolitical concerns in advance of any major problems.

2012-06-19 After the Greek Vote, Now What? by Russ Koesterich of iShares Blog

The relief rally Monday following Sundays Greek election was short lived. To be sure, the outcome of Sundays election is near-term good news for investors. A government led by the pro-bailout New Democracy is likely to follow more of the austerity program and to try, at least for now, to keep Greece in the euro. That said, there are two main reasons why markets arent continuing to celebrate the Greek vote.

2012-06-19 Achilles Last Stand: Greeks Vote in Favor of Euro by Liz Ann Sonders of Charles Schwab

The June 17 Greek elections favored the pro-bailout party and allow for a likely coalition to be formed probably the least-tumultuous outcome. However, kicking the can further down the road doesn't solve the eurozone's structural problems, nor does it stem contagion. Next on investors' radar is this week's Federal Reserve meeting, where additional easing is expected.

2012-06-18 A Brief Primer on the European Crisis by John P. Hussman of Hussman Funds

Europe has repeatedly been successful at addressing its recurring liquidity crises with the help of other central banks, but its still an open question whether they can durably solve the solvency crisis without more disruption and more restructuring of both government debt and troubled banks. In my view, the hope for an easy solution is misplaced, and the likelihood of recurring disruptions from Europe will remain high.

2012-06-18 Mood by Jeffrey Saut of Raymond James Equity Research

M-O-O-D: That is the important word right here. And, what a difference a few weeks makes for last week the markets seemed to switch from the glass being half-empty to half-full leaving Mr. Market in a more forgiving mood. Importantly, market mood frequently sets the near-term trend. If the mood is positive, all things are possible; if it is negative, little is.

2012-06-18 Greece Gains Some Breathing Space by Darren Williams of Alliance Bernstein

Today, New Democracy (ND) leader Antonis Samaras will try to form a government. If he succeeds, an immediate disaster scenario will have been avoided. The question is: for how long? Yesterday, the centre-right ND party narrowly defeated the radical left wing Syriza party in the second Greek election. A coalition between ND and the center-left Pasok party would command enough seats in parliament to give it a small working majority (a target that the two parties just missed in the May election).

2012-06-18 Japanese Equity The Impact of Global Instability by Team of Nomura Asset Management

Mainly owing to fears of a potential Euro break up, the decline in the global stock markets in April 2012 continued through May as well. On June 4th, the Japanese equity market (TOPIX) sank to its lowest level in 29 years, declining even further below the bottom set in the aftermath of the Lehman shock in Japanese yen (JPY) terms. However, in U.S. dollar (USD) terms, the level of the Japan equity market is still above its post Lehman low recorded in March 2009.

2012-06-18 Secrets to Brand Building in China by Sherwood Zhang of Matthews Asia

The topic of Chinas consumer market tends to conjure up the catchphrase 1 billion customers and companies from around the world have flocked to cater to this market. As consumers in many developed countries have increasingly become overleveraged from years of easy credit, Chinas consumers have remained mostly underleveraged. Even as Chinas consumption growth has slowed recently, it is still expected to remain on a positive trajectory.

2012-06-18 I Like These Calm Little Moments Before the Storm by Christian Thwaites of Sentinel Investments

It is the job of investment managers to look beyond the gloom. There's plenty of it. The big list last week was the slow hand clap the market gave to the Spanish bank rescue, the probable downgrade of India, one of the dead cert BRICs we all read about, and queasy economic data from the US. Now we don't just jump in and buy on all the bad news. We're not likely to retain clients that way.

2012-06-18 Choosing the Right Asset Class in Emerging Markets: Why it Matters by Ignacio Sosa, Christopher Getter of PIMCO

Depending on individual risk tolerances during the past five years, it may have made more sense to overweight one or two EM asset classes and at times to avoid one or two EM asset classes altogether. In general, asset classes are better viewed as carriers of risks rather than each being considered a risk in its own right. This phenomenon is readily apparent in the emerging market space. We have advocated that asset allocation in EM should be dynamic with respect to both segment and country.

2012-06-15 Is the World on Sale? by Peter Langerman, Christian Correa of Franklin Templeton

Like a swift kick to the gut, the eurozone crisis knocked the wind out of the stock market in May. While most investors duck and run, others see market stumbles as opportunities to pick up potential long-term values. For these contrarians, they see the world on sale. Peter Langerman, Chairman, President and CEO of Mutual Series and co-manager of Mutual Shares and Mutual Global Discovery funds, and Christian Correa, Director of Research for Mutual Series and co-manager of Mutual Beacon and Mutual Recovery funds, are in the latter group.

2012-06-15 Theres No Place Like America by Frank Holmes of U.S. Global Investors

One should not underestimate what it means to be American; you dont find a feeling quite like it outside the nation. In fact, emerging countries such as Singapore and China are now striving to replicate what my friend Alexander Green calls American exceptionalism. On the Organisation for Economic Cooperation and Development (OECD) Your Better Life Index based on 11 diverse measures of well-being, the U.S. is highly ranked. Each element measures a feeling of satisfaction with life, including health, education, environment, personal security, life satisfaction, and work-life balance.

2012-06-15 Falling Equity Prices Reflect the European Crisis and Slower Economic Growth by Team of Thomas White International

Heightened concerns over the European fiscal crisis and slower economic growth dragged down emerging market equity prices during May. The emergence of political parties opposed to short-term austerity measures in recent elections in countries such as France and Greece has upset the political consensus that paved the way for an agreement on tackling the crisis last year. Borrowing costs of some of the troubled countries such as Spain have increased substantially, while countries that are in better fiscal health such as Germany remain hesitant about the issuance of common euro bonds.

2012-06-15 Equity Prices Reflect Concerns over Global Growth Slowdown by Team of Thomas White International

International equity prices corrected in May on heightened worries over a further global growth slowdown as the European fiscal crisis worsened. Political consensus on ways to address Europes fiscal problems dissipated after political parties opposed to austerity measures gained popularity in countries such as France and Greece earlier this year. However, Germany and select other countries continued to insist that structural reforms agreed as part of last years pact should be adhered to.

2012-06-15 Global Outlook Dampened Further by the European Crisis by Team of Thomas White International

Apprehensions over a worsening European fiscal crisis and concerns about slower growth in the emerging economies continued to dampen investor sentiment in May. Europes political leadership is yet to find a common ground that would accommodate the opposition to short-term austerity measures expressed in recent elections in countries such as France and Greece. There is growing expectation of a possible Greek exit from the monetary union while borrowing costs of troubled countries such as Spain have increased further, following credit rating downgrades.

2012-06-15 Remembering Hainan Development Bank by Sherwood Zhang of Matthews Asia

With tropical weather and white sand beaches, Hainan Island is often referred to as the Hawaii of China. Popular particularly among Chinese honeymooners, Hainan attracts tourists from around the world. Few, however, recall the islands darker days when it was mired in the failure of Hainan Development Bank (HDB). In June 1998, Chinas then regulator of commercial banks announced the closure of HDB, which was saddled with bad debts.

2012-06-15 Every Economists Career Ends in Failure - The Irony of Hyman Minsky by John Gilbert of GR-NEAM

The economist Hyman Minsky held that capitalist economies are inherently unstable because investments are financed with debt, and the financial markets pricing of debt is volatile. Economies are prone to booms and busts as the cost of financing falls too far, or rises too much, revealing poor investment decisions. This has always been obvious to observers of business cycles, of which Minsky was one. Too many of his colleagues in economics ignore this, which we have found puzzling.

2012-06-15 A Global Perfect Storm by Nouriel Roubini of Project Syndicate

Dark, lowering financial and economic clouds are, it seems, rolling in from every direction: the eurozone, the United States, China, and elsewhere. Indeed, the global economy in 2013 could be a very difficult environment in which to find shelter. For starters, the eurozone crisis is worsening, as the euro remains too strong, front-loaded fiscal austerity deepens recession in many member countries, and a credit crunch in the periphery and high oil prices undermine prospects of recovery.

2012-06-15 Schwab Market Perspective: Time for Action by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

With escalated uncertainty, sitting back can be an easy choice, but we believe investors and policymakers alike need to take action. Equities bounced off of what appeared to be oversold conditions but although the US economy appears to be holding its own, a renewed sustainable uptrend may be hard to come by until some substantive policy actions are taken around the globe. The time for decisive action in the eurozone appears to be quickly approaching as short-term solutions are no longer satiating the market.

2012-06-15 Cohen & Steers International Real Estate Securities Strategy by Team of Cohen & Steers

We would like to share with you our review and outlook for theinternational real estate securities market as of May 31, 2012. The FTSE EPRA/NAREIT Developed ex-U.S. Real Estate Index had a total return of 8.0% for the month (net of dividendwithholding taxes) in U.S. dollars. By comparison, U.S. REITs returned 4.5% for the month, as measured by the FTSE NAREIT Equity REIT Index. Year to date, the indexes returned +7.3% and +8.8%, respectively.

2012-06-14 Field Notes on Non-Traditional Markets by Douglas Clark Johnson of Codexa Capital

Saudi Arabia is now the worlds third largest holder of foreign-exchange reserves. It may be their quiet attempt to counter Irans influence with Shiism. We further offer views on China, Jordan, and Tunisia. Investors heralded Chinas rate cut last week, however modest in scope. Its common wisdom that China has the worlds largest slice of foreign exchange reserves, followed by Japan. But few appreciate that Saudi Arabia now ranks third, ahead of Russia and Taiwan. Importantly, Saudi Arabias reserve growth rate leads the world.

2012-06-13 Europe - Will the Greek Election Shift German Direction? by Milton Ezrati of Lord Abbett

As the Europeans meet and speak and summit, it becomes ever clearer just how intense and complex matters have become. Greece will determine, later this month, whether it will stay in the eurozone or perhaps even the European Union (EU). In or out, Europe and Greece will have to cope with the aftermath of the decision. Even as Greek questions remain open, an even broader drama has grown around recent proposals for the union to issue eurozone bonds that would draw on the generalized credit of all members in common.

2012-06-13 Creative Destruction by Robert McConnaughey of Columbia Management

Creative Destruction is always at play in competitive markets of all kinds. Given the metamorphic pressures caused by todays over-levered and structurally low- growth global economy, the forces of Creative Destruction are perhaps far greater than normal. Low overall growth and historically high profit margins create a particularly potent environment in which corporations compete for their share of a potential profit pool. Revenue growth is increasingly hard to come by and cost-reduction opportunities may have been stretched to their outer limits.

2012-06-12 The Problems with Trying to Benchmark Unconstrained Portfolios by Ken Solow (Article)

Benchmarking unconstrained, 'go-anywhere' managers is difficult. Common methods to determine an appropriate benchmark - such as an ex-post regression of how the fund was invested - can obscure the actions of the manager. Is the only solution to simply select an arbitrary benchmark and proceed accordingly?

2012-06-12 Why Oil Prices Can Move Higher by Russ Koesterich of iShares Blog

With oil prices down roughly 25% from their 2012 peak, many investors are asking about the future direction of crude. In my opinion, while fears of a hard landing in China and overall weakness in global growth are likely to keep prices down in the near term, crude should rebound in the longer term for three reasons.

2012-06-12 Pacific Basin Market Overview - May 2012 by Team of Nomura Asset Management

Depressed market sentiment, high volatility, and low trading volume together resulted in another difficult month for the Pacific Basin regions equity markets. Following a great start to the year, Asian markets gave most of these gains back during May, as worries about the health of the Spanish banking system stoked deeper concerns about the progress of the eurozone debt crisis, with Greek elections looming on June 17th as well. U.S. data continued to disappoint, raising fears that the economic recovery could be stalling.

2012-06-12 Frontier Markets: The New Emerging Markets by Allan Conway, Edward Evans of Schroder Investment Management

In this paper, we summarise the attractive investment case for frontier markets both over the long term but also for an investment today. Frontier markets provide access to some of the most dynamic and fastest-growing economies in the world, supported by strong secular growth drivers. The investment opportunities are similarly benign as market liberalisation is accelerating and valuations look attractive in absolute terms and versus the developed and emerging world.

2012-06-11 The Heart of the Matter by John P. Hussman of Hussman Funds

The ongoing debate about the economy continues along largely partisan lines, with conservatives arguing that taxes just aren't low enough, and the economy should be freed of regulations, while liberals argue that the economy needs larger government programs and grand stimulus initiatives. Lost in this debate is any recognition of the problem that lies at the heart of the matter: a warped financial system, both in the U.S. and globally, that directs scarce capital to speculative and unproductive uses, and refuses to restructure debt once that debt has gone bad.

2012-06-11 Bet Against QE3 by Brian S. Wesbury and Robert Stein of First Trust Advisors

Since the financial crisis in 2008 the Federal Reserve has done extraordinary things lowered interest rates to essentially zero, increased the size of its balance sheet by $2 trillion and announced Operation Twist. With unemployment still relatively high and real GDP growing at a 2% rate in the past year, there are many on (and off) the Fed who think more should be done. If we thought liquidity was a problem, we might agree, but its not.

2012-06-11 Investors Look Forward to More Policy Help by Bob Doll of BlackRock Investment Management

Following a significant slide the week before, stocks bounced back last week, primarily due to a growing sense that policymakers in Europe and the United States may be ready to engage in further easing measures. The increasing stress in Europe has put additional pressure on the European Central Bank (ECB) and on other policymakers to take stronger action, and, indeed, over the weekend European finance ministers announced a new plan to recapitalize the Spanish banking sector.

2012-06-11 Bertha and Casey by Christian Thwaites of Sentinel Investments

Markets braced last week for a bailout on Spain which came this weekend. Its banking sector is in wretched condition and joins other European banks at 25 year lows in share price. The official downgrades came long after the stock market had voted with its feet. European leaders had little to add to the debate. There's some talk of a twin track: some European countries pressing on to further integration, some coping with contraction and austerity on their own.

2012-06-08 Monthly Investment Commentary by Team of Litman Gregory

Global stock markets dropped sharply in May amid renewed macroeconomic fears. Large-cap U.S. stocks fell 6%, while small and mid-cap stocks lost 6.6% and 6.7%, respectively. Domestic stocks are still well in positive territory for the year, with returns ranging from just over 5% for large-caps to 3.4% for small-caps. Foreign markets fell further, as questions over the stability of the eurozone dominated headlines. Both developed and emerging-markets were down 11% for the month and in negative territory year-to-date (down 3.3% and 0.4%, respectively).

2012-06-08 The Default Delusion - Inevitable....and Desirable by Jonathan Compton of Bedlam Asset Management

The many tortuous what if articles on the eurozones financial problems address the risks of collapse and contagion together with the inchoate political responses. Inevitably they conclude catastrophic consequences. There is no gain in further exaggerating this fairy tale, which is repeated to frighten voters into submission. Every scribbler had got there apart from those for whom it became a quasi-religious cult. The current cacophony of commentary remains backward looking so will again miss the key issue: default is good.

2012-06-08 Waiting for Clarity and Action in the Euro Zone by Neil Dwane, Stefan Hofrichter of Allianz Global Investors

Poor economic data and the collapse of a Spanish bank have kept the pressure on Europe and the financial markets, but we believe Greece will stay in the euro and the European Union. U.S. investors should know that Germany is pro-Europe and recognizes the need for growth, not just fiscal austerity. It is also important to point out that ECB policy has been supportive, but they do not want to do the job of the government. U.S. investors should look to high-quality dividend-paying stocks in this uncertain environment...

2012-06-08 Five Tech Stocks with the Added Benefit of Dividends by Team of F.A.S.T. Graphs

Here are five technology-oriented companies that are currently trading at a price earnings ratio that implies that the stocks are attractively valued. Each of these five companies currently offers a dividend yield that is above-average as represented by the S&P 500.

2012-06-07 Spain & Weak US Economy Dominate Markets by Gary D. Halbert of Halbert Wealth Management

Stock markets around the world have been pummeled in recent weeks amidst the growing reality that were in a global recession, especially in Europe. Fears that the US will also fall into recession have intensified, particularly in light of last weeks very disappointing economic reports. At the same time, the European debt crisis has once again raised its ugly head, this time with the spotlight on Spain. Spains own Prime Minister has admitted that the country is in a state of emergency, and money is gushing out of Spanish banks.

2012-06-07 The Absolute Return Letter - First Mover Advantage by Niels C. Jensen of Absolute Investment Advisers

Contrary to conventional wisdom, the eurozone crisis has always been a banking crisis. It only morphed into a sovereign crisis because of political incompetence. Given the rather stubborn approach of the German government to its beleaguered eurozone partners, the crisis is rapidly moving towards some sort of crescendo. It is only a question of time before one of the Southern European countries come to realise that they might be better off outside the eurozone, particularly if they are the first mover.

2012-06-07 Remarks to the 12th Annual International Seminar on Policy Challenges for the Financial Sector by Mohamed A. El-Erian of PIMCO

Let me start with what I will refrain from doing specifically, I will not pre-empt the detailed discussions that you may have on such topical issues as regulatory principles, SIFIs, market infrastructure, stress testing and, of course, the rapidly changing nature of sovereign risk in advanced countries. Instead, I will try to touch on three more general topics that, in addition to your critical detailed analysis, I believe are important in assessing the potential impact of regulatory reform in terms of the past, present and future.

2012-06-06 Economic Insights: Japan - Glimmers Amid the Gloom by Milton Ezrati of Lord Abbett

Japan still looks troubled. To be sure, the economy recorded a surprisingly strong 4.1% annualized real gross domestic product (GDP) growth in the first quarter. Much of that growth, though, was due to government spending. Otherwise, the flow of news still points to the same tepid growth that has troubled Japan for more than 20 years now. Four of the last six quarters have shown real declines, including last years fourth quarter. This once-powerful exporter faces a deficit on its balance of international payments, while spring data releases show industrial production in decline.

2012-06-05 Finding the Best Dividend Fund by Geoff Considine (Article)

Assets are flowing into dividend-stock funds. But many experts are warning that those investors are setting themselves up for significant losses. Using an objective methodology that assesses tradeoff between yield and risk, we can determine those funds that investors should prefer - and a few they should avoid.

2012-06-04 After Disappointing Jobs Data, Now What? by Russ Koesterich of iShares Blog

Stocks tumbled Friday after particularly disappointing May jobs data. Russ provides his take on what the report means for the US economy and stocks going forward. First, the implications for the economy: As jobs numbers tend to lag broader economic activity, the report doesnt in itself suggest that the United States is slipping back into recession. In addition, its worth calling out that according to the new data, the United States created only 69,000 net new jobs in May, less than half of what economists were expecting and the slowest rate of net new job creation in a year.

2012-06-04 It's All Relative by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Equities have pulled back and are flirting with correction (-10%) territory. We believed this was a needed process, and remain modestly optimistic that economic data will rebound and the market will eventually resume its move higher over the next several months. The Federal Reserve has made clear that it stands ready to act should the US economy deteriorate, or the European debt crisis escalate, but we remain skeptical. The more important issue in our view is how the coming "fiscal cliff" is addressed.

2012-06-04 Opportunities in Credit Higher Quality High-Yield Bonds by Team of Columbia Management

One of the more compelling opportunities across todays fixed-income landscape is within the higher quality segment of the high-yield market bonds rated BB and B. Strong underlying fundamentals driven by a wave of refinancing and solid operating performance have greatly diminished credit risk among these issuers, as demonstrated by exceptionally low current and expected default rates. Despite this, spreads, or yield premiums relative to Treasuries, are generally higher than long-term averages.

2012-06-04 Is Global Financial Reform Possible? by Paul Volcker of Project Syndicate

Nowadays there is ample evidence that financial systems, whether in Asia in the 1990s or a decade later in the United States and Europe, are vulnerable to breakdowns. The cost in interrupted growth and unemployment has been intolerably large. But, in the absence of international consensus on some key points, reform will be greatly weakened, if not aborted.

2012-06-04 Alternative Mutual Funds See Continued Growth by Chris Maxey and Ryan Davis of Fortigent

During an especially difficult week, global equity markets were deep in the red, as the S&P 500 Index lost 3.2% and the Dow Jones Industrial Average fell 3.3%. There was no shortage of disappointing data during the course of the past week, ranging from weakness in the ISM manufacturing survey to an underwhelming May labor market report. It was such a bad week, in fact, that Bespoke Investment Group found that 18 of the 21 economic indicators released in the U.S. fell short of expectations.

2012-06-04 Negatives Intensify, but Panic Isn't Warranted by Bob Doll of BlackRock Investment Management

For some time, we have been suggesting that the US economy had been holding up relatively well compared to the rest of the world. While we are not changing that view, last weeks data (particularly Mays employment report) provided a negative jolt and pushed stock prices down sharply. Our summary view of the US economy is that while the United States appears to have entered another slowdown phase with the data growing more disappointing in recent weeks, the case for a renewed recession still looks flimsy.

2012-06-02 The Golden Wealth of Turkey by Frank Holmes of U.S. Global Investors

When I talk about the Love Trade, India and China are frequently discussed since the two countries have been dominating world jewelry demand. Turkeys love for gold, though, cannot be overlooked, as an estimated 5,000 tons have been accumulating in peoples homes for years. Turkey is now offering incentives for people to store their gold in the bank instead. By acknowledging the hidden wealth of the Eastern European nation, this move will allow banks to lend more money and ultimately improve the countrys current account balance.

2012-06-02 Snapshot on Spain: And the Money Keeps Rolling Out by Francesc Balcells of PIMCO

The severity of the Spanish financial crisis can be most vividly seen through the balance of payments data. March data shows net financial inflows of 533 million, but that includes ECB funding for the Spanish banks. When excluding the ECB funding, i.e., mostly private sector flows, the data shows 66 billion in outflows. In the past 12 months, 193 billion in private capital has left Spain, a whopping 18% of GDP.

2012-06-01 Hasenstab on a Possible Grexit by Michael Hasenstab of Franklin Templeton

The Greek debt drama looks to be entering its final act. On June 17, Greek citizens will cast their votes to either elect a pro-austerity government that would keep the economically eviscerated country in the eurozone, or leave the union and go it alone. Dr. Michael Hasenstab expects either option is going to be painful for Greece, so the big question in his mind is whether the world is prepared for either outcome. A summary of some of Dr. Hasenstabs thoughts on what Greeces next move may mean for investors.

2012-06-01 Are Small-Caps Overexposed to International Markets? by Frank Gannon of The Royce Funds

Frank Gannon looks at U.S. small-caps and how much revenue they derive from non-U.S. sources. According to a recent report by Steven DeSanctis of Bank of America-Merrill Lynch, small-caps derive less than 20% of their revenues from outside the U.S. but almost 45% of all companies in the Russell 2000 have overseas exposure.

2012-06-01 Civil Disobedience Hong Kong Style by Robert Horrocks of Matthews Asia

Walking around Hong Kong a couple of weeks ago, I was struck by the citys own version of the Occupy Wall Street movement. Directly underneath the HSBC tower, in the center of Hong Kongs vibrant financial district, is a small paved area, a portion of which is home to Hong Kongs anti-capitalist, anti-Wall Street movement. In the skyscraper above, thousands of banking and financial employees toil away daily, not overly disturbed by the protesters directly beneath their feet. Why? Because the civil disobedience below is just sowell, civil.

2012-05-31 The Global Industrial Sector: Have Profit Margins Peaked? by John Longhurst of PIMCO

Factors driving profit margin expansion in the industrial sector include globalization, EM capital expenditures, a focus on profitability and global labour arbitrage. Potential headwinds include a slowdown in global growth drivers, rising labour rates and global deleveraging. We believe profit margins are most at risk in product areas where EM companies are benefiting from state capitalism and seek to take local advantages global.

2012-05-31 The Eurozone Crisis: 4 Developments to Watch by Russ Koesterich of iShares Blog

With the future of Greece and the eurozone still so uncertain, many investors are asking how they might predict what the most likely outcome is. While I dont have a crystal ball, in addition to paying attention to eight pivotal eurozone events happening from now until July, Im also watching for four critical developments in the run-up to the second Greece election on June 17. Heres my watch list.

2012-05-31 The Sense and Sensibility of Global Investors by Mark Mobius of Franklin Templeton

The worlds financial markets are like a spiders web; inter-linked and highly connected, strong and flexible, but sometimes fragile, too. The global financial markets have gone through rapid change in the last ten years. Large, emerging economies such as China and India have increased their contribution to global GDP and become true global powers1, causing individuals perceptions of the global economy to shift, as well. Perception has the tendency to impact market reality, which is why I was intrigued to see the results of our 2012 Global Investor Sentiment Survey.

2012-05-31 Institutionalizing Courage by Robert Arnott of Research Affiliates

Most investors measure wealth in terms of the value of their portfolio. We believe it is better to measure wealth in terms of the portfolios ability to support sustainable spending. This months Fundamentals explores why this approach requires courage.

2012-05-30 The Eurozone Crisis: 8 Key Events to Watch by Russ Koesterich of iShares Blog

Be prepared for another volatile summer. From now until July, there are a number of pivotal events from votes to meetings that could help dictate Greece and the eurozones future, and will most certainly drive market sentiment. But because the outcome of many of these events is so hard to predict, I expect markets will remain especially volatile in the days leading up to these key dates. Among the 8 pivotal moments highlighted, key events include a May 31 Irish referendum on the Stability Treaty, and the June 17 Greek elections, among others.

2012-05-29 Letters to the Editor - An Attack on Paul Krugman by Various (Article)

Two readers respond to Michael Edesess' article, An Attack on Paul Krugman, which appeared on May 15.

2012-05-29 Unraveling the Mess in Europe by Charles Lieberman of Advisors Capital Management

There is considerable nonsense written about the European debt crisis. Greece must balance its books, whether they remain inside the Euro or not. There are major benefits and costs to both remaining inside the Euro and to exiting. There is no silver bullet that will solve their problems easily. More broadly, banks need to be recapitalized all across Europe. This has not been done as yet, perhaps for political reasons, which only compounds the economic problems and allows them to fester. It seems like the Europeans are working towards solutions, but painfully slowly.

2012-05-29 Canada: Untangling Pipeline Projects to Realize Energy Export Potential by Team of Thomas White International

Oil production in Canada is set to increase to 6 million barrels a day by the end of this decade, but the country lacks pipeline infrastructure to facilitate exports. For a country richly endowed in natural resources, and with growing energy production, Canada has been facing a perplexing problem in recent years. While its producers are supplying oil and gas to U.S. refineries at prices below the international market, Canadian refineries on the east coast are paying higher international prices for the oil they import.

2012-05-26 Meanwhile, Back at the Ranch by John Mauldin of Millennium Wave Advisors

We need to tear our gaze away from Europe and look around at what is happening in the rest of the world. There is about to be an eerily near-simultaneous ending to the quantitative easing by the four major central banks while global growth is slowing down. And so, while the future of Europe is up for grabs, the true danger to global markets and growth may be elsewhere.

2012-05-25 Saber Rattling by Colin Moore of Columbia Management

Tension between Iran and its Gulf Co-Operation Council (GCC) neighbors continues to rise. The GCC was formed in 1981 by the Sunni controlled states to bolster security after the 1979 revolution in Iran and the subsequent war with Iraq. Tension between Shiite Iran and Sunni Saudi Arabia escalated last year after Saudi troops entered Bahrain to quell protests. The members of the GCC held talks to discuss closer political, economic and military union.

2012-05-25 Loss Capacity Drives 401(k) Investment Default Evaluation by Stacy Schaus and Ying Gao of PIMCO

Based on our research, we believe retirement plan participants capacity for loss may be much lower than many investment default options accept as tolerable. Regardless of asset allocation structure, an investment default option should maximize the likelihood that each plan participant will meet his or her retirement income needs. One of the keys to meeting a set income replacement goal is to understand how much plan participants can afford to lose at every age as they approach retirement.

2012-05-25 India's Demographic Dividends by Sunil Asnani of Matthews Asia

Fortunately, Indias vast population of 1.21 billion, considered a time bomb not long ago, is increasingly being viewed as a positive. While its population has grown by roughly 18% over the past decade, the percentage of its children has actually fallen during this same period.looking to base manufacturing operations in other countries.India would do well to realize that this period of demographic shift is not merely a stroke of luck, but a window of opportunity. For growth to be sustainable requires some reforms in the way people live and work.

2012-05-25 Supply Your Portfolio With Healthy Growth From Medical Suppliers by Team of F.A.S.T. Graphs

With baby boomers being one of the biggest population bubbles, medical suppliers can be a healthy addition to a portfolio. Here are five medical supply companies that are trading below their normal historical PE ratios and inline or slightly below their estimated growth rates. Consequently, they represent an opportunity for above-average growth and yield.

2012-05-25 Going Defensive With Dividend Funds by Russ Koesterich of iShares Blog

With markets likely to remain volatile in the near term, investors should consider dividend paying stock funds as a defensive play.

2012-05-25 There's No Place Like America by Frank Holmes of U.S. Global Investors

Investors arent endorsing U.S. equities today. With all the positive aspects mentioned above, todays low participation in the U.S. stock market is perplexing. Here are two more reasons to invest today: 1) About 620 companies in the S&P 1500 Index are growing their revenues at more than 10 percent; and 2) 428 stocks in the index have an annualized dividend yield higher than the 10-year Treasury.

2012-05-24 Europe's Tragedy Nears the End of Act One, but the Drama Continues by Team of Knowledge @ Wharton

What a difference a year can make. When a group of European Union experts met at a workshop in Italy's Tuscan hills in the spring of 2011, the center of attention was Greece and its ever-growing sovereign debt crisis. Could it, should it, default on debt repayments? And what would happen then? The delegates wondered whether the result might be a meltdown not just of the Greek economy but of Europe as a whole.

2012-05-24 Pocket of Strength: Turkey Retail Stocks Rally by Frank Holmes of U.S. Global Investors

To add alpha, we believe investors need to continually seek pockets of strength amidst todays mire of pessimism. One bright spot weve seen lies just east of Greece: Turkey. Many investors believe banks are the only investment play in Turkey. The sole question for those investors is to hold or not to hold banks. Heres what we think is a better strategy: Invest in undervalued, diverse, smaller companies that will benefit from a resilient consumer, low unemployment rate and sound government policies.

2012-05-24 Reform in India: A Work in Progress by Mark Mobius of Franklin Templeton

The global investment community has been up in arms (and rightly so) about the Indian governments attempt to address possible past tax evasion through retroactive tax measures. Many investors started to express their disapproval by withdrawing their dollars, and amid the pressure, the Indian Finance Ministry decided to hold off on enacting the general anti-avoidance rule (GAAR) for a year. I believe this is a step in a positive direction, although the debate has simply been delayed and not completely resolved. And, retroactive capital gains taxes are still on the table.

2012-05-23 Greece Poised to Default & Exit the Euro by Gary D. Halbert of Halbert Wealth Management

Weve all heard horror stories about the global financial crisis that could unfold if tiny Greece defaults on its debts later this year. There are genuine fears that if Greece defaults, that leaves the door open to similar defaults by Portugal, Ireland and possibly even Spain. Some fear, in this nightmare scenario, that even Italy could default (although I doubt it). Will the ECB pony up even more taxpayer money for Greece this time around? Most agree that this will be decided largely by Germany.

2012-05-23 The Three-Part Case for Commodities by Russ Koesterich of iShares Blog

With both gold and broader commodity indices down significantly month to date, many investors are asking if they should lower or even remove their commodity exposure. I believe the answer is no. First, its useful to put the recent weakness in perspective. Both gold and a broad basket of commodities are down roughly 10% over the past three months. While the losses represent a significant correction, they are in line with the performance of equity markets over the same time period. Even more importantly, here are three reasons for maintaining a strategic exposure to commodities.

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.

2012-05-22 New Lows and a Dud IPO by Christian Thwaites of Sentinel Investments

We're testing all sorts of lows: 1) record low for GT10 auction last week 2) GT30 yield, same level as Dec 2008 3) European banks are at same price level as 1987...so 25 years of gains wiped out 4) euro stocks same level as March 2009, so all the gains gone 5) US safest and best place to be 6) China stocks at same level as 2006, since then the Chinese economy has doubled and 7) to cap it all we had an IPO that should never have happened. We're back in risk territory and markets don't want to extend or commit.

2012-05-22 Investing Through a Bumpy Ride by David Kelly of J.P. Morgan Funds

Its been a tough quarter so far. The U.S. economy is still growing, but not at a sufficient pace to excite anyone. Meanwhile, investors have had plenty to worry about including a fiscal cliff in the United States, a slowdown in China and, right now most ominously, further turmoil in Europe. Despite plenty to worry about, the realities of a U.S. economic recovery, very conservative allocations and relatively attractive valuations suggest that investors should still consider adding stocks and other risky assets to their portfolios.

2012-05-22 The Achilles Heel of the US Economy by Russ Koesterich of iShares Blog

The Achilles Heel of the US economy may just be that entitlement programs havent kept pace with US demographics, a fact that has long-term implications for investors. According to a recent annual government report on entitlement programs, the Social Security trust fund is likely to run out of money in 2033, three years earlier than previously projected. Meanwhile, both Social Security and Medicare arent sustainable in the long term without structural changes.

2012-05-22 Assessing the European Elections by Team of Neuberger Berman

In the two years since the onset of the European sovereign debt crisis, policymakers have struggled with the issue of fiscal integration and the tradeoff between growth and austerity. Although many observers hoped that some clarity would emerge from the recent elections in Greece, France and Germany, political paralysis continues throughout Europe. In this edition of Strategic Spotlight, we discuss the fiscal and growth outlooks for key eurozone countries and the region overall.

2012-05-21 Global Shipping: Any Port in a Storm? by Sai Devabhaktuni and Gregory Kennedy of PIMCO

With the exception of LNG tankers, all three major shipping categories have been suffering from a supply glut. This, combined with higher fuel costs, has led many shipping companies into financial distress. Although banks have worked with ship owners through this down cycle, they have also pulled back from financing the industry. We believe downside risks are likely minimized in the shipping industry for new lenders and investors. Vessel values are depressed by rates that are sometimes below owners' operating costs and by an oversupplied market that suppresses secondary market values.

2012-05-21 Economic Insights: Europe - Drama or Tragedy? by Milton Ezrati of Lord Abbett

The drama never ends. The past few weeks have seen another sudden change in the eurozones political-economic complexion. Four or five weeks ago, the Continent seemed to have established a fairly firm consensus for fiscal austerity. Since then, the government in the Netherlands has fallen over the austerity question, and elections in France, Greece, and elsewhere have all but quashed any such conviction. Street protests in Athens, Madrid, and elsewhere have also spoken to the breadth of anti-austerity sentiment. Are Europes current leaders up to the task of fiscal reform?

2012-05-21 I Should Have?! by Jeffrey Saut of Raymond James Equity Research

The brilliant Lee Cooperman, captain of hedge fund Omega Advisors, quoted Joe Rosenberg on CNBC last week, You can have cheap equity prices, or you can have good news, but you cant have both! Clearly, we currently have bad news, which in my opinion has resulted in cheap equity prices. Playing to that quote, my father always told me, Good things tend to happen to cheap stocks. As stated, the real question is, If we get a rally from this oversold condition is it the start of a new up leg, or is it just a compression rally that will be brief followed by still lower prices?

2012-05-21 Are We Near the End of the Correction? by Bob Doll of BlackRock Investment Management

Although US economic data was generally good last week, stocks sank sharply as investor fears over Europe's debt problems intensified. Despite the mounting crisis in the eurozone, the US economic recovery continues to look stable. While it is true that US stocks have taken a turn for the worse over the last month, other markets (particularly European stocks) have been hurt even more. In our view, markets are awaiting some sort of positive jolt (perhaps in the form of a policy response in Europe or some stronger US economic data) to break out toward the upside.

2012-05-19 On Corruption by Bill Mann of Motley Fool

Several large countries have little or no presence in our portfolios that have international mandates. A major reason for this is our fear of corruption in those markets. Our heightened concerns about the treatment of foreign capital in Argentina, for example, convinced us that we should greatly reduce our exposure to companies generating large amounts of revenue there.

2012-05-19 Dr. Frankensteins Europe by John Mauldin of Millennium Wave Advisors

We explore the options that the eurozone faces in order to stay together, and what it all means for some of the countries involved. While I have written for a very long time about the probability of Greece exiting the eurozone, the actuality is fraught with risk, not just for Europe but for the world economy. What happens in the next few months will impact us all for a very long time. Indeed, this is one of those years, as Lenin noted, when decades happen.

2012-05-18 Gold: The World's Friend for 5,000 Years by Frank Holmes of U.S. Global Investors

Investors have defriended gold recently in favor of the dollar, as Greek and French voters rejected austerity measures. Greeks have been responding to their escalating debt issues for a while by steadily pulling money from overnight deposits. I often say, money goes where it is best treated, and these deposits will need to find a safe haven.

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.

2012-05-18 International Real Estate Securities April 2012 Review and Outlook by Team of Cohen & Steers

European economic challenges keep us focused on high-quality names. Policy easing trends likely to benefit Asia Pacific.

2012-05-17 Greece Must Exit by Nouriel Roubini of Project Syndicate

The Greek euro tragedy is reaching its final act: it is clear that either this year or next, Greece is highly likely to default on its debt and exit the eurozone.Like a doomed marriage, it is better to have rules for the inevitable breakup that make separation less costly to both sides.

2012-05-17 Five Conservative Utilities From The Wild And Wooly West by Team of F.A.S.T. Graphs

Utility stocks have historically been known as conservative investments with above-average dividend yields. Therefore, investors seeking income from equities within a reasonable level of risk may find opportunities within the utility sector. However, the reader should note that the dividend records from utility stocks can be somewhat spotty and therefore, moderately unpredictable. Consequently investors seeking a growing dividend income stream may want to look elsewhere in spite of the above-average yield these companies offer.

2012-05-16 Can Government and the Corporate Sector work together again? by Mike Kayes of Willingdon Wealth Management

Can we find the right balance between government regulation and corporate entrepreneurship? History has shown that too much government intervention can strangle the creative energy of the private sector. Yet more recent history has shown that too little or perhaps ineffective regulation can have dire economic consequences as well. Is it possible to combine these opposing forces for our collective good, and for the collective good of the world? Sadly, in the midst of never-ending political rancour in this election year, it would appear to me that these forces are moving ever farther apart.

2012-05-16 Will a Grexit Come to Pass? by Russ Koesterich of iShares Blog

The Greek election provided further evidence that despite all of the accords, firewalls, and bailout funds, Europes economic future remains on a precipice. In a reflection of deepening economic malaise in Greece, the majority of the May 6th vote went to far left and right parties, few of which ran on a platform of fiscal austerity or loyalty to Europe. While the election certainly raised the odds of Greece eventually leaving the euro, its too soon to conclude that a Greek exit is imminent. Greeces fate now hinges on the results of a second election, expected to occur as early as mid-June.

2012-05-16 Germany Faces Political Isolation by John Browne of Euro Pacific Capital

One month ago it appeared that Germany held the whip hand in its titanic struggle against those seeking to cure all economic ills with the snake oil of currency debasement. Now, it appears that the ground beneath its feet is being swept away in a flood of popular unrest and political exploitation. The recent elections in Europe, which highlight both the strong grass roots revolt against Germanic demands in Greece and France show that the cause of sound money and fiscal prudence to be a lonely and difficult endeavor.

2012-05-16 ProVise Bullets by Team of ProVise Management Group

If you listened carefully to the CEOs during their earnings announcements, they were tepidly upbeat but upbeat nonetheless, as they looked forward into the remainder of the year. On a day-to-day basis the markets will be driven by the headlines and emotions. We encourage you to refrain from getting caught up in that fray. At the end of the day it will be about an economy that moves forward creating jobs and not one built on the back of debt.

2012-05-16 Core Alternatives Fund Quarterly Review by Josh Parrott of Hatteras Funds

A balanced position seems prudent given liquidity is slowing, credit spreads have tightened considerably and equity valuations have jumped. The destabilizing market force of deleveraging still exists and many economist have predicted that the coming months might produce some drawbacks in the markets like last summer, but also new entry points for growth areas such as Emerging Markets, Technology, Mortgage Backed Securities and possibly European distressed debt.

2012-05-15 Lacy Hunt on Debt, Austerity and Recovery by Robert Huebscher (Article)

Global economies are experiencing unsustainable debt disequilibrium, according to Lacy Hunt. Economic textbooks preach that equilibrium, rather than transition, should be the predominant condition. But our attempts to reduce our indebtedness by taking on more – and less productive – debt are weakening our economy and creating unstable conditions.

2012-05-15 Fancy Hut by Liam Molloy and Bethany Carlson of Galway Investment Strategy

Frontier markets are not going to wait 30 years to take the global economy by storm. The parallels drawn between Africa today and 1980s China are apt, but the pace of the emerging market life cycle is likely to be accelerated by technology, investment, demographics, and other factors. The lack of a one-child policy leads to more favorable demographics. Africas workforce will be the worlds largest by 2040, surpassing both China and India. The payment-with-infrastructure investment approach favored by China can mean better transportation, utilities, and communication for whole communities.

2012-05-15 Equity Investing: From Style Box to Global Unconstrained by Andrew Pyne of PIMCO

PIMCO sees greater potential benefit to global portfolios in strategies that are unconstrained by a benchmark, and with managers who think about absolute return at least as much as they think about relative return. We believe the style box approach resulted in too great a focus on returns relative to a very narrow index and led investors to have too short of an investment time horizon in which to evaluate their managers, and that the cycles of style performance and the narrow benchmarks in the style box world encourages manager turnover and undermines long-term portfolio return potential.

2012-05-15 Policy Confusions & Inflection Points by Mohamed A. El-Erian of PIMCO

During this important annual event, PIMCO colleagues from around the world debate the major trends that will play out over the next three to five years, focusing not on what should happen, but what is likely to happen. Based on the 2012 Secular Forum discussions, we expect three themes to play out: continued policy and political confusion, overly incremental public and private sector responses and, therefore, greater potential for inflection points. In terms of regions, the status quo is no longer an option for Europe.

2012-05-15 Searching for Big Foot by Anwiti Bahuguna of Columbia Management

For the past few years, the sovereign bond markets have pushed peripheral European countries to reduce public debt. This has meant adopting austerity measures whereby government budgets are slashed and taxes are raised. Such measures meet investors approval. However, the immediate impact of such efforts is less economic growth which is intolerable to the people in Europe. The path to sustainable growth is complicated and requires long-term investments. We believe despite decades of research on the topic, academic efforts have not found a clear answer. Perhaps finding Big Foot will be easier.

2012-05-14 Brazil: Compelling Opportunities for the Long Term by Brigitte Posch of PIMCO

Although economic growth has moderated somewhat in recent years, Brazils growth story remains compelling. Underpinned by favorable GDP growth, Brazilian bank fundamentals are solid; banks are closely regulated and well-capitalized. PIMCO believes several key corporate sectors oil, gas, utilities, infrastructure and major banks will dominate the outlook for Brazil over a secular horizon thanks to stronger pricing power and improved profitability.

2012-05-14 Adaptive Asset Allocation: A True Revolution in Portfolio Management by Adam Butler and Mike Philbrick of Butler, Philbrick, Gordillo & Associates

Modern Portfolio Theory has been derided by practitioners, academics, and the media over the past ten years because the dominant application of the theory, Strategic Asset Allocation, has delivered poor performance and high volatility since the millennial technology crash. Strategic Asset Allocation probably deserves the negative press it receives, but the mathematical identity described by Markowitz in his 1967 paper is axiomatic in the same way Pythagoras' equations describe the properties of right triangles, or Schrodinger's equations describe the positional probabilities of electrons.

2012-05-14 A Taste of Reality by Kristina Hooper of Allianz Global Investors

There was nothing fun loving about the spoonful of bad news overseas last week that left investors with a bad taste in their mouths. New wrinkles to Europes debt crisis and slower growth in key emerging markets have shaken the stock market and put the U.S. recovery in doubt. The recovery may be weakening and there is a good chance we will see more negative surprises in the near term. This challenging environment calls for investors to be selective in choosing risk assets. Still, shunning stocks altogether could undermine long-term financial goals and, ultimately, is a recipe for disaster.

2012-05-14 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Europe is never too far away from the headlines and investors surely will be watching 1) Greece to see if its internal politicos can get along to forge a coalition and 2) France to see if its new Prez can make nice with German Chancellor Merkel. Retailers take center-stage next week as Home Depot, JC Penney, Target, Wal-Mart, and Gap all post earnings. Additionally, retail sales heads a hectic week on the economic calendar, though investors must remember that declining energy prices should help in the months to come.

2012-05-11 Here We Go Again....or Not? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Softer economic data has prompted concerns that the market may be headed for a summer swoonsimilar to the previous two years. We believe the backdrop is decidedly different (and better) this time around but investor and business confidence will continue to be important. Some appear to be hoping for weaker data in order to spur the Fed to enact QE3. We believe the bar is much higher and that the Fed should look to return to a more normal monetary stance. Complicating the overall picture and the Feds job is the coming "fiscal cliff" out of Washington at the end of this year.

2012-05-10 Diversification 301: Tailored Solutions for Your Portfolio by Team of American Century Investments

We continue our discussion of diversification and its application to investor portfolios. We explain how there is no single universal diversified portfolio suited to all investors and occasions. Instead, diversification is a highly customizable framework that can and should be uniquely tailored to suit each individual investors goals and risk tolerances. Earlier articles in the series discussed the basic benefits and rationale for diversification and a discussion of alternative investments that can be used to diversify a traditional balanced portfolio of stocks and bonds.

2012-05-10 Five Consumer Staples For A Hearty Portfolio With Yield by Team of F.A.S.T. Graphs

The old adage that people got to eat apply to the five consumer staple companies covered in this report. From the farm to the table these companies provide sustenance to a hungry world. Therefore, we believe that conservative investors that are craving the opportunity for growth and income might want to look closer at these five consumer staples. Each appears to be reasonably priced, and the group provides various combinations of growth and yield.

2012-05-10 Sell in May: Volatility Isnt Going Away by Russ Koesterich of iShares Blog

According to the old adage Sell in May and go away, investors are supposed to cash out their stock market positions in May and then take the traditionally poorer performing summer months off. Its no wonder, then, that many investors are asking if its time to sell, a question all the more pertinent after last weeks losses. In my opinion, the answer is a qualified yes. I believe that investors should consider lightening up on certain positions and getting more defensive. But my belief is not based on the month of the year, but rather on current market volatility.

2012-05-10 International Equity: Monthly Product Commentary April 2012 by Team of Thomas White International

International equity prices remained subdued during the month of April as concerns over the European fiscal crisis continued to cloud market sentiment. Accordingly, price declines were the greatest in Europe while select markets in Asia and Latin America outperformed. As expected, the economies of both the U.K. and Spain contracted during the first quarter, and underscored the mild recession the region is facing at the moment. Bond yields of some of the troubled countries such as Spain and Italy have increased in recent weeks, and investor response to new bond issues remains lukewarm.

2012-05-10 Emerging Markets Equity: Monthly Product Commentary April 2012 by Team of Thomas White International

Emerging market equity prices were subdued for the second successive month in April as renewed concerns over the European fiscal crisis dulled the outlook for exports from some of the leading emerging economies. The moderate correction in energy and other commodity prices also dampened the optimism over economic growth in some of the leading resource exporting countries. Among the major emerging markets, Brazil declined the most followed by India and Taiwan. Most emerging markets in Europe also underperformed during the month.

2012-05-09 Pacific Basin Market Overview - April 2012 by Team of Nomura Asset Management

In April, risk-averse sentiment prevailed throughout the global financial markets amid fresh concerns about the prospects for European sovereign debt. Recent economic indicators have presented mixed signals, with signs that the Western economies are at a standstill together with a recovery for Asian industrial countries. Our outlook for global economic growth remains reasonably optimistic, and financial markets in the near future will be highly dependent on monetary policy. In the developed economies, we believe the authorities will probably take additional easing measures.

2012-05-09 Economic Update by Team of Cambridge Advisors

More money has flowed out of stock funds and into bond funds consistently over the past three years even though stock returns have outpaced bond returns and forward looking bond fund returns are expected to be low and possibly negative. This movement reflects investor aversion to the inherent risk in stocks. Bond investments tend to provide some stability to a portfolio when stock prices decline.

2012-05-09 Africa: Investing in the Cradle of Civilization: Part 2 by Team of Franklin Templeton

Africa is well known for its wealth of natural resources. These riches have attracted global investors, most notably from emerging market countries such as China, India and Brazil. Many of these investors have been seeking raw materials for their own economic development and markets for their industries. In return, many African countries have been receiving vitally needed infrastructure such as transport links, power stations, schools and hospitals, which brings into play another great African resource: a huge and youthful population.

2012-05-09 Going Global Can Pay Dividends by Brad Kinkelaar, Cliff Remily and Raji Manasseh of PIMCO

In todays low yield environment, many investors now include dividend-oriented equities in their portfolios in an effort to reach their income goals. U.S. investors with home market bias risk severely limiting their income potential because in the U.S., dividend payout ratios are on the decline, taxes are potentially on the rise, and valuations in sectors that typically offer attractive dividends are near historical highs. In our view, global equities can provide more attractive dividend income opportunities and offer potential for additional benefits, including diversification

2012-05-08 Q2 Outlook: "Sell in May" May Not Work This Year by OppenheimerFunds (Article)

Chief Economist Jerry Webman explains why he believes the U.S. economic recovery is real and CIO Art Steinmetz talks about how stocks are as cheap compared to bonds as they have been in decades.

2012-05-08 Why Be Scared Of A Hat by Christian Thwaites of Sentinel Investments

Markets tend to overreact and the last few weeks in France were no exception. Equities fell around 9% on the expectation of a change in government. On close look, the Hollande manifesto is modest...a change in retirement age here, a year difference to a balanced budget, a non-descript growth pledge, tax banks more, reduce immigration. Markets also have notoriously short memories: socialist (i.e. left of center) governments are good for markets. Stocks rose vigorously in the years after leftist governments took control of France in 1981, Sweden in 1998, the UK in 1997, the US in 1992.

2012-05-08 Eurozone Election Hangover by Axel Merk of Merk Funds

The euro is recovering after a dire Monday morning; keep in mind, though, that much of Asia had a holiday and missed digesting the disappointing U.S. unemployment report; liquidity is low, as London is closed for a holiday. Medium term, however, our bigger concern is that big money, such as the Norwegian sovereign wealth fund, is taking a step back from the Eurozone. As such, the odds of more liquidity provisions from the ECB have increased. We believe the euro will underperform other European currencies; note, though, that the world, including the U.S., will remain awash in money.

2012-05-07 After Austerity by Joseph E. Stiglitz of Project Syndicate

So many economies are vulnerable to natural disasters earthquakes, floods, typhoons, hurricanes, tsunamis that adding a man-made disaster is all the more tragic. The pain that Europe, especially its poor and young, is suffering as a result of its leaders willful ignorance of the lessons of the past is entirely unnecessary.

2012-05-05 A Graphic Presentation by John Mauldin of Millennium Wave Advisors

The job market is still in a deep hole. At April's rate of job gains, it would take well over three years to return to December 2007's employment level, without adjusting for population growth; at the average rate of the last six months, it would take about two years. Earnings are weak, and the strongest sectors aren't those of which economic miracles are spun. QE3 looks like more of a possibility than it did a few days ago.

2012-05-05 Has Tech Reached Its Top? by Russ Koesterich of iShares Blog

Since last fall, technology companies have been helping pull the broader market higher. The S&P 500 technology sector, of which Apple Inc. makes up a significant part, has gained roughly 20% year to date and is up approximately 37% from last summers low. Its no surprise, then, that many investors are wondering if the momentum will last. In my opinion, while the technology sector still looks compelling over the longer term, it may be time for some investors to pare back their positions in the sector.

2012-05-04 Bullish on America by Andrew J. Redleaf of Whitebox Advisors

Todays crisis has nothing to do with the shadow banking system or any other sort of shadow. Todays crisis is all out in the bright sunshine and remarkably straightforward. The supposed danger is that some major economic power (i.e., not Greece) will become unable to access credit markets. Spanish or Italian or French bonds will decline so steeply as to imperil the banks that own them or appear to do so, causing a run on global financial institutions as severe as 2008s.

2012-05-04 Stocks Cheap? Not so Fast! by Mike Paciotti of Integrated Capital management

Markets seem to have forgotten that which ailed us just 4 months ago. Talk of another Lehman style meltdown by a major financial institution has given way to positive earnings results, record profit margins and a much publicized recovery in the US. Equities, have now taken center stage once again with many major asset management firms proclaiming their attractive nature. Over the course of the next few paragraphs, we will examine this argument in greater detail by deconstructing equity market returns into component pieces.

2012-05-04 Back In by Mark Kiesel of PIMCO

U.S. housing may be a decent place to put money over the next several years due to improved absolute and relative valuations. U.S. housing fundamentals have improved significantly, led by lower prices, record low mortgage rates, improving inventory and delinquency trends and a gradually improving labor market, which in combination are helping homebuyer confidence and potential demand. While the outlook for U.S. housing has improved, several headwinds remain, including tight credit, potential supply from the shadow inventory and weak household formation due to a subpar economic recovery.

2012-05-03 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Earnings season continues (with the likes of Humana, AIG, Kraft), though investors may shift gears to focus on the economy next week as the new month brings key releases from manufacturing and labor. The recent jobless claims release has cast some doubt on the employment picture and last months lower-than-expected nonfarm additions have worried some analysts for the past month. (At least, it should look better than the picture in Spain?)

2012-05-03 Renewed Eurozone Concern as Liquidity Injections Dont Solve Solvency Woes by Thomas D. Higgins of Standish Mellon Asset Management

As investors recognize that the ECB's long-term refinancing operation is doing nothing to address the regions underlying solvency problems. Resolving those problems through monetary policy is complicated by the large disparities in economic growth and inflation across the eurozones economies, rendering both loosening and tightening inappropriate for certain parts of the region. As a result, Standish remains cautious about the European economic outlook and fears that renewed uncertainty over Europes fiscal stability could lead to another bout of global financial market volatility.

2012-05-03 Why a More Flexible Renminbi Still Matters by Kenneth Rogoff of Project Syndicate

Given the sharp drop in Chinas current-account surplus, should the US, the IMF, and other players stop pressing China to move to a more flexible currency regime? The answer is no, because Chinas economy is still plagued by massive imbalances, and a more flexible regime would provide an important stabilizer.

2012-05-03 6 Reasons Why a Soft Landing in China Matters by Russ Koesterich of iShares Blog

World markets and financial media seem to react to every new data point about Chinas economy, whether its manufacturing reports or gross domestic product numbers. This market sensitivity isnt very surprising given how important China has become for the global economy. But it also means that it will be hard for the global recovery to continue without a soft landing in China.

2012-05-03 A Troika of Problems by Team of BondWave Advisors

The troika of the International Monetary Fund (IMF), European Union (EU), and European Central Bank (ECB) has continued to prescribe austerity. But at the end of what is now a lengthy cycle of agreements and ever-increasing austerity measures, the debt still remains significant and much of the region has either been plunged into recession or is heading that way. We discuss these ongoing problems and provide additional insight on the US Treasury, Corporate and Municipal Bond Markets.

2012-05-01 Q2 Outlook: by OppenheimerFunds (Article)

Chief Economist Jerry Webman explains why he believes the U.S. economic recovery is real and CIO Art Steinmetz talks about how stocks are as cheap compared to bonds as they have been in decades.

2012-05-01 Another Story of Too Much Debt: Investing During Unsustainable Economic Conditions by Brian McAuley (Article)

US-based investors cannot ignore the macro environment, and therefore must consider the consequences of our increasing indebtedness and its impact on capital markets. We can gain valuable insights into our fiscal problems from the housing bubble and the European sovereign debt crisis - lessons which every value investor should heed.

2012-05-01 The Income Hunt: Opportunities Abroad by Russ Koesterich of iShares Blog

When it comes to fixed income portfolios, investors are often too reliant on domestic debt issues. However, as Russ explains, today there are a number of reasons why US investors should consider looking outside their own country particularly toward emerging markets for their fixed income needs.

2012-05-01 Bernanke: Be Humble! by Axel Merk of Merk Funds

To Bernanke, being humble means to keep strong monetary policy support to avoid deflation. This humbleness creates a lot of debt whether that be out of thin air on the Feds balance sheet, or across the economy as consumers, businesses and the government alike are enticed to borrow evermore money. What we consider monetary largess, as well as fiscal unsustainability, may ultimately lead to deterioration of the US purchasing power. We have encouraged investors to take a diversified approach to cash. A basket of hard currencies or gold might serve to mitigate the risks of a declining dollar.

2012-05-01 Germanys Neighborhood Watch by Mohamed A. El-Erian of Project Syndicate

Ultimately, there can be no strong Germany without a stable eurozone; no stable eurozone without a strong Germany; and no global economic stability without both. Germans might not like their choices, but refusing the responsibility of leadership is one option that Germany does not have.

2012-04-30 Japans Quest to Replace Nuclear Energy with Natural Gas by Team of Thomas White International

During last summer when Japan was facing a severe decline in electricity generation, consumers readily answered to the governments call to reduce consumption. However, Japanese policymakers have quickly and correctly realized that such noble responses from a strongly patriotic people are not the answer to the energy challenges facing the county. Now, the new long-term energy roadmap being drawn up in Tokyo will go a long way to help Japan lighten the gloom that engulfed the country when those giant waves came ashore last year.

2012-04-28 A Gold Standard? by John Mauldin of Millennium Wave Advisors

Here is a speech by Jim Grant to the New York Federal Reserve. The always erudite Grant takes us back in time to the very beginnings of the Federal Reserve, to show us how far we have strayed from the original intent. Grant argued for a return to the gold standard in the very halls of fiat money! It seems the New York Fed is asking some of its critics to come and speak.

2012-04-27 What are ETF and Mutual Fund flows telling us? by Kevin Mahn of Hennion & Walsh Asset Management

On the ETF front, while we did see some positive net flows into bond-oriented ETFs (notably High Yield Bonds), we also observed significant funds flowing into domestic and international emerging market equity products. In terms of outflows, or redemptions in this case, funds were flowing out of a wide variety of Morningstar categories, albeit only slightly on the bond-oriented front. I believe that the divergence in fund flow information for the first quarter of 2012 may primarily be related to the types of investors who generally invest in the products.

2012-04-27 Roller Coaster Returns by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Despite an earnings season that has been much better than expected so far, investors appear to be again focusing on more macro concerns. Europe and China are dominant concerns but US growth sustainability is also being questioned. We remain optimistic on the ultimate direction of the stock market. The Fed meeting provided no changes but did show a slightly more hawkish tilt in their economic forecasts. Meanwhile, the US government continues to play a dangerous game of chicken as election season is already in high gear and the so-called "fiscal cliff" looms.

2012-04-26 Why Eurozone Woes are Creating Headwinds for Global Firms by Team of Knowledge @ Wharton

Europe is in crisis -- and that has major implications for multinational firms with significant operations in the region. In fact, while much is written about the race by corporations to penetrate emerging markets like China and Brazil, the reality is that the investment by multinationals in Europe dwarfs the assets they have in those fast-growing economies. And the sovereign debt crisis in Europe, along with weak economic growth, is sparking changes in how these firms operate -- altering everything from manufacturing strategies to marketing to financial maneuvers.

2012-04-26 The Newlyweds Dilemma by John West of Research Affiliates

Before marriage, men and women enjoy a lot more free time. Married life represents a huge shift in their habits and schedules. Similarly, a new world of lower expected returns signals a major break from mainstream investment approaches. This months Fundamentals examines how investors can position their portfolios for the future.

2012-04-26 The Global Fiscal & Monetary Policy Shift Moves Markets by George Bijak of GB Capital

The powerful macro forces that drive global economy and move stock markets have changed direction post the peak of the Global Financial Crisis. Governments are tightening their Fiscal Policies and Central Banks are expending their Balance Sheets (also known as quantitative easing or money printing) as part of globally synchronized deleveraging process. The two opposing forces pull the global economy in different directions. The fiscal cuts are slowing economic growth but are counter-balanced by a stimulative nature of the Central Banks easing.

2012-04-26 Myanmar: Opening the Door to Democracy by Mark Mobius of Franklin Templeton

As I have always maintained that with opportunities come risks. Myanmar is no exception. At this moment there is a lot of euphoria and excitement about the possibilities, but investors should try to avoid getting caught up in emotion. Its important to realize that the development of capital markets (bonds and stocks) takes time. One should be cautious about potential over-speculation, which tends to run high in the early stages of development. Investors often try to rush in early and can potentially push the price of stocks too high, which can in turn make valuations expensive.

2012-04-25 Developed Europe: Economic Review 1st Quarter 2012 by Team of Thomas White International

The first quarter of 2012 witnessed several comforting developments in Europe. Greece fulfilled the pre-condition for securing its second bailout by convincing its private creditors to accept a 53.5 percent write-off on its debt. The deal eased concerns about a disorderly default by Greece on its sovereign debt. Following up on the liquidity-infusing program it introduced late last year, the ECB carried out another round of its Long-Term Refinancing Operation (LTRO), this time handing out to about 800 banks a total of 529.5 billion in 3-year loans at a very low interest rate of 1 percent.

2012-04-25 Impatience Will Lead To Our Demise by Lance Roberts of Streettalk Live

What is both disturbing and disappointing is the lack of foresight exhibited by the media and political leaders of not only Europe but the U.S. as well. It should not be a surprise to anyone that the austerity regimen, agreed to last month as a long term solution to Europe's sovereign debt crisis, is going to cause economic growth to slow. We have been very vocal about this point. Austerity measures cannot be imposed when an economy is saddled by rising debt costs and high unemployment. It will reduce economic output and therefore requires a strongly growing economy to offset the drag.

2012-04-25 Is The Economic Recovery Stalling? by Gary D. Halbert of Halbert Wealth Management

The US economic recovery is facing some stiff headwinds. Those include high gasoline prices, the recession and higher interest rates in Europe and the recent disappointing unemployment numbers in the US, just to name a few. The apparent slowdown in the recovery recently is in part due to the unusually warm winter, which served to pull economic activity forward in January and February, thus making March and April so far look softer. Some in the mainstream media concluded that we dont have a problem with the economy. Maybe so, but the recovery has had an uneasy feeling about it recently.

2012-04-24 Why a 60/40 Portfolio isn’t Diversified by Alex Shahidi (Article)

Maintaining a balanced portfolio is critical, especially when predictions of growth and inflation vary as widely as they do today. Investors are always better off spreading risk than aggressively betting on one economic outcome, and that's especially true when the range of possible economic outcomes is so wide.

2012-04-24 Is 2012 the Year for Hedge Funds? by Chris Maxey of Fortigent

Prior to the financial crisis, hedge funds were largely viewed as alpha generating, high return seeking, portfolio diversifiers. In 2008, that model came under attack from multiple angles fraud, illiquidity, and poor returns being the primary culprit. Ever since that time, the value proposition of hedge funds and alternative investments remains in question, causing some to wonder if this is a make or break year for the space. There is reason to think the environment for hedge funds and active managers is improving.

2012-04-24 A Risky Business by Russ Koesterich of iShares Blog

In todays low yield environment, fixed income investors face a stark choice: accept lower income or take on additional risk to generate incremental yield. In assessing these two options, investors must start with their own tolerance for risk and investment objectives. For those willing to take on additional risk, I continue to advocate reducing duration risk, for which investors are not being adequately compensated, and modestly increasing exposure to spread products. I currently see opportunities in Investment Grade US Corporate Debt and Emerging Market Bonds.

2012-04-24 Real Career Risk by Bill Smead of Smead Capital Management

Real career risk is too many people doing what you do for a living. Granthams problem is that every day three million brilliant people get up and spend most of their waking hours trying to practice wide asset allocation. Most of those three million brilliant people have strong backgrounds in economics and lean on their ability to make macroeconomic predictions. Too many people are doing the same thing at the same time for a living. Therefore, they need to either move to another town or wait patiently for most of the other bright people to take up another profession.

2012-04-24 The Weight of AAPL and Mixed Data in the U.S. by John Buckingham of AFAM

Last week was quite an interesting week, with investor darling Apple Computer shedding another 5.3% of its value after losing 4.5% in the week prior, the latest economic numbers generally coming in a bit weaker than expected and first quarter earnings reporting season getting off to a solid start. Happily, though there was no shortage of daily volatility, the major market averages all ended in the green, which rebounded by 1.4%. While Apple is not a Dow component, it presence in the Russell 3000 and the S&P 500 did not help those indexes, each of which turned in returns of less than 0.7%.

2012-04-24 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Dr. Bernanke and friends get together again to set monetary policy and will discuss oil and gas prices and the effect on inflation as well the newfound labor slowdown. Still, no one expects any additional stimulus moves at this time and the policymakers should reiterate their intent to keep the funds rate at near-zero percent well into 2014. The future of Europe remains atop the headlines as France holds crucial national elections and the IMF convenes for its semi-annual soiree.

2012-04-23 Middle East/Africa First Quarter 2012 Economic Review by Team of Thomas White International

While the Middle East and Africa (MEA) region continues to weigh the impact of the tumultuous Arab Spring uprisings, the area is facing against another challenge yet again. In addition to the existing domestic instability, a strained external environment (the Euro debt crisis) is proving to be a major threat to the regions trade, tourism, remittances and other exports receipts. According to the World Banks Global Economic Prospects report, the economic recovery seen in Morocco, Jordan and Tunisia in late 2011 is likely to stall in 2012.

2012-04-23 Americas: Economic Review First Quarter 2012 by Team of Thomas White International

Optimism over economic prospects increased across the Americas regions during the first quarter of the year, as economic data showed sustained improvement and global risks eased somewhat. Despite costlier fuel, consumer spending climbed in most countries across the region, especially in the U.S. The European fiscal crisis now appears less worrisome when compared to last year, while the slowdown in Asia has turned out to be milder than expected earlier. Commodity prices have recovered after the correction during the second half of last year, on an improved outlook in global demand.

2012-04-23 A Seesaw of Surprises by Kristina Hooper of Allianz Global Investors

It was a week full of surprisesboth good and bad. Corporate profits in the United States have come in stronger than expected. U.S. consumers are spending more money than anticipated. But continued housing weakness, higher-than-expected jobless claims and deeper disruptions in Europes debt crisis have raised some eyebrows. Adding to uncertainty are the events in the Netherlandsone of only a few AAA-rated lenders in Europeas its government rejected a fiscal austerity plan and now is in jeopardy of collapsing. Here is how to put such a mixed bag in perspective.

2012-04-20 Currency Wars: Gambling With Other Peoples Money by Axel Merk of Merk Funds

If running out of your own money wasnt bad enough, policy makers are increasingly spending other peoples money to bail their country out. At the upcoming G-20 meeting, finance ministers from around the world will contemplate an increase to the resources of the International Monetary Fund (IMF). At stake for politicians is whether they can continue to do what they know best to play politics. In contrast, at stake for investors may be whether currencies will retain their function as a store of value.

2012-04-20 Powerless in India by Siddharth Bhargava of Matthews Asia

More than 400 million people have no reliable access to electricity in India, which has more citizens living without power than any other nation. As is the norm in the worlds largest democracy, the root of the problem spans several sectors, and highlights structural issues and political considerations. It is an issue that ultimately requires clarity on policy and capable leadership at the helm of state-run enterprises.

2012-04-20 How European Politics Could Impact Markets by Mohamed A. El-Erian of PIMCO

Fed up with how all the economic, financial and policy news out of Europe have been contributing to equity market volatility? Well, not only will this continue but, now, we must also get ready for something new over the next few weeks: the impact of elections. In addition to their consequential national impact, the series of forthcoming elections involve cross-border implications that influence prospects for regional policy coordination and, therefore, the nature and speed of the solutions for Europes debt crisis.

2012-04-20 Weighing the Evidence of Oil and Gold Stocks by Frank Holmes of U.S. Global Investors

We believe in thinking contrarian and keeping a close eye on historical trends to discover inflection points, as stocks tend to eventually revert to their means. For example, in March 2009, we noted significant changes signaling the market had hit rock bottom; following that time through the end of the first quarter, the S&P 500 Index rose more than 100 percent. Todays extreme divergence in oil and gold stocks and their underlying commodities presents a rare opportunity: what these stocks need now are investors to take advantage of it.

2012-04-20 International Real Estate Securities Investment Review & Outlook First Quarter 2012 by Team of Cohen & Steers

Europes attempt to rein in its fiscal imbalances has made for a negative macroeconomic backdrop, and we expect a moderate recession as a base-case scenario for the continent, marked by more severe contraction in the southern region. The recent LTRO facilities have prevented a severe credit crunch and collapse of the EU banking system. However, we take the view that this three-year program merely buys time to sort out the overleveraged balance sheets of most EU banks. It does not solve the long-term solvency crisis facing Greece and possibly Portugal.

2012-04-18 Stock Picking in a World of Profit Margin Mean Reversion by Bill Smead of Smead Capital Management

We feel investors should avoid capital intensive companies which are tied to commodities or emerging markets. As interest rates rise and capital becomes dear, those who eat capital lose and those with strong balance sheets and who generate high and consistent free cash flow, should win. As Buffet, Grantham, Hutchinson and Stein pointed out, someone loses in the reversion to the mean of profit margins when compared to GDP. Lastly, dont be fooled by those who are bearish on the stock market because of their belief in profit margin reversion.

2012-04-18 Q2 Markets: Dont Expect Smooth Sailing by Russ Koesterich of iShares Blog

While valuations still appear reasonable, inflationary pressures remain well contained and the economy is stabilizing, Russ explains why he expects more market volatility in the second quarter and details how investors may want to position their portfolios as a result.

2012-04-18 Emerging Market Brands: From Backstage to Center Stage by Mark Mobius of Franklin Templeton

If the growth of the emerging market consumer class persists, it should translate into more clout for local consumer brands. The global emerging markets middle class is anticipated to grow from 430 million in 2000 to 1.2 billion by 2030.3 By some estimates, China and India are expected to account for two-thirds of the expansion in emerging markets.2 Its not a given, but such a large group of people with diverse tastes in consumer goods could be a boon to emerging brands over the long term.

2012-04-18 Ride the Wave of Crude? by Brad Sorensen of Charles Schwab

Crude-oil prices have moved steadily higher over the past several months, but the move may not be sustainable. Geopolitical tensions are unpredictable, but the response in demand to rising prices has become more rapid, and we see other downside risks. Investing directly in the energy sector may not be the best way to try to benefit from rising oil prices, given new investing options, along with companies' various costs and sources of revenue.

2012-04-18 Quirky Tales and Waves of Change by Doug MacKay and Bill Hoover of Broadleaf Partners

While almost all commodities (ag, chemicals, and energy) have tended to move up and down together in price, oil has always beat to a different drummer, likely as a function of the ebb and flow of geopolitical concerns and the physical location of most known reserves. I would guess, however, if natural gas is in such abundance domestically, it could very well be the case around the globe. The prospect for $200 oil might be as remote as NASDAQ 5000.

2012-04-18 Monthly Product Commentary: International Equity March 2012 by Team of Thomas White International

After the robust gains during the first two months of the year, international equity markets corrected marginally during March as the markets waited for further economic data and trends from first quarter earnings announcements. Emerging markets underperformed on renewed concerns that domestic consumption growth in some of the larger emerging economies could be lower than current expectations. The lack of investor interest for a new issue of Spanish bonds drew renewed attention to the European fiscal crisis.

2012-04-17 The Rebalancing Problem by Michael Nairne (Article)

Selling winning asset classes to buy losers runs counter to human nature. But doing so with discipline can increase the potential return of a portfolio while critically maintaining its risk profile. The rebalancing premium is an important and often overlooked addition to returns of properly managed portfolios.

2012-04-17 Letters to the Editor by Various (Article)

We have several letters from readers, including one in response to Lisa Keung's article on myths about women and investing and one in response to a recent commentary by Dan Ariely.

2012-04-17 Emerging Europe: First Quarter 2012 Economic Review by Team of Thomas White International

In an interim review published in February, the European Commission reduced its growth outlook for most of the non-euro member states in the European Unions eastern periphery. The commission said while Hungarys economy is expected to contract, the Czech economy is likely to stagnate during the year. However, the agency singled out Poland for special praise. The EC said the Polish economy will continue to expand during the year. The commission said investment spending will be the driver of growth in Poland, while a weak zloty will encourage exports.

2012-04-17 Investor Question: Gold or Gold Miners? by Russ Koesterich of iShares Blog

The Fed may be the best friend gold investors ever had. The most important factor for gold is actually not inflation or the dollar, but rather the level of real interest rates. In fact, the relationship between gold and real rates is so critical that since 1990, the level of real rates explains roughly 60% of the annual performance of gold. Gold generally does best in an environment in which real rates are low to negative as this means no opportunity cost to holding gold. Since 2003 when gold began its long-term outperformance we have been in just such an environment.

2012-04-16 The Time Between Too Early and Too Late: Monthly Commentary by David Kelly of J.P. Morgan Funds

After three years of market gains, a record year for corporate profits, and in the midst of solid monthly job gains, it is difficult to argue that it is still too early to get back to a more balanced approach to long-term investing. But some may now argue that it is too late and that perhaps the market has run too far. However, while there is always the risk of a correction, it is hard to see why March 2012 should represent a market peak.

2012-04-16 Can Foreign Trade Cure America's Ills? by Kristina Hooper of Allianz Global Investors

A narrower international trade gap could be the elixir that helps speed the recovery. A shrinking trade deficit suggests the economy may have grown faster than expected in the first quarter. The news prompted the New York Feds William Dudley to boost his GDP estimate. While headlines on employment, Europes debt issues and Chinas slower-than-expected growth have hurt stocks, they are likely to cause only short-term market disruptions. The correlation between international trade and corporate profitability point to improved earnings and economic growth over the longer stretch, however.

2012-04-13 Pacific Basin Market Overview - March 2012 by Team of Nomura Asset Management

Our outlook for global economic growth remains reasonably optimistic. The U.S. in particular has exhibited some surprisingly buoyant conditions driven by improvements in the job market and stronger consumption. Europe for now appears to have disproved the more pessimistic forecasts, whilst Japan will benefit from reconstruction activity. Our sector allocation strategy remains biased towards growth. We hold overweight positions in the Industrials, Consumer Cyclical, and to a lesser extent, Technology, while we remain underweight in the Telecommunications and Utilities sectors.

2012-04-13 Developed Asia Pacific: Economic Review 1st Quarter 2012 by Team of Thomas White International

Developed Asia Pacific economies showed more promise in the first three months of 2012 compared to the gloomy scenario witnessed during the last quarter of 2011. A marked upturn in the U.S. economy along with receding fears about the debt crisis in Europe gave a fillip to export-based economies in Asia such as Japan and Singapore. Whats more, inflation in most of the developed Asia Pacific economies became less of a concern during the first two months of 2012, with Singapore, Hong Kong and New Zealand all reporting subdued inflation.

2012-04-13 Schwab Market Perspective: Concern or Correction? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic data has softened a bit lately but still indicates growth in the US. After a long stretch of relative calm in the markets, we've seen the markets pull back, possibly fulfilling the correction that was overdue. We believe the longer-term trend is higher but near-term risks continue to be elevated and earnings season could bring more volatility. The minutes from the most recent meeting of the Fed seemed to solidify that another round of quantitative easing (QE3) is not in the offing. Although the stock and bond markets initially reacted negatively, we are heartened by the rhetoric.

2012-04-13 Wheres the Beef for Gold Equities? by Frank Holmes of U.S. Global Investors

If you plan on shopping for bargains in the gold miner department, youre going to fight a crowd. Numerous global investors have been pounding the table for gold stocks, including Marc Faber who said gold shares have become extremely oversold and could rebound in the next few days and Global Portfolio Strategist Don Coxe, who reiterated that gold equities are undervalued compared to the precious metal. A big buyer has been the miners themselves. Mergers and acquisitions in the mining sector have been at an all-time high over the past two years. Theyve been willing to pay a premium too.

2012-04-12 Benjamin Graham's The Intelligent Investor: Chapter Eight by Kendall J. Anderson of Anderson Griggs

There are only five pages dedicated to bonds in Chapter Eight. But, these five pages had such major influence on my early years as an advisor. And once again, it is those pages that are sending me a reminder as to why I should not buy bonds today. Given the current interest rates, I would strongly suggest any and all bond investors read these pages. I can assure you that Mr. Buffett has.

2012-04-12 Bond Market Review & Outlook by Thomas Fahey of Loomis Sayles

Central banks around the world sent a rush of liquidity into the global financial system, and this coordinated effort helped stem the risk of a major European credit crunch that was brewing at the close of 2011. In our view, the liquidity provision has improved the macroeconomic outlook and buys some much needed time for sovereigns, banks and other indebted private sector agents to try to get their balance sheets in order. Risk assets have generally responded very well to easy money policies over the last two quarters, while negative real interest rates have piqued the global thirst for yield.

2012-04-12 Volatility Is Not Risk by Chuck Carnevale of F.A.S.T. Graphs

Rogers blog dealt with his feelings about a recurring theme in Barrons over the weekend referencing peoples complacency for risk. The first part of his writing dealt with the risks associated with the utilization of puts. On this subject, Roger and I are in agreement. However, the second part of his blog talked about what he felt was the great risk of using dividend paying equities as an alternative investment choice. The following analysis utilizing the F.A.S.T. Graphs earnings and price correlated research tool illuminates the important parts that I feel Roger left out.

2012-04-11 A Balancing Act by Mark Mobius of Franklin Templeton

The balancing act between inflation and growth that economies often face is perhaps even more pronounced in the emerging markets world: stimulate growth too much, and inflation could flare, but stamp out inflation too hard, and growth could freeze. The fire of inflation seems to have moderated and some central banks have taken actions to stimulate growth. I believe the fundamentals in many emerging markets look supportive of these actionsas long as it doesnt tip out of balance. Inflation is a big challenge, and I believe it will probably be a very important consideration going forward.

2012-04-11 Time to Exit Emerging Markets? by Russ Koesterich of iShares Blog

Is it time to sell emerging market equities? Thats what many investors are wondering given that emerging market stocks are up significantly since fall lows and have modestly outperformed developed markets year to date. Despite emerging markets strong recent performance, I believe there are two major reasons why investors should still consider overweighting select countries relative to their weight in the MSCI ACWI benchmark. Cheap Valuations and Falling Inflation.

2012-04-11 Taxes and Cheating by Dan Ariely of Predictably Irrational

Will Rogers once said that The income tax has made liars out of more Americans than golf and I worry that he was correct. During his confirmation hearing to become the Treasury Secretary, it was revealed that Tim Geithner failed to pay Medicare, Social Security, and payroll taxes for several years while he worked for the IMF. When asked by Senator John Kyl during the hearing about the $40,000 mistake, which Geithner blamed on the tax software he was using it was very clear that this was an avoidable mistakeI had many opportunities to see it. But he didnt, apparently, and that was that.

2012-04-10 Which Stocks Win on Main Streets Comeback? by Bill Smead of Smead Capital Management

We are very excited about the next three to five years because we believe it is likely that Main Street will start to compete with Wall Street for capital and economic growth will accelerate. Unemployment rates would fall in that scenario and pent-up demand for goods and services could come out of the woodwork among average American households. What we mean by saying this is that capital will begin being demanded for business activities. As capital gets demanded for business activities ranging from housing to business expansion, the cost of capital will rise and bond prices would fall.

2012-04-09 Strong Fundamentals Drive Best First Quarter Since 1998 by Douglas Cote of ING Investment Management

The best first quarter since 1998 was marked by strong fundamentals and reduced volatility and global risk.Could it be that the vicious cycle of the past few years has been broken? Could we have entered into the type of virtuous cycle in which positive data beget more positive data, as has marked prior sustained bull markets? Sell in May and go away and other bear strategies that have worked in prior years will likely be ineffective this year, driven in large part by strong fundamentals and global risks that have been excessively discounted.

2012-04-06 Managing Expectations: Why Gold Should Thrive by Frank Holmes of U.S. Global Investors

Its been a challenging week for gold investors. As I often say, investing, like life, is about managing expectations. Over the past 11 years during golds spectacular bull run, investors should remember that price action can go both ways. What helps is to look at the historical rise and fall of gold. For example, looking at the past decade of one-day 5 percent drops in gold, you can see that this event is pretty rare. In 2006, gold dropped more than 5 percent in a day only two times. In 2008, there were three such events. Another one occurred at the end of this February.

2012-04-06 Postcard from Taiwan by Sherwood Zhang of Matthews Asia

Managers of most businesses seem eager to duplicate their efforts in China and elsewhere in the region. Given the successful track record of Taiwanese companies in the food and beverage market, they should be well-positioned to transfer such service industries to China. I look forward to assessing the changes on my next visit, and hopefully, by then, getting into Taiwan will be a smoother process for me.

2012-04-06 TSA: Wasteful and Insecure by Dan Ariely of Predictably Irrational

When you consider the approach to security so far, who knows what the next step might bewill we have to wear certain clothes only, carry only certain kinds of luggage, or no luggage at all? Instead we need a comprehensive approach that addresses concerns more fully, rather than the reactionary, piecemeal approach we have at present.

2012-04-05 CACI - Growth at a Ridiculously Low Price by Chuck Carnevale of F.A.S.T. Graphs

We believe that CACI it is extremely high-quality Defense Company with a niche that is currently being unfairly discounted by Mr. Market. The company possesses a predictable and consistent opportunity for continued double-digit earnings growth that is significantly in excess of the average company. Nevertheless, it can currently be purchased at a significant discount to the average company. This company pays no dividends; it is purely an opportunity for growth that can currently be purchased at a significant discount to its True Worth.

2012-04-05 Shifting Focus: Behind Country Valuations Today by Russ Koesterich of iShares Blog

As the European financial crisis raged last fall, investors were closely monitoring metrics like credit default swaps and yields on Italian bonds to determine where to place their country bets. But 2012 has brought some stability to the eurozone and with it weve noticed a shift in the types of indicators that investors should be tracking when it comes to determining country valuations metrics that show economic growth.

2012-04-05 You Cant Handle the Truth by Niels C. Jensen of Absolute Return Partners

The UK may not be facing the same set of challenges as many other European countries but that does not mean that the next few years will be plain sailing for the British. Households are overextended, banks are highly leveraged and the pension model is deeply flawed. Meanwhile, the British government, obsessed with keeping the coveted AAA rating, is pursuing a fiscal policy which is well intended but entirely inappropriate.

2012-04-05 BRICS Plan for the Future by John Browne of Euro Pacific Capital

Last week, the leaders of Brazil, Russia, India, China, and South Africa met in New Delhi for their fourth annual "BRICS" summit. The meeting brought together five countries that together represent 43% of the world's population and 18% of the world's GDP. When the gathering concluded on March 29, the coalition subtly issued its latest challenge to the increasingly desperate bankers and politicians of the West. They announced more definitive plans to establish a BRICS-focused development bank, to be solely funded by the BRICS countries themselves.

2012-04-05 Calm After the Storm by Richard Michaud of New Frontier Advisors

The Fed has announced that it stands ready to promote economic growth with all the tools at its disposal. The Fed policy of low interest rates and cheap credit may still be needed to help the job market heal for some time to come. However, the inevitability of a rise in interest rates at a foreseeable point may encourage investors to avoid fixed income securities. The financial reality is that markets clear and prices depend on buyers as well as sellers. Time horizons and global forces are always considerations. The importance of diversification is always prudent for long-term investors.

2012-04-05 Global Equities: Building a Research Mosaic for the Information Age by John Longhurst of PIMCO

As a result of increasing correlations across the globe, identifying the best global franchise opportunities at attractive valuations is becoming increasingly important. We believe that taking a broader global perspective and comparing a companys valuation and growth outlook versus their global competitors is just as germane as looking at them relative to their country or region. Identifying Chinese and non-Chinese companies that will gain and lose in this process is a critical long-term challenge when constructing a global portfolio and not an easy one.

2012-04-04 What Shall We Do with All Our New Natural Gas? by Team of American Century Investments

Youre probably aware of the revolution taking place in natural gas technology and supply. Horizontal drilling along with hydraulic fracturing has created the ability to capture huge quantities of natural gas trapped within large shale formations across the U.S. And so the United States is faced with an energy policy challenge and question not related to dealing with scarcity but instead what to do with this sudden windfall of new domestic energy. How we address this question will have important economic consequences for our various industries, employment and our economy overall.

2012-04-04 Economic Update by Richard Hoey of Dreyfus

We believe that a full-scale global recession is unlikely, assuming that there is no major oil price spike from a disruption of the flow of Middle East oil. We believe that a key cause of global economic expansion will be the easy monetary policy prevailing in many regions and countries worldwide. We expect a global growth recession in 2012, with declining economic activity in Southern Europe, an economic stall or temporary declines in the U.K. and much of Northern Europe, a moderate slowdown in emerging markets and a U.S. expansion at a near-trend pace in 2012, somewhat faster than last year.

2012-04-04 Time Heals All Wounds by Robert Stimpson of Oak Associates

The US stock market enjoyed a strong first quarter of 2012. Fueled by better economic data and a calming of fears over Europe, the stock market surged higher. For the first quarter, the S&P 500 rose 12.6%. Oak Associates accounts did much better, gaining on average more than 17%. The strongest performing sectors of the market were financials, technology, and consumer discretionary. These three groups are the most cyclical and their strong performance bodes well for a broader economic recovery through 2012.

2012-04-03 A Q1 Letter to Clients: Bernanke, Buffett and Siegel on the Prospects Ahead by Dan Richards (Article)

Here is a template for a letter to serve as a starting point for advisors looking to send clients a summary of what's happened in the past 90 days and the outlook for the period ahead.

2012-04-03 Good Quarter. More to Come. by Christian Thwaites of Sentinel Investments

Good week ending an even better quarter. We like this rally because i) large cap stocks were in line with small and mid, that means less speculative juice and more reality investing ii) GTs came unglued fast but iii) Baa spreads came in thanks to low net issuance and high demand, again crushing the crowding out theorists but, no matter, iv) Europe came back from the brink and fewer daily catastrophe headlines and v) the Fed gave plenty of information to not expect a policy reversal. This is solid stuff and markets feel better than this time in 2010 and 2011 when we saw spring sell offs.

2012-04-03 Beyond Bonds: The Role of Risk Assets in Liability-Driven Investing by Sebastien Page of PIMCO

In liability-driven investing, unless the plan is fully immunized or significant leverage is employed, the bond portfolio only hedges part of the liabilities. Overall, when diversifying across risk assets, there are choices that may be more attractive to pension plans than they are to liability-agnostic investors, such as risk assets with exposure to duration. Plan sponsors who choose to maintain a short duration stance on a total portfolio basis should consider alternative sources of diversification beyond equities.

2012-04-03 Comfortably Numb: Have Investors Become Too Complacent? by Liz Ann Sonders of Charles Schwab

The market has had its best first-quarter start in 14 years! But with the rally has come elevated optimism, a contrarian indicator. The market may be vulnerable in the short term, but we think optimism longer-term remains warranted. Let's get right to the point: It was the best first quarter for the stock market since 1998. The total return of the S&P 500 index was 12.6% for the quarter; up nearly 30% from the October 3, 2011 low. What was particularly notable about the surge since then has been the attendant plunge in volatility.

2012-04-03 Christine Lagarde: Emerging Market Nations Will Get More Power in the IMF by Team of Knowledge @ Wharton

Christine Lagarde, managing director of the IMF, sees no alternative to the strict austerity policies being imposed on many peripheral European countries, says the double dip recessions in Italy and Ireland just announced come as no surprise, and notes that IMF reforms will shift 6% of current quotas to dynamic emerging and developing countries. Lagarde's comments came in an exclusive interview with Knowledge@Wharton and media partner ParisTech Review late last week, as BRIC countries demanded more voting power in return for the larger financial contributions being requested by the IMF.

2012-04-03 Have Investors Moved Past Europe? by Chris Maxey of Fortigent

At the end of 2011, the Long-Term Refinancing Operation brought a modicum of stability to financial markets in Europe.When coupled with the orderly default of Greece, the situation in Europe is seemingly on a road to more pleasant ground. Just as soon as investors place Europe in their periphery, however, problems once again begin bubbling to the surface.In recent weeks, the spotlight has turned to Spain, where unemployment is near 24% and the government is expected to run a 5.9% budget deficit for 2012.

2012-04-02 The Hazard of Second Best by Mohamed A. El-Erian of Project Syndicate

The international community appears increasingly intent on settling for second best on two key issues to be discussed this month in global meetings in Washington, DC: the lingering (if currently dormant) European debt crisis, and the selection of the World Banks next president. It is not too late to change course.

2012-04-02 1Q 2012: Why The Rally Can Last by Chuck Royce of The Royce Funds

We're seeing one of those rare occasions when one of our predictions for the market as a whole worked out almost exactly the way we thought it would. For a while now, we have been noting the disjunct between the very negative and alarmist headlines and the more optimistic view our own analyses and contacts with managements were revealing. It seemed to us as early as last September that the economy was in better shape than the conventional wisdom was suggesting.

2012-03-31 All Spain All the Time by John Mauldin of Millennium Wave Advisors

The events of the last 24 hours compel me to once again look "across the pond" at the problems that not only plague Europe but will be a drag on world growth as well, as Europe goes through its continued painful adjustment as a consequence of trying to adopt a single currency. Since Spain is going to be on the front page for some time, it will be useful to look at some of the problems it is facing, to put it all into context. And what I heard while in Europe in private meetings is troubling.

2012-03-30 Shifting Winds-Turbulence Ahead? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Treasury yields have moved somewhat higher, while stocks have largely continued to rise. Recent correlations appear to be breaking down, which could lead to increased volatility but we remain relatively confident in equities. Perception as to the next moves by the Fed appeared to be shifting, but Bernanke reiterated their easy monetary stance. Uncertainty is rising and the Feds goal of increased clarity through more transparent communication is under scrutiny. Liquidity concerns in Europe have eased but economic risks remain, while Spain and Italy face deal with their ongoing debt crises.

2012-03-30 Does China Hold the Winning Ticket? by Frank Holmes of U.S. Global Investors

Some bears may think the odds of China being the winner among emerging markets in 2012 are also remote. Over the past few years, Chinese stocks have lagged compared to its emerging market peers. However, the Periodic Table of Emerging Markets perfectly illustrates: last years loser can be this years winner. Historically, every emerging country has experienced wide price fluctuations from year to year. Over time, though, each country tends to revert to the mean.

2012-03-30 Singapore Gateway to Southeast Asia by Mark Mobius of Franklin Templeton

Viewing the region from the now 20-year old seat of our Singapore office, what we see in Southeast Asia is a generally favorable combination of rising per-capita incomes and a relatively young population, a recipe with the potential to fuel the appetite for a wide variety of consumer goods. The challenges Southeast Asian markets face must not be easily dismissed, but overall I am optimistic about the regions long-term growth potential.

2012-03-29 China's Gravity-defying Economy: How Hard Will It Fall? by Team of Knowledge @ Wharton

As China's high-octane economy shifts into lower gear, virtually everyone agrees that the double-digit, super-charged boom years are drawing to a close. Speculation over the possibility of a so-called "hard landing" for the country flourishes with each boom and bust cycle, only to die down as China's growth revs up again. This time, however, both external and internal factors -- including global conditions, domestic politics and financial trends -- are reinforcing the downturn. Many experts warn that without some painful reforms, there will be worse trouble to come.

2012-03-29 Should you be Concerned About the U.S. Government Debt? by Jason Hsu of Research Affiliates

Should investors be concerned about the size of the U.S. government debt? Does it matter who owns the debt? This months Fundamentals, authored by Research Affiliates CIO Jason Hsu, examines the implications for future consumption and investors portfolios.

2012-03-29 Stocks: Still a Bargain by Russ Koesterich of iShares Blog

With global stocks up approximately 25% from their fall low and many market watchers endorsing equities in recent weeks, its hardly surprising that investors are wondering if stocks are still a good bargain. While some measures of sentiment notably abnormally low volatility levels could be interpreted as flashing yellow caution signs, valuations and fundamentals still favor global stocks over the long term. Currently, equities look reasonably priced. Developed market equities are trading at around 14.5x trailing earnings, while large emerging markets are trading at roughly 12x earnings.

2012-03-28 Auctions Never Fail! by Lorenzo Pagani of PIMCO

The increase in volatility can reach a breaking point when dealers are no longer willing to absorb risk and the issuer loses market access, irrespective of whether an auction fails or not. Individual countries are working to regain credibility and address their debt-sustainability but what is needed is an explicit collective commitment towards fiscal union. Catalysts for uncertainty may only be a few weeks away with the elections in Greece, France and a referendum in Ireland looming. Foreign investors who preferred to remain on the sidelines during the rally may reappear as sellers.

2012-03-28 How to Access the EM Consumer? Think Small by Russ Koesterich of iShares Blog

Investors who are looking to gain exposure to emerging market domestic consumption may want to consider the small cap segment of emerging markets. I expect emerging markets to outperform based on low relative valuations, falling inflation and stronger growth. Longer term, emerging market stocks are likely to benefit from falling volatility and rising developed market volatility. However, if youre specifically trying to capture, and profit from, the secular rise of emerging market middle class consumers, its worth considering that small cap stocks provide a more targeted exposure.

2012-03-28 Challenges and Change in Brazil by Team of Franklin Templeton

Brazils economy is grappling with some interesting challenges right now, such as shifts in monetary policy to cope with a possible economic slowdown and preparing to host two major events on the international stagethe 2014 FIFA World Cup Brazil and the Olympics in 2016. Marco Freire, Franklin Templetons CIO, Brazil Fixed Income for the Local Asset Management team based in Sao Paulo, isnt sharing any locals-only secrets about either event, but hes happy to share his insights on how Brazil is approaching these challenges, and to clear up some common misconceptions about Brazils markets.

2012-03-27 GMO: Two Questions We Can't Answer by Robert Huebscher (Article)

Its reputation was built on stellar returns achieved with long-term bets on undervalued asset classes. Current market conditions, however, pose two unanswerable questions for GMO – leaving the firm with an uncertain strategy for its equities and fixed-income allocations.

2012-03-27 The Top Three Myths about Women Investors by Lisa Kueng (Article)

Successful marketing requires an understanding of your target market. Too often, however, advisors are misled by outdated industry ideas and strategies that have shifted over time. Advisors who target women investors should avoid myth-based errors that others have made.

2012-03-27 One Year Into the Arab Spring by James A. Pressler of Northern Trust

The last three months marked the first anniversary of events considered unthinkable before 2010. The past year saw the outbreak of protests throughout Tunisia, Egypt, Bahrain and beyond; an outbreak of democracy not imported from the industrialized powers but home-grown. And as each dictatorship fell, onlookers checked off another successful transformation from the Arab Spring. Such waves of change felt as unstoppable as they were inevitable, and a feeling emerged that it was only a matter of time before the Middle East/North Africa (MENA) region stepped into the third era of Arab awakening.

2012-03-27 Bernanke's Problem with the Gold Standard by Axel Merk of Merk Funds

In his new lecture series, Federal Reserve (Fed) Chairman Ben Bernanke is going out of his way to discuss the "problems with the gold standard." To a central banker, the gold standard may be considered "competition," as their power would likely be greatly diminished if the U.S. were on a gold standard. The Fed, Bernanke argues, is the answer to the problems of the gold standard. We respectfully disagree. We disagree because the Fed ought to look at a different problem.

2012-03-27 The Economic Backstop: The Consumer by Matt Lloyd of Advisors Asset Management

As we near the summer, if you listen close you might hear the anticipation of yet another macro shock to stall out the equity market gains. Over the last couple of years, the risk of a domestic double-dip recession, natural disasters, public political debates and European sovereign debt crises have all had the effect of stalling out positive momentum gained in the first quarter. Through April of last year, the S&P 500 showed a total return of 9.05%. However, by the end of September it was at negative 8.67% including dividends and thus rebounded to show total return of 2.11% by year end.

2012-03-27 Uncovering Equity Yield Traps by Team of American Century Investments

As the low interest rate environment persists, uncertainties continue even as new marketplace concerns begin to emerge. This observation is especially applicable to investors that are desperate for current income opportunities. In their search for equity investments, many will opt to screen for opportunities using current yield as the main filtering criterion. In situations such as this, those in hot pursuit of rich rates find themselves at risk of falling prey to nasty yield traps. Although yield traps exist in the fixed-income space, this piece focuses on yield traps involving equities.

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.

2012-03-26 Chinas Stability Gambit by Stephen S. Roach of Project Syndicate

Given centuries of turmoil in China, todays leaders will do everything in their power to preserve political, social, and economic stability. That is why they removed Bo Xilai, the powerful Party Secretary of Chongqing, just before a major conference that attacked the economic model that he personified.

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 International Real Estate Securities- Investment Review & Outlook - February 2012 by Team of Cohen & Steers

International real estate securities added to their year-to-date gains in February, although the pace of the rally moderated. Most markets in Europe and Asia Pacific continued to benefit from the retreat of macro risk concerns. Europes difficult grapple with its fiscal crises has made for a negative macroeconomic backdrop, and we expect a moderate recession as a base-case scenario for the region. Given this environment, we seek to invest in companies that are best able to shield themselves from the most adverse effects of slowing economies and a general deleveraging.

2012-03-23 Diversification at the Core by Team of Franklin Templeton

The late Sir John Templeton was certainly a champion of diversifying ones basket of investments. And so is Tucker Scott, portfolio manager for Templeton Global Equity Group and manager of Templeton Foreign Fund. Diversification is at the core of his investment strategy. A summary of his recent remarks: We try to find stocks that we believe are undervalued, then build a portfolio thats well-diversified by industry and by country. We try to limit position sizes in an attempt to help limit potential stock-specific risk.

2012-03-23 Eye on Myanmar by Xin Jiang of Matthews Asia

Since the U.S. declared that the Asia-Pacific region is America's new priority, its strategic moves in Southeast Asia have included the notable visit to Myanmar in December by U.S. Secretary of State Hillary Clinton. The visit was generally viewed as an endorsement of the reform processes that Myanmar has slowly begun to roll out over the past year or so. On my recent trip there, I was able to take a first-hand look at some of these developments.

2012-03-23 Gold and China: Where the Bulls and Bears Square Off by Frank Holmes of U.S. Global Investors

To paraphrase the great Steve Martin, todays investors are very passionate people and passionate people tend to overreact at times. An overreaction is exactly whats happened in gold and global markets in recent weeks. While market bulls have been sniffing out data points to support their case, market bears have continued to take a glass-half-empty approach. Gold and China are two areas that have been caught in the bear trap this week, but we believe the gold and China bulls still have room to run.

2012-03-22 The Case for Chinese Stocks by Russ Koesterich of iShares Blog

Chinas recent lowering of its growth target made some investors nervous that the country may be in for a period of sluggish growth. Russ, however, believes that a hard landing can be avoided, and he continues to advocate overweighting Chinese equities for three reasons.

2012-03-22 The American Recovery by Mohamed A. El-Erian of Project Syndicate

The US has gone through an arduous period of intervention and rehabilitation since the global financial crisis in 2008 sent it to the economic equivalent of the emergency room. The question now is whether the US economy is ready not just to walk, but also to run and sprint.

2012-03-22 Brazil Retail Sector Riding the Wave of Middle Class Growth by Team of Thomas White International

Even in the late 1990s, Brazil was just like any other emerging economy, characterized by extremes of wealth and abject poverty with no social class dividing the bridge between. A decade and more down the line, the effervescence in the middle cannot be missed. Yes, the great Brazilian middle class defined as those who earn between $690 and $2,970 a month has arrived and is here to stay. If Brazil has made a name in the global retail sector, it had better thank these late comers, empowered with good purchasing power and access to credit.

2012-03-21 Falling Treasuries: A Currency Perspective by Axel Merk of Merk Funds

What are the implications for the U.S. dollar and investors portfolios if bond prices continue to fall, as they have of late? Within that context, should investors care whether the U.S. retains its status as a reserve currency? Should it effect the way investors think about their own cash reserves?

2012-03-21 Reflections: Expect the Unexpected by John Gilbert of GR-NEAM

The tides of financial returns ebb and flow, and for the moment, they are flowing. Since the financial crisis of 2008-2009, the deflationary forces of excessive indebtedness prevail for a while, and then are beaten back by the determination of popularly elected governments to reflate. The financial markets no longer reward skill, so much as they react to the relative strength of governments will to offset contraction.

2012-03-20 Bob Rodriguez on the Dangers in Today's Markets by Robert Huebscher (Article)

Bob Rodriguez is the managing partner and chief executive officer of Los Angeles-based First Pacific Advisors. In this interview, he discusses how the challenges faced by the US economy will impact the capital markets.

2012-03-20 Game On by Scott Brown of Raymond James Equity Research

Nothing in the recent economic data suggests that the Fed is any closer to raising short-term interest rates. However, the figures also imply that further Fed asset purchases are less likely. While the Fed did not surprise last week, the bond market had factored in some chance that the Fed would eventually undertake QE3. In the short term, the recent pop in bond yields may simply be a case of be on the bus or be under it. However, bond yields seem unlikely to rise sharply from here, at least for now.

2012-03-20 International Equity Product Commentary February 2012 by Team of Thomas White International

The optimism in international equity markets remained unabated in February, as macroeconomic trends continued to allay concerns over a significant decline in global economic activity. At the same time, the worst fears about the risk of a disorderly default by any of the troubled European countries and their withdrawal from the common currency have also eased. Equity price gains during February were more even across regions and emerging markets outperformed the developed markets again, though by a smaller margin when compared to the previous month.

2012-03-19 Andrew Balls Discusses PIMCO's European Cyclical Outlook by Andrew Balls of PIMCO

The ECBs intervention has helped the European system undergo a slower and more orderly deleveraging process but it does not deal with the twin underlying problems of too little growth and too much debt in the countries at the center of the crisis. The eurozone faces a daunting set of challenges, including technical and economic challenges but highest on the list are politics and coordination. Greeces potential exit from the eurozone remains a significant risk and one that could lead to contagion across the eurozone as investors reassess the potential currency risk.

2012-03-16 Why Invest in Asia Bonds? by Teresa Kong of Matthews Asia

The development of Asias bond markets is one of the regions most profound economic changes of the last decade. This month Teresa Kong, CFA, writes about the diversification Asias bond markets can offer investors, and their three primary return drivers: credit, currency and interest rates.

2012-03-16 The Heart of March Madness by Frank Holmes of U.S. Global Investors

Everyone agrees that its unethical to put the firms interest ahead of its clients. More importantly, a self-serving financial attitude is a breach of fiduciary duties. It may be possible that Goldman Sachs has moral issues, but not all financial firms are morally bankrupt. Nor are thousands of executives and professionals employed in the industrymoms, dads, uncles, aunts, daughters, sonswho are hard-working and acting in the best interest of their customers.

2012-03-15 You Can No Longer Say Corporates Without EM by Brigitte Posch and Ignacio Sosa of PIMCO

In our view, the risk profile for EM corporates has improved thanks to stronger sovereign balance sheets and economic growth prospects compared with developed markets. While EM corporates generally have not garnered as much attention as sovereigns, PIMCO expects that significantly more assets will be managed against an EM corporate bond index this year. The road ahead for risk assets may be bumpy. But PIMCO believes the case for focused EM corporate bond investing remains compelling based on improved credit fundamentals, a solid macro backdrop, and potentially attractive yields.

2012-03-15 Where to Look for Dividends? Try Outside the US by Russ Koesterich of iShares Blog

With the dividend corner of the US equity market now crowded and expensive, Russ gives three reasons why investors might want to consider looking abroad for dividend income. More Reasonable Valuations: Outside of the US, dividend paying stocks still appear cheap and are trading at a significant discount to the broader equity market. More Attractive Yields: Non-US dividend companies are offering more enticing yields. Outperformance in a Slow Growth Environment: high dividend paying stocks tend to outperform during periods of slow growth like the one were experiencing this year.

2012-03-14 Par for the Investing Course by Team of Franklin Templeton

Theres a certain Hollywood mystique around the quest for The Next Great Investment. The un-glamorous truth, of course, is that unearthing hidden opportunities actually takes equal parts elbow grease and know-how. Par Rostom, is that roll-up-the-sleeves kind of guy. Hes not looking to invest in companies just because they are household names with splashy advertising campaigns. The companies are the ones he feels are best in their particular niche, but that youve probably never heard of. Surprisingly, hes finding some of them in the eurozone, a place the crowd is largely avoiding today.

2012-03-14 Why U.S. Investors Should Look Beyond Dividend Yield by Patrick O'Shaughnessey of O'Shaughnessey Asset management

Many investors are fed up with yields on fixed income securities and are in search of higher yield. As a result, U.S. stocks with high yields have become very popular with individual and professional investorsbut we believe that investors are looking at the wrong kind of yield. Though dividend yield works very well internationally, investors in U.S. stocks should instead focus on shareholder yield, a factor we have long advocated that has provided considerably stronger returns for U.S. stocks for more than 80 years.

2012-03-14 Pacific Basin Market Overview - February 2012 by Team of Nomura Asset Management

We still have a broadly positive view of the outlook for the Asia Pacific equity markets. The European Central Banks efforts to provide long-term liquidity support have alleviated the default risk among the peripheral Euro-zone countries. It also appears that the Federal Reserves easy money policy is beginning to have a positive impact on the U.S. economy. Given this optimism, we believe that equities in the region will continue to rally, particularly in the oversold cyclical sectors such as Industrials, Technology and Consumer Durables.

2012-03-13 Europe Needs a Good Crisis by Michael Edesess (Article)

When it comes to economies in general and financial crises in particular, it's remarkable how little we actually understand. While global financial actors struggle to restructure Greece's debt and to avoid contagion throughout Europe's periphery, we should recall the lessons of the Asian-Russian crisis 15 years ago. As the writings of Joseph Stiglitz and Martin Wolf remind us - and those events illustrate - crises are part of an evolutionary process, and the afflicted economies often emerge with surprising vigor.

2012-03-13 The Gutenberg Economy by Michael Lewitt (Article)

As commentators near and far speculate on what 2012 will bring to the global economy and markets, there is little question that one factor will be decisive: the central banks' printing presses. Both the Federal Reserve and the European Central Bank (ECB) will keep printing dollars and euros around the clock until their presses run out of ink.

2012-03-13 The Ambergris Factor! by Jeffrey Saut of Raymond James Equity Research

I had a meeting with two PMs from Switzerland that had 10 questions they wanted answered. 1. Would you buy cyclical stocks or defensive stocks? I would buy cyclicals because I dont believe we are going to see another recession in the U.S. for the near future. 2. 2011 was a risk on/risk off year, so is it a top down or bottom up strategy for 2012? Last year you only had to get two things right. You had to raise cash in March/April and put it back to work during the bottoming sequence of August October. One always needs to employ a bottom up strategy combined with a top down view.

2012-03-13 Another Country in Europe to Avoid by Russ Koesterich of iShares Blog

Russ recently advocated that investors avoid Spain and Italy, markets that are cheap for a reason. Now, hes adding the United Kingdom to the list of European markets to consider underweighting -- a country that has its own issues separate from those of the euro zone.

2012-03-12 EuropeAll Talk, Little Action by Milton Ezrati of Lord Abbett

Europes heads of state have done a lot of summiting and deal- making of late. Greece has voted for still more austerity. But on balance, the results have, again, disappointed. Though Europes monetary authorities have staved off Greek default, the more significant help for Europes sovereign debt troubles has come from the European Central Bank (ECB), which, at last, has begun to provide markets much needed liquidity. Otherwise, Europes leaders, though they have managed something, seem incapable of thinking broadly enough even to begin grappling with the continents underlying problems.

2012-03-12 Iran, Oil Prices, and the Economic Recovery by Milton Ezrati of Lord Abbett

With the situation highly unstable the hope is that the powers involved can reach a resolution without resorting to military action or even a standoff that prompts insurers to close down shipping. Should such a resolution develop, crude oil and gasoline prices would certainly drop from today's highs. Though they would not likely recapture the lows of late last year. Even if today's level of tension were to hold up current prices indefinitely, it would cause little further harm than it already has. But until some resolution is reached, risks for much higher prices remain significant.

2012-03-10 There Will Be Contagion by John Mauldin of Millennium Wave Advisors

The headlines are about Greece, but the real story is not Greece but who is next. European leaders were right to be worried only a short while ago about contagion effects of a Greek default to the entire Euro system, which of course they now say doesn't exist. This week we look at Europe, and sort through the ever more fascinating implications of the news in today's headlines.

2012-03-09 Economic Update - March 2012 by Team of Cambridge Advisors

We continue to deal with the added risk to the global economic system caused by the high degree of debt that exists throughout the developed world. A spirit of cooperation in Europe helped to put those concerns on the back burner in February. Solutions for Greece have been announced however, these are not permanent solutions and the problems go much further than Greece. We expect more turbulence from sovereign debt problems to reemerge in coming months.

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.

2012-03-09 Why Equities Are Attractive Today by Matthew OConnor of Hartland & Co.

Is today the right time to invest in equities? Equity investors have experienced a roller-coaster ride. As a result, many investors have run as far as they can from equities, pulling out roughly $135 billion from U.S. stock mutual funds last year. Even with the S&P 500 Index off to its best start in 25 years and inching closer to its 2008 high*, investors continue to withdraw money from U.S. stock mutual funds. So, where are we? Is it the right time to invest in equities? Due to a combination of reasons, we believe equities do look particularly attractive today and for the long term.

2012-03-09 Remarks at the Launch of USAIDs Policy on Gender Equality and Women Empowerment by Mohamed A. El-Erian of PIMCO

Many of us have a responsibility, indeed an obligation, to do whatever we can to ensure that both conscious and unconscious biases are better identified and minimized. This is a multi-year, multi-faceted effort. As illustrated by the USAID policy, it involves research, education, advocacy and action; as well as measurement, accountability and mid-course corrections. For all these reasons, we admire the important work being done on gender equality and the empowerment of women. We strongly endorse the importance of greater and equal opportunities.

2012-03-09 Appreciating China to its Fullest by Frank Holmes of U.S. Global Investors

While most analysts dont expect another moon shot rise in China's GDP this year, a 7.5 percent growth rate still exceeds most emerging economies and all developed nations. Advanced economy growth is expected to be meager, slowing from 1.6 percent to 1.3 percent in 2012, according to The Conference Board. For long-term investors learning to appreciate the finer points of the country, we believe China is somewhat like fine wine; it only gets better with age.

2012-03-09 Market Fatigue? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Market action has been relatively muted, notwithstanding the first 1% down day of this year. After the strong run to start the year, another pause or pullback would not be surprising but we continue to believe the upward trend will largely stay intact. Uncertainty abounds as to whether the Fed will unleash a new round of easing but liquidity remains abundant. Rhetoric continues in Washington but any substantial fiscal or tax policy action this year seems unlikely, despite the many challenges that are looming.Europe has stabilized somewhat but risks remain elevated.

2012-03-08 Bernanke Spooks Gold by John Browne of Euro Pacific Capital

Regardless of who wins the reserve currency race, a key issue will be the gold conversion price. To accommodate the world economy without being recessive, many have concluded that the price of gold would need to be far higher than it is today. In any case, if China continues to pursue a path towards a fully convertible Yuan, investors might be wise to pursue a buy and hold strategy. This of course discounts the possibility that their holdings are not confiscated by debtor governments with plummeting fiat currencies.

2012-03-08 If Israel Bombs Iran How Could Stocks & Stock Markets React? by Paul Dietrich of Foxhall Capital Management

The probable results of Israel bombing Irans nuclear sites would be oil and gold prices skyrocketing, the stock market could drop precipitously and Iran would almost certainly retaliate by sending missiles raining down on Israel, close the Straits of Hormuz and even attack oil tankers or U.S. naval vessels, as they have threatened to do. Americans could also see a spike in terrorism directed against Americans and American interests overseas and here at home.

2012-03-08 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks continued to mark time last week as concerns increased over slowing global growth and rising international tensions as evidenced by the price of oil. All in all though, the combination of low interest rates, high profit growth and rising dividends all combine to support stock prices and continue to make the stock market virtually the only investment game in town. As the charts above illustrate, the Dow Jones Industrial Average was flat last week, while the NASDAQ Composite (aided by Apple) moved fractionally higher.

2012-03-07 Q&A with Russ Koesterich: What Obamas Budget Proposal Means for Dividend Investing by Russ Koesterich of iShares Blog

President Obamas 2013 budget proposal includes a significant hike in the dividend tax rate. Russ explains how likely this proposal is to pass and what it would mean for the dividend paying stocks investors who have embraced in their quest for yield.

2012-03-07 The Labors of Hercules Were Never This Tough by Neil Dwane of Allianz Global Investors

Theres no shortage of insight on the ever-expanding debt drama in Europe. Despite the deluge of information, there are still a few key points to consider. Banks and hedge funds could file lawsuits against Greeces government. Protection against the ISDA declaring a default on Greeces debt could prove to be inadequate. This could mean that things may be worse than we imagine. Markets have rallied this year on positive sentiment that Greeces default has been contained. Are we being too complacent? Still, with solutions being drafted, now might be a good time to buy European equities.

2012-03-07 Winning the War in Europe by Scott Minerd of Guggenheim

Given my view on the global liquidity glut, it probably will come as no surprise that I remain bullish on U.S. investments, including equities, high yield bonds, bank loans and other risk assets, as well as art and collectibles. I believe the United States has entered a period of self-sustaining economic expansion, driven primarily by the aggressive monetary policy of the Fed, which is now being reinforced by the ECB. U.S. growth is necessary to reduce domestic unemployment and to provide support to the struggling economies in Europe and Asia.

2012-03-05 Dancing with PIIGS by Jim Carroll of Long Run Capital Management

A euro is a euro, right? Worth the same in Ireland, Portugal, Germany, France and Greece? Well, maybe not. There is a lot of political and economic dancing going on in Europe these days and the name of that tune appears to be Love Can Keep Us Together. And it sounds just as vapid and schmaltzy as the original by the Carpenters. But I have become convinced that something else is going on namely a monumental effort to restructure the EU by removing the weakest links in as orderly a fashion as possible. Greece is the first to be loaded into the cannon so lets use them as the guinea PIIG.

2012-03-02 The Protein Bomb by Niels C. Jensen of Absolute Return Partners

Population will grow from 7-8.3 billion people over the next decade. Meanwhile, arable land across the world will shrink and living standards will continue to rise, with the OECD projecting 3 billion new middle class consumers over the next 20 years. Many of these people will change their diets in favor of more animal protein. Livestock is quite inefficient in terms of converting grain to energy, so the pressure on farmers to deliver more will be immense. We conclude that agriculture should be represented in every long-term portfolio, but farm land has already risen a lot in value.

2012-03-02 Austerity Korean-Style by Sang Yoo of Matthews Asia

Europe is undergoing its own version of austerity, where (ironically) the region actually is running budget deficits of 4.3% of GDP on average, spending more than it raises in taxes. These deficits run as high as 8.2% in Spain and 8.4% in the U.K. Meanwhile, as the U.S. calls for more stimuluseven with its own budget deficit at 8.7% of GDPit is interesting to look back at Korea and the crisis that began there 15 years ago this July.

2012-03-02 TARGET2: A Channel for Europe's Capital Flight by Andrew Bosomworth of PIMCO

The Eurosystem's TARGET2 transaction system introduces elements of fiscal union via the back door. The large TARGET 2 positions developing among national central banks in the eurozone reflect capital flight from the periphery to the core and de facto introduce transfer and burden sharing elements of a common fiscal policy. Monetary policy ends up substituting for fiscal policy without going through the same democratic channels that governments' expenditure and taxation decisions entail. Taxpayers in the eurozone are contingently liable for losses incurred by monetary policy operations.

2012-03-02 Will Oil Continue Heading Higher? by Frank Holmes of U.S. Global Investors

We expect there to be corrections in the price of oil throughout 2012, just like the ups and downs commodities experience from year to year. While the world is hungry for energy, theres no free lunch on the Periodic Table of Commodities, and historically, from year to year, commodities fluctuate. Crude oil, for example, has seen its share of ups and downs: In 2008, oil lost 53 percent; in 2009, it increased a substantial 78 percent. While oil may remain elevated, use these higher prices to your advantage by owning natural resources companies that benefit from higher prices.

2012-02-29 Capitalizing on Cambodia by Mark Mobius of Franklin Templeton

Cambodia has been making strides into the capital market arena. The government has been encouraging foreign and local investment. Eventually, the local capital market should follow suit. The Cambodia Securities Exchange opened last year, making it one of the last Southeast Asian nations to open a stock exchange. Neighboring Laos opened its bourse in January 2011 and Vietnams exchange has been operating since 2000. 3 Though the Cambodian exchange has no stocks listed as I write this, the plan is to have state-owned companies in utilities, telecoms and portsto be listed.

2012-02-29 Dirt Economics: Demographics Matter! by Shane Shepherd of Research Affiliates

Generations ago, people had large families, ensuring an adequate supply of labor to work the farm and provide a comfortable retirement. Now, families are small and we face a mountain of debt and soaring deficits. This months Fundamentals examines the implications for the economy and investors portfolios.

2012-02-28 The Outlook for Oil by Russ Koesterich of iShares Blog

Are we headed for another oil shock, and, if so, what are the investment implications? Russ tackles these questions, explaining what could cause an oil spike, why he believes crude prices are likely to stay elevated in the near term and what this means for his view of global energy companies.

2012-02-28 Globalization: Its Saboteurs and Its Chicken Littles by Michael Edesess (Article)

The word 'globalization' provokes both excitement and fear. The excitement has sold millions of Tom Friedman books and turned a drab annual business conference, the World Economic Forum, into one of the hottest events of the year. It is front-and-center in recent tensions between the U.S. and China, and makes the European Union's economic crisis a concern for the whole world. Should we fear or embrace globalization?

2012-02-28 Black: Swans and Crude by Liz Ann Sonders of Charles Schwab

Economic/financial "black swans" are generally more dire than geopolitical ones. The Middle East is today's hotbed for potential geopolitical crises. Oil is taking the brunt of the pressure, but it's not necessarily the death knell for stocks or the economic recovery.

2012-02-27 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Europe will continue to make headlines as Greece took strides this week to achieving its bailout, but still must appease its European trading partners and the International Monetary Fund. The domestic economic calendar heats up as news from manufacturing and consumer-related releases highlight the data of the week as the month of February comes to a close (a day later than usual). The Federal Reserve publishes its Beige Book and investors can again start speculating about any future stimulus moves and the continued dissension among the policymakers.

2012-02-27 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The stock market paused last week in its 2012 rally over concerns about what might happen in Greece. As the charts above illustrate, both the Dow Jones Industrial Average and the NASDAQ Composite fell fractionally for the week, but certainly showed underlying strength given the urge of many to take short-term gains.

2012-02-27 Game Changer by Mark Kiesel of PIMCO

In addition to strong secular tailwinds supporting the energy sector, highly expansionary global monetary policies from many central banks are adding cyclical support to globally traded commodities like oil. In the U.S. energy sector, we believe that onshore natural gas shale and oil shale developments are creating opportunities to invest in energy companies that may grow significantly faster than the overall U.S. economy.

2012-02-27 Brute Force and Two Serious Problems by Christian Thwaites of Sentinel Investments

The brute force of liquidity driven markets is waning. Earnings season draws in and there were enough negative surprises, about 30% of reporting companies, to take the edge off the rally. As of writing, we're up over 6% YTD on SPX [1] but with little decisive break out in the last three weeks. Why? Well, the culprits are: Greece: Greece has been punching well above its weight as a pain for some time. China: After a pretty awful 2011, when stocks fell 20% and remain at about half the 2007 peak, inflation, housing and net exports remain a problem.

2012-02-25 The Emotions of Fear and Apathy Create Good Buying Opportunities by Frank Holmes of U.S. Global Investors

One of the reasons money has found its way back to the market is that low interest rates and a bubble in bonds have upped the attractiveness of equities relative to other asset classes. In fact, many large-cap equities come with a higher yield. This means that investors can wait for the growth, while receiving the income. Overall, it looks like the markets dark clouds are lifting and we could be in for a period of sunny skies in the months ahead.

2012-02-25 Tax That Other Guy by John Mauldin of Millennium Wave Advisors

Last week's letter on taxes drew more response than any letter I have written in years. Questions that were raised simply beg for an answer, and some of the replies were very thoughtful, well-written suggestions for alternatives. This week I am going to do something I can't ever remember doing, and that is to use the entire letter to involve and respond to my readers.

2012-02-24 Global Real Estate Securities - January 2012 Review & Outlook by Team of Cohen & Steers

We are encouraged by the recent trend of U.S. economic data showing measured improvement, including steady employment gains. With funding costs remaining low and demand showing signs of strengthening, we believe U.S. real estate fundamentals will continue to gradually improve in 2012. Importantly, new supply remains scarce in most sectors, due in large part to banks continued reluctance to finance speculative development projects.

2012-02-24 International Real Estate Securities - January 2012 Review & Outlook by Team of Cohen & Steers

International real estate securities rallied along with stocks broadly in January amid an easing of macro risk concerns. Positive developments in Europe significantly reduced the risk of a liquidity crisis, while data from China suggested the country was successfully navigating a soft landing to its economy. Meanwhile, the U.S. economy continued to show evidence of modest yet self-sustaining growth.

2012-02-24 The Outlook for the Overvalued Euro by Russ Koesterich of iShares Blog

Now that a second Greek bailout deal has been reached, investors are asking whether Greece will remain in the euro bloc and how the euro will likely perform going forward. Russ answers these questions, explaining why the euro currently appears overvalued and how a weaker currency could be good for Germany.

2012-02-24 Greek Crisis: This Too Shall Pass by Team of Franklin Templeton

Jerry Palmieri, Vice President and Sr. Portfolio Manager for Franklin Equity Group, doesnt worry too much about whether the Greek drama dominating daily headlines will turn into global market tragedy. A veteran of Franklin Templeton since 1965, hes survived to tell the tale after more than four decades of market ups and downs. His wizened view summarized: Market ups and downs are to be expected. U.S. market, economy will survive the Greek debt crisis. Things will work out. Market timing not the ticket to long-term investing success.

2012-02-24 Schwab Market Perspective: Two Steps Forward... by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

US stocks and economic data appear to be moving at least two steps forward for every step back, which we believe leads to a strengthening trend for bothalthough there are inevitable bumps along the way. We believe the agreement in Washington to extend the payroll tax through 2012 may be the last substantial economic-related agreement before the election, but there are major issues looming. The Fed continues to believe another round of easing may be appropriate, which we think could be dangerous and that they should be looking to move in the other direction.

2012-02-23 9 Key Themes To Impact Returns in 2012 by Scott Migliori of Allianz Global Investors

A breakdown of the key drivers of market performance in 2012 including corporate profits, pricing/inflation, interest rates, economic activity, international performance, the dollar, valuations, technical/sentiment and fiscal policy. The U.S. economy is likely to grow 5%

2012-02-22 European Real Estate Securities by Team of Cohen & Steers

Recent initiatives to address the sovereign credit crisis appear to be having a meaningfully positive effect on credit conditions across Europe. Importantly, the ECBs long-term repurchase program has given banks vital breathing room to recapitalize. While we are cautiously optimistic, we remain vigilant to the potential risks and have a keen eye on Greece, which is engaged in ongoing negotiations with international lenders.

2012-02-22 Buyer Beware When it Comes to US Retailers by Russ Koesterich of iShares Blog

While the US labor market has improved recently, it has yet to lead to any real acceleration in US consumption. In fact, last week, US retail sales came in below expectations for a second month in a row, and US consumption growth has held relatively steady at a 2% annualized rate for the past 10 quarters. There are four reasons why consumption is still so far below trend despite the improving labor market. 1. Keeping the improvement in context: The job market is actually improving from a very low base. 2. A Smaller Work Force. 3. Decelerating Wages and 4. Household Debt.

2012-02-22 Greece Anxiety to the Rising Cost of Crude Oil by Matt Lloyd of Advisors Asset Management

With the ever so slowly resolution for Greece becoming a reality, most markets are turning their anxiety to the rising price of crude. The international energy markets have been shaken by the realization that Iran and its 2.5% of the worlds oil production may soon cause another economic shock. Though this concerns Europe more than the other continents, it surely puts a strain on everybody needing oil to help sustain the positive growth in the global economy. As such, we have seen a steady and sharp rise in gasoline prices.

2012-02-22 Will Greece Survive the Ides of March? by Mike "Mish" Shedlock of Sitka Pacific Capital Management

As a point of curiosity, the Greek 1-Year Bond Yield touched 682% today, now down to a mere 666%. Bloomberg quotes the open as 566%, if correct, the one year yield soared 116 percentage points from the open to the high. Deal "Really" Finalized? Open Europe says Many questions around the second Greek bailout remain unanswered.

2012-02-21 Woody Brock on Solving America's Fiscal Problems by Robert Huebscher (Article)

Dr. Horace 'Woody' Brock is the founder Strategic Economic Decisions, an economic research and consulting service. In this interview, he discusses his recently published book, American Gridlock, and how America can grow its economy through 'good' deficit spending.

2012-02-21 Inflation Held in Check by Fear by John Browne of Euro Pacific Capital

Out of control money supply creates inflation. In light of the trillions of synthetic dollars that have been injected into the economy by the Fed over the past five years, most observers had expected prices to spiral upward. But in making these determinations, many of us forgot to factor in the supply side of the supply/demand equation. Inflation remains low now because of game changing events that have reduced the demand for money. So beware of the recovery. Any wakening of animal spirits in the U.S. will likely stir the threat of inflation, which may very well short-circuit the recovery.

2012-02-21 International Equity - January 201 by Team of Thomas White International

International equity prices recorded strong gains in January on increased optimism that the global economy is not headed for a significant downturn this year. Markets across all regions, led by Asia, recovered during the month. Emerging markets, which had seen price declines during the second half of last year, outperformed the developed markets. Economic indicators from most regions, except Europe, have been relatively healthy and suggest expansion. EU leaders have now agreed to set tighter fiscal rules for member countries, including limits on fiscal deficits and aggregate public debt.

2012-02-18 Danger: Caution Ahead by Bob Rodriguez of First Pacific Advisors

I know many of you would like more actionable ideas but principal protection is uppermost in my mind. Patience is required now. Many investors underestimate the potential risks and disruptiveness from high global financial leverage. We are in phase 2 of a continuing and expanding economic and financial market instability. Flexibility, high liquidity, and concentrated asset deployment, when appropriate, will be key elements in attaining superior investment performance. The era of being fully invested and adjusting portfolio weights relative to an index has been over for more than a decade.

2012-02-17 Oracle Is Too Cheap To Ignore Any Longer by Chuck Carnevale of F.A.S.T. Graphs

We believe that Oracle Corp. is just one of many technology titans that we believe the market is mispricing. Furthermore, we believe part of that stems from the general pessimism that has created the so-called flight to safety get out of equities. Pessimism thrives on uncertainty; and one of the main attributes of technology is uncertainty. We believe that investors seeking maximum capital appreciation at reasonable levels of risk might do well to take a hard look at not only Oracle, but the technology sector in general.

2012-02-17 Imaginary Problems Who really benefits from lower regulatory burdens? by Bill Mann of Motley Fool

Did you know that it is extremely hard for American companies to go public? Neither did I. Yet Congress, which has shown little ability to engage in serious discussion about the large problems facing our country, has taken on this dubious crisis as its cause du jour, and in this instance, its doing an absolutely great job. Of course, I learned a long time ago that if something isnt worth doing, it certainly isnt worth doing well.

2012-02-17 Economic Insights: Around the World of Investing Opportunity by Milton Ezrati of Lord Abbett

Europe seemingly creates new financial and economic concerns daily, while in the United States, fiscal questions and election uncertainties trouble the outlook. Still more dangerous issues surround the military and diplomatic maneuvering in the Persian Gulf. And these are just a sample of the sources of investment concern. But even as all this prompts people to hide in cash and the usual safe havens, such as U.S. Treasury bonds, these investment choices pay such poor yields that presumed safety comes at tremendous cost. Investors, then, must consider riskier investments.

2012-02-17 Digital Content in Asia by J. Michael Oh of Matthews Asia

Most companies I met with were still cautious over the years outlook, which was evidenced by unusually low inventory levels going into the Chinese New Year holiday shopping season. Smartphone sales, however, continue to be one bright spot for markets in Asia. While second-generation mobile handsets still dominate the regions markets, 3G phones and smartphone sales have been taking off in some economiesmost notably in Asias more developed countries, with Singapore showing the highest smartphone penetration rate in the world (at over 50%), followed by Hong Kong.

2012-02-16 Currency Funds - Special Case International Bond Funds by Axel Merk and Kieran Osborne of Merk Funds

Investors may want to reduce their exposure to interest and credit risk in their international fixed income investments. One way to accomplish this may be to invest in international fixed income funds that have a commitment to the short end of the yield curve and to high credit quality securities. Currency funds may be considered special cases of international bond funds, as many typically invest in international fixed income securities of short duration to gain currency exposure. As such, currency funds tend to focus on currency risk while seeking to mitigate interest and credit risk.

2012-02-15 Stay Frosty by Liam Molloy and Bethany Carlson of Galway Investment Strategy

The Roubiniesque blues felt globally due to a lack of confidence is not isolated to just the marginally attached and does have merit. As the economy restructured manufacturing workers in the 1980s only had a 65% reemployment rate. We feel the past few years have marked another restructuring in US the economy. Again it will likely mean unemployment will remain high as many workers may not make the transition. This time around the reemployment rate for housing related jobs and financial services will likely remain very subdued.

2012-02-15 Winning Streak Ends On the Last Day of the 6th Week, the Markets Rest, Still Relatively Positive by John Buckingham of AFAM

Hard to complain about Fridays relatively modest pullback as we knew the equity market five-week winning streak would eventually have to come to an end and the ever so slight gains for each of the previous four days of the week meant that the performance for the full week was not so bad. While the markets were long overdue for a breather, the main catalyst for Fridays drop was concern that this weekends austerity vote in Greece would not go as planned, setting the stage for a default of the countrys debt next month.

2012-02-15 Not in My Lifetime by Bill Smead of Smead Capital Management

The weak dollar and international economic fears have sparked multi-year bull markets in gold, oil and most major commodities. This has forced asset allocators at the largest institutions, consulting firms, registered advisory firms and financial advisor networks to over-emphasize all aspects of the capital eaters and the longer-term Treasury bonds which compete for these dollars. In effect, the Federal Reserve Board caused the last of the unbelievers to give up in early February because it does not appear that rates will rise in our lifetime.

2012-02-15 From Argentina to Athens? by Mohamed A. El-Erian of PIMCO

There are way too many discomforting similarities between what has been happening in Greece recently and Argentinas 2001 path to economic and financial turmoil. Unless Greek and European officials reflect on key lessons from Argentina's experience back then, the parallels could also end up including a financial meltdown, a deep output collapse, and social and political turmoil. Greece need not and should not - continue to follow Argentinas example of eleven years ago.

2012-02-14 A Dejected Asset Class Finds Its Way in 2012 by Chris Maxey of Fortigent

Investor interest is acutely focused on the developed world, specifically Europe and the US. All the while, developing countries continue to be better positioned fiscally, with lower debt and better long-term growth prospects. Despite the outlook, stock markets in emerging markets are largely at the mercy of their counterparts in Europe and the US, suffering in lockstep as opposed to embracing the decoupling phase that was supposed to have begun in 2007. According to the IMF, emerging and developing economies grew 6.2% in 2011, compared to a 1.6% growth rate in advanced economies.

2012-02-14 3 Reasons to Underweight South Africa by Russ Koesterich of iShares Blog

In my opinion, investors should consider minimizing their exposure to emerging markets in Europe, the Middle East and Africa, otherwise known as EMEA. The big reason: emerging markets in EMEA generally have close economic ties to the euro zone, which as we all know is going through a rough spot and is likely to experience at least a mild recession this year. Drilling down to the stocks of specific emerging market countries within EMEA, Im particularly focused on South Africa as its the largest country in the MSCI Emerging Markets EMEA index.

2012-02-13 Greek Austerity Bill Passed But Many Challenges Ahead by Fred Copper of Columbia Management

Even assuming all the required approvals are garnered, the bailout funding is paid and the debt write-down is imposed, it seems highly unlikely that the situation will have been resolved. The Greek economy is in freefall, and the forced austerity is likely to exacerbate that fact, making any debt/Gross Domestic Product targets unlikely to be reached.

2012-02-12 Hot Potato by John P. Hussman of Hussman Funds

A hot potato has been repeatedly passed from speculatively overvalued, overbought, overbullish market conditions driven by massive central bank interventions, to credit strains and emerging economic weakness nearly the instant those interventions are even temporarily suspended. The same speculators who have historically accompanied major and intermediate market peaks have emerged, followed by the emergence of credit strains, economic pressures, and a flight to safe-havens. The market is in an extended game of hot potato which will be resolved by the eventual removal of both conditions.

2012-02-10 Pacific Basin Market Overview January 2012 by Team of Nomura Asset Management

The risk of a meltdown in the peripheral European economies now appears to have been alleviated due to aggressive monetary easing by the European Central Bank. We have also recently upgraded our GDP forecast for the U.S. Japan has started implementing the third supplementary budget for earthquake reconstruction. As such, the countrys growth rate will exceed those of other developed economies in the first half of 2012. A less hostile global environment will be positive for Asian stock markets as investors increasingly appreciate the regions superior fundamentals.

2012-02-10 Does Inequality Mean Slower Growth? by Team of Neuberger Berman

As the November election inches closer, taxes are as always a key element of the political debate. This time out, however, the issue of income inequality has become more prominent, altering the typically partisan argument over tax rates. Below, we take a closer look at the dynamics of income inequality, how it could affect the long-term outlook for U.S. economic growth and what that implies for tax policy.

2012-02-10 Missed Opportunities? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Investors eased back into stocks to start the year. This is the start of a sustainable trend, but equities rarely go up in a straight line and near-term caution may be warranted. Another deadline is approaching for Congress and the President to make a deal. Something will get done, but any hopes for substantial action remain dim. Markets appear to be more comfortable with the European debt crisis and the risks associated with it. Central banks around the world are easing, which could help support international stocks in the coming months.

2012-02-10 Theres Value in Russias Future by Frank Holmes of U.S. Global Investors

Increasingly, Russian companies have begun paying dividends, with some companies paying as much as a 10% annual dividend. As interest rates around the world will remain low or even negative for years to come, dividends offer investors the opportunity to earn income with the potential of appreciation. Although political risks remain, we believe Russia continues to be a hotbed of opportunity for emerging market investors.

2012-02-09 Q411 Portfolio Commentary by Jay Compson of Absolute Investment Advisers

We continue to stress that investors remain patient. Given that we are likely in the 1% of money managers that look beyond the next 30 days, it is inevitable that the markets will move counter to our positioning. This is to be expected and is consistent with the Fund's historical performance.We continue to remain disciplined and receive counsel from the investing bible: Graham and Dodd's Security Analysis. For those few true value investors left, it's worth noting that nowhere is the phrase "margin of safety" defined by quantitative easing, government stimulus, or bank bailouts.

2012-02-09 Economic Update by Richard Hoey of Dreyfus

For 2012, we have three themes and three risk concerns. The three main themes are (1) global growth recession, (2) lower inflation for now and (3) monetary ease. The three main risk concerns are (1) the European financial stresses, (2) the Chinese property market and (3) the Middle East risks, with oil supply vulnerabilities as the main concern. We expect a global growth recession in 2012, rather than either a strong global expansion or a fullscale global recession.

2012-02-07 Market Dimensions by James Damschroder of Gravity Capital Partners

We estimate there is a 15% to an upwards of 31% opportunity for some reasonable re-inflation to normal valuation to be had in emerging equity securities. It wouldnt be too aggressive to even call 60%. That would bring us to an implied P/E of only 15. I dont know if itll take six months or several years to accomplish this, but this was the logic I used in getting back into the international markets quickly after having correctly anticipating the start of the sovereign debt crisis. In retrospect, we came back a little early; but I believe this move will be very fruitful in the long run.

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.

2012-02-07 Fed Policies Pay Off by Christian W. Thwaites of Sentinel Investments

The forces of disillusion have glowed recently. We have had unsubtle debates on the Fed debasing money, the ECB providing unwarranted support and threats that the economy was going to lurch into a double dip (a reasonable but narrow view) or accelerate into hyperinflation (yes, really). So this was a week of unequivocal good news.

2012-02-07 Where to Find Value in Emerging Asia by Russ Koesterich of iShares Blog

Im updating my views on some of the emerging market countries in Asia. While Im upgrading Chinese equities from neutral to overweight, Im downgrading South Korean and Indian stocks from neutral to underweight. Starting with China and South Korea the two countries are both highly exposed to global growth, but China currently appears to be the better positioned and is likely to hold up much better. To be sure, South Korean equities are also cheap compared to other emerging markets. Im downgrading India in response to the countrys recent surge in valuations and persistently high inflation.

2012-02-06 Apparent Decoupling of U.S. and European Economies Underway by Matt Rubin of Neuberger Berman

U.S. showing continued improvement in economic indicators, while IMF predicts Europe contraction. Improvement in economy and favorable fourth quarter earnings helped S&P 500 to its best January since 1997. Given situation in Washington and Europe, investors unlikely to experience a smooth ride.

2012-02-03 Thunderstorm First, Then Rising Pressure by John Gilbert of GR-NEAM

The developed world is riskier than it was, and should be valued accordingly. That is a dour conclusion, but avoiding it does not mean that one can outrun it. Perceptions of what makes risky assets attractively valued need to be adjusted for the context. Valuation levels that were attractive when the world was less indebted are attractive only at lower levels since valuations have not yet anticipated eventual inflation. Those that will do the best are those that benefit from inflation and the negative real interest rates that result, since ultimately that is the choice governments will make

2012-02-03 Sri Lanka's Story by Taizo Ishida of Matthews Asia

Ever since Sri Lanka ended more than 25 years of civil war in early 2009, its economy has been on the upswing. The countrys stock market has quadrupled in the two years since the end of its long and bitter conflict, helped by strong, pent-up domestic demand. Among Sri Lankas top priorities has been a rebuilding of its tourism industry, and officials have set a target of attracting 2.5 million visitors by 2016. They may well get there if they keep pace with their 2011 annual growth rate, which saw a 30% increase to 856,000 visitors.

2012-02-02 The U.S. Economy: This is How Our Game is Played by Team of American Century Investments

In an election year, it is impossible to escape the bombardment of political rhetoric. Politicians typically have little compunction as they encroach into the arena of economics. As a result, people from all walks of life, including investors, are often left confused and wondering which of the various economic theories and norms remain relevant. The goal of this piece is to consider what recompense we receive from government intervention in the economy. Some bitter divisions exist regarding the style of play that should be adopted to guide our nation as the slow economic recovery continues.

2012-02-02 Royce Looks Back at 2011, a Year of Correlation, Capitulation, and Consternation by Team of The Royce Funds

Twenty-eleven saw disasters both natural and human. There were threats of European default, failures of political leadership, worries over recession, and the ever-present specter of staggering debt. All of these events contributed to one of the wildest years for stocks in recent memory. It seems likely that 2011 will be remembered not for the severity of its losses, which weren't nearly as bad as one might think, but for its daily drama of extreme volatility.

2012-02-01 A Slippery Year for Excess Returns by John West of Research Affiliates

Last year, securities prices moved like a school of sardines. That environment made life difficult for both active managers and the Fundamental Index approach. This month's Fundamentals examines what happened in 2011 and the opportunities for breaking loose this year.

2012-02-01 Year-End Commentary by Steven Romick of First Pacific Advisors

We find investing especially challenging todaynot that its ever been easy. We feel like we are forced to bet on policy, and how does one do that? Particularly when we believe we are betting that too many of the wrong people will make the right decisions. We feel a little like explorers, blazing new trails, learning about the new world weve come upon, charting a different path with new information, all while trying to avoid being scalped. We continue to seek the best path, even if its new, to both protect your capital (first) and to provide a return on it (second).

2012-02-01 What is a Moat? by Bill Smead of Smead Capital Management

Our investment committee talks about the moat of a business a great deal. We believe that a wide moat is provided by the aspects of the company and their business which prevent competition from damaging highly sustainable profitability. Wide moat is one of our eight proprietary criteria for selecting common stocks. We have seen a number of organizations begin to include logic associated with moats into their equity research formats. Unfortunately, we believe many market participants confuse the by-products of a moat with the actual moat itself. We think this spells opportunity.

2012-02-01 Will I be able to retire ever? Answers to our clients #1 question! by David Edwards of Heron Financial Group

Our clients are divided between those who are at least 65 and already retired (30%) and those clients aged 35-65 for whom retirement seems like an ever receding mirage. In this commentary, we will concentrate on the mechanism that we use to implement a clients retirement income strategy, review how this strategy has performed since January 2000, and review the lessons learned.

2012-01-31 Bob Doll Believes the Recent Equities Rally Could Continue by BlackRock (Article)

Conditions have improved compared to last quarter, with the US economy showing signs of acceleration and European policymakers moving further along the path of progress. With the bearish tone receding, investors should consider moving into "risk" assets and out of "safe" assets, especially on pullbacks.

2012-01-31 Barry Eichengreen on the End of the Dollar by Dan Richards (Article)

Barry Eichengreen is a professor of economics and political science at the University of California, Berkeley and a former senior advisor to the International Monetary Fund. In this interview, he discusses the future of the dollar as the reserve currency and the role of the IMF in the Eurozone crisis. This is the transcript of the interview.

2012-01-31 Precisely Watson? by Jeffrey Saut of Raymond James Equity Research

I have repeatedly commented that earnings comparisons were going to get more difficult because the trailing four quarters earnings reports have been so strong; and, thats precisely what is happening. For example, with 180 of the S&P 500 companies reporting, there has been 1.81 upside earnings surprises for each disappointment versus a more normal ratio of 3:1. Accordingly, it makes sense to screen for companies producing Triple Plays that would be companies beating earnings and revenue estimates and also raising forward earnings guidance.

2012-01-31 Q4 2011 Market Commentary by John G. Prichard of Knightsbridge Asset Management

The proposed restructuring for private creditors of Greece has been called voluntary. Who voluntarily takes 30 cents on the dollar? The government authorities involved have insisted that any deal be deemed voluntary to avoid triggering credit default swaps (CDS) written on Greek debt. These CDS could accurately be called insurance contracts that are supposed to pay out if the Greek government defaults or changes the terms of its debt. The ISDA, the entity who decides these things, has more or less already said they wont consider the default a default.

2012-01-31 Sunday Bloody Sunday: Hoping For a Giants Win by Liz Ann Sonders of Charles Schwab

The "January effect" stock-market indicator bodes well for the rest of year. A "golden cross" occurrence would also add fuel to the market bulls' fire. Sentiment looks frothy in the near term, but the "wall of worry" remains intact. I think the market is vulnerable to a pull-back in the near term, but likely remains in a bull market, with further gains to come. It's also worth noting that February has not been a great month for the stock market historically. But, if the Giants win on Sunday, my mood will improve.

2012-01-30 And Thats The Week That Was by Ron Brounes of Brounes & Associates

As January goes, so goes the market for the year. Can we keep these gains for two more days? A few key bellwethers post earningsExxon Mobil looks to set new records; Amazon shows the effects of the holiday season; and UPS provides new signs about the strength of the overall economy. Labor and manufacturing highlight a very busy week on the economic calendar as investors hope to see continued positive trends from the ISM (manu), nonfarm payroll, and the unemployment rate. And, of course, Europe is never too far from the weekly headlines. (The more things change) Go Giants (a week early).

2012-01-30 Sector Insights Focus: Consumer Staples by Mark H. Dawson and Daniel M. Brewer of Rainier Funds

After steadily rising in terms of market capitalization in the 1980s, the consumer staples sector shrank in the 90s as technology shares swelled in market value. Over the most recent decade, staples representation has crawled back to about 10% in the large growth and value indices, while inclusion in small-cap indices ranges between a mere 3-6%. The theme of consolidation within industries continues today and the sector is increasingly dominated by a small number of mega-cap corporations often seeking to acquire small- and mid-cap companies.

2012-01-30 Fourth Quarter Investor Letter by Mark Bennett, David Templeton and Nick Reilly of HORAN Capital Advisors

We have our reservations about world economic output, but stand by our past comments about slow U.S. growth without a recession. We do believe equities offer attractive return opportunities for the foreseeable future in the context of historical valuation and relative valuation. We acknowledge the structural issues prevalent in developed economies and the risk that comes with debt hurdles, demographic challenges and potential deflation, but there are many data points that make us optimistic about equity returns in 2012 and for long-term strategic investment allocations of capital.

2012-01-27 What the Bond Market Knows That You Dont by Matt Tucker of iShares Blog

On the back of improving US economic data, equities have rallied off of autumn lows, and yet US Treasury yields have continued to surf bottom with the 10-year note trading below 2% for the first time on record. Why havent interest rates recovered in support of improving data? Do US Treasury investors know something that equity investors dont? The answer may lie across the pond in Europe. The European crisis intensified significantly in the fall, causing equity markets (and most risky assets for that matter) to sell off and US Treasury rates to fall, despite the August downgrade.

2012-01-27 Slow Road to 'Normal?' by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Market volatility has fallen and tight correlations have loosened, indicating to us some calming of fears and increased attention on more traditional economic and earnings-related news. This is a good sign for stocks in the foreseeable future. The Fed unveiled its new communication strategy after its most recent meeting, reiterating that interest rates will likely remain extremely low for some time. The European picture is brightening slightly and there may be a glimmer of hope for stock market investors. After a soft patch, global growth may be turning around.

2012-01-26 2011 A Difficult Year for Active Investors by Owen Murray of Horizon Advisors

Actively managed mutual funds greatly underperformed their respective benchmarks in 2011. This was primarily due to extreme market conditions triggered by the European debt crisis. Investment managers were not rewarded for good fundamental decision making as fear dominated trading activity in the global markets. Active manager underperformance / outperformance trends tend to be cyclical, but over time, good active managers add value. We expect actively managed funds to outperform once market volatility subsides and fundamental factors reemerge as a key consideration for investors.

2012-01-26 Questions and Answers About S&Ps European Downgrades by David Fisher, Michael Story and Olivia Albrecht of PIMCO

Sovereign downgrades will likely be another trigger for cuts in the ratings of European banks. Nearly all major eurozone banks are on negative watch. Even those securities guaranteed by eurozone sovereigns that were not downgraded are also in the ratings agencies crosshairs. The most significant downgrade for benchmark compositions was Portugal -- downgraded to below investment grade by S&P, consistent with Moodys and Fitch.

2012-01-26 The Price of a Good Nights Sleep by Russ Koesterich of iShares Blog

Even with the recent market rally, investors are still placing a significant premium on those assets perceived as safe. Case in point: the US Treasury market. By one measure-real yields measured against core inflation long-dated Treasuries are offering the worst returns in over 30 years. The flip side of this trade is a persistent aversion to assets perceived to be the most risky, particularly Europe. Even in the more stable, northern parts many markets are trading at 8 times earnings, with dividend yields at 4% to 5%. In a low yield world, this strikes us as a long-term opportunity.

2012-01-25 New Year, Same Crisis by George Soros of Project Syndicate

The measures introduced by the European Central Bank last December have relieved the liquidity problems of European banks, but have not cured the financing disadvantage of the highly indebted member states. Since high-risk premiums on government bonds endanger the capital adequacy of banks, half a solution is not enough.

2012-01-25 Straightening Out the Straits by John Browne of Euro Pacific Capital

Recently some of the fears that investors had focused on in the 11thhour debt negotiations in Greece have drifted southeastward towards the Straits of Hormuz. An increasingly bellicose Iran threatens to throw the world economy into confusion with the potential closure of one of the worlds most important sources of energy. Catastrophic failure in Athens or the Gulf could plunge the world into severe recession if not depression. Having discussed the Eurozone at length, we focus this week on the threats posed by Iran.

2012-01-25 2011 Review and Outlook by Ronald W. Roge and Steven M. Roge of R. W. Roge

While there is plenty to worry about globally, particularly the European financial crisis, Iran, and domestic policy decisions, we can take some comfort that corporate earnings continued to grow and our economy is muddling through with positive GDP numbers. Traditionally, election years are positive for equities. Since 1928 there have been 21 Presidential elections with only three of those years producing negative returns for the S&P 500. Until we have more clarity on the U.S. election, domestic policy decisions and the European financial crisis we will remain cautious and flexible.

2012-01-24 Beyond Reinhart and Rogoff by Robert Huebscher (Article)

My article two weeks ago, The Misreading of Reinhart and Rogoff, elicited a number of challenges, both from those who argued that excessive debt imperils our economic growth and from those who claimed that my proposed solution was unworkable. Among those challengers was Lacy Hunt, who raised several valid concerns. I will explain why I disagree with Hunt and others, and why the dollar's position as the reserve currency increases our borrowing capacity. But our ability to borrow cannot be a license to spend unwisely, and I will conclude by expanding on the policy choices the US must pursue.

2012-01-24 Contrarian Concern Too Much Bullishness? by John Buckingham of AFAM

While we expect volatility to remain elevated this year, and we have to concede that the markets have come a long way quickly, we see no reason to alter our 1400 year-end S&P 500 price target. Of course, that level actually might be a little low, considering where we stand today, but we focus our attention on the companies in which we are invested. After all, we own businesses like International Business Machines (IBM - $188.52), Intel (INTC - $26.38) and Microsoft (MSFT - $29.71), all of which posted impressive Q4 results last week, and not index funds.

2012-01-24 Economic Update by Richard Hoey of Dreyfus

The most likely outlook for the world economy in 2012 is a global growth recession. The economic outlook reflects disparate trends in different regions: a full-scale recession in Europe, stagnation or moderate recession in the nearby U.K., near-trend growth in the U.S., continued expansion in Japan and moderate slowdowns in China and most other emerging market countries. While European financial stresses are serious, the global shift towards monetary ease should help mitigate the spillover effect. The result should be a global growth recession rather than either a full-scale global recession.

2012-01-24 The Global Economic Outlook: Diverging Paths by Thomas D. Higgins of Dreyfus

The global economy can weather a mild eurozone recession, but is too fragile to absorb a severe financial shock such as a breakup of the euro. Higgins expects Central and Eastern Europe are likely to be most negatively affected by a eurozone recession, followed by the UK, the US and other advanced economies, given their respective trade dependencies. The least vulnerable regions would be Asia and Latin America. Long-term value in popular safe havens such as U.S. Treasuries and gold, preferring to focus on U.S. non-financial corporate credit as well as emerging market local currency debt.

2012-01-24 Africa: Opportunities and Challenges in a Growing Economy by Team of The Royce Funds

As the South African economy continues to mature and other, even less developed, economies begin to thrive, we will keep our attention focused on company fundamentals, corporate governance, and what we think are attractively undervalued businesses with the potential to grow in the global economy. As the bulk of Africa's economies are frontier markets, still progressing toward the status of developing economies, the continent as a whole represents long-term opportunities that will require patience and diligence. Its resources and demographics are likely to make it well worth the wait.

2012-01-23 Willful Optimism in the Face of Pessimism by Robert Horrocks of Matthews Asia

The U.S. has an unemployment problem, Europe is insolvent and Chinas banking system and property developers face the prospect of rising bad loans. The only thing that appears to be sustainable in investors minds is depression. Indeed, this has led to ongoing pessimismand perhaps too much of it. This month Robert Horrocks, PhD, takes a dissenting view on all the negativism as central banks in Europe, the U.S. and Asia appear to be shifting to more accommodative stances as inflationary pressures subside.

2012-01-20 And That's The Week That Was by Ron Brounes of Brounes & Associates

So will Frances borrowing costs start tumbling now that the S&P has cut its rating below AAA? Illogically, thats what happened in the US. Now that the news is finally out in the open, investors can go back to monitoring Greece as it hopes to finally make a debt restructuring deal with private creditors. What say you, Germany? Earnings season moves forward and the banks look to reverse the pessimism initiated from JP Morgans disappointing report. Intel pushes some of the earnings attention over to the tech world and GE provides profit news from one of the nations key economic bellwethers.

2012-01-20 It May Take a Dragon to Breathe Fire into Markets by Frank Holmes of U.S. Global Investors

Ive found many people are particularly energized about predicting a hard landing for Chinas economy, but I believe the country is no sinking ship. China isnt fast-approaching an iceberg in the dark of the night like the Titanic. Beijing has long been anticipating the ice chunks and subtly adjusting the rudder around inflation without steering the economic ship too far off course.

2012-01-20 And That's The Week That Was by Ron Brounes of Brounes & Associates

So will Frances borrowing costs start tumbling now that the S&P has cut its rating below AAA? Illogically, thats what happened in the US. Now that the news is finally out in the open, investors can go back to monitoring Greece as it hopes to finally make a debt restructuring deal with private creditors. What say you, Germany? Earnings season moves forward and the banks look to reverse the pessimism initiated from JP Morgans disappointing report. Intel pushes some of the earnings attention over to the tech world and GE provides profit news from one of the nations key economic bellwethers.

2012-01-19 Riding the Global Roller Coaster: The Outlook for Emerging Markets High Yield Corporates in 2012 by Brigitte Posch of PIMCO

Because many emerging market high yield companies were able to deleverage after the 2008/2009 crisis, we believe they are generally in a stronger position than their developed market counterparts. Limited financing needs should provide technical support to the overall emerging markets corporate market. In an environment where lending conditions tighten in international capital markets, domestic markets may become a source of funding for EM HY corporates.

2012-01-19 Developed Europe: Economic Review Fourth Quarter 2011 by Team of Thomas White International

Germany: Unemployment fell to historically low levels. Exports grew in November, while businesses and consumers remained optimistic. U.K.: The services and construction sectors stayed buoyant. GDP grew 0.6 percent in the third quarter of 2011 France: The unemployment rate rose suddenly in the July after being in a downtrend for several quarters. Italy: The new government introduced the countrys third austerity package in 2011. Spain: Tax hikes and spending cuts were announced by a new conservative government.

2012-01-17 The Mess That Is the Eurozone Inflation-Linked Bond Market by Michael Althof and Jeremie Banet of PIMCO

Italian ILBs now mostly reflect credit risk and tend to trade at a discount to compensate for the higher volatility. Unless the eurozone collectively decides to inflate their way out of their sovereign debt problems through a large increase in the ECB balance sheet, Italian inflation-linked bonds are likely to keep trading like a more volatile and less liquid version of nominal Italian bonds. A European investor looking to secure consumption of real assets in the future may wish to think about alternative measures to help protect their real purchasing power when hedging real liabilities.

2012-01-17 Thinking About the Implications of Rising Euro-Exit Risks by Myles Bradshaw of PIMCO

Even if the euro survives this crisis intact, the market will price in uncertainty as the crisis evolves. Scenario planning is indispensable for investors. Politics may prevent the European Central Bank from buying government bonds, but it could provide funding support via a special government or banking intermediary. This balance sheet expansion could be a negative for the euro. Within the eurozone we believe investors should look at alternatives to the government sector, including agency, regional government and covered bonds.

2012-01-17 In Praise of Radhanath Sikdar by Christian Thwaites of Sentinel Investments

This week we saw: France and Austria downgraded, Greece take a step closer to default, new bond auctions from Spain and Italy that, while below last month's, had pitifully low bid/cover ratios and Hungary lurch again in its bond prices and currency...down 11% and 22% in last 3 months. On the other side of the trade, Germany auctioned 6-month paper at a negative 0.012%. So this is what happens: fiscal consolidation hits private consumption and investment without (because of a pegged exchange rate system) a rise in net exports or higher lending. Mr. Sikdar would have figured this out long ago.

2012-01-17 The Impact of the Falling Dollar by Jonathan A. Shapiro of Kovitz Investment Group

Regarding the progress of the businesses we own, a useful metric we track is the Price-to-Value ratio. Conceptually, this statistic measures the current price of a portfolio company to its intrinsic value, conservatively estimated through our multiple valuation techniques. For example, Wal*Marts current P-to-V Ratio is 80%, determined by taking its roughly $60 stock price divided by our current fair business value estimate of $75. This implies, based on what we know today, Wal*Mart is roughly 20% undervalued, providing approximately 25% upside from current levels (not including dividends).

2012-01-13 2011 An Anomaly? by Sean Hanlon of Hanlon Investment Management

The dictionary defines anomaly as; something anomalous: something different, abnormal, peculiar, or not easily classified. Looking back at the economic, political and market activity of 2011 it could be described as an anomaly. I hesitate to label a markets action as odd, or unusual, because markets by their nature will always be independent, potentially odd and unusual. Be 2011 certainly was a rare year. A major cause for this anomalous market activity was the rarely seen occurrence of a large portion of an entire continent running the risk of sovereign debt default.

2012-01-13 Investing in 2012: Same Issues, More Extreme Valuations by David Kelly of J.P. Morgan Funds

When all was said and done, 2011 turned out to be the metaphorical equivalent of a roller coaster ride.There were quiet positives: The addition of 1.6 million jobs with the unemployment rate falling from 9.4% to 8.5%, a gradual improvement in light vehicle sales, the demise of Bin Laden and gathering economic momentum as the year drew to a close. There were scary negatives: soaring oil prices in reaction to the Arab Spring the human and economic toll of the Japanese tsunami the inability of Europe to deal with its complicated debt issue and the inability of Washington to deal with simpler one.

2012-01-13 Euro Fears by Richard Michaud of New Frontier Advisors

Global investing is likely to be very challenging in the year ahead. While the euro has so far been resilient, many eurozone countries face substantive debt refinancing in the coming year. Given the current political, structural, and economic reality there is no simple cure to the euro crisis. The ECBs evolving pursuit of liquidity policies and potential interest rate cuts may be helpful, but major political changes may be necessary. Beyond Europe, the remainder of the global economy may be very dependent on a continuing expansion of the American economy and improving consumer demand.

2012-01-13 Time to Climb? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

The US economy continues to expand and has recently picked up momentum. Investors have been focused on European and US debt problems, but that may set up an environment for stocks to move higher. Many challenges await Congress. We're not optimistic that much progress will be made, but the rhetoric will almost certainly heat up as late-year elections loom. Recent policy decisions in Europe provide some hope but the region's banks continue to struggle and are pulling back on lending, which likely impedes growth. In China, policymakers attempt to keep growth from dipping below healthy levels.

2012-01-13 Chinese Debt Restructuring at Work? by Teresa Kong of Matthews Asia

How long a restructuring takes will also have a notable bearing on recovery value. Given the myriad of jurisdictions involved, the legal battles will likely take many months if not years to resolve. Given the time value of money, a penny recovered today is worth more than a penny recovered tomorrow. Hence, investors must weigh the cost in terms of time and legal costs against any future recoveries. Asia offers great opportunities, but one has to be mindful that some of the regions markets are still developing.

2012-01-13 Do Friday's European Downgrades Matter? by Mohamed A. El-Erian of PIMCO

Friday's downgrades of European sovereign ratings debt is all over the place-from those dismissing it as old news to those viewing it as part of a larger and consequential transformation of the international monetary system. What follows is an attempt to provide a guide to the multi-faceted implications. It focuses on three types of consequences: 1 those that are unambiguous and already reflected, albeit not fully, in market valuations. 2 those that are less well understood but will become clearer. 3 those that are consequential but where the analytics are still largely unknown at present.

2012-01-12 42 Dividend Contenders for Above-Average Total Return by Chuck Carnevale of F.A.S.T. Graphs

With interest rates hovering near all-time lows, investors needing income are faced with very limited choices. The traditional high yield available from bonds and other fixed income vehicles are no longer available to meet the needs of retirees needing income to live off. Moreover, it is almost a certainty that todays low yields are not adequate enough to fight inflation. Consequently, there is a growing investor interest in dividend paying common stocks, especially those that have a long record of increasing their dividend every year.

2012-01-12 Pacific Basin Market Overview December 2011 by Team of Nomura Asset Management

For much of the fourth quarter of 2011, anxiety surrounding the ongoing European sovereign debt crisis has kept the Pacific Basin equity markets largely range bound, although most indices managed to trend higher from their October lows with the help of unexpectedly buoyant economic data from the U.S. The MSCI AC Asia Pacific Free Index including Japan gained 0.66% and the MSCI AC Asia Pacific ex Japan Free Index gained 3.96%, resulting in declines of 17.31% and 17.98%, respectively, for the full year.

2012-01-12 A Look Back (2011) and Forward (2012) by Team of American Century Investments

The major US equity markets ended 2011 not far from where they began in terms of their index values. Now that the New Year has arrived, the question is where these markets might be headed in 2012. Three important considerations behind this question are: 1. How key macro-factorse.g. the EU debt crisisare or arent addressed 2. Can U.S. corporations continue to deliver the earnings growth they have for the past three years 3. What are the prospects for US consumers and householdsan increasingly important consideration as the global recovery slowed in the fourth quarter of last year.

2012-01-12 Emerging Europe: Fourth Quarter 2011 Economic Review by Team of Thomas White International

The European Bank for Reconstruction and Development was established in 1992 to help the former communist states in their transition to market-based economies. The EBRDs mandate includes investments in Russia and its satellite states such as Poland and Hungary. The Czech Republic, which was the first country to complete the transition process successfully, has come out from under the EBRD umbrella. According to the banks latest forecasts, GDP growth in the central and eastern European region will be approximately 4.5 percent in 2011 and about 3.2 percent in 2012.

2012-01-11 And That's The Week That Was by Ron Brounes of Brounes & Associates

After a meaningless breakeven year, the S&P 500 looks to better its performance in 2012.A recent CNNMoney survey speculates the benchmark index will gain 7% in the current year.While the economic data has been positive as of late, all eyes shift to corporate earnings and Alcoa kicks off the season in the coming days. Retail sales highlight the economic calendar and investors get a better feel for the true results of the holidays.While sales looked strong throughout, mass discounting undoubtedly cut into profits and some retailers are now rethinking the success of the markdown strategy.

2012-01-11 Aberdeen Chile Fund, Inc. Fund Manager Interview by Team of Aberdeen Asset Management

Chile has developed a middle class quicker than many of its Latin American peers and consequently, more robust domestic consumption trends. Chile has formed close ties with China in recent years and in 2005 became the first country in Latin America to sign a Free Trade Agreement with the Asian nation. Chile has proven to be a model to the Latin American region in regards to good corporate governance and transparency. Though Chile will not be fully insulated from the global downturn, the countrys longterm fundamentals remain sound.

2012-01-10 Safe Withdrawal Rates: A Do-It-Yourself Approach by Wade Pfau (Article)

Reconciling the assumptions that underpin safe withdrawal rate studies with one's own capital market expectations and constraints is a daunting task, since those studies rarely reflect the practical realities of an advisory practice. But new research now provides a generalized framework for determining a safe withdrawal rate for a given retirement duration, acceptable failure probability, asset allocation and capital market expectations. Advisors no longer must be constrained by the assumptions and choices of others.

2012-01-09 Macro Matters: Incorporating Top-Down Views in Emerging Market Equities by Curtis Mewbourne and Masha Gordon of PIMCO

From 2003 to 2011, over 50% of returns of the MSCI Emerging Markets Index came from country-related and currency-related factors. Over the next 12 months, there will be elections in countries representing just under half of global GDP. Therefore, we expect more policy experimentation, varying degrees of effectiveness, and unintended consequences. Currencies are also an important driver of EM equity returns, and the cost of hedging currencies has meaningfully declined over time.

2012-01-09 Investment Perspective Fourth Quarter 2011 by Team of Cambridge Advisors

The concerns over Europes debt problems continued and contributed to volatility in stock prices and bond prices. Although the markets have responded favorably to the partial solutions that have emerged, the issues are not entirely resolved. In this environment where the outlook can and does change quickly based on unfolding worldwide events, volatility is likely to persist. We continue to believe diversification across asset classes is the prudent strategy in this environment. Bonds provide stability, but stock exposure is needed for long-term growth.

2012-01-09 The January Barometer by Jeffrey Saut of Raymond James Equity Research

Its amazing that equity markets have rallied in light of the strong U.S. dollar. That action suggests that stocks are not ready for the pullback I have been expecting following last Tuesdays upside blow off. Still, while the Dow Industrials and Dow Transports have tagged new reaction highs, the SPX and NDX have not. Such divergences always leave me cautious, especially since we are past the seasonally sweet spot for stocks. At some point we are going to get a profit-taking event, whether it is from last Tuesdays intraday high or the 1300-1320 overhead resistance zone remains to be seen.

2012-01-09 Middle East/Africa Fourth Quarter 2011 Economic Review by Team of Thomas White International

Weakening global activity and further political uncertainty are the foremost risks that are likely to affect the Middle East and Africa (MEA) regions performance. The IMF report notes that oil exporting nations of the MEA region have benefited from continued high energy prices and are slated to finish off 2011 clocking in a GDP growth of 5% before easing to 4% in 2012. However, these countries do face a downside risk in the likelihood of fiscal and debt challenges in the developed nations that could adversely impact global activity and international oil prices.

2012-01-07 2012: A Year of Choices by John Mauldin of Millennium Wave Advisors

2012 will the year that the consequences of the choices made by the developed world will begin to manifest themselves in the economic realm. We are in the closing chapters of the current Debt Supercycle, with different countries strewn out along the path, and all headed for a destination that will force major decisions if politically painful actions are not taken. Some countries (e.g., Greece) have a choice between the dire and the disastrous. The option for merely difficult choices was long ago, and there is no going back to where you started without a different but equally painful outcome.

2012-01-06 Pioneering Frontier Markets by Mark Mobius of Franklin Templeton

While emerging markets were considered a niche or exotic investment when I started investing in the late 1980s, many investors are now familiar with them and Im seeing more and more investors turning to emerging markets as a way to diversify their portfolios. Yet, emerging markets themselves are not a homogeneous zone. Within the emerging markets universe, we believe frontier markets as a whole have begun to take an impressive lead in terms of growth.

2012-01-06 Burgers or Barrels--What's Your Power Play? by Frank Holmes of U.S. Global Investors

In a recent blog post, the Wall Street Journal asked its MarketBeat readers if a share of McDonalds stock or a barrel of oil made a better $100 investment. The share price of the fast-food restaurant topped $100 for the first time ever in late December and rose 30 percent over 2011, substantially beating the overall market. Crude oil prices had less sizzle, only moderately increasing over the year. The three-year picture is a little different, with crude oil more than tripling since its bottom in late 2008. Over the same time, McDonalds increased about 66 percent, says the Journal.

2012-01-06 Euro Fears by Richard Michaud of New Frontier Advisors

The euro crisis has dominated financial headlines and threatened global economic growth for the last two years. The European Union (EU) has repeatedly failed to articulate an effective plan to address Europes debt problems and deteriorating finances. German demands for austerity and economic rectitude by eurozone members, while politically popular in Germany, ignore basic principles of orthodox Keynes-Samuelson macroeconomics for dealing with a financial slump. There is no historical example of austerity leading to growth.

2012-01-06 A Balanced Asia Strategy for 2012: Income, Quality & Growth by Carl Delfeld of Chartwell Partners

When investors think of Asia, they usually think of growth investing. When I was making my three-week swings through Tokyo, Hong Kong and Sydney to visit clients the issue of dividends and income rarely came up at all. Since then, the region has matured - representing more than a third of world GDP and world stock market value. Asia is a big deal and is at the sweet spot of dividend yield, growth and quality. But the challenge of volatility still lurks.

2012-01-06 Dividend Champions a Rare Undervalued Opportunity by Chuck Carnevale of F.A.S.T. Graphs

We believe that based on earnings, 2012 is starting out with the stock market undervalued. We believe in the long-term ownership of great businesses purchased at sound and attractive valuations. Consequently, we view the stock market as merely the store that we shop at in order to buy the businesses we want to own.

2012-01-06 What Happened in 2011Whats up for 2012? by Peter Schiff of Euro Pacific Capital

This all lends itself to a volatile, but nearly flat trend for stocks and bonds in 2012. Fundamentals dont yet support a run-up, but easy money may put a floor underneath assets over the short run. Unless the situation were to change, we believe aggressive dips in stock markets represent buying opportunities. We tend to think bonds will underperform equities in 2012, given their dramatic outperforming in 2011.

2012-01-06 What Will 2012 Bring? by Monty Guild and Tony Danaher of Guild Investment Management

In 2011, financial news was dominated by the turmoil in Europe. Looking ahead, the ongoing crisis will be addressed by a global money printing jamboree and coordinated funding from central banks in the developed world, including the Fed. When the money starts rolling off the presses, the liquidity infusion will create some genuine buying opportunities for American, European, and Asian stocks, as well as selected commodities. Liquidity infusions are like a rising tide of money available to buy assets. Buy stocks, commodities, and primarily gold to protect the buying power of their assets.

2012-01-06 Have Winds Shifted to Provide Relief to Investors? by Frank Holmes of U.S. Global Investors

We believe the winds are shifting to bring needed relief to global investors. Weve seen improving economic data from the U.S. lately, and this positive news from the worlds largest economy, along with an improving Chinathe worlds most populated countryoffsets the negativity in Europe.

2012-01-05 3 Economic Scenarios for 2012 by Russ Koesterich of iShares Blog

Russ believes that one of three economic scenarios will likely play out next year: the Great Idle will continue, the global economy will slip into a recession or global growth will accelerate. The most likely scenario is that The Great Idle continues. A severe global recession in 2012 is a second possible scenario. In fact, Im placing higher odds on another global recession than I did last year. Theres a tiny chance of a third scenario. In this scenario, emerging markets would resume stellar growth and the developed world would revert back its long-term average growth.

2012-01-04 ProVise Bullets by Team of ProVise Management Group

The year 2012 is upon us and looms large for a number of different reasons. Within the next few days, the first of the Presidential primaries will begin and by early November we will know who our next President is and who controls Congress, along with many State Houses. Some astrologists believe this is the Age of Aquarius and according to the Mayan calendar, December 21st will be the end of time, or as some prefer to think of it (ourselves included) the beginning of a new age. Maybe the astrologists and Mayans have something going.

2012-01-04 Fundamentals March on Despite Global Risks in 2012 by Douglas Cote of ING Investment Management

The two primary drivers of market performancefundamentals and global risksacted in opposition in 2011. It is critical to understand the hierarchy of influence of these drivers in order to understand the current market and to forecast its future direction. Although spikes in global risk may make headlines and cause temporary shocks to investor confidence, the markets path ultimately comes down to the strength of the underlying fundamentals. We expect 2012 will mark the third consecutive year that fundamentals relentlessly march forward despite ample global risks.

2012-01-04 On Tap for 2012: More Bond Market Transparency by Matt Tucker of iShares Blog

In 2011, 102 new fixed income funds launched across exchanges in Europe, Canada, Asia and the United States. How will the landscape continue to evolve in 2012? Matt Tucker is here to provide a few insights, including his expectation that new fund launches will help to make the bond market more transparent.

2012-01-03 And Thats The Week That Was by Ron Brounes of Brounes & Associates

As January goes, so goes the market for the year. While most investors look beyond such hype, many surely will be pulling for a strong start to the new year. Despite summit after summit, emergency call after emergency call, bailout after bailout, stimulus after stimulus, the European debacle appears no closer to resolution (and is maybe getting worst). Italy is hurting; Hungary could be next; Germany and France are calling the shots. Iran presents a new threat to the oil markets as a blockage at the Strait of Hormuz threatens real damage to the energy supply/demand picture.

2011-12-31 Remarkable Resilience by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Despite a remarkable series of crises, the stock market was roughly flat on the year. Earnings increasing, inflation decreasing, and economic data improving, the environment for a renewed upward move may be in place to start 2012. There seems to be little hope from DC for any relief in the near term, but 2012 brings an election cycle that will likely have a major impact on the future of the US. A near-term implosion in Europe seems to have been avoided but real solutions remain absent and the risks for a greater economic pullback are growing, which would likely have global implications.

2011-12-31 Collateral Damage by John Mauldin of Millennium Wave Advisors

The economic travails of much of the West are reaching a decisive stage as the year ends. In 2008, we predicted sluggish recovery and a long period of low growth for the West in a two-speed world. This picture does not now properly reflect the downside risks. The policy of "kicking the can down the road" is failing, as the intensifying crisis in the euro zone and the failure of the G20 summit in late October clearly demonstrate. As to December's European summit, we describe its impact later in this paper.

2011-12-30 Beyond Beasts and Bossa Nova:The Brazilian Boom by Team of Guild Investment Management

What does all this mean for those who wish to invest in Brazil? It means that when it is time to buy Brazil and the time isnt here yet you will want to consider banks and credit card companies as a way to capture the wave of consumer cash since many consumers go abroad to buy personal and pricey consumer goods. To take advantage of rising internal Brazilian spending you will probably want to consider autos, housing, and big ticket durables that will not fit into the luggage of shoppers returning from spending trips abroad.

2011-12-30 A Look Back at 2011s Calls by Russ Koesterich of iShares Blog

Last December, Russ shared his economic forecast for 2011, along with a series of investment calls. Nearly every Monday since then, he has highlighted certain asset classes and market sectors in his weekly call posts. So, how did his calls perform? Read more to find out.

2011-12-30 Case for Sustained $100 Oil by Frank Holmes of U.S. Global Investors

China, along with other emerging markets, and the European Central Bank are in the early stages of a global easing cycle, primarily by cutting interest rates to spur growth. Also, the Federal Reserve should remain stimulative. These government actions set the stage for sustained, or perhaps higher, demand for oil. Geopolitical threats remain on the horizon, and could also be a positive catalyst for oil.

2011-12-29 On the Sharia and Islamic Finance by William Maeck of Seafarer Capital

The practice of banking according to Islamic principles, or the Sharia - the moral code and religious law of Islam - is relatively unknown within developed nations. However, in many parts of the developing world, Islamic banking is a burgeoning industry. It deserves closer scrutiny not only because it is bringing new and otherwise un-banked customers into the fold, but also because it serves as an alternative model for finance and it may manage certain types of risk better than conventional Western models.

2011-12-28 Where Falling Inflation Means Rising Valuations by Russ Koesterich of iShares Blog

Emerging market inflation should decelerate further in 2012 thanks to a combination of continuing slower global growth and the lagged impact of monetary tightening. With the outlook for emerging market inflation improving, my team recently ran an analysis to determine which developing countries are likely to see their valuations benefit the most from falling inflation. Here is the list, with each country ranked in order of how much they should benefit. 1. Brazil 2. India 3. Egypt 4. South Africa 5. Russia 6. Turkey.

2011-12-27 Brief Holiday Update by John P. Hussman of Hussman Funds

As I noted last week, there is a typical "sentiment cycle" in economic surprises, which we would expect to roll over to an increasing number of economic disappointments in the weeks ahead, but we'll respond to the data as it emerges. Given that we're in a typically low-volume, slightly positive seasonal period, I expect that day-to-day movements over the next several sessions may be more influenced by those factors than by meaningful economic or international developments.

2011-12-23 Twenty Years of Investing in Asia by Paul Matthews and Mark Headley of Matthews Asia

This month Asia Insight speaks with Paul Matthews and Mark Headley to get their thoughts on 20 years of investing in Asia. Why were you so convinced of Asias growth prospects at a time when few others were? Paul: As a young businessman trying to build an asset management firm focused on Asia ex Japan, the challenge for me was that Japan was 95% of the investment universe and also a majority of the market for asset gathering. While based in Hong Kong, I was given the task of looking for ways to build the business and so I was attracted to the markets that were open and growing.

2011-12-23 International 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.

2011-12-22 The Corporate Cash Myth by Neeraj Chaudhary of Euro Pacific Capital

Despite huge amounts of cash on their balance sheets, America's largest companies are as broke as the rest of the country, and not only are they in no position to hire workers, but higher interest rates could result in more layoffs at a time when the nation can least afford it. Given these factors, economists, journalists and politicians should be applauding corporate cash reserves not deriding them. Given that a real recovery will not come until America as a country has paid down some of its debt, we should not be urging our corporations to throw caution to the wind.

2011-12-21 Time for the Fed's Public Service Announcement by Kristina Hooper of Allianz Global Investors

Jitters over Europe's debt crisis once again sent investors fleeing despite mounting evidence of economic expansion in the U.S. While the Fed has prudently kept interest rates at historical lows, an explicit call to action for investors is needed.

2011-12-21 The New International Economic Disorder by Mohamed A. El-Erian of Project Syndicate

A new economic order is taking shape in front of our eyes, as the old Western powers and the emerging worlds major new players converge. But the forces driving this convergence are not those that generations of economists envisaged when they pointed out the inadequacy of the old order.

2011-12-21 Hot Potato by Tony Crescenzi, Ben Emons, Andrew Bosomworth, Lupin Rahman and Rob Mead of PIMCO

The world is playing a game of hot potato with European financial assets, and the European Central Bank is a reluctant player. Together, Europes fiscal and monetary authorities can likely avert a systemic accident, but they must act quickly and courageously. Differentiation among emerging market monetary policies is increasing. And in Australia, the central bank will likely need to ease further in 2012. If every central bank enacts similar monetary policy tools, those tools compete for the same targets (financial and inflation stability), thereby potentially eroding their effectiveness.

2011-12-20 Letters to the Editor by Various (Article)

Readers respond to several articles: GLWBs: Retiree Protection or Money Illusion?, Did Congress Cash In on Insider Stock Trading?, and Can this be Serious?, all which appeared last week, and to John Mauldin's commentary, The Center Cannot Hold, which appeared on Saturday.

2011-12-20 By The Side Of The Road by Jeffrey Saut of Raymond James Equity Research

For months I have stated, While I guess we could talk ourselves into a recession, like the aforementioned hot dog folks, most of the finger-to-wallet ratios I monitor are not pointing towards a recession. To be sure, railcar loadings (especially intermodal) have been pretty strong for the past few months. State tax receipts are up year-over-year. East Coast port traffic, both inbound and outbound, remains perky. And, one of the best walk around indicators, namely foot traffic at the casual dining restaurants because it is the most discretionary of all consumer purchases, is still positive.

2011-12-20 NewsLetter - December 2011 by Harold Evensky of Evensky & Katz

No question the markets have been scary and whenever that happens youll read about the value of diversification. The good news is, it works. It may not work day-to-day but over economic cycles, it works. Still, most investors do not really understand what a real diversified portfolio looks like so I did a quick and dirty evaluation of E&Ks typical investment portfolio and found: Stock positions in well over 12k different companies. The largest single position was Exxon at about 0.8% in an all equity allocation. Companies based in over 40 different countries.

2011-12-20 European Credit Freeze Thawing? by Matt Lloyd of Advisors Asset Management

Mario Draghi, President of the European Central Bank, said that banks may borrow money from the ECB to purchase sovereign bonds. This is a form of quantitative easing that circumvents the prohibitive inflexibility many other central banks around the world dont have to meddle with. Like any additional indirect action, its ultimate impact may be more subtle than a direct action but it does bring about some creative solutions where leadership has stalled. Other assistance could come from a discussion in increasing liquidity by nearly 200 billion Euros via the International Monetary Fund.

2011-12-20 A Look Back at 2011 by Bob Doll of BlackRock Investment Management

Although 2011 started off on a relatively strong note for the global economy and markets, the past year was dominated by fears that contagion from the European debt crisis would derail the recovery. Overall global economic growth struggled as most areas of the world experienced growth slowdowns (the notable exception being the U.S.) Emerging markets were also faced with some mounting inflation pressures, which presented a challenge for policymakers. Although there have been some signs of progress regarding the debt crisis, uncertainty levels remain high going into 2012.

2011-12-20 The Three Scrooges by Team of Dana Investment Advisors

Lawmakers are lining up to play Ebenezer Scrooge in the seasons production of A Christmas Carol. The backdrop for this years production is energy and the key players trying for the lead role are the EPA (Environmental Protection Agency), the Department of Energy, and Congress. They are each doing their best to stifle energy development thereby keeping gas prices high and curtailing job growth.

2011-12-19 Emerging Markets: Yesterday, Today and Tomorrow by Mark Mobius of Franklin Templeton

Almost every market move these days seems to be tied to the latest headline coming from Europe. And the U.S. political deadlock on deficit reduction, high unemployment and fear of a recession hiding under the bed are certainly not helping investor morale. But dont throw in the towel just yet. While the ongoing turbulence in the markets has investors feeling more than a little edgy, the story of robust and resilient growth in emerging markets seems cause for optimism.

2011-12-19 When "Positive Surprises" Are Surprisingly Meaningless by John P. Hussman of Hussman Funds

How much importance should we put on the fact that economic data has delivered positive surprises in recent weeks? Don't all these surprises significantly short-circuit the risk of probable recession? As economist John Williams observes, "starting in October, a divergence developed: Whereas year-to-year change in BLS estimated payroll earnings continued at a more-or-less constant, positive level, tax receipts fell quite markedly. Where the Treasury numbers reflect full reporting, the BLS data are sampled..modeled and..revised...the BLS has overstated average earnings..in recent months."

2011-12-19 Pacific Basin Market Overview November 2011 by Team of Nomura Asset Management

In our assessment the market has already priced in the prospect of future earnings deterioration and credit risk spreads. Although we must be watchful for the possibility of a temporary future decline in share prices in the event that investors again become more risk averse, we believe an up-tick in investor sentiment will be enough to support a market rally. Cash levels at institutions are relatively high, valuations are very reasonable and investor sentiment is weak. Nevertheless, support for Asian markets could come from the fresh evidence that the U.S. economy has regained some momentum.

2011-12-19 Changing of the Guard: Do European and U.S. Debt Woes Signal a Shift in the Economic World Order? by Team of Emerald Asset Advisors

Industrialized nations in the West have enjoyed decades of economic prosperity and generous social safety nets. However, recent events have made it clear that shifting demographics and huge debt burdens will make it increasingly difficult, if not impossible, for many industrialized nations to maintain the same standard of living for their citizens. It seems that many formerly emerged economies are now on the verge of submerging. As citizens and political leaders in Europe and the U.S. slowly awaken to this reality, economies in many emerging markets are moving ahead at full steam.

2011-12-19 The Volcker RuleAn Exercise in Confusion by Milton Ezrati of Lord Abbett

This past October, a group of four regulatory bodies jointly released draft proposals of the so-called Volcker Rule. Part of the Dodd-Frank financial reform legislation set to go into effect this coming July 2012, this rule would forbid banks any substantial interest in either hedge funds or private equity firms and also prohibit banks from doing any proprietary trading on their own account in securities of any kind. Apart from the legitimate concerns and arguments on both sides, the most threatening and dangerous aspect is the debilitating lack of clarity.

2011-12-17 The Center Cannot Hold by John Mauldin of Millennium Wave Advisors

We'll leave aside the politics of the payroll tax extension and look at the economic implications, and then go on to examine the deficit in the US. That will give rise to some thoughts about Europe and what would have to happen for a country to leave the euro. We'll finally close with some thoughts and graphs about the more controversial part of the tax cut extension, the Keystone XL Pipeline. Just how radical is it to build such a pipeline in the US? And what are the implications for the deficit?

2011-12-16 Early Santa Arrival? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Stocks have continued their seesaw pattern around developments in the European debt crisis. The major indices remain in the wide range we've been in for the last two years. Factors are setting up for a potential break above that range in the coming year. Expectations about progress in Washington are extremely low and near-term the biggest issues are the proposed extensions of the payroll tax cut and unemployment insurance. The increasing populist rhetoric is not helpful and any chance of major debt-reducing legislation occurring before the 2012 election seems remote.

2011-12-16 Striking Portfolio Balance with Gold Stocks by Frank Holmes of U.S. Global Investors

Back on August 22, I wrote that gold was due for a correction and that it would be a non-event to see a 10 percent drop in gold. I wrote, This would actually be a healthy development for markets by shaking out the short-term speculators. This mornings gold price of $1,590 is about 15 percent from the high, which is a little greater than predicted, but a non-event just the same. I believe the long-term story remains on solid ground.

2011-12-13 Harnessing the Power of Momentum by Michael Nairne (Article)

A market phenomena that we can harness on behalf of our clients is momentum - the propensity for price trends to persist in the short-term. I examine the origins of momentum, illustrate its return premium and consider how managers can leverage momentum on behalf of investors.

2011-12-13 Euro Summit V More Sequels Than Rocky by Fred Copper of Columbia Management

The ongoing series of Euro summits continued on Friday with the fifth installation since the project began back in 2009. The good news is that those who make money off these productions set themselves up nicely for a long run of future sequels. The bad news is that market volatility is unlikely to abate anytime soon as more questions were raised than answered. Not to spoil the movie for those who havent seen it (or any of the four prequels) but little was resolved at Summit V al-though some important steps were taken on the path towards a future fiscal integration of the Euro Area (EA).

2011-12-13 You Can Bank on It: European Banks Need Tons of Money by Richard P. Mattione of GMO

The global economy has been one victim of the recent crisis of European sovereign debt, but Europes banking sector and the investors who have financed it will be the next. A great deal of pushing and shoving has forced European authorities to accept that there is a problem in their banking sector. Some are working hard to understand the problems and others see themselves as immune, though they probably are not; but all have been tempted to let political factors influence decisions that need to be based on sound economic and regulatory footings.

2011-12-12 Decoupling, American Style by Kristina Hooper of Allianz Global Investors

The loosening relationship between US and European economic growth and what it portends for US stocks and investors. Decoupling never seems to go out of vogue in America. Britney and K-Fed. Ashton and Demi. Arnold and Maria. Kris Humphries and a Kardashian. Elizabeth Taylor and just about everyone. But right now were seeing a differentand decidedly more positivekind of breakup: the US economy is decoupling from Europes economy. While strategists are increasing the odds that Europe goes into recession, they are decreasing the odds that the US will go into recession. And with good reason.

2011-12-12 Europe Crisis: Not Over Yet! by Komal Sri-Kumar of TCW Asset Management

On Friday European leaders completed their 14th or 15th crisis-related summit meeting since the beginning of 2010. Fitting a pattern, the results were termed a success by the leaders. Wolfgang Schuble told Focus magazine that he was certain that the leaders will be able to handle the debt crisis in Europe with the agreed, far-reaching measures on institutional reform of the European currency union. A close examination of factors behind the agreement suggests, however, that the decisions may end up being another band-aid solution to the still festering crisis.

2011-12-10 A Player to Be Named Later by John Mauldin of Millennium Wave Advisors

There are two main points to be taken away from this week's European summit. First, the Germans really took control. This has been coming for a long time, and it's not like we haven't discussed it in these letters. Second, Britain either opted out or was shown the door, depending on your point of view. That is the real game-changer, long-term, for more than the obvious reasons.

2011-12-09 Building Wisdom with Our Boots on the Ground by Frank Holmes of U.S. Global Investors

Analysts at U.S. Global Investors scrutinize research reports and study Bloomberg data to help our investment team gain first-mover advantage. Today, I asked research analyst and Shanghai-native Xian Liang to share how he combines analyses from third-party reports with boots-on-the-ground observations to find the best opportunities Asian markets have to offer.

2011-12-08 Will a Eurozone Recession Put a Damper on the World's Fragile Economic Recovery? by Team of Knowledge @ Wharton

If large parts of Europe fall into a recession, as many experts are predicting, it is likely to have negative, although varied, effects on economies around the world, including those -- like the United States -- that are struggling to recover from the global financial crisis. As European leaders hammer out yet another package of solutions this week, Wharton faculty weigh in on the impact of a eurozone recession, as well as the pros and cons of the recovery measures that are up for debate.

2011-12-07 4 Portfolio Moves for a Long-Term European Debt Crisis by Russ Koesterich of iShares Blog

In recent weeks, governments around the world have stepped up efforts to solve the European debt crisis. While Russ believes European leaders will address the outstanding issues in time to avoid a sovereign debt collapse, here are four investing ideas to consider if you expect the crisis to drag on. 1. Within your international equity exposure, overweight CASSH countries. 2. Within your international equity exposure, overweight emerging markets outside of Europe. 3.) Overweight safe-haven assets. And 4.) Within fixed income, overweight investment grade and munis.

2011-12-06 Sauta Clause by Jeffrey Saut of Raymond James Equity Research

December has been the best performing month of the year over the past 100 years with positive returns 73% of the time. And while last weeks 7.39% romp will likely not be duplicated quickly, the path of least resistance remains up according to our work. That said, while the DJIA bettered its 200-day moving average last week, the SPX and D-J Transportation Index did not. Consequently, a divergence currently exists that could lead to some sort of pause and/or pullback. Therefore, look for opening strength this morning followed by attempts to sell stocks back down.

2011-12-06 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The past few weeks have seen a rollercoaster ride for stocks. Despair over the European sovereign debt crisis has been replaced, for now, with optimism that the authorities there have finally decided to act. Both the Dow Jones Industrial Average and the NASDAQ Composite had stellar weeks. Both indices gained more than 7 percent for the week. Of course, this just reclaimed the losses from the previous couple of weeks, but the averages are once again positive for the year and given the level of pessimism and uncertainty supports our notion of just how undervalued this stock market is.

2011-12-06 What Are Investors Up To? by Chris Maxey of Fortigent

With markets ebbing and flowing and making it virtually impossible to differentiate up from down, it has become all the more difficult to determine what qualifies as an attractive investment. While equity markets rallied into the end of November, volatility remains well above its long-term average, causing most investors to question their equity allocations. It should come as no surprise, then, that individual investors are anything but confident in the latest rally. Macroeconomic headlines and excessive volatility are dampening even the most hardened investors faith in financial markets.

2011-12-06 Risky Moves Spark Quick Rally by John Browne of Euro Pacific Capital

In order to win for itself as many economic cards as possible, we can expect Germany to continue playing economic brinksmanship. The high stakes game will continue creating extreme market volatility. Various bodies such as the Fed, ECB, EU, IMF and G-20 likely will continue to issue calming statements to cover a building crisis of confidence in paper currencies and sovereign debt. Meanwhile, greatly increased liquidity threatens high future inflation. In such an environment, precious metals remain a hedge against inflation and a form of insurance against possible catastrophe.

2011-12-06 Evaluating Optimum Currency Areas: The U.S. versus Europe by Ben Emons of PIMCO

While economic integration has progressed materially since the inception of the EMU, the U.S. scores much higher in terms of labor productivity, labor mobility and wage flexibility. Research shows that wage rigidity-defined as wage freezes or cuts as a fraction of total workers-is much lower in the U.S. than the eurozone. Eliminating these rigidities is crucial for the eurozones growth as an optimum currency area. Albeit painful, the intensity of the debt crisis in Europe may force a quicker progress of reform implementation, which could be a competitive advantage for the EMU in the future.

2011-12-05 Timber: Favorite of the Big Money by Douglas Clark Johnson of Codexa Capital

Retirement funds, life insurers, and other major institutional investors with a long-term view have been high-profile investors in timber. The benefits the asset class brings to portfolio composition include low correlation with more conventional asset classes, as well as the renewable nature of the investment.

2011-12-05 Solid Improvement by Charles Lieberman of Advisors Capital Management

The latest employment report showed significant improvement. Job growth is still not strong enough, but the gains are sufficient for the expansion to continue without faltering, as long as the financial crisis in Europe is addressed. And finally, it appears that the Europeans are closer to resolving their debt issues.

2011-12-03 December Monthly Economic Update by Justin Anderson of Cambridge Advisors

While the improving domestic economic picture seems to be pointing to continued slow growth, the markets are focused on Europe as they continue the tumultuous process of finding a resolution to their debt crisis. Until a long-term solution is found, we will likely continue to experience above average market volatility. In this environment we continue to favor a diversified mix of asset classes with an emphasis on yield.

2011-12-03 Schwab Market Perspective: Short-term PainLong-term Gain? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Markets have been under pressure as the crisis in Europe has recently intensified, providing the impetus for more aggressive action and an eventual resolution, including this week's coordinated central bank actions. Economic data in the United States continues to be largely better than expected. The supercommittee failed to come to a deficit reduction agreement. While markets expressed initial disappointment, their failure may end up being beneficial as it forces spending restraint. As the euro crisis has deepened, some steps have been taken but mostly address liquidity, not solvency.

2011-12-02 Beware the Falling Euro by Bill Gross of PIMCO

Neither the U.S. economy nor U.S. stock indexes will benefit from the euros decline. A declining euro means a rising dollar in relative terms, so our exports will necessarily become less competitive. During the Great Depression, the country that devalued its currency the quickest and the most was the country that was least affected by depression and that recovered the fastest. This truism will aid Euroland, and hinder the U.S. recovery.

2011-12-02 Indian Logistics Chug Along by Siddharth Bhargava of Matthews Asia

In February, Indian officials addressed infrastructure issues with proposed policy reforms to create infrastructure debt funds, boost development with tax-free bonds and increase investment levels for foreign institutions. While these measures are steps in the right direction, the question remains over whether they will actually go the distance.

2011-12-02 Are Stars Aligned for a Year-End Rally? by Frank Holmes of U.S. Global Investors

Correlations will decrease along with volatility as we get more clarity on the eurozone crisis and see signs of stability in the global economy. Volatility fell this week, with the CBOE Volatility Index (VIX) declining 20 percent. This could be related to the news that November U.S unemployment unexpectedly dropped to 8.6 percent, U.S. auto sales in November were the strongest in more than two years, and preliminary data on holiday retail sales appears to be strong. According to Bloomberg News, Black Friday sales hit a record high this year, with consumers spending $11.4 billion.

2011-12-01 Return of the Comandante's Gold by Frank Holmes of U.S. Global Investors

Back in August, we discussed the precarious proclamation that Venezuelan President Hugo Chavez was shipping his countrys gold reserves home for safekeeping. On Friday, we learned Chavezs chosen transportation method for Operation Gold was through the air after the first shipments arrived to much fanfare in Venezuela. Some believe Chavezs announcement of Operation Gold was a catalyst for the August run up in gold prices, but there is no way to be sure. However, the impact could be significant if other countries employ a similar strategy.

2011-12-01 Betting on Macau by Mark Mobius of Franklin Templeton

Macaus lifeblood is the casinos. Its quite astounding to consider that Macaus 2010 gaming revenue was four times that of Las Vegas, making it the worlds top casino market. Macau casinos are expecting 2011 gaming revenues of $34 billion whereas Las Vegas anticipating revenues of $6 billion. The potential for Macau looks good to us, however, casinos in Singaporeare providing stiff competition, now represent the worlds second-largest gaming market. In addition, Singapore casinos enjoy a lower tax on gaming revenues. However, we still think Macauis a solid prospect for good investment.

2011-11-30 The European Crisis and Global Investing by Team of Neuberger Berman

The sovereign debt crisis in Europe has placed persistent pressure on global equity markets since first emerging as a problem in Greece in the first half of 2010 and quickly spreading to Ireland, Portugal, Spain and Italy. In a recent panel discussion, moderated by Investment Strategist Leah Modigliani, Benjamin Segal, portfolio manager and head of the Global Equity team, and Tony Gleason, portfolio manager for the MLG Group, discussed the turmoil in Europe, prospects for global growth, and some potential areas of opportunity. We share their thoughts below.

2011-11-29 Is 2012 Destined to be a Repeat OF 2008 for Banks? by Chris Maxey of Fortigent

Mounting concerns in Europe and the failure of Congress supercommittee weighed on investor sentiment during the holiday-shortened week. As expected, the congressional supercommittee failed to negotiate a $1.2 trillion deficit reduction by Wednesdays deadline. The move triggers automatic cuts to the federal budget starting as early as this year. Near-term effects are mostly in the form of program non-renewals for example, the expiration of 99-week unemployment benefits, the payroll tax cut, and other Recovery Act stimulus.

2011-11-29 Assessing Bank Strength Down Under by Russ Koesterich of iShares Blog

Australias strong banking sector is one reason the country is expected to grow faster than larger developed markets. In the 1990s, the Australian government adopted whats called the Four Pillars policy, which prohibits the four big Australian banks from merging or acquiring each other. In this post Russ explains how the countrys Four Pillars policy has helped fuel Aussie banks strength.

2011-11-29 Playing \'What If?\' with Oil Prices and a Potential Strike on Iranian Nuclear Facilities by Greg E. Sharenow of PIMCO

The impact of a major disruption in the supply of oil from Iran would depend on the IEAs intervention, the duration and the degree to which any attack might be a surprise. The market has less cushion than it did earlier this year due to production outages and relatively strong non-OECD demand, leading to sharp draws on inventories. Excess capacity is virtually exhausted and we doubt other OPEC nations would be able to compensate for a reduction in Iranian oil production. In light of these possible price spikes, investors should evaluate how their portfolios might be affected by inflation.

2011-11-28 Are Corporate Balance Sheets Really the Strongest in History? by John P. Hussman of Hussman Funds

At an aggregate level, corporate balance sheets look reasonable, but are certainly not "stronger than they have ever been in history." Cash levels are elevated, but this is at best a second-order factor (with excess cash representing only a few percent of total assets), while debt remains near record levels relative to total assets and net worth.

2011-11-28 The Upshot: In Thanksgiving by Kristina Hooper of Allianz Global Investors

Despite a turkey performance from the stock market last week, U.S. investors still have a lot to be thankful for, namely a doubling of corporate profits in the last three years, improved labor market conditions and surprisingly strong consumer spending.

2011-11-26 With Rising Wages, Will China Remain a Manufacturing Hub? by Frank Holmes of U.S. Global Investors

In 2010, countries such as Hong Kong, Japan, South Korea and Germany depended on China for data processing, apparel, and iron and steel exports. Chinas largest import partners in 2010 were Japan, South Korea, the U.S., Germany and Australia. For those companies not already doing business in China, theres one dominant factor that shows they should start: the vast domestic market. Companies may be able to find a cheaper workforce in Bangladesh, India or Sri Lanka, but being located in China allows convenient access to what is rapidly becoming the worlds largest consumer market.

2011-11-25 Changing the Rules in the Middle of the Game by John Mauldin of Millennium Wave Advisors

Angela Merkel is leading the call for a rule change, a rewiring of the basic treaty that binds the EU. But is it both too much and too late? The market action suggests that time is indeed running out, and so well look at the likely consequences. Then I glance over the other way and take notice of news out of China that may be of import.

2011-11-23 The Case for CASSH by Russ Koesterich of iShares Blog

Not all developed markets are stuck in a slow-growth environment. Certain smaller developed countries what Russ is calling the CASSH countries appear fundamentally stronger than their larger counterparts. Five countries (Canada, Australia, Singapore, Switzerland and Hong Kong) are likely to hold up much better in the long term than their larger neighbors.

2011-11-22 Morningstar’s Attempt to Predict Performance by Robert Huebscher (Article)

Few question that skillful mutual fund managers exist, but virtually all attempts to identify them ex ante have failed. Last week, Morningstar took up the challenge with its Analyst Ratings, which aim to identify funds with the 'long-term potential for superior risk-adjusted performance.' Given the futility of such efforts over the last several decades, advisors should approach this new effort with skepticism.

2011-11-22 Crafting a Country Call by Russ Koesterich of iShares Blog

For nearly a year, Russ has made weekly investment calls about markets across the globe. Heres a quick look at the macroeconomic approach behind his country views and a summary of where his calls now stand. Generally underweight in countries where prevailing macroeconomic conditions cannot explain high or expensive valuations, and he is typically overweight in countries where prevailing macroeconomic conditions cannot explain low or inexpensive valuations.

2011-11-22 The Domestic Economy Keeps Fighting for Growth by Chris Maxey of Fortigent

It is a shortened week due to the Thanksgiving holiday in the US, but that does not mean investors should tune out. The market will turn its sights on the governments super committee, which is looking less than super. The committee looks like it will not meet its target deadline of November 23, which will likely have negative implications for financial markets. The committee was supposed to find spending cuts that would reduce the deficit by $1.2 trillion over the next decade.

2011-11-21 No Direction Home by Christian Thwaites of Sentinel Investments

The conceit of Ancient Rome: In Imperial Rome, roads out of the city marked only the distance from the city, not to anywhere. All that counted was how far or near you were from it. The ECB adopts a similar centricity: all that matters is to keep prices stable. Nothing else. Which is why euro bonds continue to retreat with Italy and Spain hitting the 7% club for their 10-year paper. Unemployment can remain at 10% for three years. Growth can slow to 0.2%. But while inflation stays above the 2% target, all bets are off to ease the pain.

2011-11-21 No Direction Home by Christian Thwaites of Sentinel Investments

The conceit of Ancient Rome: In Imperial Rome, roads out of the city marked only the distance from the city, not to anywhere. All that counted was how far or near you were from it. The ECB adopts a similar centricity: all that matters is to keep prices stable. Nothing else. Which is why euro bonds continue to retreat with Italy and Spain hitting the 7% club for their 10-year paper. Unemployment can remain at 10% for three years. Growth can slow to 0.2%. But while inflation stays above the 2% target, all bets are off to ease the pain.

2011-11-19 Print or Perish by John Mauldin of Millennium Wave Advisors

I do not think the euro will survive with the current mix of countries, nor do I think that Germany thinks so either. Greece is likely to go, as is Portugal. Can Spain really get its deficit under control in time? Do we see a two-euro world, one in the northern states and one in the southern? And to which one does France go? Looking at the politics, one might think the answer is obvious, but if you just look at the numbers, it is clearly not. France is in many respects a Mediterranean country. So many choices and none of them good.

2011-11-18 The Anatomy of Global Economic Uncertainty by Mohamed A. El-Erian of Project Syndicate

The sense of uncertainty prevailing in the West is palpable, and rightly so. People are worried about their futures, with a record number now fearing that their children may end up worse off than them. Unfortunately, things will become even more unsettling in the months ahead.

2011-11-18 Coping with Uncertainty by Elizabeth Dong of Matthews Asia

During my recent trip to Beijing, I found the city to be bustling as usual with people and energy, and on the surface, the economy seemed just as robust as it did during my last several visits. But this time I did sense a slight erosion of confidence under all the visible activity. Among executives at small- and medium-size companies I detected uncertainty caused by the slow progress in global economic recovery and the need for change to cope with it.

2011-11-18 Getting Granular with Emerging Markets by Russ Koesterich of iShares Blog

Given todays volatile world, it may be time for investors to adopt a more nuanced approach to investing in emerging markets. Rather than using the traditional frameworks such as emerging markets versus developed markets Im advocating that investors consider creating their international allocation on a country or regional basis. Here are two reasons why.

2011-11-18 The Gold Triple Play - Volatility, Currencies and Europe by Frank Holmes of U.S. Global Investors

Resurgent investment lifted global gold demand 6 percent from the previous year to just over 1,000 tons during the third quarter of 2011, according to the latest Gold Demand Trends Report from the World Gold Council (WGC). The potent cocktail of inflationary pressures in the emerging world and the European sovereign debt fiasco left investors searching for a safe haventhey looked for it in gold.

2011-11-17 European Respite Allows Fundamental Scrutiny of Economy by Matt Lloyd of Advisors Asset Management

An interesting week of economic data has allowed the slight respite from the European soap opera to push a more fundamental scrutiny of the economy. The two-day heavy release reveals quite a few of positive surprises, even if they are slight. In Q1 we grew at 0.4%, the Q2 at 1.3% and the non-revised number for the Q3 is at 2.5%. This growth is in light of the acceleration of the European situation that started in July and should have impacted the domestic GDP growth rate. However, we saw just the opposite due to the relative strength of the Euro compared to the U.S. dollar.

2011-11-17 U.S. Earnings Update by Joseph S. Tanious of J.P. Morgan Funds

As 3rd quarter earnings season winds down, more than 90% of the S&P 500 market cap has reported, and it appears were headed for another quarter of record-breaking results. However, whats even more impressive is the revenue growth weve observed across all 10 S&P 500 sectors. The index is currently tracking revenue growth of roughly 13% year-over-year, a clear indicator earnings have been boosted by more than cost cutting. To be sure, margins have also widened out, which has helped fuel earnings growth over the past two years, something well touch on in more detail in the coming pages.

2011-11-16 As Alternative Investments Move into the Mainstream, Advisors and Investors Need to Choose Wisely by Team of Emerald Asset Advisors

We believe that having a piece of an overall portfolio that is committed to liquid alternatives is a critical component to long-term portfolio stability, capital preservation and growth. No one wants a repeat of 2008, or anything close to it. There are an abundance of liquid alternative choices available, some of which have proven themselves through various market cycles and environments. They have gone from Wall Street to Main Street for good reason. Embrace the opportunity, and you and your clients may just sleep a bit better at night during these volatile times.

2011-11-16 It Ain't Over Till It's OverAnd Thats Not Happening Soon by Team of Guild Investment Management

Dont expect the current crisis of budgetary deficits and spending restraints to stop any time soon. Instead, think in these realistic terms: the era of fiscal restraint and spending limits has come, and will be with us for ten to twenty more years. It is obvious to veteran observers that Europe and America are facing hard choices that will result in slow growth and increased suffering for the people. And for that we have our incompetent legislators past and present to thank. They have misused their mandates, grossly exceeded their budgets, and are loath to correct wayward behaviors.

2011-11-15 Michael Aronstein on Today's Key Macro Trends by Robert Huebscher (Article)

Michael Aronstein is the president and chief executive officer of Marketfield Asset Management. Since its inception in 2008, his fund has returned 31% while the S&P has been down 15%. I spoke with him about the key macroeconomic and strategic issues facing investors today.

2011-11-15 It's All Greek to Me by Michael Lewitt (Article)

As one who has written that there is little chance of a long-term solution to Europe's problems without a radical rethinking of global economic policy, the Europeans still have little choice once they peer over the cliff to realize other than to step back and buy some time before taking the inevitable leap. For, in the end, they have no other options than to jump.

2011-11-15 Capital Flows: Asias Quiet Revolution by Gerald Hwang of Matthews Asia

As markets evolve, so do regulations. The reflexive rebuke of capital controls once voiced by Western regulators has given way to a more flexible approach in times of extreme volatility. Asias regulators have observed the efficacy of volatility-dampening measures, and thus far, appear to have avoided the worst excesses. As fears continue over diminishing U.S. dollar power, Asias bonds remain attractive diversifiers for their yields and good credit ratings. However, one should never forget the volatile history of currencies in Asia.

2011-11-15 An Endgame for Japans Debt? by Bryce Fegley of Saturna Capital

The Japanese government's ability to extract itself from two decades of runaway debt has become all the more challenging in the face of its shrinking tax base, rising interest payments, and social security obligations, not to mention the aftermath of its earthquake, tsunami, and nuclear disasters. The recent precedent of the country's dysfunctional political system does not bode well for making tough choices necessary to stabilize the debt. Of the possible consequences of the runaway debt, eventual monetization, high inflation, and currency devaluation are the most likely outcomes.

2011-11-15 Why US Equities Look Expensive, but Japan Does Not by Russ Koesterich of iShares Blog

Im downgrading my view of US equities to neutral from overweight. Since I first initiated an overweight on US stocks last December, large cap US equities have outperformed global equities by roughly 5%. The US has recently become marginally more expensive relative to other countries at the same time that its growth prospects have worsened. Im upgrading my view of Japanese stocks to overweight from neutral given Japans low valuations, better growth prospects and stable risk. This is a value call. Japan currently trades at under book value, down from 1.11 times book value 6 months ago.

2011-11-15 In a World Dependent on Crude, is Natural Gas the Savior? by Chris Maxey of Fortigent

It will be a busy week in the US with reports on inflation, retail sales, industrial production and housing starts. Inflationary pressure is likely to show further signs of easing in October, particularly as food costs continue to stabilize. Retail sales were quite strong in September, but gains for October are expected to be more muted. Earnings season is winding down, with quarterly reports expected from UniCredit, Dell, Home Depot, Walmart, Target, Vivendi, Dollar Tree and Gap. The only major central bank to meet this week is the Bank of Japan, which is unlikely to change rates.

2011-11-14 Improving Recovery Prospects by Charles Lieberman of Advisors Capital Management

Europe is moving slowly towards resolving its financial issues, but the performance of the domestic economy is looking significantly better. A domestically originated recession is looking ever more unlikely. Europe may take a while to resolve its financial and budget issues, but the adverse effect of a recession in Europe, even a severe one, on our domestic economy should be negligible. So while tremors from Europes financial turmoil may disrupt our market temporarily, they are unlikely to derail our expansion. This suggests that the equity market should continue its recent recovery.

2011-11-14 Colditz and the Trevi Fountain by Christian Thwaites of Sentinel Investments

Bottom Line: Keeping volatility down. Raising cash and using the trading opportunities in bonds. Trimming international especially Europe; DAX is 11% off October lows; but sentiment is very negative. This bond rally is all about the need to cover much higher margins on repos for European and Italian bonds but could have more to go.

2011-11-14 The European Stutter Step by Milton Ezrati of Lord Abbett

Markets have shown a mixed response to Europes agreement on sovereign debt. On the positive side, Germany, France, European banks, and other members of the eurozone have shown more direction, control, cooperation, and concerted action than previously, and in so doing, have taken a step to avoid panic and what could easily have become a global financial meltdown. But still, Europe and, consequently, the rest of the world remain far from out of the woods. This latest step is inadequate. To get a grip on the crisis, the ECB will need to add its financial resources.

2011-11-14 The Upshot: Fear vs. Fundamentals by Kristina Hooper of Allianz Global Investors

There is continued disparity between investor moods and a healthy corporate America. A vicious tug-of-war between positive economic data and negative news formed the backdrop for another tumultuous week in the financial markets. The tiebreaker was a more optimistic take on Europes ability to solve its debt problems, which enabled stocks to finish the week on a positive note with the S&P 500 gaining less than 1%. Looking at the stock market's progress so far in 2011, it has been a similar tale: volatility with little to show for it. The S&P 500 is up a modest 0.5% year to date.

2011-11-14 Pacific Basin Market Overview October 2011 by Team of Nomura Asset Management

The Japanese equity market ended the month of October almost unchanged. Concerns about Europes sovereign debt crisis and a slowdown in the global economy initially sent the index sliding to a new year-to-date low at the outset. Subsequently, the Japanese stock market rebounded along with a steady retreat from the excessive investor pessimism surrounding overseas economic conditions. Positive U.S. economic indicators, including unexpectedly strong employment figures, housing data and solid GDP growth, boosted market confidence.

2011-11-12 Where is the ECB Printing Press? by John Mauldin of Millennium Wave Advisors

There is too much debt in many southern countries; France is not far from having its own crisis if they do not get back into balance. And if they lose their AAA rating, then any EFSF solution is just so much bad paper. The path of least resistance, and I use that term guardedly, is for the ECB to find its printing press. Perhaps they can borrow one from Bernanke.

2011-11-11 The Beginning of the End of Fiat Money by John Browne of Euro Pacific Capital

Last week, the G-20 meetings did not produce an expanded bailout fund for the eurozone. While this may bode well for the long-term solvency of the member-states (moral hazard and all), it has also triggered a market reaction that I expect to help destabilize the common currency. Yesterday's market moves suggested that this development is good for the dollar and bad for gold. Allow me to step back from the stampeding herd to evaluate whether they are, in fact, moving in the right direction.

2011-11-11 The Many Factors Fueling a Return to $100 Oil by Frank Holmes of U.S. Global Investors

The IEA says trends on both the oil demand and supply sides maintain pressure on prices. We assume the average IEA crude oil import price remains high, approaching $120 per barrel (in 2010 dollars) in 2035 (over $210 per barrel in nominal terms). Thats a distant projection but it certainly illustrates why you should consider investing a portion of your wealth in oil.

2011-11-09 Seasick: Hanging on the Rail by Cliff W. Draughn of Excelsia Investment Advisors

For the past 22 months the question has lingered: when will Greece default? The markets are beginning to learn from the prior three Euro-crises what to expect from European policymakers. In the end it will be what Germany wants, as they are seemingly content to amputate the leg of Greece six inches at a time. Even prior to this past weekends summit, German Chancellor Merkel complimented now former Prime Minister Papandreou for stepping down but implored the new Greek policymakers to carry out the Brussels decisions completely and immediately.

2011-11-08 An International Perspective on Safe Withdrawal Rates by Wade Pfau (Article)

Prospective retirees must consider whether they are comfortable basing retirement decisions on the impressive but perhaps anomalous numbers found in historical US data. What has been safe for US retirees in the past has been far less secure for their foreign counterparts.

2011-11-08 Ignore Egan-Jones at Your Peril by Niels C. Jensen of Absolute Return Partners

The ink on the Greek rescue agreement has barely dried, and the feeling in financial markets is sombre yet again. However, investors have changed their focus away from Greece towards Italy - a change which could prove disastrous for the eurozone given the size of the Italian bond market. In this edition of The Absolute Return Letter we take a closer look at Italy's refinancing needs and suggest corporate bonds as an alternative to government bonds.

2011-11-05 Fund Manager Interview by Nick Robinson of Aberdeen Asset Management

The popular perception of Latin America as a region of weak political systems and economies is changing. Prudent fiscal and monetary policies have helped many countries stabilize their economies. The region came through the recent credit crisis relatively unscathed. Good-quality companies trading at attractive valuations can be found in the region. A local presence helps bolster our research.

2011-11-05 Where Will the Jobs Come From? by John Mauldin of Millennium Wave Advisors

What is the role of government in creating jobs? To answer that, let's look at the data that shows us where jobs come from. And we find that net new jobs for the last 15 years came from new business start-ups. Big business is a net drag on job creation, and small businesses are a wash. Governments have seen job growth, but where does the money come to pay government employees?

2011-11-04 Buyer's Remorse by Hardy Zhu of Matthews Asia

Autumn has traditionally been a strong season for housing sales in China, and September and October are usually dubbed the golden and silver months. But press reports this year have called September copper and October iron in light of sagging sales figures. Sales dropped 49% over last year in the 14 major cities it tracks. Transaction volume in many major cities retreated even further. Due to weak sales and tighter loan quotas from banks, many developers have lowered prices in attempts to expedite sales. In Shanghai, prices for some units have declined 20% to 40%.

2011-11-03 Poland's Power Play for Energy by Frank Holmes of U.S. Global Investors

Poland is setting the stage to become a rising player in the European natural gas market. Europe has long been reliant on Russia for its supply of natural gas, but domestic discoveries of shale gas might soon catapult Poland to the forefront of the energy landscape. Morgan Stanley cites several reasons for Polands likely success: a large resource base, gas pricing that is almost twice the pricing of the U.S., a developed gas market, and political support that welcomes foreign firms and hydraulic fracking permits compared to other countries in Europe.

2011-11-02 Born in the USA: A Look at What Could Go Right by Liz Ann Sonders of Charles Schwab

The expectations bar has probably been set low enough to be easily hurdled as the big market rally may be indicating. Not only is recession risk fading in the near term, a very positive longer-term story is emerging, even though very few are in tune (yet). Investors have gotten used to digesting worst-case scenarios maybe it's time to ask what could go right.

2011-11-02 Breathing Space in an Unhealthy Environment by Mark Burgess of Columbia Management

Within Europe, while breathing space has been achieved, the outlook is still very clouded. The crisis has highlighted the eurozones structural flaws; how does the system work without fiscal and political integration? Achieving this is going to be very difficult and may ultimately lead to a smaller eurozone. Whatever the politicians think about closer integration, winning public support is going to be impossible for many governments. According to reports, for Greece, even with the 50% debt haircut, they are still forecast to have net debt to GDP of 120% by 2020, not exactly sound finances!

2011-11-01 The Danger in European Stocks by Geoff Considine, Ph.D. (Article)

European equity prices, depressed by fears of a sovereign debt crisis, are cheap to such a degree that William Bernstein, author of The Intelligent Asset Allocator, called them a true bargain. Income-oriented investors, in particular, may be tempted by 4.2% dividend yields and a market-wide P/E ratio of approximately 11. My analysis, however, contradicts Bernstein's and shows the underlying risk those investments carry.

2011-10-31 Financial Market Update & Outlook by Jonathan E. Lederer of Lederer Private Wealth Management

In this volatile environment, I consider preservation of capital to be a higher priority than speculation and am inclined to remain defensive until valuations appear more attractive. I strongly believe that we will see better opportunities in 2012 as the markets start to better reflect the global economic situation and the inevitable reduction in corporate earnings estimates. Though we run the risk of getting left behind if this rally turns into a longer-term bull market, it is a risk that Im comfortable taking in light of the global macroeconomic backdrop.

2011-10-31 U.S.China Trade: More Than a Game of Chicken by Milton Ezrati of Lord Abbett

Now that the U.S. Senate has fired what might be the first salvo in a trade war with China, investors, already beset by a host of uncertainties, must consider anotherpossibly the most dangerous of all. If Congress can label China a currency manipulator, then tariffs aimed at China become likely, as does Chinese retaliation in a pattern that would hurt world trade, growth prospects in both countries, and asset values on both sides of the ocean and beyond. The Senates recent vote is still a ways from legislation, but the dangers here are so profound they demand a consideration.

2011-10-29 Missing the Forest for the Trees? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Earnings season was good and economic data in the US has improved. Robust growth is unlikely in the near future, but the economy is improving. Investors appear to be unconvinced that the picture may be brightening. Inflation continues to run higher than we'd like to see but sustainable price gains are unlikely. The Fed continues to be extremely accommodating. Italy has the potential to be a much bigger problem than Greece. A tentative agreement has been reached for Europe, but hopes for a true long-term solution remain thin. China is likely to suffer no worse than a soft landing.

2011-10-29 European Summit: A Plan with No Details by John Mauldin of Millennium Wave Advisors

The market reacted like yesterdays announcement was the Second Coming of the Solution to End All Solutions. But if you look deeply there is more to the market "melt-up" than simple euphoria and relief. What you find is a very disturbing unintended consequence that will come back to haunt us. The finger points to derivatives and credit default swaps. This week, we look at gamma and delta and other odd entities that may be behind the real reason for the market response, as we march inexorably toward the final chapters of the Endgame.

2011-10-28 U.S. Corporate Third Quarter Profits Looking GoodSo Far by Monty Guild and Tony Danaher of Guild Investment Management

The events of the past few days have proved our case that more QE will be coming. In Europe, they will not let their banking system fail and will provide the necessary liquidity to backstop their banks. They can either nationalize banks or recapitalize the banking system with new capital from several countries. The bottom line is that liquidity will be added and central banks balance sheets will expand. Growing use of QE is bullish in the short to intermediate term for stocks in the U.S. and emerging markets, and it is bullish for gold, oil, wheat, and the currencies we have recommended.

2011-10-28 Et tu, Berlusconi? The Daunting (But Not Always Insuperable) Arithmetic of Sovereign Debt by Rich Mattione of GMO

This paper sets itself two tasks. The first is to construct a simple model that would arithmeticize the dynamics of sovereign debt so as not to get hung up with all of the acronyms and programs designed to save the world. The second is to put this into the context of the European sovereign debt problem and hazard some opinions as to which options can work, and which cannot. Grand solutions may yet come, but they probably will not come soon enough. Now is the time to separate the daunting from the insuperable, and to fix both sets of nations.

2011-10-27 FPA Crescent Fund Q3 2011 by Steven Romick of First Pacific Advisors

An unresolved European sovereign and financial dilemma, in concert with a U.S. economy thats been a disappointment compared to the once-rosy projections of most economists, caused global markets to retreat in the third quarter. Crescent declined as well, but it fell 30% less than the U.S. market for the quarter and 40% less in the year-to-date period. The U.S. markets actually fared quite favorably and Crescent more favorably still when viewed in context of the global financial upheaval.

2011-10-27 Greek Bondholders at a Loss by Michael Finger of Euro Pacific Capital

In a best case scenario, Western governments increasingly accept that creative destruction is a part of capitalism that bad debts must be liquidated fully, honestly, and quickly to make room for new growth. In the more likely scenario, the EU's structural divide keeps it walking a middle road between bailouts and default of its weaker members, while the US refuses to accept reality until it risks becoming the largest sovereign collapse in history. Let's hope laissez-faire prevails, but invest like we know better.

2011-10-27 Salami Tactics by Andrew Bosomworth of PIMCO

Repeated attempts to solve the eurozone's sovereign crisis have failed, reflecting a coordination problem among its fiscal authorities and between the ECB and governments. Markets will not return to supporting the eurozone as it stands, signaling the EMU's leaders to choose one of two solutions: downsize to a smaller, stronger group of countries or adopt a federation with political and fiscal union. A comprehensive solution not only needs the right tools in place, but also requires a credible commitment with regard to sequencing and executing the long-term plan.

2011-10-25 How a Trivial Oversight Created a Big Problem by Dan Richards (Article)

Over 25 years working with advisors, I've learned that while you need to get the big things right, small issues are often much more important than they appear on the surface. Last week I met with a 25-year industry veteran who told me about a big price he paid for a seemingly minor oversight.

2011-10-25 ASEANHow Different is it This Time? by Kenneth Lowe of Matthews Asia

ASEAN nations have recently seen increases in foreign ownership, and many show attractive demographics and the potential for strong economic growth. But with ASEAN nations having been a root cause and major casualty of crises past, investors may be asking: How sustainable is this? This month Kenneth Lowe, CFA, takes a look at how ASEAN got where it is today, and what challenges may still lie ahead.

2011-10-25 On Mexicos Shores by Kate Jaquet of Seafarer Capital

Investors must exercise caution when approaching Mexico. The countrys fiscal position appears to be eroding, and this may induce greater dependence on inflows of foreign capital to cover the deficit; and this in turn may make the peso more volatile. However, with scant few safe havens left and as the flights to quality and liquidity continue across the financial markets, I am optimistic that industrial production in Mexico will be a bright spot in the emerging markets in the coming years.

2011-10-25 Time to Put Your Shades On by Pamela Rosenau of HighTower Advisors

The paradox of the stock market is that higher prices attract buyers, while lower prices attract sellers. This herd-like behavior is confirmed by peers and exaggerated even more now by social media outlets. The most important thing to acknowledge in these markets is to be tactical and buy on weakness. In our current yield starved environment, I have focused on growth and income (two such scarce resources these days) in both dividend paying large cap stocks and energy infrastructure MLPs.

2011-10-24 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Earnings season rolls along as Citigroup, Wells Fargo, and Bank of America hope to send some positive messages from banking (that JP Morgan was unable to dodont hold your breath). IBM and Intel give investors a glimpse into the world of tech. A hectic week on the economic calendar leaves investor hoping to see a continuation of the rebound in manufacturing (from the post-Japan earthquake doldrums) and good news on the inflation front. The Fed Beige book grants another look into the data debated by the policymakers as investors speculate about future stimuli.

2011-10-24 Greeks May Look North by John Browne of Euro Pacific Capital

If the citizens of Greece follow the Icelandic lead, a larger sovereign debt crisis will likely follow. In such a scenario all fiat currencies will likely suffer. However, those considerations will merit little concern from those throwing Molotov cocktails on the streets of Athens. In the end, Greek politicians will cater to their constituencies rather than their creditors. We should all prepare for that.

2011-10-21 Global Equity OutlookFourth Quarter 2011 by Team of American Century Investments

In this edition of Weekly Market Update, presents the teams outlook for global equity markets, based on the latest research and discussions with companies from industries and countries across the economy and the globe. The team focuses on individual security selection, building portfolios from the bottom up, rather than making top-down judgments about the economy. In their view, economic trends matter to the extent that they relate to corporate earnings power. As a result, the outlook focuses on corporate earnings and other areas they deem important to successful global equity investing.

2011-10-21 3rd Quarter Commentary by Chuck Akre of Akre Capital Management

For almost two years now we have commented on the ideas of slower growth, the constrained consumer, high unemployment, and federal government deficit issues as reasons to remain cautious with our allocation of capital. During this time we have held higher than average amounts of cash and made opportunistic purchases along the way. As we look back to a December 2009 interview with Maria Bartiromo on CNBC, we suggested that the market was on a sugar high and that we were in a period in which it was prudent to be cautious. It seems the sugar high has subsided and reality has set in.

2011-10-21 Postcard from China by Sherry Zhang of Matthews Asia

While companies throughout China are dealing with the pressure of rising inflation and tightening macroeconomic policies, many are cautiously optimistic about continued (albeit moderated) growth. In addition, more and more are seeing a domestic focus on that growth, and the development and maturity of the local restaurant industry is one example. Chinas food services industry is estimated at US$350 billion and growing. Although the industry is still highly fragmented, more restaurant chains are being launched to deliver consistent, high quality and safe foods.

2011-10-20 U.S. Large Cap Value Market Commentary by Rick Helm of Cohen & Steers

Our outlook for the U.S. economy remains cautious in the face of Europes possible slide back into recession and slowing growth in China. Conflicting economic data are likely to persist and contribute to market volatility. On a positive note, earnings remain decent and dividend payers are well positioned to raise payouts, which should attract investors, as yield is becoming a favored strategy. However, stock buybacks have become a competing use for excess cash once again, as evidenced by Berkshire Hathaways announcement.

2011-10-20 International Real Estate by Global Real Estate Team of Cohen & Steers

We would like to share with you our review and outlook for the international real estate securities markets as of September 30, 2011. International real estate securities fell sharply in the third quarter, along with equities broadly, as risk factors escalated. All major regions had double-digit declines amid slowing growth in the U.S. and China and intensified concerns regarding Europes sovereign debt problem.

2011-10-20 Making the (Credit) Grade in Emerging Markets by Russ Koesterich of iShares Blog

While emerging markets are not without their share of macroeconomic problems, they are not experiencing the same sovereign debt problems as their developed market neighbors. In fact, the worlds sovereign debt problems are centered in developed markets such as Europe, the United States and Japan. Ive already mentioned this as a fact supporting emerging market equities. Its even more supportive of emerging market fixed income.

2011-10-19 Fixed Income Investment Outlook by Team of Osterweis Capital Management

We continue to favor short-term high yield securities.While the high yield market has generally been under pressure due to fears of lower economic growth, lower gross domestic product growth does not necessarily translate into weaker credit fundamentals. In light of all the uncertainty in the market, we have generally reduced our exposure to convertible bonds and have continued to favor bonds with high coupons that we think are likely to be refinanced before maturity.In addition we are keeping some cash on the sidelines so that we are in a good position to buy as future opportunities arise.

2011-10-19 Welcome to the Machine: High-Frequency Trading Domination by Liz Ann Sonders of Charles Schwab

Market volatility has spiked, starting with 2010's flash crash and culminating in this year's wild August, bringing asset-class correlations up with it. High-frequency trading and the use of leveraged exchange-traded funds (ETFs) are the primary culprits, but the impact isn't all bad. What are regulators doing and saying about the phenomenon?

2011-10-19 Five Policy Prescriptions for Europe by Tom Fahey of Loomis Sayles

The European sovereign debt crisis is chronic. It can not be resolved until countries can demonstrate the ability to grow and improve their budget deficits. The immediate need is to stop Europe from hemorrhaging risk into the global financial markets. That can only be done by the ECB because it is Europes most effective and high profile euro-area institution and the banking systems only lender of last resort. Until the ECB steps up to commit sufficient liquidity, the overall septic conditions of European risk will likely continue to infect the global capital markets.

2011-10-19 Get It Right Already, Apple Had an Awesome Quarter by Chuck Carnevale of F.A.S.T. Graphs

Any way you slice it, Apple booked a great quarter. You can even say an awesome quarter. 99.9% of every publically traded company would give its proverbial right arm for a quarter like Apple had. Apple stock should not be down on this news, it should be up. In fact, based on their incredible past, present and future earnings power we believe that Apple is extremely undervalued. In our opinion, Apples numbers support a better valuation than the market is currently awarding it, based on the fundamentals behind this great technology stock.

2011-10-19 Pacific Basin Market Overview September 2011 by Team of Nomura Asset Management

Europes inability to find a solution for its current fiscal problems and the weakening macroeconomic outlook sent equity markets into a downward spiral during the July-September quarter. In Asia, concerns about the risk of a hard landing in China resurfaced as well. All country and regional indices declined, with the MSCI AC Asia Pacific Free Index including Japan and the MSCI AC Asia Pacific ex Japan Free Index declining 16.35% and 21.28%, respectively, for the quarter. In the short term, the rush to raise cash could lead to further declines in markets

2011-10-19 Middle East/Africa: Economic Review September 2011 by Team of Thomas White International

The MENA region continues to grapple with instability in the aftermath of the Arab Spring uprisings. The draining of public finances, elevated levels of inflation and high rates of unemployment seem to paint an unfavorable picture for the region in the short term. According to the IMF World Economic Outlook report, inflation in the region is expected to average around 7 percent in 2011 and 10 percent in 2012. In addition, the report noted the adverse impact of weaker growth in the United States and Europe on commodity prices, foreign investments and economic activity.

2011-10-19 Emerging Europe: Economic Review September 2011 by Team of Thomas White International

A leading economic sentiment indicator for the Central and Eastern European region recorded its lowest reading in more than two and a half years amid an uncertain outlook for the region and the continuing debt crisis in the Euro-zone, according to a news report published in Bloomberg. Europes failure to find a way out of the debt crisis amid a slowing global economy has clouded the outlook for the whole Eastern European region, which is dependent on exports for much of its growth. Hungary recorded the biggest fall in economic expectations, then Poland, according to the Bloomberg report.

2011-10-19 Developed Europe: Economic Review September 2011 by Team of Thomas White International

With the world anxiously watching, Developed Europe battled against its sovereign debt problems on several fronts all through September. Investors became increasingly concerned as the month progressed because Euro-zone leaders delayed making a decision on paying Greece the next installment of its bailout package, despite the beleaguered country declaring that it would run out of money by mid-October without the aid tranche. News reports from the region indicated that the installment was being delayed to pressure Greece into speeding up crucial structural reforms.

2011-10-19 Emerging Asia Pacific: Economic Review September 2011 by Team of Thomas White International

After battling inflation for over a year, many emerging Asia Pacific economies are now facing challenges over stimulating growth. A year of persistent monetary tightening in emerging Asia Pacific has unfortunately coincided with slowing growth prospects in the developed world. The U.S. and the European Union are the largest trading partners for many export-dependent emerging Asian economies like South Korea, Taiwan and even China. With economic growth slowing in the U.S. and the European Union, many emerging Asian nations are rightly worried about their export prospects.

2011-10-19 Americas: Economic Review September 2011 by Team of Thomas White International

Financial markets faced significant volatility as the global economic outlook weakened and concerns about the European crisis worsened. Markets in the Americas region were also affected by the erosion in investor confidence, though the developed markets in the region fared relatively better. Latin American currencies saw steep falls against the U.S. dollar, as the weaker economic outlook is expected to force the central banks to cut interest rates in the future, potentially reducing the relative attractiveness of these markets to global investors.

2011-10-19 Global Overview: October 2011 by Team of Thomas White International

Global financial markets have partly recovered from Septembers extensive price declines, helped by hopes of stability in the Euro-zone and moderately better economic data from major countries, including the U.S. Volatility in the currency markets has also eased somewhat after last months steep fall in international currencies against the U.S. dollar. Commodity prices have seen similar trends as well, though concerns about global demand persist. Monetary policy in major economies has seen significant shifts over the last month, as central banks have lowered their economic outlook.

2011-10-18 Bob Doll: Why the US is Positioned Strongly by BlackRock (Article)

Investor unease has risen dramatically over the past quarter in the face of growing concerns about the world's economic and financial health. The focal point has been the intensifying debt crisis in Europe. The issues facing Europe are highly complex, but essentially are underscored by a single question: Is Europe facing a solvency crisis or a liquidity crisis?

2011-10-15 Can 'It' Happen Here? by John Mauldin of Millennium Wave Advisors

The beginning of the end of the Weimar Republic was some 89 years ago this week. There is a stream of opinion that the US is headed for the same type of end. How else can it be, given that we owe some $75-80 trillion dollars in the coming years, over 5 times current GDP and growing every year? Remember the good old days of about 5-6 years ago (if memory serves me correctly) when it was only $50 trillion? With a nod to Bernankes helicopter speech, where he detailed how the Fed could prevent deflation, I ask the opposite question, Can it (hyperinflation) really happen here?

2011-10-14 Most of the 10 Best Performing Dow Jones Industrial Stocks are Great Buys Today by Chuck Carnevale of F.A.S.T. Graphs

When people refer to what the stock market is doing, they are more often than not speaking about the Dow Jones Industrial average. This leading index of 30 high profile stocks serves as a proxy for the overall health of both the economy and the stock market. We have long held that thinking in generalities can be harmful. When dealing with averages the numbers we associate with it represent an average of the whole group. It's important to remember, that the individual companies or components can have materially different results and even attributes than what we glean from the average itself.

2011-10-14 Europe Moving In The Right Direction by Monty Guild and Tony Danaher of Guild Investment Management

The rally in European and world stock markets that began on October 5th appears to be continuing for several practical reasons. Many stocks just got too cheap. Europes policymakers have expressed language the markets want to hear. Ans Chancellor Merkel and President Sarkozy have given the world reason to believe that Europe will gradually implement a comprehensive program to recapitalize European banks. The combination of these factors has made us feel more constructive about markets. Don't forget gold, our advice continues to be buy the dips and take some profits on spikes.

2011-10-14 Postcard from Taiwan by Lydia So of Matthews Asia

On the surface of things, Taiwan indeed seems dwarfed by the glamour of some of its Asian counterparts. However, encouraging changes have been taking place since President Ma Yung-Jeou took office in 2008. These have included more relaxed restrictions on investments into China by Taiwanese companies, direct flights from China and, more recently, approved travel among individuals from China. In 2010, 1.6 million mainland Chinese tourists visited Taiwan, compared to just 81,000 in 2007. In related travel improvements, I was also encouraged to see ongoing renovations to the airport terminal.

2011-10-14 Will the Micro Matter? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Q3 earnings season is in full swing and it will be modestly positive after numerous reductions of expectations due largely to economic concerns. The US will avoid a dip into recession and, for now, the data seems to support that view. The yield curve has flattened since the announcement of Operation Twist but mortgage applications have yet to jump and companies continue to cite concern over governmental policies for their continued caution. The EU debt crisis has had some positive movement, providing some hope to the market, but concern is growing over the state of the Chinese economy.

2011-10-14 Case Study: Buyouts Crystallize Value in the Market by Frank Holmes of U.S. Global Investors

Theres value in the market. Thats the message the market is sending through the recent strategic acquisitions in the energy and gold mining spaces. This week it was announced that Sinopec, a large Chinese oil and gas company, is purchasing Canadian energy company Daylight Energy for $2.1 billion in cash. The deal was struck at a whopping 120 percent premium to Daylights share price prior to the announcement and a 43.6 percent premium over the 60-day weighted average price, according to Reuters.

2011-10-14 Fall 2011 Quarterly Commentary by Alan T. Beimfohr and John G. Prichard of Knightsbridge Asset Management

We are left with depressed equity valuation in the US and Europe. Stocks are not supposed to be this cheap in the face of interest rates and inflation this low. In fact, stocks have tended to trade at more like 20 times earnings in the context of todays 2% inflation and 2% ten year Treasury yields, roughly 50% higher than todays valuation. Alan Greenspans Fed Model, which compares forward earnings yield (inverse of P/E) to 10 year Treasury yields, suggests US stocks are the most compelling vs. Treasuries in over fifty years.

2011-10-13 Our Fixed Income Macro OutlookFourth Quarter 2011 by Team of American Century Investments

Our economic outlook has become a bit more defensive and cautious, compared with earlier this year. After improvement last year, economic conditions have slowed. In particular, the financial sector has come under renewed pressure from the European sovereign debt crisis and continued housing market stagnation. It remains to be seen if this slowing is transitory or more significant. Both the consumer and business sectors have experienced slowing. But a subpar recovery with headwinds remains our projected most-likely scenario, not a recession.

2011-10-13 Pointing Fingers: Can Europe and the U.S. Work Together to Solve the Financial Crisis? by Team of Knowledge @ Wharton

Even as U.S. officials and investors watch Europe struggle to shore up its financial system and avert another shock to the global economy, signs of a subtle transatlantic "blame game" have surfaced. Experts from Wharton and elsewhere note that although there are no immediate answers to the mounting crisis -- and its impact on capital markets in the U.S. -- it's clear that any finger pointing needs to be replaced by a sense of urgency and mutual cooperation before solutions can be found.

2011-10-13 Boomer Demographics: The Shift Ahead by Doug Short of Advisor Perspectives (dshort.com)

I looked at developments in U.S. demographics from 1980 to the present with a focus on the Boomer bulge. Then I examined current day demographics for several major countries around the globe. I've developed a set of population pyramids for the U.S. that start with 1981 and span7 decades at 10-year intervals using the U.S. Census Bureau data. Let's look at some comparative numbers for these seven snapshots. I've calculated the Elderly Dependency Ratios for each. As this ratio shifts higher, the productive population is increasingly burdened by the cost of entitlement programs.

2011-10-12 ​Repeating the Future by Neel Kashkari of PIMCO

For long-term investors, meaning those prepared to stay invested for three, five and even 10 years, who can endure volatility, we believe equities can offer attractive returns. In an extended period of slow economic growth and deleveraging, interest rates are likely to remain low. Actual income generation from investments is important. Hopefully society can institutionalize the lessons from this crisis so that future generations dont repeat it: Individuals, corporations and countries should only borrow to fund long-term investment, not current consumption.​

2011-10-12 Quarterly Review and Outlook by Team of Hoisington Investment Management

Negative economic growth will probably be registered in the U.S. during the fourth quarter of 2011, and in subsequent quarters in 2012. Though partially caused by monetary and fiscal actions and excessive indebtedness, this contraction has been further aggravated by three current cyclical developments: a) declining productivity, b) elevated inventory investment, and c) contracting real wage income.

2011-10-11 Thomas Friedman's View of the Future of the US by Michael Edesess (Article)

Andy Rooney once said, 'It's just amazing how long this country has been going to hell without ever having got there.' Our country's roughly 30-year march to perdition is the subject of Thomas Friedman's and Michael Mandelbaum's new book, That Used to Be Us. Rooney may still be right, though - the authors identify, albeit not all that convincingly, a path to salvation.

2011-10-10 Talking Points for the "Occupy Wall Street" Protesters by John P. Hussman of Hussman Funds

The proper way to address the present economic imbalances is pursue policies that encourage the restructuring of bad debt, the allocation of public funds and private savings to productive investment and new research, the accumulation of education and labor skills ("human capital") to allow workers to capture a greater share of their own productivity, and the continuation of social safety nets to ease the economic adjustments that are necessary in a deleveraging economy. In my view this requires a number of steps which not everyone will like.

2011-10-08 An Irish Haircut by John Mauldin of Millennium Wave Advisors

But here is the issue for Europe. The amount of money needed for Ireland is going to be a lot more than they now think, or at least are willing to admit. When Eurozone politicians worry about 'contagion,' or one country wanting the debt relief that another country gets, it is a very real worry. And rightfully so, as voters in Portugal or Spain or (gasp) Italy who are burdened by debt that is seemingly intractable will also want relief. It is not just an Irish condition, it is a human trait.

2011-10-07 Market Turmoil by Richard Michaud of New Frontier Advisors

A promising market expansion was stilled by ugly politics in Washington and Brussels. While both domestic and European crises were largely political rather than economic, the consequences rattled investor confidence in capital values worldwide. As in the U.S., agency issues are the root cause of the European debt crisis. The U.S. subprime mortgage crisis resulted from agents paid to issue mortgages without considering the ability of borrowers to pay back the loans. Similarly, European bank agents ignored the default risk of euro-based Greek government.

2011-10-07 Fiddling While the Euro Burns by John Browne of Euro Pacific Capital

Last week, eurozone finance ministers postponed, the most difficult decisions on the Greek debt crisis. The assembled powers could have forced an orderly Greek default or they could have taken steps to push Greece out of the union. Instead, they simply bought time until the next major rollover of Greek debt-which comes due in November. Much of the prevarication can be attributed to political disagreement in Germany, where some see the current crisis not only as a means to further European unification, but also as an opportunity to extend German influence throughout the continent.

2011-10-07 Corporate Bond Transparency Report by Chris Shayne of BondDesk Group

The equity market turmoil impacted yields for retail corporate bonds as expected, but the effect was not consistent across rating grades. Yields for 2nd tier investment grade (A, BBB) bonds increased substantially, while upper tier (AAA, AA) were largely unchanged. This was a continuation of the trend established in August.

2011-10-05 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

A fixation with tangible metals is both forward looking as well as reflective melancholy. Because the price of commodities had risen in the past, people might expect it to do so again. In the case of commodities trends lose their appeal when everyone already knows that the valuations have become inflated. In todays case we have been in a twelve year commodities price expansion. While some might try to eke out the last few cycles of profit within that trend, others wonder how much greedier can the trend enthusiasts be. There are no linear cycles that last forever and no free lunches.

2011-10-04 Jeffrey Gundlach: Preparing for the Coming Crisis by Katie Southwick (Article)

Speaking at a luncheon in New York last week, Jeffrey Gundlach, the founder and chief investment officer of DoubleLine Capital, gave investors advice on how to survive pending crises at home and abroad. After outlining the current state of U.S. debt and tax policy, Gundlach advised against European investments, favoring the U.S. dollar and owning U.S. government bonds as a hedge against credit.

2011-10-04 Currency: The Hidden Portfolio Risk by Peter Schiff of Euro Pacific Capital

In the spirit of sharing our favorite dollar-alternatives, I recently sat down with Axel Merk, founder and president of Merk Investments, who is a well-known authority in the international currency arena today. That conversation resulted in a new report, entitled Peter Schiff's and Axel Merk's Five Favorite Currencies for the Next Five Years, which is now available for free download. In a world where gold is in the quadruple-digits and the S&P has downgraded US debt, we both feel it's high time every American consider diversifying his or her portfolio to mitigate currency risk.

2011-10-04 Markets Warned of Impending Recession by Chris Maxey of Fortigent

In the latest week, economic data was mixed, but news on consumer income and spending raised concerns over the health of the all-important consumer sector. Even worse, a growing number of economists are highlighting the possibility of recession. One organization, the ECRI, went as far as declaring that recession was unavoidable and warned, theres nothing policy makers can do to head it off. Such dire forecasts do nothing to bolster economic or market confidence. The ECRI has accurately predicted prior recessions, including the most recent one in 2008.

2011-10-03 Forecasts, Confidence and Facts by Brian S. Wesbury and Robert Stein of First Trust Advisors

When fearing recession, investors can rely on three different sets of information forecasts, confidence and facts. These days, forecasts and confidence are both very negative. Recession fears have been on the rise. But, the facts dont back up all these fears. The economy is not contracting. Fear overlooks these facts and fear has driven stock prices to undervalued levels. When the facts win and thats what we expect equity markets will get over the fear and move significantly higher.

2011-10-01 Tough Choices, Big Opportunities by John Mauldin of Millennium Wave Advisors

There is a pattern, and the United States is no different than Greece or Ireland or Italy or Japan or any other country in history. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! confidence collapses, lenders disappear, and a crisis hits. There's a limit to how much the bond market is going to let us borrow. As we approach that limit and we're not there yet, we have time, thank God we can make choices about how we want to deal with the problem. But the problem is too much debt and too high a deficit.

2011-09-30 Commodities and Conservation in the Caspian by Mark Mobius of Franklin Templeton

What country is the worlds largest producer of petroleum? No, its not Saudi Arabia but Russia. Oil and gas are important to Russias economy, as are a whole host of natural resources such as nickel, palladium, diamonds, etc. Because of what have been higher commodity prices, Russias economy is growing at a fast pace, projected by IMF to grow 4.3% this year, interest rates have come down from their peak in 2008, unemployment is lower, foreign reserves have risen to over US$500 billion as at July 2011, and Russian equity markets have generally done well since 2008, even considering declines.

2011-09-30 Schwab Market Perspective: Perception vs. Reality by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic data continues to reveal sluggish activity, and markets have been increasingly trading in a risk-on, risk-off mode. The Fed continues to try to stimulate greater economic growth, most recently with the announcement of operation twist. We have serious doubts this will engender any broad upturn. We continue to look toward Washington to move beyond short-term rhetoric and provide some serious long-term plans that allow businesses to have more confidence in the future. European policymakers continue to delay any real action, increasing the risks of an escalation of the debt crisis.

2011-09-29 European Banks Under Pressure by Team of American Century Investments

On the surface, the European banking sectors status in the fixed-income markets should be on the upswing. The Basel III Accord strengthened capital requirements for banks and also set stricter guidelines for liquidity and debt. Helping reduce the risk profile of the banking sector, and this would normally be attractive to fixed-income investors. However, bond investors have had the opposite reaction, shunning the bonds of European banks in recent months. The gap between bank bonds and government bonds recently rose to levels not seen since the height of the 2008 Financial Crisis.

2011-09-29 Grease (Greece) is the Word by Bill Smead of Smead Capital Management

You might think that the countries in Europe like Portugal, Ireland, Greece and Spain are the source of the current consternation in the US stock market. We believe that Europe is peripheral to the core issue. American investors have spent the last ten years falling in love with the BRIC trade and feeding an infatuation with the global synchronized economy and the emerging consensus surrounding global stocks/bonds. In our opinion, it is time to go back to conventionality and leave the BRIC trade before its time is gone and investors put their capital back in motion.

2011-09-29 PIMCO Cyclical Outlook: Growth Risks, Policy Polarization and Rethinking Returns by Saumil H. Parikh of PIMCO

Over the next 12 to 18 months, we expect the global economy to expand at a very modest real rate of 1% to 1.5% Global imbalances have continued to rise in the post financial crisis environment, global leaders continue to fail in their policy coordination efforts, and deleveraging and reregulation continue to be critical over the course of our cyclical horizon. We are transitioning into a world where we believe the incentives of policymakers and the divisiveness of politics will become the predominant drivers of investment returns and economics.

2011-09-28 Fed Extends Maturities by Kathy A. Jones and Rob Williams of Charles Schwab

Fed Notes-The TwistObservations and takeaways on the Fed's two day meeting this week. Bank Bondsplus Extraordinary Calls on Trust Preferred SecuritiesWe elaborate on factors affecting the banking sector. Obama Bill Questions Exemption on Muni bondsOur view on one piece of the job proposal presented by the Obama administration. Liquidity- Ignore at Your PerilWe highlight some reasons why liquidity, especially in volatile markets, is an important investment factor.

2011-09-28 The Latest (Secret) Rescue Plan For Europe by Gary D. Halbert of ProFutures Investments

Europe is preparing to go down a similar path as the US took in 2008 huge bailouts and a possible Euro-TARP to restructure its ailing banks. I hope it turns out better for Europe, but I am not optimistic. The possibility of a controlled default by Greece on 50% of its debt has numerous potentially disturbing ramifications. For example, what does that mean for Ireland and Portugal? Or Spain and Italy for that matter? Think unintended consequences. All of this suggests that October could be another very rough environment for the global equities markets. Keep your seatbelts fastened!

2011-09-27 When Greece Defaults by Keith Goddard (Article)

The Greek default is indeed inevitable, but there remain two possible ways the world may learn about it, and financial markets will react very differently depending on which of these two processes for default occurs.

2011-09-27 Do Low Correlations Favor Active Managers? by FundQuest Investment Management & Research Group (Article)

There has been much debate regarding the challenges for active managers in market environments with persistently high correlations. Some argue that high correlations hinder active managers seeking to generate alpha through security selection. Indeed, in a recent study, we found that active managers were more likely to succeed in low-correlation environments.

2011-09-27 Markets Struggle to Reconcile Macro and Micro by Chris Maxey of Fortigent

It was a difficult week from a number of standpoints, not the least of which was the growing number of downside risks that rose to the surface. A broad number of financial markets broke down this week, including copper, the Hang Seng and precious metals. Struggles in those markets came from any multitude of reasons, including the acknowledgement of slower growth ahead from the International Monetary Fund and the US Federal Reserve.

2011-09-27 And Thats The Week That Was by Ron Brounes of Brounes & Associates

As finance ministers gather to put Humpty Dumpty together again, Prez O hopes more concrete measures are taken; the contagion is already occurring as other economies are suffering from the global crisis of confidence. Domestically, investors get more manufacturing news that will hopefully show a bounce-back from the Japan disaster-related downturn. Consumer-related data could indicate whether retailers have any hope for the future holiday season. Politicos are sure to bicker; Fed watchers continue to question; and investors remain uncertain. So what else is new?

2011-09-27 And Thats The Week That Was by Ron Brounes of Brounes & Associates

As finance ministers gather to put Humpty Dumpty together again, Prez O hopes more concrete measures are taken; the contagion is already occurring as other economies are suffering from the global crisis of confidence. Domestically, investors get more manufacturing news that will hopefully show a bounce-back from the Japan disaster-related downturn. Consumer-related data could indicate whether retailers have any hope for the future holiday season. Politicos are sure to bicker; Fed watchers continue to question; and investors remain uncertain. So what else is new?

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.

2011-09-26 Reflections and Outrage by Bob Rodriguez of First Pacific Advisors

Here is address given at the 2009 Morningstar conference which has just as much relevance now as it did then. Last years performance was a terrible one for the market averages as well as for mutual fund active portfolio managers. It did not matter the style, asset class or geographic region. We managers did not deliver the goods and we must explain why. In letters to shareholder will this failure be chalked up to bad luck, an inability to identify a changing governmental environment or to some other excuse? We owe them more than simple platitudes, if we expect to regain their confidence.

2011-09-24 Catastrophic Success by John Mauldin of Millennium Wave Advisors

Rick Perry touched the third rail of Social Security and called it a Ponzi scheme, which of course immediately made him the leading candidate in the shoot the messenger category. Behind the rhetoric, I look at some actual numbers. Not the unfunded liabilities, thats too easy. Lets look at what a heartless, uncompassionate man President Roosevelt was when he started Social Security. And of course, we must start off with the results of the FOMC meeting, which has me feeling not at all amused. What are they thinking? Apparently, they are seeing the results from another, alternative universe.

2011-09-23 Turkey Gets an Upgrade by Frank Holmes of U.S. Global Investors

The IMF offered a sober assessment of the global economy this week when it released the September 2011 update of its World Economic Outlook. The IMF stated the global economy is in a dangerous new phase, citing two main downside risks: The possibility the crisis in the eurozone will be too much for the regions policymakers to handle, and soft economic activity in the U.S. is due to a weak housing market, deteriorating financial conditions and a political impasse regarding fiscal consolidation. Accordingly, the IMF cut its projections for global growth to 4 percent through 2012.

2011-09-23 Extreme Moves Leave Markets in Rare Territory by Frank Holmes of U.S. Global Investors

Many investors have used gold and other commodities as a haven from recent volatility, buoying prices while equities sunk, but even those investments werent immune to the wave of selling. The U.S. dollar, in contrast, was up 2.2 percent. Much of the dollars rally came after the Fed announced the creatively named Operation Twist. The Fed will sell $400 billion of short-term securities and buy an equal amount of long-term debt. The goal is to push down long-term interest rates, which would spur economic activity.

2011-09-22 Talking Our Way to Recession! by David Edwards of Heron Financial Group

The Europeans do not yet have a political structure for engineering a rescue, and that will be the over-hang in Europe. They will figure it out - eventually. The risk remains whether Italy, Spain, Portugal, Ireland will require equivalent rescues. The largest unknown risk is: of all the banks and hedge funds that sold Credit Default Swaps on Greek bonds, do any have enough capital to pay off their exposure. Remember that the US Treasury directed $62 billion to AIG to cover CDS exposure at that firm in 2009. We doubt that the European central banks are prepared to do the same.

2011-09-22 World Running Low on its by Frank Holmes of U.S. Global Investors

Did you know that Chinas energy demand is set to grow so dramatically over the next 25 years that its consumption is expected to be 68 percent higher than that of the U.S.? That was only one of the findings of the U.S. Energy Information Administration (EIA). In its new International Energy Outlook 2011, the EIA reports that throughout the world, energy consumption is expected to rise by 53 percent from 2008 through 2035 driven by robust economic growth and expanding populations in the developing countries.

2011-09-22 Dividends: Paid To Wait and Poised to Rally by Mike Boyle of Advisors Asset Management

There are myriad clichs that capital market participants and commentators like to call on from time-to-time to help soothe the pain or illustrate the potential for gain. One that we believe applies on almost any given day concerning dividend paying stocks is, paid to wait. However, there are certain times, like now, when we think we can add the addendum, and poised to rally. We have been discussing for quite some time that we thought the U.S. equity markets were attractive based on current valuations and earnings growth (both current and projected), and that is still the case.

2011-09-21 Liquidity Crisis? A Currency Perspective by Axel Merk of Merk Funds

In 2008, the global financial system faced a potential meltdown when funding seized up for investment banks, ultimately leading to the failure of Lehmann Brothers. Three years on, we have got plenty of problems, but as we shall argue - investors may want to differentiate between a financial meltdown and insolvency. While complaining about policy makers and bankers may generate animated water cooler discussions, lets take their human (and fallible) nature as a given, and discuss implications for investors. In this context, we assess the U.S. dollar, currencies and equities.

2011-09-20 Point & Counterpoint: Value vs. Growth by Kendall J. Anderson of Anderson Griggs

The debate over which investment philosophy is best will continue with winners promoting their own style and losers rationalizing their losses. Value vs. Growth. In 1996 the now defunct Mutual Funds Magazine invited me to contribute my thoughts in this ongoing debate in a featured article titled Speaking Out. The case for growth would be argued by John D. Gillespie. Since the debate between Value and Growth has continued to this day I am providing you, word for word, our Point and Counterpoint.

2011-09-20 Europe!? by David Kelly of J.P. Morgan Funds

Investors might wonder why global markets care so much about European debt. After all, relative to the size of their economies, both the U.S. and Japan run bigger annual budget deficits and have accumulated more government debt than the Euro Zone as a whole. The answer lies in the fact that Europe is now too integrated to be immune to the problems in any one nation, but still too divided to do anything effective to deal with them. Because of this, a very serious budget problem in one nation can undermine confidence in government debt and the banking system across the entire continent.

2011-09-19 Pacific Basin Market Overview August 2011 by Team of Nomura Asset Management

The global economic environment seems to be deteriorating rapidly. European economies are increasingly weighed down by the de-leveraging of the peripheral countries, while confidence in the U.S. is being sapped by the political paralysis in Washington. As a result, we have significantly downgraded our economic forecasts. For the U.S. economy, we are now predicting 2.0% real growth for 2012. However, we still believe that a double dip recession can be avoided.

2011-09-19 Diogenes in the Barrel by Christian Thwaites of Sentinel Investments

Its a good time to sit tight and stay with cash. Its not uncertainty. We can live with that. Its the certainty of temporary impasse. Heres why. When Europe gets it wrong it gets it really wrong. The cycle of tighter budgets, lower growth, higher deficits and higher bond yields is so manifest that you would think some coordinated policy response would be front and center. Not a bit of it. Greece is fast approaching the point where a declining economy cannot support debt repayments. It does not matter if the country embraces frugality or not. There is simply not enough juice to pay off debt.

2011-09-16 China as an Asset Class by Henry Zhang and Robert Horrocks of Matthews Asia

China's economic expansion over the last 30 years has allowed many enterprises to prosper. For a number of investors, Chinese stocks have also grown in importance. As modern capital markets have taken root in China, stock markets have become one of the primary channels for companies to raise capital. While China's capital market is still early in its development and has its own risks and challenges, the country is expected to continue to grow and increasingly influence world economies. For a variety of reasons, we believe China is emerging as an investment asset class in its own right.

2011-09-16 Libya: Reconfiguring National Wealth by Douglas Clark Johnson of Codexa Capital

In Libya, economic redevelopment, understanding tribalism, and economic diversification may be more relevant to a cross section of global commercial interests, than ongoing dissection of oil production, however important that sector may be to funding reconstruction efforts.

2011-09-16 Fall 2011 Market Review by Owen Murray of Horizon Advisors

After the volatility in the capital markets over the past few weeks, it is easy to forget that the market was just a hair from its 52-week high as recently as July. Then, a flurry of events has made the once happy days of spring feel like a distant memory. With the debt ceiling debate going into the eleventh hour, Standard and Poors announcing a debt downgrade, and the euro-zone debt crisis seemingly reaching a crescendo, confidence has been severely impacted and concerns over the durability of our recovery have been raised.

2011-09-16 The Bottom Line #5 by Paul Azeff and Kory Bobrow of Euro Pacific Capital

Today marks the third anniversary of the death of Lehman Brothers, not the first, nor the last, bank or broker-dealer to require emergency meetings of exalted officials to take place over a weekend, but it is the only one that resulted in a complete loss for shareholders and significant losses for bondholders. Whether you see this as the example of the officials getting it right or stunningly wrong really depends on where you sit, and it should color your perspective on everything that has occurred since.

2011-09-16 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Housing numbers highlight the data of the week so dont expect much positive news on the economic front. The Fed holds its policy meeting and the jury is still out over how the debate will unfold. Some investors seem to want stimulus for stimulus sake. The Fed could extend maturities on its government portfolio; it could reduce the interest paid to banks for holding excess cash in reserves. Such measures could prove more symbolic than anything. On the other hand, some Fed watchers warn of unforeseen consequences and believe it is time to let capitalism rule the day.

2011-09-16 Is the End Near for the Eurozone? by Team of Knowledge @ Wharton

Warning signs are flashing red. Bond markets are projecting a 98% chance of default on Greece's debt. Stock prices for French banks, heavily invested in that debt, have plunged 10% in recent days. Has the European debt crisis hit the breaking point, with Greece -- and perhaps others -- soon to exit the eurozone? Or, will officials once more cobble together new agreements that keep Greece in the club and prevent a huge contagion effect likely to cripple an already slowing global economy? Wharton finance professors Franklin Allen and Bulent Gultekin offer their insight.

2011-09-16 Perfect Storm Creates Tidal Wave of Gold Demand by Frank Holmes of U.S. Global Investors

In the East, gold is not only celebrated, acquired, worn or displayed during holidays or special occasions; it is seen as an everyday symbol of wealth. Increases in demand from China and India have driven a 7.5 percent increase in demand for gold jewelry during the first half of the year despite a 25 percent increase in the price, according to a report released this week from GFMS. However, much of Indias potential gold demand remains untapped.

2011-09-15 More of the Same by Bob Rodriguez of First Pacific Advisors

What would it take for me to shift to a more optimistic longer term outlook? First, there should be a discussion and then implementation of real and substantive congressional budgetary reforms that have a standing in law. Without this change, a future congress can overturn any of the expenditure cuts that are voted on today but are not implemented until much later. With a congressional approval rating of 13%, the American public should demand nothing less because the Congress cannot be trusted. Both parties are equally responsible for the fiscal mess the nation faces.

2011-09-13 The Risks of Exchange-Traded Products by Dennis Gibb (Article)

Every major financial crisis has been foretold by timely but ultimately ignored warnings. At the end of mania, the rush to secure more fees, investment performance and status trumps common sense. In the last few months, the drumbeats of warnings from financial journals and regulators about exchange-traded funds have been sounding. Few seem to be listening.

2011-09-13 A Response to 'A Winning Endgame' by Guy Cumbie (Article)

A Winning Endgame, Robert Huebscher's review of John Mauldin's book Endgame, made some highly problematic claims about our energy usage. Moreover, Huebscher's claim is unfounded that an energy policy, such as the cap-and-trade policy he recommended, is the right step toward solving our economic crisis.

2011-09-13 The End of the Line: Eurozone Crisis Hits Tipping Point by Liz Ann Sonders & Michelle Gibley of Charles Schwab

The growing likelihood of debt default by Greece rocks markets and sentiment. Although the banking system is healthier today than it was in 2008, contagion risks are elevated. The grand experiment of a unified currency in Europe is facing its greatest test yet.

2011-09-10 China Fears Much Ado About Nothing by Frank Holmes of U.S. Global Investors

There are many questions surrounding the global market but the Chinese economy remains headed toward the moon. The country, of course, remains vulnerable to external forces but we believe the economys strong momentum will be enough to carry the country through, should volatile times persist.

2011-09-10 Preparing for a Credit Crisis by John Mauldin of Millennium Wave Advisors

This week we turn our eyes first to Europe and then the US, and ask about the possibility of a yet another credit crisis along the lines of late 2008. I then outline a few steps you might want to consider now rather than waiting until the middle of a crisis. It is possible we can avoid one but whether we do depends on the political leaders of the developed world making the difficult choices and doing what is necessary. And in either case, there are some areas of investing you clearly want to avoid. Finally, I turn to the weather and offer you a window into the coming seasons.

2011-09-09 Americas: Economic Review August 2011 by Team of Thomas White International

While markets have calmed after the anxiety caused by S&Ps downgrade of U.S. debt, economic indicators for most countries in the Americas region remain subdued. 2nd quarter growth declined for most countries and full year forecasts are being revised lower. The subdued global growth outlook has dulled the prospect for continued growth in export earnings while consumer spending in some of the larger economies is increasingly being restrained by higher interest rates and the heightened economic uncertainties. Nevertheless, inflationary risks have declined, except most notably in Brazil.

2011-09-09 Examining Systemic Risk in the Banking System by Team of Litman Gregory

When we spoke over two years ago, we discussed credit default swaps as speculative derivative instruments, the risks these presented to the financial system, and the need to better mitigate these risks. Can you comment on the progress the industry has made in reducing the systemic risk they pose to the financial system and talk about the risks they continue to pose? Derivatives, as such, were never entirely the problem. But, in some senses, they were symptomatic of a much deeper problemwhich is why we had created a system that was highly leveraged, highly complex, and highly networked.

2011-09-09 Merk sells Euro to buy Australian Dollar by Axel Merk of Merk Funds

Given that many know Merk Investments as "euro bulls", arguing that the euro can thrive despite all the turmoil in the Eurozone, we wanted to share with our investors and the public that in our hard currency strategy, currently with over $700 million in assets, we sold over U.S. $90 million worth of euros late Thursday to re-allocate to the Australian dollar. This re-allocation was an acceleration of a recent trend to deploy euro holdings elsewhere. The strategy is now underweight in euros. Our move was motivated by recent European Central Bank (ECB) and U.S. Federal Reserve communication.

2011-09-09 Brazil and Chile | One for Now, One to Watch by Russ Koesterich of iShares Blog

Earlier this month, as part of my changed view of emerging markets. I initiated an overweight view of Brazil and noted that I am paying close attention to Chile. As promised, here are more of my thoughts regarding these two emerging market countries.There are a number of reasons why I like Brazil. First, from a valuation standpoint, Brazil looks attractive relative to both its own history and to other MSCI ACWI countries. I am not yet establishing an overweight view of countries in Latin America beyond Brazil, but I am watching Chile closely.

2011-09-09 Schwab Market Perspective: What's Next? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

The economic debate continues between the recession and slow growth camps. We lean toward the latter but the argument may be just splitting hairs. The more important issue is what this sideways movement may mean for the market and jobs growth. There seems to be more disagreement among Fed members than we've ever publicly seen. Theyve laid out potential further stimulus but we believe their effects are likely to be limited. The European crisis continues to fester and some hard choices may need to be made sooner rather than later. Slowing European economies however, could help emerging markets.

2011-09-08 The Transfer Payment Paradox by Russ Koesterich of iShares Blog

You dont have to be a fan of profligate government spending to recognize the enormous paradox the United States faces in getting its economic and fiscal houses in order. The US economy is driven largely by consumptionroughly 70% of GDP comes from personal consumption. A large and growing percentage of that consumption is dependent on federal transfer paymentsdirect government payments to individuals. Yet as the US tries to get its deficit under control, these payments could be cut. That in turn could have a significant impact on disposable income and economic growth.

2011-09-08 The Changing Landscape of Global Investing by Mohamed A. El-Erian of PIMCO

National and global realignments are fundamentally and durably changing the global investment landscape. Investors face the challenge of recalibrating some of the traditional parameters that are key to managing risk and delivering returns. There are also implications for investment management firms which are yet to be sufficiently reflected in the thinking and actions of the industry as a whole.

2011-09-08 Middle East/Africa: Economic Review August 2011 by Team of Thomas White International

According to the IMF, global economic prospects have taken a downturn in the wake of a weaker U.S. economic recovery, uncertainty surrounding the Euro-zones fiscal stability and relentless turmoil in the Middle East and North Africa (MENA) region. In recent weeks, the MENA region has been in the spotlight yet again, with the Libyan revolt against Muammar Gaddafis 42-year long dictatorship gaining momentum. The IMF has been keeping a close watch on developments in the strife-ridden country and is yet to determine the uprisings impact on the Libyan economy.

2011-09-08 Developed Europe: Economic Review August 2011 by Team of Thomas White International

Last month, major economies such as Germany and France as well as the European Central Bank (ECB) took steps to allay fears about a debt contagion in Developed Europe. Still, investor sentiment remained weak in the region, echoing worldwide concerns over the state of the American economy and the loss of momentum in the global economic recovery. Amid worries that the European Financial Stability Facility (EFSF) may not have adequate funding to bail out Italy and Spain, if the need arises, the ECB stepped in to buy the sovereign debts of the two countries for the first time.

2011-09-07 Keep Calm, Carry On by Scott Minerd of Guggenheim

The markets overreaction has created an incredible opportunity in U.S. equities. In particular, I see value in high-dividend stocks. Many companies with strong cash flows and stellar credit ratings pay more in dividends than the yield on their bondsa situation that hasnt existed for such a large number of stocks since the 1950s. Without doubt, Europes problems indicate that further turbulence, even a retest of recent lows on the S&P 500, cannot be ruled out. Nevertheless, for investors with 2- to 5-year horizons, price dips represent buying opportunities.

2011-09-07 More Readers Questions Answered by Mark Mobius of Franklin Templeton

We have begun to see signs that the overheated Chinese economy may moderate in the not-too-distant future. We believe that inflation in China could reach a peak in the near future as a result of the Chinese governments decision in July to increase pork supply by releasing a portion of their strategic pork reserves. By releasing more pork supply into the market, the government hopes to combat rising pork prices. That move, combined with an easing growth rate, could subsequently lead to the end of the central banks current tightening monetary policy cycle in the near term.

2011-09-06 An Imminent Downturn: Whom Will Our Leaders Defend? by John P. Hussman of Hussman Funds

The global economy is at a crossroad that demands a decision-whom will our leaders defend? One choice is to defend bondholders-existing owners of mismanaged banks unserviceable peripheral European debt, and lenders who misallocated capital by reaching for yield and fees by making mortgage loans to anyone with a pulse. Defending bondholders will require forced austerity in spending of already depressed economies, continued monetary distortions, and the use of public funds to recapitalize poor stewards of capital. It will do nothing for job creation, foreclosure reduction, or economic recovery.

2011-09-06 Time to Embrace a new round of Quantitative Easing by Chris Maxey of Fortigent

As we head into the fall, investors should prepare for a continuation of this summers volatility.While August is viewed as a challenging month for the markets, September reigns supreme as the worst month for market performance historically. Dominating the headlines this week will be an announcement by President Barack Obama on Tuesday regarding plans for boosting job growth and increasing budget savings. Across the globe, services PMIs will be released this week, and akin to the global manufacturing PMIs, declines are expected.

2011-09-02 If Carlsberg Did Mortgages by Niels C. Jensen of Absolute Return Partners

The old world is drowning in debt. Governments are responding with austerity programmes and near zero interest rates but neither will work. Economic growth will be required to get the escalating debt under control, but policy makers need to dig deep into the tool box for different ideas as to how to create this growth. In this month's Absolute Return Letter we focus on one particular idea which will greatly benefit economic growth at no cost to the tax payer - reform the mortgage finance system across the world, using the model developed by the Danes over the past 200 years.

2011-09-01 Updated Ideas for Fixed Income Positions by Team of American Century Investments

The current environment and related factorsincluding double-dip recession concerns, equity and high-yield corporate bond market volatility, moderate inflation expectations in the near term, and premium pricing for U.S. Treasury securitieshave raised questions for investors as they return from summer activities and re-examine fixed income investment positions. It is difficult to address all investor situations and scenarios. So for our hypothetical allocations in this piece, we will focus on fixed income positioning within employer-sponsored retirement plans, both qualified and non-qualified.

2011-09-01 ProVise Bullets by Team of ProVise Management Group

In the widely anticipated comments from Federal Reserve Chairman Ben Bernanke at Jackson Hole, WY, he acknowledged that, for a number of reasons, the recession was deeper than originally thought. The recovery has been more modest than he would like, notwithstanding the fact that we have had nine months of economic growth since the recession ended, albeit anemic growth. Unfortunately, the media focused on more of the negative parts of his comments. Fortunately, investors heard optimism. Why did investors see something different than the media?

2011-09-01 Will the IMF Stand Up to Europe? by Kenneth Rogoff of Project Syndicate

Until now, the IMF has sycophantically supported each new European initiative to rescue the over-indebted eurozone periphery, committing more than $100 billion to Greece, Portugal, and Ireland so far. Unfortunately, the Fund is risking not only its members money, but, ultimately, its own credibility. Now that the Fund has squarely acknowledged the huge capital holes in many European banks, it should start pressing for a comprehensive solution to the eurozone debt crisis, a solution that will involve either partial breakup of the eurozone or fundamental constitutional reform.

2011-08-30 Brazil and Chile | One for Now, One to Watch by Russ Koesterich of iShares Blog

Brazil looks attractive relative to both its own history and to other MSCI ACWI countries. The MSCI Brazil index is currently trading at 1.4x book value, versus its average of 2.1x book value over the past five years. In addition, from September 2008 to July 2009, the OECD composite leading indicator for Brazil was lower than it is today; yet the Brazilian market appears cheaper today than it did during that period on average. While Chile is starting to look interesting and we currently hold a neutral view of it, there is no need to rush in.

2011-08-29 A Reprieve from Misguided Recklessness by John P. Hussman of Hussman Funds

Over the past three years, Wall Street and the banking system have enjoyed enormous fiscal and monetary concessions on the self-serving assertion that the global financial system will "implode" if anyone who made a bad loan might actually experience a loss. Because reversing this mantra is so difficult, policy makers are likely to continue fitful efforts to "rescue" this debt for the sake of bondholders. The justification for those policies will therefore have to be coupled with rhetoric that institutions holding these securities are too "systemically important" to suffer losses.

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.

2011-08-27 The End of the World, Part 1 by John Mauldin of Millennium Wave Advisors

It is only a matter of time until Europe has a true crisis, which will happen faster BANG! than any of us can now imagine. Think Lehman on steroids. The US gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the US is at best at stall speed, will tip us into a long and serious recession. Stay tuned.

2011-08-26 Confidence Counts by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Most of the normally historically-telling leading indicators continue to point to the US avoiding a recession. However, risks are clearly heightened as continued erosion of confidence could push perception into reality. The Fed continues to be divided on whether to attempt further monetary stimulus. We question if any efforts will have the desired impact. The Obama Administration and Congress continue to scramble to be seen as doing something to help, but also have limited policy options. European policymakers seem oblivious to the erosion of confidence.

2011-08-26 Valuation Gap Makes Gold Miners Attractive But All Miners Arent Created Equal by Frank Holmes of U.S. Global Investors

Goldwatchers were reminded golds volatility works in both directions this week, with prices falling more than $100 an ounce in just one day. We forecasted the selloff last week, explaining a 10 percent correction would be a non-event. Once again the CME Group hiked the exchanges margin requirements for gold investment to shake out overleveraged speculation. This is a positive for long-term investors.

2011-08-25 German Court Wields Huge Economic Power by John Browne of Euro Pacific Capital

With investors now emerging from a state of panic after the harrowing losses of late July and August, stock markets are now rising and gold is finally falling after a record run that pushed its price north of $1,900 per ounce. The buoyant mood is largely undergirded by the hope that on this Friday, August 26th, Fed Chairman Ben Bernanke will announce another round of stimulus to stop the U.S. economy from slipping back into another recession.

2011-08-25 The Fork in the Road by Lance Paddock of Thompson Creek Wealth Advisors

On a fundamental basis the US stock market is still overvalued. As discussed in our last View from the Bluff profit margins are already likely to begin retrenching. If the economy gets worse that will likely accelerate along with a slowing of sales. Narrower segments of the US market are now near fair value, especially the highest quality parts of the market. Overseas markets are another story. International and developing markets are looking reasonable on the whole. Not cheap, but around fair value. Some individual markets (such as Japan and parts of Europe) are actually looking cheap.

2011-08-24 Political Theater by Andrew Schiff of Euro Pacific Capital

Unfortunately issues can be complicated, but the image of strength is simple. Mitt Romney leaning over a hay bale in Iowa while thrusting a finger at an audience heckler is the campaign moment most clearly relished by his supporters. What he said to the heckler was immaterial; he just looked strong doing it. There is a very similar dynamic in the financial world in which, during times of uncertainty, investors often blindly follow the crowd while seeking safety in numbers. They flock to U.S. Treasuries simply for the aura of safety, not for any inherent virtue of the asset.

2011-08-23 Strategies for a Rising Rate Environment by Jayant Kumar of Fisher Francis Trees & Watts (Article)

Shortening the duration of a fixed-income portfolio is often considered the default option, but it is not the only way to hedge against a potential rise in interest rates. This article provides investors with a framework to analyze and implement a range of fixed-income strategies, and highlights various investment considerations that should carefully be taken into account.

2011-08-23 And Thats The Week That Was by Ron Brounes of Brounes & Associates

As another successful earnings season winds down, investors have all but forgotten the solid second quarter showings and are focusing on the sudden economic downturn. So much for the nice results and strong outlooks from energy, health care, retail, and certain techs. Investors are choosing instead to trade based on the political bickering, the seemingly never-ending European woes, and the short-term negative effects of Japan. Many corporations across various sectors remain cash-rich and are weighing their options as they pursue new opportunities: acquisitions, dividends, share buyback.

2011-08-22 Why Washington Urgently Needs to Break America's Negative Feedback Loop by Mohamed A. El-Erian of PIMCO

It is tempting to dismiss all this market volatility as just irritating "noise" rather than insightful "signals". But, be very careful before you are opt for this seemingly comforting interpretation. There is a lot in play today that requires a bold response out of Washington. This is not just an American phenomenon. Europe is in a much worse situation. And, if policymakers on both sides of the Atlantic don't get their act together, they will run out of tools that have a chance of being effective circuit breakers. Things could get a lot worse before they get better.

2011-08-22 Whack-A-Mole by John P. Hussman of Hussman Funds

What did I think of Rick Perry's comments about Ben Bernanke? Frankly, I thought they were unfortunate. Perry suggested that monetary intervention would be "playing politics," which implies that Perry believes the Fed actually has the power to benefit the Obama Administration by improving the economy with its interventions. We certainly differ on that point. In my view, QE2 was an economically baseless attempt to distort the financial markets and force the prudent into taking risk in hopes of substituting speculation for innovation. Perry gives Bernanke far more credit than I do.

2011-08-19 Who Will Take Over China's Role as the World's Factory Floor? by John Scott of Saturna Capital

As China moves up through the economic chain by outsourcing many of its low-cost, low-value-added consumer goods to places like Vietnam and Indonesia and begins producing more value-added products, it is highly likely that prices of these intermediate consumer goods will fall. We anticipate that the price levels of basic consumer goods in the West will likely rise in the future, but they will be offset by a decline in the price levels of mid-tier consumer goods. This will benefit the middle and upper-middle income segments of our population at the expense of low-income households.

2011-08-19 Is Business Choking on Red Tape? by Frank Holmes of U.S. Global Investors

About a year ago, I wrote about The Shocking Cost of Regulation and the unintended consequences new rules can have on our business system without proper cost-benefit analysis being done. A year later, its clear the swarm of red tape is choking companies and impeding growth.

2011-08-18 The GDP Growth Downgrade by Team of American Century Investments

While much of the nation focused on events leading up to the credit rating downgrade for the U.S. by Standard & Poors last week, this was preceded by another downgrade to the estimates of our recent, past gross domestic product (GDP) growth, which was announced by the U.S. Bureau of Economic Analysis (BEA) on Friday, July 27. While garnering much less attention, this revision has some serious implications for our economic outlook at least through the end of this year.

2011-08-17 The European Debt Crisis: Key points to consider by Tom Fahey & Ed Thaute of Loomis Sayles

A toxic combination of factors contributed to the recent selloff in risk assets and the sharp decline in German and US government bond yields. The lingering European sovereign debt crisis, exacerbated by political bickering, weak economic data and doubts about the potential effectiveness of monetary and fiscal policy tools, fed investor anxiety. Ever since Greece requested its first rescue package in May 2010, the European sovereign debt crisis has been simmeringwith occasional flare-ups.

2011-08-17 Emerging Markets: The New Defensives? by Russ Koesterich of iShares Blog

Traditionally, investors looking for more defensive country-specific exposure would have opted for equities of developed world countries, while the stocks of emerging market countries would have been considered more risky options. However, lately many emerging market countries have actually become more attractive places to invest than parts of the developed world. Why are some emerging markets now more attractive? One reason is that certain countries within the developed world are at the epicenter of the recent global sovereign debt crisis.

2011-08-17 Readers Questions Answered Part VII by Mark Mobius of Franklin Templeton

Many of you may be particularly concerned about the developments related to debt in the eurozone and theU.S.over the last few weeks. Id like to take this opportunity to share my thoughts on these events and respond to a couple of reader questions. To me, the European debt situation does not seem as serious as the U.S. debt crisis, both in terms of scale and the possible impact on the global economy. As such, I believe the worlds focus should really be on the U.S. debt crisis. We also have to remember that the tolerance for debt is generally affected by investor confidence levels.

2011-08-17 Terminator 3: Rise of the Machines by Jeffrey Saut of Raymond James Equity Research

While people who live in glass houses should not throw rocks, I have to observe how the media has trotted out super-bear Robert Prechter at every major stock market low for the past decade. They featured him again last week. Combine such anecdotal gleanings with the aforementioned market valuation metrics and it suggests a downside inflection point may have been reached. And while the bottoming process should take weeks, many individual stocks have likely already bottomed.

2011-08-16 A Commentary on the Correction by Michael Nairne (Article)

Market corrections are always painful and this one particularly so because of the lingering anxiety from memories of the 2008-2009 market crash. I explore the history of stock market corrections and examines the dynamics of the recent downturn as well as actions that may be warranted, depending on individual circumstances.

2011-08-16 Equities, Mega Caps, Germany & More by Russ Koesterich of iShares Blog

Given last weeks extraordinary volatility, my call this week focuses on the overall market today. Essentially, I still believe the odds favor slow but positive growth; equities look inexpensive; and volatility appears too high. While I would continue to expect subpar growth, leading indicators arent suggesting that were heading back into a recession. For instance, in the year leading up to the 2008 recession, leading economic indicators fell or were flat in 11 out of 12 months. In contrast, leading indicators have risen in 11 out of 12 months, including the most recent.

2011-08-15 Emerging Asia Pacific: Economic Review July 2011 by Team of Thomas White International

China, India, Taiwan and Philippines and other Asian economies seeing inflation accelerate to new highs in June. In most of these countries higher fuel costs and food prices were the primary culprits. While large economies such as India and China hiked interest rates aggressively, many countries increased bank reserve ratios to drain excess liquidity and rein in credit growth. The lone exception to the inflation-ridden scenario in Asia was Indonesia. Indonesia has successfully navigated inflationary pressures by allowing its domestic currency to strengthen strongly.

2011-08-15 Americas: Economic Review July 2011 by Team of Thomas White International

Second quarter economic growth was weaker than expected in the U.S.. Canada is also expected to report slower second quarter growth, but may regain some of the lost pace by the second half. Slower growth in the U.S. will likely have a restrictive effect on economic activity in Latin America, especially in Mexico and Colombia, which have relatively deeper economic ties with the U.S. For the resource exporters in the region, the expected decline in global demand growth for commodities and industrial material is likely to be a dampener.

2011-08-15 Middle East/Africa: Economic Review July 2011 by Team of Thomas White International

Inflation has been the highest in the MENA regions due to capacity constraints and food prices. While rising costs of food and oil have increased inflationary pressures in South Africa, Israels inflation rate has breached the target range set by its central bank. In addition, South Africa is witnessing strained consumer demand, while growing economic disparity despite lower unemployment rates has triggered social unrest in Israel. Jordan is also battling pricing pressures and is looking to bridge its wide funding gap by raising capital with the issuance of its first Islamic debt instrument.

2011-08-15 Panic Is Not a Strategy - Nor Is Greed by Liz Ann Sonders of Charles Schwab

Originally published in 2008, it's time for a refresher about the perils of panic. Asset allocation, diversification and rebalancing are as close to a "free lunch" as you can get as an investor. ThIn world where time horizons have shrunk precipitously, think longer-term.

2011-08-15 Return to Recession.or Recovery? by Liz Ann Sonders of Charles Schwab

Soft economic data has caused talk of a return to recession to grow, leading to a return to the risk-off trade and a spike in volatility. We believe these fears and the market reaction are overdone and indicators still point to growth, but risks are high. The chorus calling for a new quantitative easing (QE3) program from the Fed has grown. We believe it's unlikely at this point. The European debt crisis continues to damage investor confidence as policymakers appear to be consistently behind the curve. Meanwhile, the economic slowdown could ultimately help emerging markets.

2011-08-15 Why This Cycle Is Different by Milton Ezrati of Lord Abbett

Back in 2009, when the recovery from the subprime crisis was just beginning, the International Monetary Fund produced a remarkable study of past economic cycles. The analysts there made a point of distinguishing the behavior of cycles caused by financial crises from the behavior of cycles with other causes. Their work made clear that recessions associated with financial crises were deeper and lasted longer than others and that the subsequent recoveries were slower. And that when cyclical forces were synchronized across the globe, as they were in 0809, these differences were even greater.

2011-08-12 Robert Rubin, Bank America and the fate of the dollar by Team of Institutional Risk Analyst

This week in The Institutional Risk Analyst, we take a look at the latest week of inaction and indecision on the part of the leaders of the G-20 nations. Never has doing absolutely nothing taken so much time and garnered so much market and media attention. If the nothing doing dance by Barack Obama, Nicholas Sarkozy and Angela Merkel reaches a much higher frequency, life as we know if is definitely going to change big time. And that change may include altering the international role of the dollar, a change regarding which neither Congress nor the American people have been consulted.

2011-08-12 Got Volatility? by Monty Guild and Tony Danaher of Guild Investment Management

The world markets have clearly stated that they want growth, and through growth, balanced budgets. Unfortunately, growth is not in the economic cards for Europe or the U.S. over the next few months. Rather, both regions will have stagnation, inflation, fear, turmoil, and two deeply opposed world views will be bandied about in political pronouncements. It does not matter what political view you have. If one wishes to survive and prosper, one must be very alert.

2011-08-12 Another Look at China's Property Market and Financial System by Robert J. Horrocks of Matthews Asia

There continues to be much debate over whether Chinas growth is balanced and sustainable, and many observers will demand you side with one camp or the other: extremely bullish or bearish. This month, Chief Investment Officer Robert Horrocks, PhD, takes a more nuanced view in examining the drivers behind Chinas real estate market and evolving financial system.

2011-08-12 Policy Dithering Will Further Fuel the Crisis by Mohamed A. El-Erian of PIMCO

The world economy is now in the grips of a damaging feedback loop involving deteriorating fundamentals, lagging policy responses and destabilised financial markets. If policymakers do not act boldly, and do so in a globally-coordinated fashion, the world risks tipping into a prolonged recession with worrisome institutional, political and social consequences.

2011-08-12 Making Sense of the Markets by Team of Neuberger Berman

It is one thing to theorize about markets. It is quite another to invest. With that sentiment in mind, we offer a sampling of views from some of our portfolio managers across our firm who each independently form their own conclusions as to what to make of the market and how to position portfolios according to their respective investment disciplines.

2011-08-12 After the Downgrade - Evaluating S&Ps decision and possible opportunities for investors by Karen Dunn Kelley of Invesco

I want to highlight a few points that we believe give some much-needed context to this unprecedented situation. And I want to share some thoughts from my colleagues around Invesco, who are carefully monitoring both the risks and the opportunities presented by this downgrade.

2011-08-12 Chart of the Week - Which Luxury Brands Do Best in China? by Frank Holmes of U.S. Global Investors

Rising incomes in China are also affecting sales of gold jewelry. Year-over-year sales have outpaced the other five categories of the retail sector. CEBM forecasts wealthier consumers to drive sales of gold and jewelry products up 55-60 percent on a year-over-year basis in 2011. In addition, Chinese citizens have purchased nearly 91 tons of gold bars and coins in 2011, more than double the 2010 total, according to the Financial Times.

2011-08-12 Developed Europe: Economic Review July 2011 by Team of Thomas White International

Sovereign debt problems on both sides of the Atlantic kept the global investment community anxious in July. While the U.S. government struggled to build political consensus on the terms for having its debt ceiling raised, European leaders negotiated hard to push their domestic agendas through, while deciding on the exact nature of another aid package for Greece. Eventually, concerns about a Greek debt contagion eased slightly after the country was given a 109 billion bailout, which included provisions for lower interest rates and longer repayment periods.

2011-08-10 Update on Global Economic Uncertainty by Team of Nomura Asset Management

Investors can afford to be less nervous in a market that has already declined significantly. Rather, we would recommend that investors should recognize the ability of these companies to generate earnings as well as their ability to sustain their dividends payments. Governments of all major developed and emerging countries have to deal with deteriorating economic forecasts, so until investor psychology calms down, patience may be needed. We will continue to monitor the changing investment environment and identify stocks that offer worthwhile investment opportunities.

2011-08-09 Does Government Intervention in Financial Markets Slow Economic Growth? by Michael Edesess (Article)

As we saw with the Dodd-Frank legislation and the Consumer Financial Protection Bureau, the question underlying the debate over financial regulation is whether it stifles economic growth. Leo F. Goodstadt's book, Reluctant Regulators, provides useful insights from the experiences of Hong Kong and China. It also causes us to ponder whether our measurement of economic growth is fundamentally flawed.

2011-08-09 What the Downgrade Means for Investors by Russ Koesterich of iShares Blog

The downgrade simply reaffirms what everyone already knew. The US fiscal situation has deteriorated rapidly since 2008. More troubling, it also reiterates that the current structure of the large US entitlement programs and the narrow nature of the US tax base mean that after a brief respite, deficits will likely get much worse in the latter part of the decade. While last weeks bi-partisan deal to raise the debt ceiling alleviated the near-term pressure, the deal explicitly did not address entitlement programs and taxes, the longer-term more troubling challenges for the US fiscal situation.

2011-08-09 Don't Shoot the Messenger by Axel Merk of Merk Funds

With large-scale bond purchases announced, the ECB is moving closer to how the Fed operates in a crisis. In 2008, then NY Fed President Geithner conferred with Treasury Secretary Paulson whether to "foam" the markets. That referred to massive liquidity injection by buying Treasuries. Now the ECB may buy bonds of the largest European bond market, the Italian. The ECB has indicated it would sterilize any purchases. Let's not forget that some of the market tension comes from U.S. money market funds having dumped commercial paper issued by European banks after a lot of scrutiny.

2011-08-09 Pacific Basin Market Overview July 2011 by Team of Nomura Asset Management

Equity markets in the Pacific Basin edged higher in July despite the ongoing sovereign debt issues troubling both Europe and the U.S. and the pressure from a slowdown in Chinas economy. Smaller ASEAN (Association of Southeast Asian Nations) economies continued to provide support this month, so the MSCI AC Asia Pacific Free Index including Japan and the MSCI AC Asia Pacific ex Japan Free Index closed 1.33% and 0.03% higher, respectively.

2011-08-08 Why US of AA Matters by Niels C. Jensen of Absolute Return Partners

So what does it mean? Near term, other U.S. financial institutions (Fannie Mae? Freddie Mac? JP Morgan?) will be downgraded as a result - perhaps as early as today or tomorrow. Following that, if Standard & Poors wants to maintain whatever credibility it has left, it will probably have to downgrade a few sovereigns as well. France springs to mind; it is not far behind the US as far as profligacy is concerned, and it may prove difficult for Standard and Poors to justify the AAA rating it currently assigns to France.

2011-08-05 Is Todays Selloff a Sign of Market Capitulation? by Matt Lloyd of Advisors Asset Management

The paralysis that has dominated the markets has only been enhanced by the recent market movements. For those who have a longer-term time frame and are underweight risk assets in general, current levels still appear attractive. The one characteristic that has been missing from the benign sell-off in the second quarter was a market capitulation. Yesterday actually had a feeling of that; however, it may require more of the flushing of the system before that occurs. Calling a bottom would be foolish. Being a successful investor, buying low and selling high, has always been easier said than done.

2011-08-04 Gold is the True Reserve Currency by Michael Pento of Euro Pacific Capital

The reliance upon the U.S. dollar as the worlds reserve currency and safe haven asset has created a perverse, but deeply entrenched, mindset among global investors. In fact, many believe the major financial players have no alternatives to owning U.S. debt and dollars. They argue that the market for U.S. dollars and Treasuries is the only financial pool large enough to handle the massive liquidity that sloshes around the globe on a daily basis. This idea makes a mass exodus from U.S. debt holdings seem impossible.

2011-08-02 Commodity Caution by Richard Bernstein of Richard Bernstein Advisors

The overwhelmingly bullish consensus regarding the emerging markets should be worrisome to even the most stalwart enthusiasts of emerging markets. It's hard to believe that the consensus a decade or so ago was that the emerging markets were terribly risky and should be avoided. Today, emerging markets, and ancillary asset classes like commodities, have become the cornerstone of most investment strategies.

2011-08-02 OH, WHAT A FEELING! as were dancing on the (debt) ceiling by Rob Isbitts of Carson Wealth Management Group

Most investors are risk-averse. They want to make a solid return, but they are far more emotionally influenced by losses, especially big losses. This is the emotion that rises to the surface during stressful times like this. After all, we are only about three years removed from the last major financial crisis, and Europe is putting up a good fight with the U.S. in the battle of who can implode first. If you are thinking enough already!, you have a lot of company. But are you doing anything about it? Here is what we have been doing all year, in anticipation of an eventual day of reckoning.

2011-08-02 Russ K.s Market Calls | Developed & Emerging Markets by Russ Koesterich of iShares Blog

I started the year with a bias for developed market equities over emerging market equities. Year-to-date, developed equity markets have outperformed emerging markets by roughly 4%. I had two main reasons for favoring developed market equities. Emerging market equities looked expensive relative to their developed market counterparts and I felt that emerging market inflation would be a more persistent problem than the market was discounting. Now, however, these major rationales for broadly favoring developed markets no longer hold.

2011-08-01 America Will Avoid Default But There's A Lot More to Do by Mohamed A. El-Erian of PIMCO

Politicians are taking an important step this weekend to remove the threat of a debt default and to focus more credibly on problems facing the economy. We should thank them for that. But we should also remind them that their work is far from done. Washington should waste no time in redoubling efforts to remove the multiple policy uncertainties and structural impediments that stand in the way of restoring America on the path of high growth and plentiful job creation. Anything short of that will imply further economic and social deterioration, and a greater erosion of America's global standing.

2011-08-01 Europe's Cognitive Dissonance by Scott Minerd of Guggenheim

The latest bailout program should be successful in one regard: buying more time. Unfortunately for Europe, time is no longer an ally, and it most certainly is not healing all wounds. Across the European periphery, economic data are degenerating as the calendar marches forward. Year to date, Greeces debt burden, budget deficit, cost of funding, and unemployment rate have increased. Its economic output and tax revenues continue to depress.

2011-08-01 Why Global Debt Dramas Recur by Mohamed A. El-Erian of PIMCO

Neither Europe nor America can sustain the sort of economic recovery that would make a meaningful dent in their debt dynamics. As a result, different governments are opting for different approaches, including harsh austerity, financial repression and, in one case, a potential debt restructuring. De-levering pressures will be with us for years, and governments will mix and match from the menu of options. Accordingly, periodic debt dramas will recur. And we all need to understand the dynamics and the likely choices governments will make going forward.

2011-07-30 The 2011 Gold Season is Just around the Corner by Frank Holmes of U.S. Global Investors

September has traditionally been the beginning of the gift-giving season for gold. This is the time of year when gold jewelers are the busiest. The Muslim holy month of Ramadan begins in August and concludes with generous gift-giving in early September. Then its Diwali, known as the festival of lights in India, Christmas in the U.S., and Chinese New Year. The key to this seasonal strength over the past few years has been demand from China and India.

2011-07-30 Shifting Focus by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Some economic indicators are starting to perk up while corporate earnings have been strong as we wind down reporting season. Stocks will move higher in the coming months once confidence is restored. Whatever the near-term outcome of the debt debate, the US still has deficit issues to deal with and hard choices must be made to ensure economic stability for years to come. Europe finally arrived at their debt deal, but it likely falls short of what will eventually be needed. Meanwhile, China is key to emerging market performance and continues to deal with inflationary concerns.

2011-07-29 Gold Faces Short-Term Price Trap by John Browne of Euro Pacific Capital

Gold appears set on a very strong upward path. However, in the short term, if global recessionary forces re-emerge and/or investors become euphoric over the US dodging a debt default, gold could face a significant price correction. If governments inflate wildly in a futile attempt to avert a pending depression, leading to stagflation, then gold should rebound in priceMy forecast should not be construed as an appeal for investors to sell their gold and try to time their way back into the market. Rather I would suggest that there may be some discounted buying opportunities in the coming months.

2011-07-28 Investor Question: Greek Bonds in ETFs by Matt Tucker of iShares Blog

As the Greece situation continues to develop, Ive been hearing a lot of client questions about the exposure to Greek debt in some of our iShares fixed income ETFs. With good reason, too investors are wondering whether downgraded Greek bonds will be removed from the funds in which they currently reside. Its a fair question, and it really highlights some of the points I made in my last post on index construction. Of course, last time I focused on US indexes (which are fairly straightforward). The Greece example gives me a good excuse to cover index rules for non-US bond indexes.

2011-07-28 The Debt Ceiling by Geremy van Arkel of Frontier Asset Management

No one knows for certain what Congress will decide to do. Its actions could shock capital markets. However, the general theme of what Congress is trying to accomplish is fiscal responsibility. Long-term, this will be good for the financial markets and the creditworthiness of our government. The process of getting there, however, may cause short-term disruptions throughout the global financial markets. As portfolio managers, our concern is how developments in the capital markets affect our clients portfolios. We have significant experience navigating uncertain and difficult times.

2011-07-27 From Asset Allocation Nirvana to Asset Allocation Nightmare by Bill Smead of Smead Capital Management

We believe the next 10 years will be about money moving back into non-cyclical US large cap stocks and domestic companies which enjoy lower commodity prices and the repatriation of money from highly risky asset classes with poor odds. Being widely asset allocated today prepares folks for an under-performance nightmare In our opinion, bonds are expensive, commodities are outlandish, small caps trade at a huge premium and as Chinas economic contraction occurs, the crowd will flee emerging markets.

2011-07-27 Are We Headed For A Second Recession? by Caroline Corbett & Lance Roberts of Streettalk Live of Advisor Perspectives (dshort.com)

Is a second recession in so short of a time in the offing? It certainly seems that way. The hope for a continued recovery has grown dim lately as many of the economic indexes are moving towards contractionary territory. In the words of David Rosenberg, chief economist at Gluskin Sheff, "one small shock" could send us into a second recession. With the recent release of the Chicago Fed National Activity Index, our proprietary economic index is just one small step away from crossing the 35 mark which has always been a pre-cursor to recession.

2011-07-26 Investing with a View of Significant Inflation by Bob Kargenian (Article)

Almost all the analysis we read has concluded that, with the Fed seemingly printing money out of nowhere, the inevitable consequence must be significantly higher inflation. We're not convinced, but we have identified which strategies are likely to best protect clients if inflation accelerates.

2011-07-26 Equity Allocations: Thinking outside of the Box by Ryan Larson of Research Affiliates

In this issue we will look at a different way of constructing the equity portfolio. We will use the concept of active sharea measure of how much active equity portfolios actually deviate from their benchmark indexesas well as what active share tells us about the standard equity structure alternatives. The success of an investors overall portfolio is highly dependent on how well the equity component performs; stocks are the largest allocation in most portfolios, on average half of assets or more. Therefore, paying special attention to the equity strategy decision is very important.

2011-07-26 On Your Mind: The Debt Ceiling, US Credit Rating and Potential Default by Team of Charles Schwab

We are disappointed in the continued inability of Washington to resolve the current short- and long-term debt issues. However, we do not believe now is the time to make major portfolio adjustments given US companies' continued strong earnings reports, few signs of a double-dip recession, and few signs that the bond market currently questions the fundamental ability of the US to pay its bills. Be prepared for more volatility as the political negotiations continue. Watch the VIX index for upward spikes indicating that investors are losing patience.

2011-07-25 Weekly Market Commentary by Tom McIntyre of McIntyre, Freedman & Flynn

Stellar earnings reports, as well as the apparent success in throwing good money after bad in Greece, allowed for a decent rally in the stock market last week. As the charts above illustrate, the Dow Jones Industrial Average gained 1.6% while the NASDAQ Composite surged 2.4% on the back of Apple Computer and Google.

2011-07-22 ETF Mythbusting: Short Selling SLV by Noel Archard of iShares Blog

Short selling of SLV shares in the secondary market does not reduce the amount of silver held on behalf of Trust investors, nor does it increase the number of shares issued by the Trust. In order to establish a short position in SLV, a short seller must borrow the necessary shares of SLV from an existing holder, which means that the short seller also has an obligation to return those shares to the lender at a later time. In order to return the borrowed shares to the lender, the short seller must either purchase shares of SLV in the secondary market, or create new shares of SLV.

2011-07-22 2011 Halftime Report: Oil Outlook Remains Strong by Frank Holmes of U.S. Global Investors

Todays oil market is much different than what we experienced back in the 1970s. Back then, countries such as China, India and Russia had no global footprint; they were isolationists. Today these countries are building their economies and squeezing the existing supply of the worlds resources, including oil. These factors indicate that growth in global oil demand will likely outpace increases in production capacity and create a tighter market than what the IEA expected back in 2010.

2011-07-22 2011 Halftime Report: Oil and Copper by Frank Holmes of U.S. Global Investors

Last week we recapped commodities performance for the first six months of the year and offered our outlook on gold. This week, were discussing our outlook for two other commodities that are poised to have an exciting back half of the year.

2011-07-22 The European Rescue Plan & Italy by Russ Koesterich of iShares Blog

At an emergency meeting Thursday, European leaders backed a rescue plan for Greece that was generally in line with what the market had been led to expect. Ultimately, I believe the news supports the case for risky assets such as equities and hurts the case for more risk-averse investments such as the US dollar and US Treasuries. I think that the risks facing the Italian market are more than adequately reflected in the valuations, as the country currently trades at just 9 times forward earnings and 0.8 times book value, one of the lowest valuations among developed countries.

2011-07-22 Will China?s Real Estate Market Become the World?s Problem? by James Pressler of Northern Trust

There are significant imbalances in the Chinese real estate market and that this constitutes a large asset bubble that is reaching the end of its run. While there may not be one defining event that marks its collapse, over the next twelve months we expect a marked rise in NPLs within the smaller provincial and regional banks, and some high-profile defaults. And while this will not necessarily mark the end of the Chinese miracle, it will provide a substantial shock to development policies and perhaps a renewed drive toward a more sustainable, domestically-driven economy.

2011-07-22 And That's the Week That Was... by Ron Brounes of Brounes & Associates

While Obama and the Republicans seem to getting closer to making a deficit reduction deal (just dont mention tax hikes), plenty of naysayers lurk in the background, preparing to derail it. Additionally, lots of infighting has emerged as Conservatives worry that their leaders are giving in on taxes and Dems fear Obama is not requiring nearly enough on the tax front in return for spending cuts. The markets reacted positively to news the two sides are talking and virtually everyone thinks the debt ceiling will get raised before the deadline (except maybe some Tea Partiers).

2011-07-21 Making the U.S. Dollar Safer: Return ON Your Money by Axel Merk of Merk Funds

Todays debate may be focused on whether the debt ceiling will be raised, but its tomorrows debate that really concerns us. Last week, Standard & Poors made it clear that raising the debt ceiling would be one thing, but in order to withhold a downgrade to the U.S. credit rating, the U.S. must show that it is not maxed out. In other words, show that it would be able to manage another crisis, or a potential war. What would be the implications of a credit downgrade? And what policies would need to be engaged in, in order to avert a downgrade and strengthen the U.S. dollar over the long-term?

2011-07-21 China's New Generation of Entrepreneurs by Lydia So of Matthews Asia

As investors, we are presented with an expanding universe of small- and medium-sized entrepreneurial firms with innovative business models in China. At the same time, competitive pressures are also increasing with the growing presence of both domestic and international companies in the market. It has become increasingly critical to identify and differentiate companies with sustainable business models and viable long-term strategies.

2011-07-20 How to Orchestrate an Orderly and Credible Restructuring of Greeces Debt by Myles Bradshaw of PIMCO

​Identifying how much solvency relief Greece needs is complicated, not least because there is no magic debt ratio that is sustainable. Identifying how much political capital might be bought in European Union creditor countries and beyond is more straightforward. Contagion risks are positively correlated with any benefits Greece might experience from a potential restructuring.

2011-07-19 A New Approach for Forecasting Market Returns by C. Thomas Howard (Article)

I propose a method for predicting future market movements, which I call the strategy market barometer (SMB). The SMB is calculated by measuring the extent to which investors are rewarding specific investment strategies being pursued by active equity managers. My research reveals that equity strategy performance ranking is a useful predictor of future market returns, and tests confirm that market returns vary in line with SMB measurements.

2011-07-19 Retirement Planning and Worst-Case Scenarios by Wade Pfau (Article)

New research suggests that skepticism in a 4% safe withdrawal rate (SWR) is well justified. It is perhaps due to good luck that American retirees have not yet experienced a withdrawal rate below 4%. But a better approach than worrying about SWRs is to focus on the savings rate needed to meet your retirement spending goals, not on what the safe withdrawal rate is.

2011-07-19 You and the Internet, Part II - Places to Go, People to See by Wendy J. Cook (Article)

In my last article, How to Waste Time and Influence People, we covered productive ways to wander on the Internet. You also can benefit from harnessing the Internet as it relates to your advisory practice.

2011-07-19 Earning 'Extra Credit' Through Short-Term Strategies PIMCO by Jerome M. Schneider of PIMCO

Given renewed concerns over liquidity and credit, investors can potentially do better by considering actively managed short-term strategies that invest beyond traditional U.S. money-market guidelines. The current credit situation in Europe is different from that in both 2008 and 2010 because initial liquidity conditions in the short-term markets are better. In our view, investors should evaluate potential investments within the wider scope of relative value opportunities and not simply for the incremental yield they may offer above risk-free returns.

2011-07-19 The Debt Ceiling Debate & China by Russ Koesterich of iShares Blog

This week, our first call focuses on the ongoing drama over the US debt ceiling and its implications for the US Treasury Market. While the clock continues to tick towards an August 2nd deadline for raising the debt ceiling, Congress and the White House are still nowhere near a compromise. Next, heres a quick update regarding our view of China. While we remain, for now, neutral on China, and hold a negative view of emerging markets in general, our stance on China is starting to shift to a more constructive, or positive, view.

2011-07-18 The Eurozone’s Last Stand by Nouriel Roubini of Project Syndicate

The eurozone crisis is reaching its climax. Greece is insolvent. Portugal and Ireland have recently seen their bonds downgraded to junk status. Spain could still lose market access as political uncertainty adds to its fiscal and financial woes. Financial pressure on Italy is now mounting. By 2012, Greek public debt will be above 160% of GDP and rising. Alternatives to a debt restructuring are fast disappearing. A full-blown official bailout of Greece’s public sector would be the mother of all moral-hazard plays: extremely expensive and politically near-impossible.

2011-07-18 Dabbling with Support by John P. Hussman of Hussman Funds

The market continues to have the look of a broad topping process, in which it's very common to see it's confined to a trading range of about 5-7% for 6-8 months. Near-term, tests of widely-recognized "support" are often met by a bout of short-covering, similar to what we observed two weeks ago. Given the moderate improvement in market internals produced by that rally, a retest of those lows that isn't overly hostile to market internals might provide some latitude for market exposure. Suffice it to say that constructive opportunities are likely to be limited, but not impossible to achieve.

2011-07-15 Earnings Heat Up by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Earnings season is heating up and will provide a status update on the "soft patch" and where companies' confidence level lies. Stocks have been more volatile but are they telling us something about potential future direction? Debt ceiling talks continue in Washington, with a deal still likely to come in the final days before the supposed August 2 deadline. The make-up of spending cuts, tax changes, and any entitlement reform may be key to longer-term market reaction. Contagion fears are growing in Europe and solutions are difficult to come by.

2011-07-14 Ben Bernanke channels Genworth Financial; Chris Laursen on bank trading under the Volcker rule by Team of Institutional Risk Analyst

This week we republish an important article by Christopher Laursen, NERA Vice President, on bank trading under the Volcker rule. And we ask whether Fed Chairman Ben Bernanke knew he was saying about the conforming loan limit yesterday before the House Financial Services Committee.

2011-07-14 Pacific Basin Market Overview – June 2011 by Team of Nomura Asset Management

Faced with the imminent withdrawal of the Fed’s QE2 policy, the ongoing sovereign debt woes in the Euro-zone, and concerns over a slowdown in China, the Asian equity markets were at best only able to range trade during the second quarter. The broad indices remained relatively flat, with the MSCI AC Asia Pacific Free Index declining by 0.50% while the MSCI AC Asia Pacific declined 0.87%. As the immediate concerns over the sovereign debt crisis in Europe subsided, a steady recovery in domestic production also helped to lift the Japanese market and trigger a late rebound in equity prices.

2011-07-13 What Investors Should Know About Bond Index Construction by Matt Tucker of iShares Blog

Most people are familiar with the popular indexes in the market like the S&P 500 and the Dow. The majority of indexes people are familiar with are of the equity variety-their bond market cousins don’t have the same visibility with most investors. Today I want to talk about what bond indexes are and how they are put together, focusing on the US and then covering international in a future post. There are a large number of different US bond indexes out there, and they are all built a little bit differently, but the vast majority of them are rules-driven.

2011-07-13 Treading Water by Richard Michaud of New Frontier Advisors

While unemployment remains high, corporate balance sheets are healthier, Wall Street de-leveraging is proceeding, savings rates are up, and many strategists currently consider equities cheap.The lackluster performance of domestic equities in the quarter was associated with negative returns in financials, a symptom of the continuing de-leveraging process and new regulations worldwide. However, the underlying conditions for a long sustained business expansion do not seem in-place. A cyclical expansion, typically lasting roughly four years, seems a reasonable, though far from certain, scenario.

2011-07-12 The Real Story behind Bond Yields by Michael Nairne (Article)

One of the most important questions that individuals should ask before making any investment is 'Am I being paid enough for the risk of this investment?' I analyze the returns available today from government bonds and answer this important question for this asset class.

2011-07-12 Developed Asia Pacific: Economic Review June 2011 by Team of Thomas White International

Developed Asia Pacific economies continued to face headwinds in June as the outlook for demand from both developed markets such as the U.S. and Europe, and emerging markets cooled. In the U.S., a lukewarm labor market caused concerns about the pace of economic recovery. In the emerging markets, persistent inflation fears were prompting higher interest rates. Both these factors are putting pressure on exports from Developed Asia Pacific economies. Japan, which specializes in exporting machinery and consumer durables, is feeling the heat of a slowdown in demand from consumer countries.

2011-07-12 Americas: Economic Review June 2011 by Team of Thomas White International

The economic growth outlook in the region has moderated, as both global demand and domestic consumption growth are slowing down. Consumers are less confident than earlier this year, public spending remains restricted due to continuing fiscal challenges, and businesses have become more cautious in their hiring and investment plans. Commodity and energy prices have corrected, while manufacturing activity growth has slowed down. Even in this environment, inflation risks remain significant in some of the large emerging economies where monetary policy is being tightened further.

2011-07-12 Middle East/Africa: Economic Review June 2011 by Team of Thomas White International

The Arab Spring brought with it waves of revolution, disrupting economies of almost all the countries in the Middle East and North Africa (MENA) region. While governments of Tunisia and Egypt look to pick up the pieces, continued rumblings of unrest are heard from Bahrain, Libya, Syria and Yemen. The World Bank expects the lowest growth in Egypt and Tunisia, clocking in at 1 percent and 1.5 percent respectively, in 2011. However, despite uncertainty, these two economies are projected to improve in 2012 and witness economic expansion of around 5 percent in 2013.

2011-07-12 Emerging Asia Pacific: Economic Review June 2011 by Team of Thomas White International

Emerging Asia Pacific economies continued to be troubled by persistent inflation in June. Almost every country in the region had to either hike benchmark interest rates or bank reserve requirement ratios to rein in lending and credit growth. The monetary tightening effects are largely expected to make capital more expensive and this in turn is expected to crimp growth across many emerging markets. Inflation, which thus far has been more pronounced among food and fuel items, now seems to be spilling over to structural inputs like labor as well.

2011-07-12 Developed Europe: Economic Review June 2011 by Team of Thomas White International

The economic data reported from Developed Europe during June were mixed. According to the European Union’s statistics agency Eurostat, annual wage growth in the Euro-zone during the first quarter of 2011 was 2.3 percent compared to 1.4 percent in the last quarter of 2010. Although the figures reflect some degree of optimism in the labor market, they are a cause of worry in the context of inflation. In order to sustain their spending power amid rising prices, workers may continue to demand higher wages, which in turn may force producers to hike prices further and spark off a wage-price spiral.

2011-07-12 Emerging Europe: Economic Review June 2011 by Team of Thomas White International

In an update to its Global Economic Outlook published in April, the IMF sounded a cautionary note on the global economic recovery due to the slowing growth in the U.S. and the Euro-zone debt crisis. The Washington-based lender said it sees global activity slowing in the second quarter of 2011, though a rebound is expected in the second half of the year. Despite this forecast, the IMF exuded confidence that the strong growth in Germany, Italy, and France would offset the economic slackening in the U.S. and Japan.

2011-07-12 Monday Market Calls | US Retailers by Russ Koesterich of iShares Blog

The ongoing challenges facing the consumer – a weak labor market, anemic wage growth, too much debt and a stagnant housing market – have been well documented. To our thinking, these issues are not likely to be resolved in the near-term. Yet despite the long litany of problems, investors continue to favor US retailers. We believe this enduring faith in the willingness and ability of the US consumer to spend is misplaced.

2011-07-12 A Common Sense approach to Biotech Novartis by Kendall J. Anderson of Anderson Griggs

A common sense approach to finding a winner in biotech is to own shares of a business that can afford the cost of R&D and have access to the brightest minds in the field. Novartis is one that can meet these requirements. In 2010 Novartis net sales exceeded $50 Billion more than all 37 of the profitable Biomed/Genetic companies combined. Their R&D spend last year exceeded $8 Billion, more than the total market value of all but 7 of the 293. Granted, this is not exclusively spent on biotech research, but what they do spend exceeds the budget of all but a few in the biomed/genetics industry.

2011-07-11 Perspective on the 2nd Quarter by Sean Hanlon of Hanlon Investment Management

At the start of the second quarter Hanlon Investment Management portfolios were positioned somewhat conservatively as our research anticipated that there was some volatility ahead. Our expectation was right-on as volatility and whipsawing markets were on display during this past quarter. We further increased our cautious stance and in June raised additional cash in client accounts as the risks warranted. The upcoming "summertime" third quarter is typically a sluggish trading quarter and we remain prepared for the prospect of continued volatility.

2011-07-11 A Look at Our 10 Predictions for 2011 by Bob Doll of BlackRock Investment Management

At the halfway point of the year, we thought it would be appropriate to look at the predictions we made at the beginning of 2011 to see where we stand. 1. US growth accelerates as US real GDP reaches a new all-time high. US real gross domestic product growth reached a new all-time high in the first quarter of 2011, so we have already gotten the second half of this correct. The first half will be dependent on the degree to which the US economy is able to accelerate in the second half of this year. 2. The US economy creates 2 million to 3 million jobs in 2011 as unemployment falls to 9%.

2011-07-08 And That's The "QUARTER" That Was... by Ron Brounes of Brounes & Associates

April 2011 picked up exactly where the first quarter ended as equities enjoyed their best month of the year and bulls appeared to be firmly in control. Then a funny thing happened on the way to big gains (actually a few not-so-funny things)…Stocks tumbled and key indexes dropped for seven out of eight weeks as the quarter neared a close and investors looked to the safe-haven of treasuries (despite the credit rating concerns). And just when all hope seemed lost…a new Greek solution emerged, manufacturers seemed to get back on track, and the Fed ended the QE2 stimulus to little fanfare.

2011-07-08 Argentina by Mark Mobius of Franklin Templeton

Argentina has been experiencing steady growth throughout the years despite the country’s economic problems, from double-digit inflation to a shrinking trade surplus. We saw one good example of the improvements in the country when we arrived at the Ministro Pistarini International Airport, which is in much better shape than it was in the past. Besides the bright and airy new wing, the customs and immigration process was quick and efficient. We then checked into a modern hotel in the Puerto Madero area in Buenos Aires, which is another good example of Argentina’s transformation.

2011-07-08 What Happens Next? by Niels C. Jensen of Absolute Return Partners

If Portugal and Ireland, and eventually also Spain and Italy, increasingly get dragged into this crisis – and everything I see on the horizon suggest they will – the €400 billion the ECB has pumped into the banking sector in those countries so far will be pocket money compared to what will be required going forward. At some point the creditor countries will say enough is enough. And if the politicians don’t know when to say no, the electorate will do the job for them. The ECB’s strategy for now seems to be one of buying time.

2011-07-07 Hey Hey Hey….Goodbye: The End of Quantitative Easing? by Laird Landmann of TCW Asset Management

Commentators have described the end of QE2 as a “major milestone- the first tightening move from the Fed since the financial crisis began.” Our view is that this is just the end of one balance sheet program and is certainly not the first monetary tightening since the financial crisis. Monetary tightening is all around us in the form of new regulation, changing lending practices and increased bank capital requirements. The Fed will monitor the impacts of these changes and adjust policy as needed. Currently, the plan is to continue to replace assets on the Fed balance sheet as they roll off.

2011-07-06 Greeks Buy Time for Insolvent Bankers and Delusional Politicians by John Browne of Euro Pacific Capital

Last week, the Greek parliament voted by a narrow margin to pass an economically crippling austerity plan of some $40 billion in return for some $159 billon of fresh liquidity injections. Although many hailed the event as a needed first step on a long road to recovery, I believe the austerity program will make a bad situation worse. It is a flawed solution that stems from a false premise: that Greece should continue to be part of the euro zone, and continue to use the euro as its currency. To return to national economic viability Greece must abandon its use of the euro currency.

2011-07-06 Sparks: Are Stocks Telling a Better Story For the Second Half? by Liz Ann Sonders of Charles Schwab

Investors continue to focus on the macro … but the micro is telling a much better story. There was lots of good micro and macro news last week. Is the market's rally sending a signal that the second half of the year is looking up?

2011-07-05 No More Stupid Forecasts! by Michael Edesess (Article)

Dan Gardner's book Future Babble takes the sport of expert prediction apart piece by piece, showing why it's phony, why people still pay close attention to it and why people (including the experts themselves) continue to believe in it. Along the way, the author fills his pages with enough interesting information and anecdotes to keep us reading with pleasure.

2011-07-05 The End of Currency Wars? by Richard Clarida of PIMCO

International capital is flowing to countries with good growth prospects and to countries with central banks confident enough to raise interest rates. Certain nations are placing controls on capital or intervening in currency markets with an eye to maintaining economic competitiveness. We see central banks in the U.S. and the U.K. winding down monetary stimulus that has exacerbated the situation. Also, we see potential for emerging market currencies to appreciate, and that may give developed nations a boost.

2011-07-05 Scarce Resources by Dennis Nacken of Allianz Global Investors

For decades, investors largely ignored the commodities segment. They can no longer afford to. Commodity production can scarcely keep up with the dynamic development in global demand. The supply bottleneck could remain a sustainable driver of higher commodity prices for the foreseeable future. This applies to energy, to commodities in general and agricultural products in particular: these resources are becoming scarcer—and this is a megatrend.

2011-07-05 Is Europe’s Debt Crisis a “Lehman Moment” for America? by Mohamed A. El-Erian of PIMCO

Europe’s debt problem is a headwind for what remains a disappointing U.S. economic recovery. There is now broad-based recognition of America’s persistent economic weakness. The Federal Reserve has been forced again to revise downwards its growth projections for both 2011 and 2012. In order to avoid a repeat of the total Lehman paralysis in the face of an external shock to the U.S. economy three conditions must be met: a banking system that remains robust, no disruptions to money market funds and limited blockage to the plumbing of the country’s payments and settlement system.

2011-07-02 And That\'s the Week That Was... by Ron Brounes of Brounes & Associates

The second quarter ended on a very positive note as equities enjoyed a late surge to bring the Dow into positive territory for the period (and the other indexes close to flat). Such performances didn’t seem likely just a few weeks ago, but positive news this week from Greece, signs of a rebound in manufacturing, and declining gas prices that helped ease a more fearful inflation picture put a damper on the recent negativity. Equities enjoyed their best week in two years. Let’s hope the mood lasts.

2011-07-01 On The Importance of Sustained Capital Investment Part 2 by Andrew Foster of Seafarer Capital

This commentary revisits the topic. It presents basic evidence to support the idea that sustained capital investment is critical in the context of developing markets. The data presented below is gathered from several countries, so as to allow for comparison across emerging markets. Admittedly, the workings of macro economies are highly complex, and drawing detailed conclusions about them is tricky. Nonetheless, national statistics do reveal the general outline of an economy and its underpinnings. That’s how I intend to use the data here – to make broad inferences only.

2011-07-01 Schwab Market Perspective: Dealing with Debt by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Global governments are dealing with rolling debt crises equaling shaky investor confidence. We are concerned that many of the solutions weigh on growth prospects, but are hopeful about short-term resolutions that restore business confidence and lead to more investment and hiring. The Fed continues to hold steady, keeping short rates near zero and likely reinvesting maturing Treasury securities after QE2 ends. Greece passed the austerity package required to get short-term funding but much more is needed. And while the focus has been on Europe, it may be time to focus on the Asian region.

2011-06-30 Thoughts on Rising Volatility by Russ Koesterich of BlackRock Investment Management

In a recent mid-year update to our 2011 outlook, we noted how equity market volatility is likely to rise further in light of continued near-term weak economic growth. Already, spring’s unusually placid markets have given way to heightened volatility. The most recent cause has been anxiety over Greece, but investors are not at a loss for things to worry about. This is a sharp departure from just eight weeks ago. In April, the VIX Index, which measures implied volatility on S&P 500 options, the “fear index” hit its lowest level since early 2007. Investors had a blindly optimistic world view.

2011-06-28 The Diversified Portfolio Index by Charles Fahy, Sr. (Article)

Investment rates of return that are average but consistent are the products of exceptional performance. Over longer time horizons, these returns become increasingly difficult to outperform. One such example is the Diversified Portfolio Index - a buy-and-hold strategy deployed across all major asset classes.

2011-06-28 Monday Market Calls | European Banks & Germany by Russ Koesterich of BlackRock Investment Management

This week, our attention first turns to European banks. Since February, the sector is down more than 15% versus a 3% drop for global developed markets. Back in February, our thesis was that European banks were not taking adequate account of the ultimate hit they were facing due to write downs on European sovereign debt. While we are still advocating a negative outlook for European banks, we believe that much of core Europe now appears very cheap, and is reflecting a lot of bad news. In particular, we continue to believe German equities look attractive for long-term investors.

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.

2011-06-28 Five To-Do's for the IMF's New Managing Director by Mohamed A. El-Erian of PIMCO

Circumstances have catapulted Christine Lagarde into the role of leader of the IMF: the world’s most influential and fastest-responding multilateral institution. Lagarde will need to hit the ground running if her tenure as IMF managing director is to be an inspiring story of institutional transformation. She should waste no time in establishing a legitimate selection process for the next managing director that is truly based on merit. She must strengthen the analytical robustness of the IMF’s response to debt crises, and prepare the Fund’s balance sheet for the risk of future impairment.

2011-06-27 Brief Update by John P. Hussman of Hussman Funds

Despite the brief reprieve of market concerns Thursday on tentative agreement over Greek aid, we saw little change in the value of Greek debt. While there is a great deal of short-term attention on day-to-day developments on this front, credit spreads effectively indicate expectations of certain default within a roughly 2-year window, but very small risk of near-term default. Until we observe a firming in market internals and in leading economic measures, we expect that enthusiasm about Greece may provoke short-lived market spikes and short-squeezes, but little of durable effect.

2011-06-27 What’s ahead for home prices? Searching for a bottom by Marie Schofield of Columbia Management

At a financial analysts meeting in early 2008, I was asked when we would know the financial crisis was truly over. At that point we had no clue. It had only just begun. Many experts believed it would worsen before any improvement would be seen. It was a timely and pertinent question. My own belief was to look to where it started. I responded that I felt it would end when home prices stopped falling. As I reflect on the past three years, I am still of that opinion. We will continue to feel the effects of the financial crisis via the burden of falling home prices for some time to come.

2011-06-27 Look For Improved Conditions in the Second Half of 2011 by Bob Doll of BlackRock Investment Management

Last week the Fed elected to keep interest rates on hold. The central bank has downgraded its assessment of US economic growth. The Fed did, however, underscore that the factors causing the weakness were mostly temporary, highlighting higher fuel and food prices and disruptions from the natural disasters this year. We are not expecting to see any near-term changes in the Feds position and we think there is virtually no chance of a QE3. Conversely, given a slow recovery and a subdued inflation outlook we are not expecting to see higher interest rates until at least mid-2012.

2011-06-27 Will Japan’s Crisis Cause Force Long-Term Reform? by Milton Ezrati of Lord Abbett

For all the pain suffered by the Japanese as a result of the earthquake, the disaster and its ripple effects, offer them at least some smugness. The world, obsessed new, had for years dismissed Japan as a part of the past, preferring instead to enthuse over China and emerging economies. This horrible disaster has made one thing very clear: Japan still plays a critical role in the global supply chain and economy generally. How soon, if ever, will Japan recover its former productive role? And how will the shock of the recent disaster change the Japanese economy’s long-term direction?

2011-06-25 Playing Cat and Mouse with Global Oil by Frank Holmes of U.S. Global Investors

Oil markets took another dose of global geopolitics this week when the International Energy Agency (IEA) unexpectedly announced that it would be releasing 60 million barrels of oil from strategic petroleum reserves (SPR) around the globe. Thursday’s surprise announcement gave oil prices a 4.5 percent hair cut and oil prices closed Friday at $91.25, down 20 percent from their April 29 peak.

2011-06-25 The Malleable Market for Global Aluminum by Frank Holmes of U.S. Global Investors

Last week’s Investor Alert highlighted a Macquarie Research chart showing a recent notable upswing in aluminum production around the world. Following a huge dip in output in China and worldwide throughout 2009, China once again surpassed the rest of the world in producing the most aluminum. China’s massive production makes sense considering the country consumes the most aluminum. According to Jeremy Grantham of GMO, China uses 40 percent of the world’s aluminum as it rapidly develops its railway transportation, increasingly purchases automobiles and demands more energy.

2011-06-25 And That's the Week That Was... by Ron Brounes of Brounes & Associates

If it’s not one things, it’s another. A Greek tragedy averted (for now, perhaps?); a move to limit the rise in crude and gasoline prices (necessary or panic?); a never-ending debt crisis with political ramification (not only in Greece); an (overly) cautious assessment of the latest Fed-speak. Add it all up and you have a pretty volatile week on the equity front. The second quarter cannot end soon enough. Hey Japan…how’s that restructuring plan coming?

2011-06-24 The 3-D Hurricane and the New Normal by Jason Hsu of Research Affiliates

Debt, deficit, and demographics—the 3-D hurricane— is heading to the shores of all developed economies. It threatens to derail the economic recovery and to alter forever the heretofore path of robust growth for the developed world.Emerging economies with healthy government and household balance sheets, responsible fiscal policies, and young labor forces will be the drivers for global growth and will compete with their developed counterparts for economic and political leadership. More importantly, the emerging economies will demand their fair share in the consumption of resources and goods.

2011-06-24 International Energy Association To Sell Crude Oil From Government Stockpiles by Monty Guild of Guild Investment Management

Today, the U.S. and IEA decided to sell 60 million barrels of oil over the next month, supposedly to make up for the 1.5 million barrels a day that was produced by Libya. This is a political maneuver which will have a short term effect on oil and gasoline prices. The authorities announced that this is meant to help the consumer, but it’s obvious that they also wanted to punish the speculators. The IEA has previously said that targeting the speculators will backfire, yet here they are doing just that. We find that hard to grasp that the consumer will get more than very temporary help.

2011-06-23 Greek Drama and the Eurozone's Future: Wharton's Franklin Allen Weighs In by Team of Knowledge @ Wharton

After a week of political drama within his Socialist Pasok party and a new wave of violent riots in the streets, Greek Prime Minister George Papandreou survived a vote of confidence, helping to pave the way for his plans to unleash further austerity measures to keep the country afloat. It has been just over a year since he shepherded in a multibillion-euro rescue package from the International Monetary Fund and the European Union, which commits Greece to several more years of drastic budget cuts and will save it from defaulting on its staggering debt.

2011-06-23 U.S. Monetary Policy: A Case of Self-Induced Paralysis? by Paul Kasriel of Northern Trust

Part of the decreased real GDP growth/increased unemployment rate central-tendency forecasts for June vs. April can be attributed to supply interruptions from Japan and higher energy prices. But given the FOMC's assumption that the supply interruptions are dissipating and that energy prices are declining, this explanation does not apply to the reduced real GDP growth and unemployment rate central-tendency forecasts for 2012. I think the central-tendency forecasts for real GDP growth and the unemployment rate are optimistic for 2011 and 2012 in the absence of continued quantitative easing.

2011-06-23 The Disconnect Continues by Richard Bernstein of Richard Bernstein Advisors

BRIC yield curves are on the brink of inversion, while the US has the steepest yield curve in the world. Such signals, while certainly not infallible, have historically been reliable predictors of future equity returns, but investors’ portfolios nonetheless remain generally overweight emerging markets and underweight the US. We see opportunity in this disconnect.

2011-06-22 Summer Bargains Galore by Bill Smead of Smead Capital Management

While China’s economy is hitting the wall and investors are beginning to deal with what we believe is a major bear market in commodities, it is time to stop and examine some of the bargains created by the recent correction. We have said many times that valuation matters. We believe one of the biggest bargains currently is Aflac (AFL). They are the largest seller of supplemental health insurance in Japan and the US. Japan and the US are probably the two countries which would benefit more from a decline in commodity prices than any others in the world.

2011-06-22 And That’s The Week That Was … by Tom McIntyre of McIntyre, Freedman & Flynn

The stock and other financial markets were focused on Greece - as opposed to the other bankrupt European nations of Ireland, Portugal & Spain. As such the currency, interest rate and stock markets all traded on the back and forth of news headlines, which proved to be without substance. Stocks in the absence of earnings or other specific news just went along as the futures markets dictated. The result was that the Dow Jones Industrial Average broke its six-week losing streak by gaining .44% while the NASDAQ fell just over one percent as earnings warnings and slowdown fears took their toll.

2011-06-22 Japan Outlook – June 2011 by Team of Nomura Asset Management

Nomura’s forecast for Japan’s CY2012 real GDP growth is 3.2%, up from an expected rate for CY2011 real GDP growth of just 0.1%. Although there has been a temporary deterioration in Japanese economic indicators due to supply side constraints, such as capital stock damage, supply chain disruption, and electricity generating capacity shortfalls, we have already started to witness signs that these constraints are easing. The supply chain will return to normal this autumn, as production bases in the disaster-affected areas are restored or the users quickly switch to substitute components.

2011-06-22 Five Dividend Paying Giants of Technology Trading at Absurdly Low Valuations? by Chuck Carnevale of EDMP

These five industry dominant, blue chip, leading technology stalwarts represent prima facie evidence of how absurd and irrational the stock market can be at times. The facts are that the fundamentals underpinning each of these strong and healthy technology giants are significantly better than average. Therefore, logic would dictate that the shares of these companies’ stocks should command a premium valuation relative to the average company or the S&P 500. It makes no rational or business sense that they don't.

2011-06-21 Turkey: A Rising Power Bridging Europe and Asia by Mark Mobius of Franklin Templeton

Turkey is the land where the European and Asian continents meet. I asked Carlos von Hardenberg, who is based in Istanbul and oversees our frontier market strategies, to share his views from the center of Eurasia: Since the implementation of the customs union agreement with the European Union (EU) in 1996, Turkey’s trade with EU countries has grown substantially in certain areas. In particular, the Turkish automobile sector has been growing at a fast pace and has become highly competitive. Between 1999 and 2008, auto production in Turkey grew by 285% to 1.15 million vehicles per year.

2011-06-21 The World Held Hostage by Credit Default Swaps? Alford on the FOMC: Watch what they say by Team of Institutional Risk Analyst

In this issue of The Institutional Risk Analyst, we feature a comment from Richard Alford on the state of thinking inside the Federal Open Market Committee regarding monetary policy -- at least based on what folks at the Fed say in public. We also comment on the latest financial bailout, in this case the apparent salvation of the European and US banks in the CDS market from taking a hit in the restructuring of Greece.

2011-06-21 The Currency Exchange Market by Frank Wei of FundQuest

The currency exchange market is a global market with a daily trading volume of nearly $4 trillion transpiring worldwide. However, it is also a very fragmented market with no central exchanges and with arguably the most diverse participants. While fundamental factors such as economic growth and interest rates determine long- and intermediate-term trends of the market, random, and even irrational short-term factors, play an already disproportionate and ever increasing significant role. Rigorous risk-control and trading disciplines are essential for active participants.

2011-06-21 What’s Wrong with Chinese IPOs by Team of Renaissance Capital

Another wave of Chinese IPOs is hitting the US equity market, but this time many US investors are staying dry. The reasons for this growing aversion are several, but paramount among them are evidence of actual fraud at a handful of companies. As a result, Chinese IPOs have been one of the worst performing groups in the US IPO market, which furthers investor avoidance of the sector. If an investor bought every Chinese IPO since 2008, the average return though mid June would have been a -24% loss, compared to a 25% gain on the average non-Chinese IPO.

2011-06-20 Overseeing Systemic Risk: The 10 most systemically risky financial firms in the US by Viral Acharya, Thomas F. Cooley, Robert Engle and Matthew Richardson of VoxEU

As part of the US policy response to the global crisis, the Dodd-Frank Financial Reform Act calls for regulators to identify systemically risky financial firms – the sort that took the US financial crisis global. But how to identify these firms remains unclear. Some claim the task is impossible. This column begs to differ and names the 10 most systemically risky financial firms in the US.

2011-06-20 Sector Insights Focus: Consumer Discretionary by Daniel M. Brewer and Stacie L. Cowell of Rainier Funds

International growth is a consistent theme for companies in the consumer discretionary arena. “Consumerism” is growing globally, and those companies that are able to grow in more than just one market have more growth opportunities. Another theme in this sector is the concept of reaching the consumer in more ways than the traditional method of just providing a physical store. Retail revolves around getting the product to the consumer right at the point they want to buy it, where and how they want to purchase it. Companies have invested heavily in building out their e-commerce capabilities.

2011-06-20 Sector Insights Focus: Financials by James R. Margard, Mark H. Dawson, Andrea L. Durbin of Rainier Funds

The upheaval in the global financial system has made investing in financials quite challenging as of late, Rainier positioned itself well for the crisis. Because of our emphasis on financial strength and sustainability, we were able to avoid the major financial institutions that were most exposed to toxic assets and had taken on excessive credit risk. As the economy has moved into recovery mode, the financial sector hasn’t gotten any easier. Some of the biggest winners in the sector recently have been distressed institutions that aren’t projected to have positive earnings in the next year.

2011-06-20 Sector Insights Focus: Producer Durables by James R. Margard, Peter M. Musser and Carlee J. Price of Rainier Funds

Growth and value labels tend to be fairly subjective, and over time opportunities for growth and value tend to migrate and shift as conditions change. The producer durables sector has not historically been viewed as a “traditional growth” sector; however, there have typically been pockets of growth. Recently, this sector has begun to take on more consistent growth characteristics. We believe that the growth in producer durables could potentially be as good as other sectors of the market over the next few years. Much of this forecasted growth can be attributed to growth in the emerging world.

2011-06-20 Hard to Take a Bone from a Dog by John Browne of Euro Pacific Capital

Only by enacting massive reforms of major entitlements, which includes cuts to Social Security and Medicaid benefits, and reductions in military and domestic spending, will America be enabled once more to balance its books, generate real wealth, and issue sound currency. But given all that we know of how politics works in America, how many elected officials will grab the bone from the dog's mouth and pull? Regrettably, I can't assume many are up for the challenge. As a result, we must assume the worst for the U.S. dollar.

2011-06-20 Investors Should Look Past Near-Term Risks by Bob Doll of BlackRock Investment Management

There is no shortage of things to worry about, an environment that has caused stocks to move in a sideways pattern for close to two months. Investor anxiety and market volatility levels will remain elevated for the time being. At some point, stock valuations will settle at a level where investors feel adequately compensated for the downside risks facing the market. We are retaining a constructive view toward the economy and the markets and we suspect such a valuation level is not too far away. Investors should view the current period of weakness as an opportunity to take on additional risk.

2011-06-17 Time to Float? The Investment Case for Floating Rate Notes by Matt Tucker of BlackRock Investment Management

With QE2 winding down at the end of June, many analysts and investors are speculating that the end of the purchases may signal the beginning of a tightening cycle, creating concerns about rising interest rates. Since fixed rate bond prices decline when interest rates rise, this has prompted many investors to buy shorter duration securities to help protect their fixed income portfolios from rate increases. Another solution that investors may consider are floating rate notes (FRNs), which can help investors reduce their exposure to interest rate increases.

2011-06-17 Is Gold About to Have Its Status Upgraded? by Frank Holmes of U.S. Global Investors

Central banks have been on a gold buying spree. Mexico, Russia and Thailand, were adding to their gold reserves. And in 2010, central banks became a net buyer of gold for the first time in 21 years. Central bank gold buying could soon be matched with other global banks if gold’s quality as an asset gets upgraded to Tier 1 status by the Basel Committee on Banking Supervision. The BCBS is an international banking supervisory committee that provides a forum for determining global standards to ensure that banks all around the world have adequate capital.

2011-06-17 Will Gold Equity Investors Strike Gold? by Frank Holmes of U.S. Global Investors

While the party continues for gold bullion prices, stocks of gold companies have been a no-show. The NYSE Arca Gold Bugs Index (HUI) has fallen more than 13 percent year-to-date and the Philadelphia Gold & Silver Index (XAU) has toppled more than 16 percent. Companies such as High River Gold Mines, Jaguar Mining and NovaGold Resources are off 45 percent from 2007-2008 highs. This has been exacerbated in recent weeks making it a hot topic of discussion among investors. This chart shows gold equities of all market capitalization sizes were holding up quite well until late April.

2011-06-16 U.S. Investors Overexposed to U.S. Dollar Risk? by Axel Merk of Merk Funds

The U.S. dollar has experienced significant weakness over recent years. And there is a risk the U.S. dollar will experience ongoing deterioration for an extended period of time. U.S. investors may want to take this possibility into consideration when assessing the U.S. dollar risk inherent in their investment portfolios. Our analysis into the aggregate financial asset holdings of the U.S. personal sector finds that the vast majority of investor’s financial assets are denominated in U.S. dollars and as a result, significant U.S. dollar risk exposure is evident.

2011-06-15 The Problem with the Misuse of Derivatives by Mark Mobius of Franklin Templeton

Market volatility is a reality of today and goes in two directions, up and down. One of the reasons we have (and are likely to continue to see) this level of volatility is because of the occasional misuse of derivatives. Of course, not all derivatives are bad. If understood and used appropriately they can be used by funds as tools to hedge or mitigate risk. For example, currency forwards or interest rate swaps are typically used to hedge out a fund’s risk related to a specific currency or interest rate exposure.

2011-06-15 RMB Liberalization —What All the Excitement is About by Kenneth Lowe of Matthews Asia

Investors tend to be a fairly excitable bunch, always looking for the latest trends and themes to try to make a profit. But many trends have little relevance or impact over the longer term. During the past 12 months, one of those more “exciting” topics that have been discussed is the initial stages of renminbi (RMB) liberalization in Hong Kong—a concept that allows foreigners to get their hands on, and trade in, Chinese currency for the first time. But how excited should long-term investors be? A roundtable discussion among Matthews’ managers, on the same topic, is also included.

2011-06-15 Behind the Numbers: Retail Sales by Russ Koesterich of BlackRock Investment Management

On Tuesday, the Commerce Department said retail sales in May fell less than expected. If you look behind the numbers, however, the new retail data clearly shows a deceleration in consumption.

2011-06-14 Bruce Berkowitz - Ignoring the Crowd on Financials by Sam Parl (Article)

Bruce Berkowitz has said that his deep value and contrarian investing style will not guarantee short-term results, but he promises his shareholders will be rewarded for their patience over the long term. Last week, he explained why some of his positions - especially those in the financial services sector - are among the best opportunities in the market.

2011-06-14 What Fama and French’s Latest Research Doesn’t Tell Us by Michael Edesess (Article)

With the high name recognition and respect that the team of Eugene Fama and Kenneth French enjoys in the world of finance, anything they publish warrants attention. Their latest offering, Size, Value, and Momentum in International Stock Returns, offers some interesting data on global equity performance. But they fail to offer any insights that explain the reasons behind their findings.

2011-06-14 A Cautionary Tale from the World's Most Influential Economist by Dan Richards (Article)

Raghuram Rajan was recently cited by The Economist as having the most important ideas for the post-crisis world. In this interview, he identifies key policy issues the Obama administration must confront. This is a transcript of the interview.

2011-06-14 Pacific Basin Market Overview by Team of Nomura Asset Management

Europe’s sovereign debt woes and inflation fears have plagued the Asian equity markets recently, sending indices lower during May. The eventual withdrawal of QE2 also became a real concern for the markets. Japan’s post disaster market downturn continued in May, but mainly due to negative international factors this time. Meanwhile, domestic concerns about the ongoing negative impact of supply-chain disruption on manufacturers’ earnings and the political disarray caused by a divided parliament and a weakened prime minister have continued to weigh on the market.

2011-06-13 Internal Injuries by John P. Hussman of Hussman Funds

We're seeing a measurable and potentially dangerous breakdown of market internals in an environment where risk premiums remain very thin. Short-term conditions are fairly compressed, which invites a rebound, but the expectations for that have to be tempered by the still-complacent sentiment of investors. Indeed, about the only areas where we see real concern is in measures where such concern is actually predictive (rather than being a contrary indicator). These include widening interest-rate spreads in peripheral European debt, and surging credit-default swap spreads for major U.S. banks.

2011-06-13 Middle East/Africa Economic Review May 2011 by Team of Thomas White International

The fiscal stability of the Middle East and N.Africa region continues to be threatened by social pressures, yet rising inflation on the back of increasing fuel and energy prices and high levels of unemployment remain the main causes of concern. According to the Regional Economic Outlook report by IMF, the region is expected to grow 3.9 percent in 2011. The oil exporting countries are anticipated to record better growth thanks to high oil prices and production, while oil importing nations such as Egypt, Morocco and Jordan are expected to expand at a much slower pace.

2011-06-13 Americas: Economic Review May 2011 by Team of Thomas White International

In North America, the U.S. and Canada saw contrasting economic trends during the first quarter. While first quarter GDP growth in the U.S. slowed when compared to the previous quarter, growth accelerated in Canada. The U.S. housing market remains weak while the housing recovery in Canada started last year, and the labor market has also seen a similar divergence. However, the economic outlook for the two countries is expected to converge more in the coming quarters. As growth accelerates in the U.S., Canada may find it difficult to maintain its first quarter growth pace.

2011-06-13 Emerging Asia Pacific: Economic Review May 2011 by Team of Thomas White International

Aggressive interest rate hikes by emerging markets in the past twelve to eighteen months have started showing some results. Although food inflation in many emerging markets remains at elevated levels, the pace of inflation seemed to slow in some countries. Further, inflation expectations are expected to cool, primarily due to anticipation of record harvest of food grains in many countries. The threat from oil prices, which grew at a menacing pace during the first quarter of the year, also subsided a bit in May. Nonetheless, many central banks across Asia were cautious over monetary policy.

2011-06-13 Developed Europe: Economic Review May 2011 by Team of Thomas White International

All through May, Developed Europe’s debt woes dominated market sentiment, in not only the region but also other parts of the globe. Several other developments, such as the surge in the bond yields of other indebted nations like Spain, Ireland, and Portugal; S&P’s downgrade of the outlook for Italy’s sovereign bond from stable to negative; electoral setbacks for the ruling parties in Spain and Germany; and the arrest of the IMF chief, a key leader of the discussions on Greece; also added to investors’ unease.

2011-06-13 Emerging Europe: Economic Review May 2011 by Team of Thomas White International

According to data from EuroStat, inflation in the Euro-zone touched a 30-month high of 2.8 percent in the month of April as prices of fuel, electricity, and housing continued to soar. In line with the broader trend, the inflation gauge in the 27-member European Union, which also includes Poland, the Czech Republic, and Hungary registered an annual 3.2 percent in April, a touch above the 3.1 percent recorded in March. Among the east European economies, the Czech Republic recorded the lowest rate of inflation during the month.

2011-06-13 Oil Prices—Fundamentally Unhinged by Milton Ezrati of Lord Abbett

Oil prices spiked up more than 40% between September 2010 and early May, before suddenly giving back half the gain within the space of a week. Analysts naturally sought to explain the wild price swings with supply and demand. But, as is so often the case with commodities the fundamentals mean less than speculative money flows. These explain both the run up and the retreat and why prices moved so far so fast. Speculative motivations, more than the fundamentals, will set future price movements, though the fundamentals, when they influence, should keep the direction pointing down more than up.

2011-06-10 Time to Get Outraged by John Mauldin of Millennium Wave Advisors

This week we look at data from the Bank of International Settlements, by which (if someone does a lot of work) you can figure out how much US banks have written in credit default swaps to banks in Europe on Greek, Irish, and Portuguese debt. The details should not make you happy. I meditate on whether one should buy a house now, and then discuss “the way out” of all this mess and why we will Muddle Through.

2011-06-10 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Last summer, the markets encountered a (temporary) setback as debt problems in Europe threatened the global recovery and weaker data prompted thoughts of a double-dip. Well, after six consecutive down weeks, the pessimism has returned to the equity markets; of similar note, Greece still has yet to find its footing and the once promising labor rebound still has a long way to go. The Fed is about to end a controversial stimulus, but stands prepared to help again if situations warrant.

2011-06-10 Searching for the Market's 'Sweet Spot' by John Derrick of U.S. Global Investors

One of U.S. Global Investors’ “sweet spots” is investing in global small-and mid-cap companies. We generally define these companies as having a market capitalization between $1 and $10 billion. Ten billion sounds like a lot but is relatively small compared to market caps of companies such as Apple ($301 billion), Johnson & Johnson ($181 billion) and Coca-Cola ($149 billion). We like small and mid-cap companies because they tend to be less volatile than micro-caps, but still nimble enough to grow at faster rates than large companies.

2011-06-10 Pause or Panic? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic data has deteriorated to the point that talk of a double dip recession has returned. The risk of another recession is low as most indicators remain well in expansion territory. Several factors are contributing to a soft patch, but a rebound is likely in the latter part of 2011. Along with talk of recession risk, chatter about the need for QE3 by the Fed has increased. The bar is quite high for QE3, but it is very likely the Fed will not let its balance sheet shrink in the near-term. Global growth is decelerating as well, with China tightening and Japan dealing with reconstruction.

2011-06-09 Bernanke - It\'s Complicated! by Axel Merk of Merk Funds

Get ready for more money to be printed – this time not to subsidize but to stem against the credit destruction caused by the Fed itself. Tuesday evening at the International Monetary Conference in Atlanta, J.P. Morgan CEO Jamie Dimon gave a list of changes that have already incurred, including: No more Special Investment Vehicles (SIVs). No more sub-prime, no more “Alt-A” mortgages. No more CDOs. Higher underwriting standards. On top of these changes, the Fed now wants to introduce 300 new regulations. Has anyone at the Fed studied what impact these regulations will have on credit?

2011-06-08 Gold at $1,500 an Ounce: Speculation or Fundamental Demand? by Team of American Century Investments

We believe gold’s performance in recent years and current price above $1,500 an ounce reflect solid fundamental demand, rather than speculative fervor. A key driver of gold demand in the current environment is buying by central banks around the world. In addition, it appears that investors looking for a hedge against both the falling dollar and broader economic uncertainty have been buying gold for its diversification benefits. Jewelry demand in India and China are other, underappreciated positives.

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.

2011-06-07 Why Jim Rogers is Bullish on Gold by Dan Richards (Article)

The veteran investor Jim Rogers explains why he is bullish on gold and the US dollar, and offers his thoughts on Asian economies why he chose to move his family to Singapore. This is the transcript of the interview.

2011-06-07 Monday Market Calls | US Retailers and Emerging Market Bonds by Russ Koesterich of BlackRock Investment Management

Call #1: Maintain Underweight US Retailers. Last week, the main monthly gauge for manufacturing activity and May’s non-farm payroll report both came in weaker-than-expected and both confirmed that the economy is experiencing a dramatic slowdown. Call #2: Neutral Emerging Market Bonds. The other implication of a slower global economy is that bonds should do better relative to stocks. Given what appears to be a case of extreme over valuation, we would still advocate a negative view on US Treasuries, but we are now changing our view of emerging market bonds from negative to a neutral stance.

2011-06-07 And That’s The Week That Was … by Tom McIntyre of McIntyre, Freedman & Flynn

As we warned last week and over the past couple of months, the poor quality of the economic expansion finally has caught up to the economic statistics. Last Friday’s dismal report showing a jump in the unemployment rate to 9.1% left all of the cheerleaders from Warren Buffet to the Secretary of Labor scrambling for explanations. Given the lack of earnings or merger news, the stock market recorded its fifth straight weekly decline. As the charts illustrate, both the Dow Jones Industrial Average and the NASDAQ Composite dropped around 2.3% last week in response to the now obvious slowdown.

2011-06-06 Handicapping QE3 by John P. Hussman of Hussman Funds

As disappointing economic news mounted last week, the attention of market participants immediately turned to policy responses - will the Fed embark on QE3? In my view, there are three central questions relevant to this issue. The first is simply this: Has QE2 been successful in a way that the economy should desire more of it? The second: How much scope for intervention does the Fed have left? The third: Is Bernanke so invested in this attempt at balance-sheet expansion that he will push forward an extension of the policy despite its economic ineffectiveness and speculative distortions?

2011-06-06 David Kotok on Central Bank Credibility; Bob Eisenbeis: Did the Fed Print Money with QE? by Team of Institutional Risk Analyst

This week in The Institutional Risk Analyst, we republish a comment by Robert Eisenbeis, Chief Monetary Economist of Cumberland Advisers, "Did the Fed Print Money in QE1 and QE2?" Eisenbeis, who was Executive Vice President and Director of Research at the Federal Reserve Bank of Atlanta prior to joining Cumberland, corrects a puzzling comment on the Fed published last week in the Wall Street Journall by George Melloan. We assumed that Melloan and the Wall Street Journal editorial staff were aware of the rules of monetary quantum mechanics, but maybe not.

2011-06-03 The Eurozone Needs a Plan B, as 'Quarantining' the Weak Is Too Costly by Andrew Balls of PIMCO

The eurozone’s peripheral debt crisis is morphing into a tussle between politics and economics and the strains are beginning to show. Greece and Ireland are on programs that are neither restoring stable debt dynamics, nor in keeping current investors engaged or attracting new ones. Portugal is now following the same approach. The better and more realistic approach for the eurozone as a whole might be to acknowledge the Greek plan is not working and move to Plan B – address the need for a restructuring of Greece’s public debt and perhaps that of other countries too.

2011-06-03 Natural Resources Q&A with the Global Resources Fund Team by Frank Holmes of U.S. Global Investors

This week Frank Holmes and the co-managers of the U.S. Global Investors Global Resources Fund (PSPFX), Evan Smith and Brian Hicks, participated in a special webcast for the Peak Advisor Alliance. Here are some candid portions of the Q&A: Q. How are interest rates currently affecting commodity prices? A. The magic number for real interest rates is 2 percent. That’s when you can earn more than 2 percent on a U.S. Treasury bill after discounting for inflation. Our research has shown that commodities tend to perform well when rates fall below 2 percent.

2011-06-02 ProVise Bullets by Team of ProVise Management Group

As the first of the Baby Boomers begin to turn 65, they are being greeted with some bad news concerning Medicare and Social Security, especially since they hope to enjoy a longer time in retirement. Social Security is now scheduled to be exhausted by 2036, a year earlier than was projected last year. In addition to longer life spans, the 2% reduction in Social Security tax this year was a major factor in this updated information. As bad as things are for Social Security, things are worse for Medicare, which is projected to be bankrupt by 2024, five years sooner than was projected last year.

2011-06-01 An Investment in Infrastructure by Team of Columbia Management

Neglecting infrastructure can have tragic consequences. Think about the I-35 bridge collapse in Minneapolis, levees breaking in Missouri or the San Bruno gas pipeline explosion. These and many other examples illustrate the type of destruction that can occur if the country’s aging infrastructure is not addressed. At the same time, demand for new infrastructure is growing exponentially in emerging markets. Data highlighting the scale of construction, transport, logistics and communications development are so large they render relevant context difficult to comprehend.

2011-06-01 What’s Gold Really Worth? by Kevin Feldman of BlackRock Investment Management

Determining an exact value for gold isn’t easy—but the pressure to do so is diminished by the fact that gold shouldn’t be a short-term investment. The drop in silver’s price earlier this month suggested that some major market players had decided that silver had risen far above a reasonable valuation. In the aftermath, some writers argued that the price drop of about 27% for the week of May 2nd was a reasonable correction. Since some investors still link gold and silver some market observers and gold investors wondered if gold, down about 4 percent last week, was also due to plummet.

2011-06-01 Overweight Healthcare and Exiting Australia by Russ Koesterich of BlackRock Investment Management

This week, our attention turns to the recent slowdown in the global economy and what it means for investors. Over the past month, both equity and commodity markets have staged a modest retreat. One potential cause of the slowdown is the lagged impact of higher commodity prices, which have historically acted as a drag on growth. Late last year, we advocated an overweight to Australian equities, which we then reiterated in early April. Since the initial call, iShares MSCI Australia Index Fund (EWA) has gained around 6.5%. We are now changing our view to neutral for a number of reasons.

2011-05-28 Railway Revolution Builds China's Consumer Culture by Frank Holmes of U.S. Global Investors

China is building the world’s largest network of high speed rails. Since opening the first high speed line between Beijing and Tianjin in 2008, the country has laid down more than 4,600 miles of new tracks. This is three times more than Japan, where the bullet train was invented. Once completed near the end of this decade, the high speed rail system will connect more than 250 Chinese cities, span 18,641 miles and reach roughly 700 million people. Currently, the high speed rail network connects about one-third of China’s cities. That figure is set to nearly double over the next two years.

2011-05-28 Schwab Market Perspective: Shifting Sentiment by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic headwinds are causing growth expectations to be reevaluated, resulting in choppier action in a majority of asset classes. The Fed is moving steadily closer to ending its purchases of Treasuries but we dont believe its a major event. Normalization of monetary policy still seems slow in coming, although we believe QE2 ending on schedule is nearly certain. Europe's debt crisis continues to plague the eurozone. Solutions appear to be limited and agreement is still anything but assured. Meanwhile, China's slowdown is also weighing on investors.

2011-05-28 A Random Walk Through the Minefield by John Mauldin of Millennium Wave Advisors

In the last 48 hours, so much news has come out of Europe that has me frankly shaking my head. It is a strange game of brinksmanship they are playing, and it is one we should be paying attention to (as if the brinkmanship played by US politicians over the debt ceiling is not enough). This week we look at what seems to be European leaders taking random walks through the minefield at the very heart of the European Experiment. As Paul Simon wrote, “A man sees what he wants to see and disregards the rest.”

2011-05-27 Abu Dhabi by Mark Mobius of Franklin Templeton

Abu Dhabi is the capital of the United Arab Emirates (UAE), the federation of seven emirates including Dubai. The UAE’s combined economy is large compared to its relatively small size—it has a population of around five million, of which 1.6 million live in Abu Dhabi. Per capita GDP in the UAE is more than US$40,000, and that number is significantly higher for Abu Dhabi, mostly because of the incredible earnings from oil and gas. Each day, Abu Dhabi produces more than 2 million barrels of oil, and its oil reserves are now estimated at nearly 98 billion barrels, the sixth largest in the world.

2011-05-27 All That Glitters by Richard Bernstein of Richard Bernstein Advisors

It is hard to find anything in the current financial landscape that has caught investors’ attention as much as gold. We were proponents of gold at times over the past decade. However, the rationale for investing in gold has changed in the last three years. The story was once a fundamental one, but today’s general enthusiasm seems more emotionally-based. Gold prices might rise further, but we prefer to sit out the current rally in favor of more fundamentally-based investments that tend to perform well during periods of sizeable nominal growth.

2011-05-26 The Case for Equities by Russ Koesterich of BlackRock Investment Management

With global equity markets up over 100% from their 2009 lows, many investors are questioning whether it is time to lower their strategic allocation to stocks. While there are no shortages of risks facing global equity markets, overall we find that most markets are fairly valued and arguably already reflecting some of the risks – particularly higher inflation and interest rates – that are likely to challenge the global economy. We believe that over the long term, equities are still likely to produce higher nominal (inflation-adjusted) and real returns than other financial assets.

2011-05-25 Double-Invoicing and the Yuan by Andrew Foster of Seafarer Capital

It’s widely held that the Chinese yuan is a “cheap” currency, and that it is undervalued relative to the U.S. dollar. I agree, especially in light of how expensive some foreign currencies appear to be. However, I would quickly caveat my opinion by clarifying that it applies only to a long-term horizon. If you are looking for pessimism regarding the yuan, there is no shortage of popular arguments against it, but I will leave that aside for now. By examining a little-known practice called “double-invoicing,” we can observe commercial traders’ preference for the yuan versus other currencies.

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 How to Build a Low-Risk High-Income Portfolio by Geoff Considine (Article)

Prominent investors, including Bill Gross and Warren Buffett, now say that the yields on long-term government debt do not justify the risks. But is this perception correct? I offer a way to answer that question - and to construct a low-risk high-income portfolio - using the prices of put options to derive the true risk levels of various asset classes.

2011-05-24 The WikiLeaks of the Economics Profession by Michael Edesess (Article)

What Caused the Financial Crisis presents the most comprehensive account I have seen of the regulations that, when considered as a whole, have incentivized unprecedented self-delusion and risk-taking in the subprime mortgage market. To put it in a manner that financial advisors will understand, the book shows that the policies and regulations greatly increased the Sharpe ratio of the financial industry - they increased the return for taking risk.

2011-05-24 A Washington Forecast for Advisors and Investors by Robert Huebscher (Article)

Only entitlement reform can bridge the federal deficit, and your clients should prepare for changes to Medicare and Social Security, according to Andy Friedman. Cost-sharing and means-testing are among the big changes that Friedman sees on the horizon. Don't expect much progress in the near term, though, as Friedman forecast continued gridlock on the budget at least until the 2012 elections are decided.

2011-05-24 Risks Are Rising, but the Long-Term View Remains Positive by Bob Doll of BlackRock Investment Management

The recently weaker tone in equity markets can be attributed to a broad slowdown in economic data. A longer-term retrospective view shows that the pace of economic growth has been gradually fading over the past several months. Some of the decline can be explained by seasonal factors or factors that may prove to be temporary. In any case, however, at this juncture it appears that the recovery or acceleration phase of the business cycle may be ending. We believe the economy is now shifting into an expansion mode, and the question will become how long that expansion will last.

2011-05-24 Inflation—Which Prices Aren't Changing by Robert J. Horrocks of Matthews Asia

Inflation has been one of the big buzzwords in Asia's markets this year. Wages, interest rates and prices for commodities, assets, goods and food have all been on the rise. The problem with much of the discussion is that it treats inflation in all these areas as though they were the same—a single phenomenon that is an unqualified evil. In my view, not enough has been done to distinguish between cause and symptom. Perhaps this is because when one does try to distinguish between cause and symptom, the topic of inflation becomes much more complex.

2011-05-24 Debt Ceiling Jeopardizes Dollar’s Reserve Status by Axel Merk of Merk Funds

While borrowing costs for the U.S. government have not yet risen, irreparable harm may have already been done to the U.S. dollar and its status as a reserve currency. Ironically, it’s not a plunging, but a rallying bond market that is a symptom of the problem. Most observers believe that a) the Treasury has a big bag of tricks to continue servicing the debt; and b) politicians will play a game of chicken, but eventually do what they always do: agree to spend more money. We don’t know how the bond market will react; but we do know that policy makers are playing with fire.

2011-05-23 Spreads Edge out as Large Supply Continues by Stephen Smart of CCM

Secondary investment-grade and high-yield corporate bonds are still in favorable (albeit attenuated) trends, but are now past the seasonally “right” time of year for outperformance; most new nonfinancial issues are still being priced rich to secondaries. Investment-grade corporate bonds still look like they will probably outperform Treasuries over the next two-to-three year period, but I expect most of that outperformance will recommence later in the year – not in the May-October period.

2011-05-21 The Dollar and Oil Debate on CNBC Europe by Frank Holmes of U.S. Global Investors

This week in London, I joined CNBC Europe’s Commodities Corner to discuss an earlier post regarding my Three Reasons to Believe in $100 Oil. Of the three reasons I gave, most striking to this group was my belief that higher oil prices will continue because of a weakness in the dollar. What I explained during the discussion was that a falling dollar causes short-term volatility. As the demand for a particular commodity increases and the dollar weakens, or vice versa, investors need to deal with an exaggerated movement in the price. However, I stressed the short-term nature of these events.

2011-05-21 All for One Euro and One Euro for All? by John Mauldin of Millennium Wave Advisors

What Will the EU Do? Seriously, will Trichet really say “non” when they once again peer down at the abyss? He blinked last time. But if the desire is to acknowledge in private what they cannot say in public - that Greece should leave the eurozone and go back to the drachma - there is no better way than to not take Greek debt onto the ECB’s books. It is not a matter of whether Greece defaults, but when. It may be easier in the long run to clean up the mess they have now than continue to create even more debt that cannot be paid.

2011-05-21 And That’s The Week That Was … by Ron Brounes of Brounes & Associates

It’s beginning to look a lot like…summer. From college commencements to high school proms to nursery school graduations…soon kids will be home with nothing to do (but spend their parents’ hard-earned money); vacations start in earnest; and market volume usually takes a tumble (tee times during trading hours). As for this year…rising commodities have elevated food prices which makes dining out more expensive. Likewise, with gasoline prices pushing $4/gal, analysts worry about any ill-effects on travel plans and overall consumer activity. In fact, several retailers are already feeling the pinch.

2011-05-21 Asian Tiger Sinks Teeth Into Gold by Frank Holmes of U.S. Global Investors

The World Gold Council (WGC) released its quarterly “Gold Demand Trends” report this week and, as always, it was filled with fascinating data on the strength of the global gold market. Gold demand grew 11 percent to 981.3 tons during the first quarter of 2011, worth $43.7 billion at quarter-end’s price levels. The increase was driven by a significant rise in demand for gold as an investment, up 26 percent from a year ago, as emerging markets look to protect their assets from rising inflation. Demand for gold bars and coins was up 62 percent and 42 percent, respectively.

2011-05-20 What’s Eating You? Global Inflation and Your Portfolio by Matt Tucker of BlackRock Investment Management

Headlines have been filled with news about inflation, from rising commodity, precious metals and gas prices to higher prints of the consumer price index. Traditionally investors have looked to US real estate, commodities and US TIPS to help protect against inflation. As news of rising foreign inflation reaches the US, investors may now be asking if they need to think this in the context of their portfolios. Is global inflation different than US inflation? Could investing in assets that help protect against global inflation increase a portfolio’s efficiency? Am I missing an opportunity?

2011-05-20 More People by Bill Smead of Smead Capital Management

As value managers, we are interested in secular trends. We seek company characteristics which lead us to non-cyclical businesses which are not capital or labor intensive. For this reason, we love businesses which need more people (as customers) to become more profitable. Unfortunately, from time to time, markets massively over-capitalize industries which they believe will benefit from having more people. Historical examples: The 1929 stock market peak was built around the idea that there would be more people to listen to radio, drive cars and fly on planes. The concept was over-capitalized.

2011-05-19 Cause or Effect: ETF Trading Volume Impact on Volatility (and Vice Versa) by Noel Archard of BlackRock Investment Management

If you read Russ Koesterich’s blog post from Monday, May 12th, you already have an idea of what has been going on with the price of silver. The commodity was up over 150% over the prior 12 months before going through a downward correction and shedding 30% of value. Our iShares Silver Trust (SLV) became a focal point during the course of the week as volatility spiked, and the usual questions popped up about how people use ETFs, and whether or not ETF trading volume is caused by price volatility, or if it’s in fact a contributor to the volatility.

2011-05-18 Oman by Mark Mobius of Franklin Templeton

I recently visited Muscat, the capital of Oman. Oman has a very strategic position in the Middle East, controlling the tip of the Musandam peninsula even though the peninsula is separated from the rest of Omanby land belonging to the United Arab Emirates (UAE). That tip points right into the Straits of Hormuz, which is the choke point for oil leaving Saudi Arabia, Qatar, Iran, Kuwait, Iraq and the UAE from the Persian Gulf to the Arabian Sea, leading to the Indian Ocean. On a clear day, you can see Iran from the tip of the peninsula. Oman’s military, therefore, has to protect that waterway.

2011-05-17 Pippa Malmgren on Inflation and its Geopolitical Impact by Robert Huebscher (Article)

The Cold War may have been over for a quarter century, but the inflation-driven challenges that characterized that historical era are heating back up. Today, global volatility is back, according to Pippa Malmgren, who says that commodity-driven inflation will lead to political instability in emerging markets.

2011-05-17 Europe and Volatility by Russ Koesterich of BlackRock Investment Management

The news in Europe continues to be mixed. On the plus side, the core countries in Europe continue to post strong economic growth. We had more evidence of that this week with solid GDP results from both Germany and France. The problem of course remains the periphery, particularly Greece. Greek debt was downgraded again and markets are now convinced that Greece will need to restructure. US market volatility has been its lowest since 2007, with the VIX Index – which measures implied volatility on S&P 500 options – hitting a four year low of below 15 in April. We believe this is too low.

2011-05-17 Plantar Fasciitis? by Jeffrey Saut of Raymond James Equity Research

In past missives I have opined that China is slowly revaluing its currency in an attempt to create more domestic demand, dampen its inflation rate, and placate U.S. leaders. To be sure, the Chinese realize in the long-run the manufacturing/export driven economic model will eventually morph to the lower cost of labor, which is quickly becoming the Vietnams of the world. Accordingly, they are following what Brazil did with its currency (the Real) a few years ago. To wit, Brazil raised interest rates and increased the value of its currency.

2011-05-16 Strauss-Kahn Allegations Are Consequential for the Global Economy by Mohamed A. El-Erian of PIMCO

Should Strauss-Kahn be forced to step down, this would catch the IMF with a selection process for the top position that is still overly dominated by politics. The allegations facing Strauss-Kahn are serious and will take time to be investigated properly. In the meantime, they have caught Europe still without a sustainable solution to the debt crisis in its periphery.

2011-05-13 Congress, The Fed Reserve, and Markets by Cliff W. Draughn of Excelsia Investment Advisors

I never did particularly care for Alice in Wonderland, watching her go down rabbit holes and discover the characters of the White King and Queen, Humpty Dumpty, Cheshire Cat, and the Mad Hatter. But when watching the ongoing budget debates I feel as if the American people are Alice and we are being subjected to a world of budgetary nonsense, spoken in a language that is incomprehensible. The American people know they are being held hostage in a strange place where our Congress orchestrates a Mad Hatter tea party for which the entertainment is kicking the can of debt down the road.

2011-05-13 Postcard from Vietnam by Teresa Kong of Matthews Asia

The use of both the U.S. dollar and Vietnam’s currency, the dong, is widespread in Vietnam. Just as easily as you might pay for a new pair of jeans with cash or with credit in the U.S., you could do so in either dong or dollar in Vietnam. Over the last two decades, currency depreciation, in combination with bouts of hyperinflation, has led to Vietnam’s use of the U.S. dollar and gold as primary stores of wealth. Unlike China, which has experienced appreciation relative to the U.S. dollar over the last two decades, Vietnam has seen a drastic depreciation of its currency over the same period.

2011-05-13 Market Turbulence Increasing by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

We are entering a traditionally tough period for the market and economic data has been raising questions about the sustainability of the recovery. While still optimistic on the longer-term outlook, there could be more choppiness in the near term as markets adjust to a changing environment. The Fed continues to buck the global trend by maintaining loose monetary policy, which contributed to a weaker dollar. But lately the dollar has gotten a lift as QE2 comes to an end, contributing to a rout in commodity prices.

2011-05-13 Three Reasons to Believe in $100 Oil by Frank Holmes of U.S. Global Investors

After selling off nearly 14% last week, oil prices finished this week slightly higher at $99.65 per barrel. While the end result was a net positive, the volatility continued. Oil reached $104/bbl, then fell to around $96, before nesting just below $100. As an investor, this volatility can be difficult to handle. Throw in the uncertainty of today’s geopolitical environment, and investors feel the need to downsize their positions in commodity investments, such as oil. Markets could remain volatile in the short-term, but here are three long-term indicators to support $100+/bbl oil prices.

2011-05-12 The Value of Gold Company Stocks and Gold’s Role in a Diversified Portfolio by Team of American Century Investments

Two questions we’ve heard a lot lately are “Why haven’t the stocks kept pace with the metal?” and “What’s the right amount of gold for my portfolio?” The recent disparity in performance between gold bullion and gold mining stocks is largely down to concern about higher costs to extract and refine the metal. Compare those fears with conditions in 2009 and 2010, when gold mining stocks did very well as the price of gold bullion surged, while changes in production costs were comparatively tame. This meant better top-line revenue and margin figures, making for attractive stock performance.

2011-05-12 Pacific Basin Market Overview - April 2011 by Team of Nomura Asset Management

Equity markets in Asia continued to gain ground in April after a volatile first quarter of 2011. Stock markets ended higher as companies reported strong earnings, while expectations that inflation may have peaked out also helped to support market sentiment. Disruption to manufacturing industry supply-chains and ongoing problems surrounding the Fukushima nuclear power plant have continued to weigh on Japanese stock prices, although the market was able to stabilize from the massive sell-off that followed the Tohoku earthquake.

2011-05-12 Inflation is Not a Panacea by Peter Nielsen and Ben Bortner of Saturna Capital

It was only last August when economists and investors alike were afraid that the country was about to enter a deflationary spiral that would cripple the economic recovery. The solution in the Fed's eyes was to "print" $600 billion and pump them into the economy over the next ten months. Now, it appears we should be careful what we ask for. The threat of deflation has been all but incinerated in the afterburn of soaring raw materials prices. While strong raw material prices may be beneficial to some in the short-run, over the longer-term there is a cost paid by all.

2011-05-11 UK Country Risk: Is Lloyd's of London Too Big to Sue? by Team of Institutional Risk Analyst

Last month an American investor named Richard Tropp filed a writ of certiorari with the US Supreme Court to review a decision by the Second Circuit in New York regarding an epic litigation against the Lloyds of London insurance market. To us, the case of Tropp v. the Corporation of Lloyds is troubling not only because it implies that thousands of investors in the Lloyd's insurance market have no contractual rights enforceable at law in the courts of England and Wales, but also because of what it says more broadly about the state of the law in Britain.

2011-05-10 Emerging Europe: Economic Review by Team of Thomas White International

The International Monetary Fund in its latest report observed that the economic recovery in Europe as a whole is proceeding modestly. However, the agency noted that the pace of growth varied substantially across countries in the region. The large emerging European economies in the region are performing at or above capacity, according to the agency. Preliminary data showed that the Euro-zone economy expanded at a better-than-expected pace in April, allaying concerns that the recent rate hike by the European Central Bank would strengthen the euro and slow down German export growth.

2011-05-10 Emerging Asia Pacific: Economic Review April 2011 by Team of Thomas White International

Faced with persistent inflation, central banks across emerging Asian economies turned more active in the foreign exchange markets during April, aggressively raising interest rates. However, these actions have coincided with a loose monetary policy in the developed markets. Consequently, the investment capital, which typically chases high interest rates, continued to flow from the developed markets to emerging markets, pushing up the value of the currencies of emerging markets. To prevent a sudden appreciation of their respective currencies, central banks turned into buyers of the U.S. dollar.

2011-05-10 Americas: Economic Review April 2011 by Team of Thomas White International

Rising inflation remains the major policy concern across most economies in the Americas region and is attracting stronger policy responses, as energy and commodity prices remain elevated. While some of the Latin American countries continue with monetary policy tightening, Canada is widely expected to start hiking interest rates later this year. In the U.S., the Federal Reserve will end its quantitative easing program by the end of this quarter, though interest rate hikes are not expected until early next year.

2011-05-10 What is the greatest investment risk? The risk that money won’t be there when you need it! by David Edwards of Heron Financial Group

Stocks rallied in April, closing at the high for the year and the highest level in three years. With stocks up 9.1% through April 30th versus our 2011 forecast of 8%, we see stocks as fully to slightly overvalued. In fact, given the lack of substantial “new” news to push stocks one way or the other, we expect a 10% trading range that could last through the summer and into the fall. On February 28th, David Edwards commented on Bloomberg Radio that “the S&P 500 could fall 10% in the next six months,” but that he wouldn’t change his strategy because he expected a 20% rally on the other side.

2011-05-10 Middle East/Africa: Economic Review April 2011 by Team of Thomas White International

According to research by the World Bank, unrest in the Middle East and North Africa has affected economic growth in the region, which previously had been expected to zoom upwards in 2011 until the turmoil began. In its economic forecasts in January, the World Bank had projected that the region, which had come out of the 2009 global recession, would enjoy a rise in gross domestic product (GDP) from 3.3 percent in 2010 to 4.3 percent in 2011. In stark contrast now, some of the affected countries like Egypt will have a growth rate as low as one percent.

2011-05-07 Don’t Turn Out the Lights on Commodities Just Yet by Frank Holmes of U.S. Global Investors

The prices for many commodities suffered the worst week in recent memory this week. Oil prices dipped below $100 per barrel, gold fell below $1,500 an ounce and silver gave back much of the past month’s gains by falling to the $35 an ounce level. The prices for other commodities such as sugar, tin, nickel, aluminum, lead and copper also pulled back. Immediately, headlines on websites such as Marketwatch, Bloomberg and SmartMoney read “Has the Commodity Bubble Popped?” and “Imploding Commodities Complex.” In our opinion, not likely.

2011-05-06 And That’s The Week That Was … by Ron Brounes of Brounes & Associates

As the 10-year anniversary of 9-11 approaches, American have all too vivid memories of that dreadful day and the frightening uncertainties that have remained because of the elevated terror risks.  This week, one uncertainty was lifted as Osama bin Laden, the 9-11 mastermind, was killed in a successful military operation in Pakistan.  While his death does not eliminate the risk of future attacks, it brings much-needed closure to many and a newfound sense of country pride for the US military and intelligence community. 

2011-05-05 The Rising Financial Gold Market by Frank Holmes of U.S. Global Investors

When the University of Texas Investment Management Corporation (UTIMCO) took possession of more than 20 tons of gold worth $991.7 million earlier this year, its gold stockpile became larger than the official gold holdings of about 28 countries combined. UTIMCO manages the second-largest endowment in the U.S. However, UTIMCO’s gold holdings pale in comparison to the top five countries: United States, Germany, Italy, France and China. These countries hold approximately 19,000 tons combined, about two-thirds of official holdings at the end of 2010, according to the World Gold Council.

2011-05-04 What Happens When China Becomes a Net Food Importer? by Adam Wolfe of Roubini Global Economics

China is the world’s second-largest producer and largest consumer of grains, and it remains broadly self-sufficient despite rapid urbanization. Increased paychecks mean a smaller share of income goes toward food purchases, and consumers can afford more meat and dairy products. However, since it requires several calories of grains to produce a single calorie of meat for final consumption, China’s total grain consumption has increased about 2% annually on average since 1980. China’s ability to meet its rising grain demand with domestic production is reaching its limit.

2011-05-03 The Dollar: It’s Payback Time! by Axel Merk of Merk Funds

It’s payback time for Ben Bernanke. In some ways, this should neither surprise, nor scare anyone. Unfortunately, it might do both. In any open market, information is absorbed into asset prices, including exchange rates. Indeed, exchange rates may be the best pricing source to assess the impact of the relentless involvement of policy makers’ “print and spend” mentality in the markets. When trillions are spent, markets are likely to move. However, an unintended consequence has been that a broad range of assets are now moving more and more in tandem, giving investors fewer options to diversify.

2011-05-02 Schwab Market Perspective: Making Sense of a Mixed Bag by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Earnings season is winding down and is largely positive and CEO confidence is high. This points toward a continued improving labor outlook but could mean more grinding in the stock market. Housing remains moribund but the market seems to be largely dismissive. A ratings warning on US debt rattled the stock market but bond markets were relatively unmoved. Issues need to be addressed, but they are more likely to affect money flowing into the economy and highly unlikely to result in failure to pay obligations. Meanwhile, the Fed is striving to communicate more effectively-but about what?

2011-05-02 Global Market Commentary by Monty Guild and Tony Danaher of Guild Investment Management

As we have been saying for some time, U.S. economic growth is stuck in the slow lane.We have seen a serious slide in the American standard of living over the past three years, since the beginning of the recession.The slide can be measured in many ways.Food stamps recipients have increased by 48 percent and the cost of the program ballooned by 80 percent.Medicaid recipients are up 17 percent and programcosts are up36 percent.Welfare recipients are up 18 percent, and program costs up24 percent. That isnt the kind of growth thats good for any economy!

2011-04-29 How a Falling Dollar Affects Gold by Frank Holmes of U.S. Global Investors

Statements by Chairman Ben Bernanke on April 27 shouldn’t have surprised investors. Following the Fed’s press conference, the Fear Trade continued. Gold hit a new high while the dollar fell further, touching a three-year low on Thursday. As gold investors know, the metal has historically been negatively correlated with the dollar, meaning when the greenback is weak, gold tends to be strong. That correlation is reaching an extreme, widening substantially over the last year. Spot gold prices on the COMEX closed above $1,527 yesterday while the U.S. Trade Weighted Dollar Index tumbled to 73.32.

2011-04-29 FPA Crescent Fund Q1 2011 by Steven Romick of First Pacific Advisors

The optimists held sway in the first quarter of 2011 and ended the quarter on a good note, with the stock market having returned 5.9%. Crescent returned 4.7%, capturing 80% of the market’s return with risk exposure at just 58% of capital during the period. Two investments – Aon and Covidien – accounted for more than 10% of the Fund’s return in the period. No investment detracted from the return to that degree. The greatest negative impact in the quarter came from Microsoft (down 19 bps), a holding we have increased to take advantage of price weakness, given the current low expectations.

2011-04-29 The Endgame Headwinds by John Mauldin of Millennium Wave Advisors

By Endgame I mean the period of time in which many of the developed economies of the world will either willingly deleverage or be forced to do so. This age of deleveraging will produce a fundamentally different economic environment lasting anywhere from 4-6 years. Now, whether this deleveraging is orderly, as now appears to be the case in Britain, or more resembles what I have long predicted will be a violent default in Greece, it will create a profoundly different economic world from the one we have lived in for 60 years.

2011-04-26 Energy and Natural Resources Market by Frank Holmes of U.S. Global Investors

China’s apparent fuel consumption has gained 12 percent to an all-time high of 21 million tons in March. Chinese oil demand averaged 9.265 million barrels per day during the first quarter. Even at $4 per gallon of gas, gasoline demand in the U.S. maintained levels around 9 million barrels per day, according to the U.S. Department of Energy. Aluminum shipments by North American service centers have rebounded in March. Total U.S. and Canadian shipments were 155 kilotons. This is the highest volume since October 2008 and represents a 25 percent month increase, 29 percent year.

2011-04-26 Are You Watching Your Brokered Deposits? Bob Eisenbeis: What's a Central Bank to Do? by Team of Institutional Risk Analyst

In this issue of The Institutional Risk Analyst, we feature a comment from Bob Eisenbeis, Chief Monetary Economist of Cumberland Advisors. Bob clearly states the obvious in his excellent analysis of the choices facing the Federal Open Market Committee, namely that the Fed continues to steer monetary policy based upon largely domestic factors, this even as the global role of the dollar creates dangers for the US and other nations as they flee the perils of deflation.

2011-04-25 Monetary Policy in 3-D by John P. Hussman of Hussman Funds

One of the most important factors likely to influence the financial markets over the coming year is the extreme stance of U.S. monetary policy and the instability that could result from either normalizing that stance, or failing to normalize it. It is not evident that quantitative easing, even at its present extremes, has altered real GDP by more than a fraction of 1%. Moreover, it's well established that the "wealth effect" from stock market changes is on the order of 0.03-0.05% in GDP for every 1% change in stock market value, and the impact tends to be transitory at that.

2011-04-25 Yemen: Different Sort of Story by Douglas Clark Johnson of Codexa Capital

Yemen may now be worth a second look by the private sector, with the pending departure of Ali Abdullah Saleh from office. While the country’s distorted economy puts limits on growth, its international context could soon take a more constructive turn. The key is broad-based GCC participation in the economy, something that was never seriously on the table while President Saleh was in office.

2011-04-22 Silver Set to Soar as Paper Folds? by John Browne of Euro Pacific Capital

As a result of active “demonetization” efforts by the IMF and its member central banks, gold and silver have experienced the type of volatility that has given conservative investors reasons not to perceive the metals as dependable cash alternatives. Instead gold and silver have become known as the asset class to hold as a hedge against inflation. However, during the 1990’s, when inflation was in general much higher than it has been since the turn of the millennium, gold and silver prices drifted lower and stagnated.

2011-04-22 Don’t Fear a Pullback in Prices by Frank Holmes of U.S. Global Investors

The S&P credit agency sent shockwaves through the global financial system on Monday. This sent markets lower and the prices of commodities such as oil rocketing back above $110 per barrel and both gold and silver to new highs. It should be clear the S&P announcement was just a warning, the rating was affirmed at AAA. The fears quickly subsided and U.S. markets hit fresh three-year highs. Essentially there’s only a one-third chance of a downgrade and anyone who’s ever listened to the weather man knows that a 33 percent chance of rain means you probably don’t need your umbrella.

2011-04-21 South Korean and Taiwanese Electronics Giants Fight for Global Influence by Team of Thomas White International

The East Asian nations of South Korea and Taiwan have transformed themselves from being the manufacturing backyards of US and Japan into high-tech giants in the past four decades. Their growth in the field of electronics has been impressive especially since the late 1990s. Currently, South Korean and Taiwanese firms are not only engaged in the manufacturing of the highly-commoditized chips but also in the production of hi-tech electronic devices such as smartphones, tablets, televisions and personal computers.

2011-04-21 Banking Sector in India: Counting on Credit Growth by Team of Thomas White International

In 2008, when the global banking industry was being shaken by the tremors of the unfolding financial crisis, only one bank in India felt the aftershocks, and this, only because one of its overseas subsidiaries had made an opportunistic bet on debt issued by the failed investment bank Lehman Brothers. While the market valuations of all the leading banks in India slipped as equity prices tumbled, their businesses were not affected and their balance sheets remained healthy. Most domestic commentators continue to hold up this as evidence of the inherent strengths of the Indian banking industry.

2011-04-20 Is Europe at the Tipping Point? Sol Sanders & Bill Alpert on Keynes, Keynesianism -- and Keynesianit by Team of Institutional Risk Analyst

With the world preparing for the collapse of the post-WWII, post-Bretton Woods economic order, we thought it might be useful to look at what Keynes actually said. We depart from our optimism due to the situation in Europe. Forget the threat of a ratings downgrade by S&P, Washington on debt ceilings or our part-time POTUS, the final collapse of the southern states of Europe is accelerating. Most banks in the EU are insolvent and the states supposedly backing them cannot access the global markets. The collapse of the EU bank bailout effort could be the next catalyst for global contagion.

2011-04-19 The Bell Tolls in Washington by Chris Maxey of Fortigent

Earnings season brought about a week of choppy trading in the equity market, resulting in the S&P 500 index falling 0.6% and the Dow Jones Industrial Average dropping 0.3%. Economic data throughout the week was mixed, but the impact of higher gas prices is being felt across the economy. Small businesses recorded a severe hit to sentiment last month after the small business optimism index sank from 94.5 to 91.9. A host of concerns, from declining sales expectations to trepidation about the future of the economy, were culprits behind the weakening.

2011-04-19 Emerging Europe: Economic Review March 2011 by Team of Thomas White International

Upbeat forecasts from the European Commission as well as stable financial and economic conditions in European economies indicated that the recovery is on track in the region despite the tragic developments in Japan, increasing oil prices, and the continuing political unrest in the MENA region. Equity markets also seem to be signaling that the sustained pace of global economic recovery will offset these developments. The decision by seventeen Euro governments to strengthen the €440 billion rescue fund and to lower interest rates on Greece’s bailout helped allay fears of a lingering debt crisis.

2011-04-19 Developed Europe: Economic Review March 2011 by Team of Thomas White International

Despite several discouraging developments in March, such as the fighting in Libya, the tsunami devastation and nuclear scare in Japan, as well as the resignation of the Portuguese prime minister, Developed Europe stabilized, following an initial bout of volatility, seemingly shrugging off these events and, instead, focusing on the positive economic data from the region. Portugal’s sovereign debt crisis has been simmering for a while now, and given the scale of the country’s problems, the latest setback was not exactly a surprise to investors.

2011-04-19 Emerging Asia Pacific: Economic Review March 2011 by Team of Thomas White International

Inflation continued to be the watchword for the emerging Asia Pacific economies in March. The world’s second largest economy, China, has slowly but firmly gained control over its banks, whose relentless lending had stoked inflation. Consequently, fears about excess inflation affecting China’s economy are expected to come down over the next few months. However, worries over the damage done to Japan by an earthquake could affect a number of export-based emerging economies in the Asia Pacific region. In other emerging Asian economies, monetary tightening continued at an accelerated pace.

2011-04-19 Developed Asia Pacific: Economic Review March 2011 by Team of Thomas White International

During March, most developed Asian economies faced headwinds to export growth. Continued efforts to tighten credit in China, inflationary pressures and strengthening currencies were some of the factors affecting export growth across many developed Asian economies. However, a devastating earthquake that struck Japan in early March disrupted supply chains across Asia. Japan, which accounts for 9 percent of the worlds GDP, plays a crucial role in the functioning of the global auto and electronics industry. It is estimated that Japan will require another 2-4 quarters to recoup the losses suffered.

2011-04-19 Americas: Economic Review March 2011 by Team of Thomas White International

The economic repercussions to the Americas region from Japan's earthquake are expected to be limited. Though Japan is a large trading partner the percentage share of Japan in their total external trade is low. However, some of the large manufacturers, especially in electronics and automobiles, may face slower output because of shortage in supplies from Japan. Similarly, the escalation of political unrest in the MENA region, have not yet caused a flare up in energy prices. Though retail prices of gasoline have risen, they are not considered high enough to cause damage to consumer spending.

2011-04-19 Global Overview by Team of Thomas White International

While the earthquake and the tsunami have caused extensive damage in Japan, the impact on global economic growth is not expected to be significant. Though exports to Japan may slow in the short term, this will likely be offset by increased demand as the country starts rebuilding. The supply disruptions faced by manufacturers who depend on Japanese components are also likely to be short-lived. Global equity prices saw increased volatility during March, but recovered towards the end of the month as fears of slower global economic growth due to the disaster in Japan subsided.

2011-04-19 Rear View Mirrors by Richard Michaud of New Frontier Advisors

It was another positive quarter for U.S. equity investors. The market’s resilience in the face of the Fukushima earthquake, Middle East rebellions, and euro uncertainties was remarkable. The U.S. economy continued to demonstrate significant signs of recovery with new jobs in March and a 1% drop in the unemployment rate since November. While European markets were up 6.5% in dollar terms, Asian indices were down 2%. Bond market was mixed, with treasuries down and diversified indices flat. Oil prices were up over 16% while the dollar fell 6.4% relative to the euro but up 1.3% to the yen.

2011-04-18 Approaching the Eraser by John P. Hussman of Hussman Funds

Market conditions in stocks continue to be characterized by a hostile syndrome of overvaluation, overbought conditions, overbullish sentiment, and rising interest rates, which has historically been associated with a poor return/risk profile, on average, across a wide variety of subsets of historical data. Though I question the ability of the economy to "pass the baton" to the private sector as government stimulus effects run off in the coming 8-10 weeks, I should emphasize up front that our present defensive position is not driven by those economic concerns.

2011-04-16 Inside Information by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Earnings season gives an 'insider' look at economic growth. Businesses see and react to changes in the economy before the broader macro data show a clear trend. The Fed has floated some trial balloons about reining in its extremely accommodative policies, the time for which is overdue. Budget issues remain a problem at all levels of government, but likely wont derail the recovery at this time. Despite ongoing debt problems in peripheral European nations, the ECB hiked interest rates. Europe still faces significant issues that make it more likely to underperform other areas of the world.

2011-04-15 Will Precious Metals Survive the Double Dip? by John Browne of Euro Pacific Capital

It is rare for precious metals to appreciate in parallel with the broader stock market. Yet, this has been the case in the two years since the stock market began coming back from the 2008 financial crisis. Although metals have outperformed US equities over that time frame, it is noteworthy that stocks have gone up at all. Since January 2, 2009, the S&P is up about 50%. While gold is up 68% and silver is up a staggering 267%. With rising interest rates, oil at over $100 a barrel, and the recovery running out of steam, many investors are wisely asking if the markets are set for a sharp pullback

2011-04-15 Concerned About Inflation? by Brad Sorensen of Charles Schwab

Inflation has become a bigger topic of discussion among investors and in the media as of late. While we have noted in numerous publications that we don’t believe inflation is a near-term concern due to a number of factors, investors are wondering how to position themselves should inflation start to take hold. First, despite common perception, gold has not historically been a very good hedge against inflation. Due to the possibility of gold prices being a bit extended after the recent run, we don't recommend gold as an investment for those concerned about inflation.

2011-04-15 And That’s The Week That Was … by Ron Brounes of Brounes & Associates

Though Reps and Dems came together to find $39 billion in budget cuts to avoid a government shutdown, the mood in DC is far from amicable and no one is singing kumbaya. On the heals of Tax Day, Prez O submitted his plan to rein in the deficit by $4 trillion over 12 years that includes spending cuts AND tax hikes aimed at biz and the well-off. While a bipartisan commission praised the proposal as a "solid, responsible plan," would-be Presidential candidates lined up to offer their opposing views, particularly against anything resembling a tax increase.

2011-04-15 Middle East to Spend $80 Billion on Public Transport by Frank Holmes of U.S. Global Investors

This week, the International Association of Public Transport held its annual conference in Dubai. 2,000 delegates from 80 countries attended the 4 day event. Delegates took rides on the city public transportation, including the longest driverless metro line in the world. Long known as a city dependent on its cars for convenient travel, Dubai has been ramping up its infrastructure to relieve increasing traffic congestion driven by urbanization. Car traffic is forecasted to increase four times by 2020 as the population jumps from 1.2 million people in 2005 to more than 5 million by 2020.

2011-04-14 U.S. Dollar – Review and Outlook by Axel Merk and Kieran Osborne of Merk Funds

We believe that continued U.S. dollar weakness may be a consequence of the diverging monetary approaches central banks are taking around the globe. While many international central banks have been on a tightening path, raising rates (i.e. Australia, Brazil, Canada, China, India, Norway, Sweden, to name a few), the U.S. Federal Reserve has been conspicuous in its continued easing monetary policy stance. Indeed, while other central banks have been shrinking the size of their balance sheets, the U.S. Fed’s balance sheet continues to expand on the back of ongoing quantitative easing policies.

2011-04-14 Pacific Basin Market Overview by Team of Nomura Asset Management

Asian equity markets began the year in a particularly volatile state as they came to terms with regional inflationary pressure, unrest in the Middle East and North Africa, and the natural disaster in Japan. Notwithstanding these negative factors, most markets in Asia rebounded in late March to end the quarter on a positive note. The MSCI AC Asia Pacific Free Index including Japan, however, decreased by 1.4% in the first quarter of 2011, while the MSCI AC Asia Pacific ex Japan Free Index increased by 1.5%.

2011-04-13 Fixed Income Investment Outlook by Team of Osterweis Capital Management

Investors sometimes walk a fine line between either over-reacting to temporal changes, which ultimately don’t have a lasting impact on either the economy or the markets, or underestimating the impact of real risks that can bring about lasting and meaningful changes. Currently, the main areas of concern are the Japanese triple disaster, the Middle Eastern/North African “Arab Spring,” and inflation. While we do not believe the Japanese and Middle Eastern situations pose a real threat to financial markets long term, we do believe inflation may.

2011-04-13 Powering Up Asia by Team of Matthews Asia

Energy is a fundamental building block of all modern economies. As such, it should not be an overstatement to say that the availability, or lack of energy has been a primary driver of growth. This is why it has been imperative for all nations, to secure stable sources of energy. With Japan’s current nuclear crisis and high oil prices causing concern, the topic has drawn recent attention. And as Asia's population continues to climb, the region’s energy demands are also set to soar. China and India, are expected to develop ever greater appetites for energy sources, such as nuclear power.

2011-04-12 Sentiment Creeps Back into Overly Bullish Territory by Chris Maxey of Fortigent

Over the past six months, actions by the Federal Reserve to purchase assets through its quantitative easing program played a major role in driving market prices. As the markets prepare to transition away from quantitative easing, investors are facing the prospects of a tougher market environment. The upcoming earnings season will go a long way in determining whether this recovery is ready to stand on its own.

2011-04-12 Ten Trends that will Reshape the Fund Industry by Robert Huebscher (Article)

For advisors scouring among thousands of mutual funds, bargains and inefficiencies will be harder to find in coming years. Intense competition among funds for shelf space will not translate to lower fees, and the new class of broad asset allocation funds is unlikely to live up to its marketing promises. Those were among the surprising forecasts from Geoff Bobroff, with whom I met last week.

2011-04-12 A Top Value Manager Looks Outside the US by Robert Huebscher (Article)

David Winters, manager of the Wintergreen Fund, began his career working for Max Heine, where Seth Klarman and Michael Price also worked. In this interview, Winter discusses the why he believes many of today's best opportunities are outside the US and how he is hedging against the threat of inflation.

2011-04-12 Dumb, Dumber and Dumbest by Barry M. Ferguson (Article)

The two stupidest characters ever to grace the big screen - Lloyd Christmas and Harry Dunne - were first introduced to the world in Jim Carrey's 1994 movie, Dumb and Dumber. If that movie were made today, its leading characters could easily be our government and the supposedly independent Federal Reserve Bank. Both of these institutions have foisted their misguided policies on the American public, who, in their passive acceptance, have proven themselves to be the dumbest of all.

2011-04-12 Private Mortgage Insurance Endgame by Team of Institutional Risk Analyst

In this issue of The Institutional Risk Analyst we feature a comment on the XBRL pilot program at the Securities and Exchange Commission by Daniel Roberts CEO of raas-XBRL. First let's focus briefly on some related technical developments at the IRA HQ in Torrance, CA. Both of these data points directly impact investors, regulators and other consumers of financial data. And we feature a reader comment on the endgame of the private mortgage insurers at Fannie Mae and Freddie Mac, namely stuff the taxpayer.

2011-04-11 Despite Near-Term Risks, Stocks Remain Resilient by Bob Doll of BlackRock Investment Management

The preponderance of the economic and market-related news skewed to the negative last week, with an additional earthquake in Japan, rising oil prices, an interest rate hike by the European Central Bank (ECB), escalating debt problems in Europe and increasing noise about the since-averted potential federal government shutdown. Despite this backdrop, however, US equities remained resilient and were roughly flat for the week, with the Dow Jones Industrial Average up marginally to 12,380, the S&P 500 Index down 0.3% to 1,328 and the Nasdaq Composite down 0.3% to 2,780.

2011-04-08 And That's The Week That Was… by Ron Brounes of Brounes & Associates

All those rabid anti-government, “conspiracy theorists” may soon get what they most desire. As of Friday afternoon, politicos were continuing their game of chicken as the clock kept ticking toward the first government shutdown in 15 years. While both parties have made concessions on spending programs, the old reliable abortion issue has entered the mix. The latest WSJ poll reveals that Americans blame congressional Republicans (37%) most, countering the partisan hope that Prez O 20% and the Dems 20%, had the most to lose. For now it appears that the American people have the most to lose.

2011-04-08 Why High Oil Prices Are Likely Here to Stay by Frank Holmes of U.S. Global Investors

A number of forces continued to push oil prices higher this week, reaching their highest levels in the U.S. since September 2008. One factor fueling the run has been the continued decline of the U.S. dollar. Oil and the dollar historically are negatively correlated. This means that a rise in oil prices generally coincides with a decline in the dollar, and vice versa. The U.S. dollar has seen a dramatic decline since the beginning of the year as oil prices have moved some 30 percent higher. This could be due to fact that roughly two-thirds of the U.S. trade deficit is related to oil imports.

2011-04-07 China Part II — Looking Beyond Its Shores by Mark Mobius of Franklin Templeton

China’s latest 5 Year Plan is focusing on growing the domestic economy with a focus on harmony. A lot of the foreign investments and the large capital inflows into the Chinese market have all been focused on tapping into one of the world’s largest consumer markets. However, what many are missing is that China is the world’s fifth largest investor in terms of outbound direct investment at about US$56.5 billion in 2009. Last December, China announced US$16 billion in deals in India and this year, Chinese officials pledged to purchase as much as 6 billion Euro worth of Spanish gov bonds.

2011-04-07 Using EWJ to Access Japan – A Price Discovery Case Study by Noel Archard of BlackRock Investment Management

Is EWJ a perfect proxy for Japan? I’d go out on a limb and say it’s one of the closest proxies available for U.S. investors. It gives U.S. investors the opportunity to invest in a diversified basket of Japanese securities during U.S. market hours, and it gives the investment world a vehicle to price new information into the securities even when they are closed for trading on their local exchange – that’s about as close as you can get. At the end of the day, EWJ worked exactly how we’d expect it to work in a tumultuous market, and that’s what counts in our book.

2011-04-06 Great Speculations: Why China Is So Bubble-Friendly by Adam Wolfe of Roubini Global Economics

China can blow bubbles faster and bigger than any other country, but the Extraordinary Salt Mania of March 2011 takes the cake for speed, size and bizarreness. Shortly after radiation was reported to be leaking from Japan’s nuclear plant, rumors spread that China’s sea salt could be contaminated by radiation and that salt could prevent radiation sickness. The apparent demand and a perceived supply shock caused prices to spike upward of 85% in days. Media reported that a Mr. Guo bought 6.5 tons of salt, three days later prices collapsed after word from officials that there was no shortage.

2011-04-05 Inflation Worries? Commodities May Help by Team of Emerald Asset Advisors

Many of you may remember the movie This classic shed some interesting light on  the world of commodities. Commodities include natural resources, industrial metals, precious metals, and agricultural products. Or, as Duke explained to Billy Ray Valentine, "Commodities are agricultural products...like the coffee you had for breakfast...wheat, which is used to make bread...pork bellies, which are used to make bacon, which you might find in a BLT sandwich. And then there are other commodities, like frozen orange juice...and gold. Though, of course, gold doesn't grow on trees like oranges."

2011-04-05 Does a Weak Dollar Cause Inflation? by Axel Merk of Merk Funds

Should investors be concerned that a weaker U.S. dollar causes inflation? The price at the gas pump should be a stark reminder that a weaker dollar may contribute to higher prices. Yet, economists tell us that food and energy inflation does not count. Why do economists have such a baffling sense of logic? Are economists really aliens in disguise, locked up in ivory towers? Let’s shed some light on the logic and why it may not merely be strange, but wrong.

2011-04-04 Will the Real Phillips Curve Please Stand Up? by John P. Hussman of Hussman Funds

Much of the intellectual basis for the Federal Reserve's dual mandate "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates" is based on the Phillips Curve. The curve, named after economist A.W. Phillips, is understood as a "tradeoff" between inflation and unemployment. The idea is so engrained in the minds of economists that it is taken as fact. High unemployment, is associated with low inflation risk, and in that environment, policy makers can pursue measures targeted at increasing employment, without consequences for inflation.

2011-04-04 The Revolving Door at the Fed of New York; Dick Alford on False Dichotomies in Monetary Policy by Team of Institutional Risk Analyst

This week in The Institutional Risk Analyst, we feature a comment by Richard Alford on the false dicotomy between discretionary and rules-based regimes when it comes to monetary policy. But first we want to do a little review of the latest disgorgement of documents by the Fed. Listening to the debate between the "borrow and spend" camp led by Paul Krugman et al and the cut the deficit camp led by the Tea Partiers in Congress and around the nation, we are reminded again of the film "The Matrix" and its predecessors.

2011-04-02 Above the Fray by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Attacks on Libya and recovery efforts in Japan have dominated the headlines, but behind the scenes US economic growth remains solid and we remain optimistic on the stock market. Commodity prices have backed off a bit and the Fed is likely to see QE2 through to its June 2011 end. Of particular concern is the unwillingness or inability for Congress to agree on a budget that addresses the growing deficit issues in the US. Japan has a significant debt burden with which to deal as it rebuilds, while Europe is struggling to come up with a comprehensive plan to deal with the eurozone debt crisis.

2011-04-01 The Strong Link Between GDP and Oil Consumption by Frank Holmes of U.S. Global Investors

Global crude oil and liquid fuel consumption grew at its second-fastest pace in over three decades in 2010, rising 2.8 percent to 86.7 million barrels per day, according to the U.S. Energy Information Administration (EIA). In fact, worldwide oil consumption surpassed 2007 pre-recession levels. For 2011 and 2012, the EIA forecasts that, around the world, we’ll use an annual average of 1.6 million barrels of oil per day. The EIA says this increase is expected to be driven by rising demand from the emerging world, mainly China, Brazil and the Middle East.

2011-04-01 The Bedrock of the Gold Bull Rally by Frank Holmes of U.S. Global Investors

Naysayers started calling gold a bubble back when prices hit $250 an ounce and though gold’s bull market has tossed and flung the bubble callers around for almost a decade now, their voices have only gotten increasingly louder as prices broke through $1,000, $1,200 and now $1,400 an ounce. However, gold prices appear asymptomatic of the signs generally associated with financial bubbles.

2011-03-31 Small-/Mid-Cap Growth — Why Today’s Market Cycle is Different by Team of Columbia Management

We believe the outlook for small- and mid-cap growth stocks remains bright as we move into the later stages of the economic recovery. While the asset class is typically expected to underperform at this point of an economic rebound, there are three important distinctions that make this cycle different: 1) scarcity of growth, 2) continued M&A activity and 3) commodities inflation.

2011-03-30 Andrew Balls Discusses PIMCO’s European Cyclical Outlook by Andrew Balls of PIMCO

Europe’s outlook hinges on limiting contagion from the most troubled peripheral countries. The European Central Bank has signaled its intentions to start tightening, which could complicate the outlook for the more distressed countries. We think the Bank of England will begin to tighten rates over the summer. The UK outlook depends on the impact of fiscal tightening.

2011-03-29 Inflation versus Deflation: Two Experts Disagree by Robert Huebscher (Article)

An important question for all investors is whether low inflation rates will persist or whether the economy is heading toward much higher inflation. The answer to that question will dictate asset class allocations, portfolio construction and ultimately the rates of return investors should expect.

2011-03-29 American Consumer Sputtering in Q1 by David A. Rosenberg of Gluskin Sheff

The U.S. consumer spending and income report for February was a bit of a mixed bag. First, personal income in the U.S. did eke out a 0.3% MoM gain in February, but it was below expected and failed to keep up with the rise in inflation, which are largely, but not exclusively, being driven by food and fuel prices (accounting for half the increase). The personal consumption expenditure (PCE) price deflator rose 0.4% MoM and as such real income - straight up, net of taxes and excluding personal transfers - fell 0.1% in the first contraction since last September.

2011-03-28 Housing - Still Troubled by Milton Ezrati of Lord Abbett

As lenders, managing their foreclosure opportunities, gradually feed the “shadow inventory” of homes onto the market, the flow of properties will no doubt keep a lid on real estate pricing and on construction activity for some time to come, particularly in the most hard-hit regions of the country. Still, if circumstances keep housing from offering the economy a growth engine for a long time to come or the source of wealth creation in the household sector, the economy and financial markets will nonetheless welcome the change from the sharp declines and volatility of past years.

2011-03-28 Monday Market Calls by Russ Koesterich of BlackRock Investment Management

As Europe continues to muddle along, much of the bad news has been discounted in with the exception of the banks, which are likely to continue to remain under pressure. S&P cut Portugal’s rating two notches as its parliament rejected the government’s new austerity measures, prompting Prime Minister Jose Socrates to resign. Meanwhile Moody’s downgraded 30 small Spanish banks with mostly negative outlook following the earlier sovereign debt rating downgrade. However, despite the banking issues, Spain has been able to continue financing its debts.

2011-03-27 Wanted: Private Investors Seeking First Loss Exposure on RMBS by Christopher Whalen of Institutional Risk Analyst

In a market where volatility is this high, even with the Fed removing trillions of dollars in duration from the markets via QE, just how are private obligors going to price trillions of dollars in first loss RMBS exposure in this imaginary private market that pro-reform elements in Congress have in mind? Fact is, when the Fed ends QE. market dependence upon the GSEs for liquidity support will grow. Like we said, raise the G fees and the conforming loan limit in the name of market forces, Congress needs to find some ways to increase the volume of mortgage loan refinancing and modifications.

2011-03-27 QE2 - Apres Moi, le Deluge by John P. Hussman of Hussman Funds

As rules of thumb go, "the trend is your friend" historically performs better than "don't fight the Fed". While the market tends to perform better when both are true, the exception is the overvalued, overbought, overbullish, rising-yields syndrome, which is uniformly negative regardless of the random subset of historical data one examines. There is certainly a tendency for "unpleasant skew" featuring a persistent series of marginal new highs for some period of time, but on average, those are ultimately overwhelmed by steep and abrupt losses that finally clear this syndrome.

2011-03-25 Unrest and Turmoil = Rising Oil Prices by Monty Guild and Tony Danaher of Guild Investment Management

Nine of the eleven nations sharing land or water borders with Saudi Arabia (SA0 have had demonstrations. Trouble is likely to surface in SA because much of the country’s wealth is located under lands where Shia Muslims are in the majority. The ruling House of Saud is Sunni Muslim. The distrust and bad blood between the two sects predates oil discovery and is not likely to be solved with oil money. The political events are about freedom from repression but also represent a basic struggle between these two Muslim groups for control of revenues from the huge oil fields in that part of the world.

2011-03-25 Quantitative Easing: How the Rest of the World Reacts by Komal Sri-Kumar of TCW Asset Management

The decision was made to implement new purchases of $600 billion in U.S. Treasurys by June 2011. The transactions would expand the balance sheet of the Federal Reserve to about $2.9 trillion, a multiple of the $800 billion dollar level it was at in September 2008. This paper examines how the countries which have been recipients of the newly created liquidity have responded to the Feds move. While the Fed explained that its purchase of securities was intended to make riskier assets, the excess liquidity also made its way to foreign countries to take advantage of attractive interest rates.

2011-03-25 And That’s The Week That Was … by Ron Brounes of Brounes & Associates

Developments abroad have been such downers over the past few weeks that investors chose to focus on positive news from the domestic boardrooms. AT&T looks to be joining with T-Mobile to create the nation’s largest wireless company. Charles Schwab is adding OptionsExpress to its portfolio, and Walgreen will acquire Drugstore.com as it expands its online presence. Warren Buffet continues to cheerlead for corporate transactions as he claimed the recent Lubrizol deal was just the tip of the iceberg and Berkshire Hathaway is exploring a number of acquisitions, both at home and overseas.

2011-03-24 Understanding Japan’s Disasters by Mohamed A. El-Erian of PIMCO

Japan’s reconstruction challenge will likely be more difficult than after the Kobe earthquake. Negative wealth and income effects this time around will be more severe, and the recovery process will probably take longer and be more complex. Japan's disasters will add to the global economy’s headwinds.

2011-03-24 Bernanke Ducks as Food Prices Shoot Higher by Peter Nielsen and Bryce Fegley of Saturna Capital

As rising food prices gain prominence in media headlines worldwide, Federal Reserve chairman Ben Bernanke now finds himself deflecting accusations that the Fed's $600 billion "QE2" Treasury buying program is the main culprit of global food price inflation. In his February 18, 2011, speech to governors of the Group of Twenty in Paris,1 Bernanke completely rebuffed these claims and offered up other explanations as well, but nowhere in his speech did he concede any possibility that the Fed's QE2 program is playing a role.

2011-03-22 Statistical Insights into Everyday Problems by Sam Parl (Article)

You know that the volatility of an investment matters as much as its overall return. But you may not know that research into this fundamental investment principle has been applied in many other disciplines to explain phenomena as unexpected as waiting times in lines at Disney World.

2011-03-22 No Shortcuts to Greatness by Vitaliy Katsenelson (Article)

Nothing defined Alan Greenspan's tenure as chairman of the Federal Reserve Bank more than his wholehearted embrace of capitalism. According to a current Fed governor, however, both Greenspan's Fed and the Fed today have not been the stalwarts of capitalism that the Maestro believed them to be.

2011-03-22 Japan Update by Bob Veres (Article)

This letter, suitable for sending to clients, explains the consequences of the tragedy in Japan and how investors should gauge its economic impact.

2011-03-22 Emerging from Developed Profit Pools by Gregory A. Nejmeh of HS Management Partners

Much has been debated about the anticipated growth of the emerging markets and the tectonic shifts in political, economic and military force that such changes may yield. While the implications are significant, we are also mindful that economic activity in developed markets not only make them worthy of investor attention, but provide the stability of cash flows that will facilitate multinationals ability to invest in developing markets. We take a holistic perspective and appreciate the size and scope of developed market profit pools as a means of self funding developing economic participation

2011-03-21 This Is, Because That Is by John P. Hussman of Hussman Funds

The market action of the past two weeks contrasts with the generally uncorrected advance of recent months. I suppose it's possible for investors to characterize the recent decline as a "panic" if they press their noses directly against their monitors, but in that case, they really do have a short memory. The pullback has been negligible relative to the action of the past several months, and is indiscernible in the big picture. As of Friday, the market remained in an over valued, bullish, rising-yields syndrome that has typically been cleared much more sharply than anything we saw last week.

2011-03-21 Buy on the Cannons and Sell on the Trumpets by Charles Lieberman of Advisors Capital Management

Investors remain nervous over Libya and Japan, which has reduced equity valuations and driven some cash into the safety of sovereign debt. While risks remain, the worst possibilities now seem increasingly unlikely, presenting an opportunity to buy depressed equities. Even so, domestic economic growth should suffer some setback from the turmoil. A decline in GDP remains highly unlikely, but a few months of slower growth seems assured. If the market falters in the face of somewhat weaker data, another buying opportunity would be available.

2011-03-21 Bahrain: Distinguishing Between Objective and Risk by Douglas Clark Johnson of Codexa Capital

Many internationalists would argue that Bahrain is endangering its objective of security and stability by trying to manage risk through armed conflict. An economy that depends on regional, even global, confidence can rebuild itself by quickly addressing civic flaws and heightening commercial strengths.

2011-03-21 Risks to the Global Economy Should Remain Contained by Bob Doll of BlackRock Investment Management

Escalating anxiety over the damage from the earthquake in Japan and resulting nuclear reactor problems as well as rising tensions in Libya and the Middle East resulted in an aggressive selloff in equity prices early last week. Despite an end-of-week rally, stocks were down for the week as a whole, with the Dow Jones Industrial Average falling 1.5% to 11,859, the S&P 500 Index declining 1.9% to 1,279 and the Nasdaq Composite losing 2.7% to 2,644. The events of the last several weeks serve as a reminder about how quickly potential risks can turn into downside reality.

2011-03-21 Inflation Ready To Make Its Grand Entrance by Chris Maxey of Fortigent

Stock markets struggled in recent weeks due to a host of macroeconomic concerns, from earthquakes in Japan to uprising in the Middle East. This is causing a move in the markets that is similar, but different to what is typical during the third year of a Presidential cycle. Generally, markets rally in the first portion of the year before trading essentially flat in the second half. In the first two months, markets were adhering to this same pattern, but the aforementioned macro concerns derailed that rally. This does not mean markets will be unable to stage a recovery.

2011-03-21 iShares Bi-Weekly Strategy Update by Russ Koesterich of BlackRock Investment Management

Last week, world equity markets suffered their sharpest correction since August of 2010. Unrest in the Middle East and sovereign debt issues in Europe are contributing to the spike in volatility, but last week’s sell-off was primarily driven by the earthquake in Japan and related concerns over the safety of its nuclear power plants. The events in Japan are unlikely to detract from global growth, or change the market dynamics favoring equities. In fact given the recent flight to safety and accompanying drop in nominal bond yields, we reiterate our preference for equities over bonds.

2011-03-19 Middle East Politics and Oil: The Influences on Global Interest Rates, Credit Spreads & Stock Prices by Tom Fahey, Ryan McGrail, Richard Skaggs and Joseph Taylor of Loomis Sayles

The market has added a substantial risk premium to the price of oil given the unrest in the Middle East and North Africa. Prices have increased by more than 20% since December 2010; half of that increase occurred during the past three weeks in reaction to unrest spreading to Bahrain, one of the Gulf States. Market participants have raised their probability calculations for black swan events. There may be excess pessimism in the market, as reflected in increased concerns about unrest spreading to the other Gulf States. Those concerns are potentially overblown.

2011-03-19 Oil's Piracy Premium by Frank Holmes of U.S. Global Investors

Over the past 30 years, the International Maritime Organization (IMO) has successfully lowered the risk of pirate attacks in other regions around the world. With the recent escalation of piracy around Somalia, governments and worldwide organizations including the United Nations are now working in concert with the IMO to curb these attacks. Their theme for 2011, “Piracy: Orchestrating the Response,” represents an increased awareness of the world-wide political changes required to reverse this trend.

2011-03-18 The Southern Classic IRC, A Reason for Ben Graham to Smile & Can Share Prices Diverge from Value? by Kendall J. Anderson of Anderson Griggs

The belief that share prices can at times diverge from underlying business value is the driving force behind security analysis as practiced by active investment managers. My example is not to lay out a case to buy or sell shares of IBM. Instead, it is to look at the value the market has placed on IBM over many years and let you decide if the price has diverged from the value of IBM as a business. To be fair, and to honor the many professional investors and students of investing who do not believe in active management, I at least need to give you their beliefs.

2011-03-17 Madoff Was Right About One Thing by Bill Mann of Motley Fool

This past week, a Financial Industry Regulatory Authority (FINRA) panel ordered broker Morgan Keegan to repay $250,000 to a client whose entire investment account had been invested in Madoff's fund. That's nice. I expect there will be several more judgments and restitutions paid in the future, none of which will actually cause a change in behavior on Wall Street. Regulators failed to catch Madoff even when the evidence was dangled in front of them, and they've since failed to enact meaningful reform for how Wall Street operates.

2011-03-17 Japanese Fallout May Hit Treasuries by John Browne of Euro Pacific Capital

As the fourth largest economy in the world, behind the EU, US, and China, any major setback in Japan likely will have widespread repercussions. Japan is also the third largest holder of US Treasuries, behind the United States and China. While it is too early even to assess the Japanese damage accurately – let alone to forecast the full implications – it is possible to see the potential for a meltdown of the US Treasury market and international monetary system. Current estimates hold that the Japanese disaster has already lowered world economic growth by a full percentage point for the year.

2011-03-16 Fukushima vs. Three Mile Island vs. Chernobyl by Mikka Pineda of Roubini Global Economics

This year marks Chernobyl's 25th anniversary, and how ironic it is that the world has a new nuclear emergency on its hands: Japan's Fukushima power plant. The situation at Fukushima continues to worsen, with explosions at two more reactors and the radiation released surpassing that of Three Mile Island. The 40-year-old reactors were due for decommissioning at the end of this month. The Fukushima nuclear incident will likely be upgraded from a level 4 to a 5 on the International Nuclear and Radiological Event Scale. Chernobyl was a level 7—the only level 7 event so far.

2011-03-15 Mason Hawkins and Staley Cates on Today’s Opportunities for Value Investors by Robert Huebscher (Article)

Southeastern Asset Management's Mason Hawkins and Staley Cates, two of today's most respected value investors, discuss their portfolio and the principles behind their Graham and Dodd methodology. They explain why they like certain commodity-based companies and why they disagree with Bruce Berkowitz on the opportunities in the financial sector.

2011-03-15 Margin Shrinkage - It Can Happen to You by Vitaliy Katsenelson (Article)

Profit margins are a tick away from all-time highs and are creating the impression of cheap equity valuations. But that impression is a mirage, because today's generous margins are destined to shrink.

2011-03-15 Consumers Right the Ship by Chris Maxey of Fortigent

A confluence of macroeconomic events created selling pressure during the week, sending the S&P 500 Index lower by 1.3% and the Dow Jones Industrial Average down 1%. Releases on the domestic economic situation continued to show positive momentum, ranging from improvement in retail sales to a pickup in consumer credit. There was some concern about weaker consumer confidence figures and deterioration in weekly jobless claims, but it was clear last week that consumer balance sheet deleveraging continues. Retail sales for Feb increased 1% from Jan for a total increase of 8.9% in 12 months.

2011-03-15 U.S. Government: Evermore Reliant on Foreign Investors by Kieran Osborne of Merk Funds

Despite the Fed recently surpassing China as the largest owner of U.S. government debt, the U.S. remains heavily reliant on foreigners to fund the government’s ongoing fiscal largess. Geithner’s Treasury Department has firmly focused new issues at the mid to longer end of the yield curve. Despite the Treasury taking advantage of the ultra-low interest rate and funding environment, there are substantial refinancing issues over the near term; moreover, many of these maturing issues are foreign owned.

2011-03-14 Anatomy of a Bubble by John P. Hussman of Hussman Funds

Over the past decade, investors have seen near-parabolic advances in a variety of assets, followed by crashes. These have included dot-com stocks (which peaked and crashed well before the general market peak in 2000), technology stocks, housing, commodities, and stocks in a variety of emerging markets. These experiences have made investors somewhat more attuned to the destructive potential for speculative bubbles in various assets, but has also created something of a "casino economy" where a great deal of resources are directed in hopes of participating in these bubbles.

2011-03-14 Japan Will Recover by Mohamed A. El-Erian of PIMCO

Japan has the ability to recover economically from these horrible natural disasters. Japan’s immediate focus is on the enormous human suffering, and rightly so. Attention also turns towards the extent of the damage to the economy and its reconstruction and rehabilitation plans. The good health of Japan is central to a robust global economy that generates lots of jobs and enhances productivity.

2011-03-14 Weekly Investment Commentary by Bob Doll of BlackRock Investment Management

Risk assets experienced a setback last week in the face of rising tensions in Libya and the Middle East. Additionally, the massive earthquake that hit Japan on Friday resulted in a sharp downturn in Japanese equities on Monday and increased investor unease. For the week, the Dow Jones Industrial Average lost 1.0% to 12,044, the S&P 500 Index declined 1.3% to 1,304 and the Nasdaq Composite fell 2.5% to 2,716. The human costs of the earthquake in Japan are obviously foremost in everyone’s mind at this time, but the potential economic and market implications are also being weighed by investors.

2011-03-14 Monday Market Calls by Russ Koesterich of BlackRock Investment Management

Call #1: Underweight European equity market (with emphasis on banks) Call #2: Overweight developed (with preference for large/mega cap) vs. emerging markets. Year-to-date, emerging markets are down roughly 1.5% while developed market mega caps are up roughly 5%. Our view is reinforced by the recent market volatility and growing unrest in the Middle East. In this type of environment, large, quality companies are likely to prove more resilient.

2011-03-12 Inflation and Hyperinflation by John Mauldin of Millennium Wave Advisors

Companies and households typically deal with excessive debt by defaulting; countries overwhelmingly usually deal with excessive debt by inflating it away. While debt is fixed, prices and wages can go up, making the total debt burden smaller. People can’t increase prices and wages through inflation, but governments can create inflation, and they’ve been pretty good at it over the years. Inflation, debt monetization, and currency debasement are not new. They have been used for the past few thousand years as means to get rid of debt. In fact, they work pretty well.

2011-03-12 Domestic Equity Market by Frank Holmes of U.S. Global Investors

The figure below shows the performance of each sector in the S&P 500 Index for the week. Four sectors increased and six decreased. The best-performing sector for the week was utilities which rose 1.5 percent. Other top-three sectors were telecom services and consumer staples. Energy was the worst performer, down 4.0 percent. Other bottom-three performers were materials and technology. Within the utilities sector the best-performing stock was Constellation Energy Group which rose 6.8 percent. Other top-five performers were Exelon, First Energy, DTE Energy, and Duke Energy.

2011-03-12 Volatility on the Rise by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Geopolitical unrest and rising inflation concerns have conspired to increase market volatility. We remain bullish on US stocks and believe that this recent increase in consternation will ultimately be healthy for stocks. The US government keeps kicking the debt can down the road, while the Fed seems unconcerned about inflation and is intent on completing QE2. We believe changes are needed at both entities to foster sustainable economic growth. The European debt crisis is bubbling up again, while the ECB is talking interest-rate hikes. Future growth depends on the path of both issues.

2011-03-11 The Middle East: A Youthful Reawakening by Mark Mobius of Franklin Templeton

The upheavals in the Middle East and N.Africa can be attributed to rising food prices, unemployment, corruption and political stagnation. Unemployment has stayed high and waves of new young job seekers entering the labor market have not been absorbed. As in many emerging markets, the populations in MENA countries are young. Most politically explosive is that an increasing number of the unemployed are high school and university graduates. It is important to note that the recent protests have come not from the lowest income levels but from middle-class and educated Arabs seeking fair treatment.

2011-03-11 Europe: Economic Review February 2011 by Team of Thomas White International

Various data released in Feb. confirmed once again that the economic recovery in Europe is gaining momentum. Nevertheless, investor sentiment on the continent, and indeed everywhere in the world, remained largely subdued during the month due to the growing political uncertainty in the Middle East and N.Africa region. Since rising food, raw material, and crude oil prices have already pushed up inflation to worrying levels in most parts of Europe, the recent surge in oil prices amid the protests in Libya and some MiddleEastern countries eclipsed encouraging signals about the Euro-zone economy.

2011-03-11 Middle East turmoil not yet a significant threat to the global economy by Team of Thomas White International

The political unrest spreading across the Middle East and the resultant disruptions to the regional economy are not considered very significant for the global economic prospects for this year. Though oil prices have reacted on fears of lower supplies from the region, there have been no actual disruptions so far and any perceptible deceleration in global economic growth is expected only if prices shoot up further. It is widely believed that, unless the agitations spread to the region’s major oil producers like Saudi Arabia, the prospect of a sustained upsurge in energy prices is limited.

2011-03-11 Americas: Economic Review February 2011 by Team of Thomas White International

Rising energy prices, due to the political upheavals in the Middle East, are becoming the primary economic risk for the Americas region. While the subdued inflationary trends will provide banks leeway to hold interest rates, they may be forced to advance their rate hikes if prices rise at a faster rate. In contrast, several of the emerging economies are expected to slow down this year. These economies may see interest rates rising faster, which may slow their pace of expansion even more. Also, higher interest rates will likely keep their currencies stronger and may restrict export growth.

2011-03-10 Turmoil in the Middle East: Should It Have Been Predicted? by Team of American Century Investments

The turmoil began, when a young Tunisian college graduate immolated himself on December 17 after being harassed by police as he attempted to sell fruit on the street. Some claim the vendor, Mohamed Bouazizi, did not have the money needed to bribe police officials to continue peddling and earn a living. He died on January 4, sparking deadly demonstrations and riots throughout Tunisia (now called the Jasmine Revolution) in protest of social and political issues in the country. And just 10 days later, on January 14, President Zine El Abidine Ben Ali was forced to step down after 23 years.

2011-03-10 Stock picking is dead? Long live stock picking by Robert McConnaughey of Columbia Management

A recent front­page story in The Wall Street Journal was titled “Macro Forces in Market Confound Stock Pickers.” The article quoted a prominent Wall Street strategist as saying, “Stock picking is a dead art form.” The article is now prominently displayed on my office bulletin board as I believe it (and similar articles and research notes) marks a high in skepticism regarding active investing. I also believe these sentiments will be proven dramatically wrong in the months and years to come, as certain active investors take advantage of the inefficiencies that this very skepticism is causing.

2011-03-09 Gold or Goldilocks? by Kevin Feldman of BlackRock Investment Management

After a roller coaster January, gold prices have been soaring to nominal highs again of late. Given the recent rise in price, I thought this would be a good time to revisit the case for having a small amount of gold in your portfolio. Investors flocked to gold in 2009 and 2010 because of worldwide concern over the stability of the financial system, and as a result the precious metal’s price skyrocketed, passing $1400 an ounce. Last month, Barron’s warned its readers that the gold rush is over. Suggesting investors were likely to search for assets with greater expected returns than gold.

2011-03-09 Searching for Growth in Asia by Taizo Ishida of Matthews Asia

There are many ways one might define “growth” and go about uncovering it. There are a few key elements I look for: main drivers of growth, sustainability and scope of growth, and market expectations. Many global investors today are seduced by the last several years of strong stock performance in China and India, fueled by robust economic growth. However, economic growth alone does not guarantee good stock performance. In fact, many studies argue that, historically, there has been little correlation between stock market performance and economic growth.

2011-03-09 iShares Bi-Weekly Strategy Update Part 2 by Russ Koesterich of BlackRock Investment Management

Recently, silver prices have benefited more than gold from the economic rebound. The relative gap between gold and silver suggests that it may be time for a pause in silver’s run. One of the many ironies of markets last year was the extent to which inflation occupied investors’ attention, despite its near universal absence. While inflation has recently accelerated in emerging markets and a few developed ones, inflation was and is still largely absent in the developed world. Yet, record low inflation did not stop investors from worrying about it.

2011-03-08 The Sweet Spot by Michael Nairne (Article)

Today’s low interest rates and lackluster stock valuations suggest portfolio returns going forward will be modest. Investors in search of higher return opportunities need to consider small-company value stocks. We explore how this asset class can improve portfolio performance for long-term, patient investors and deal with its risks and limitations.

2011-03-07 A Little Understanding Goes a Long Way by Peter Schiff of Euro Pacific Capital

As the world confronts one of the most critical periods of economic upheaval that it has ever seen, it is clear that our most influential economic stewards have absolutely no idea what they are doing. But, like kids with a new chemistry set, they are nevertheless unwilling to let that stand in the way of their experimental fun. As they pour an ever-growing number of volatile ingredients into their test tubes, we can either hope that they magically stumble on the secret formula to cure the world’s ills, or more pragmatically, we can try to prepare for the explosion that is likely to result.

2011-03-07 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Last week was dominated by continued good economic data, which supported stock prices, even as concern mounts about supposed inflation and the ability of the Federal Reserve Board to come up with a believable exit strategy from its current policy of quantitative easing (read that to mean the FED is buying treasuries from the government to finance this year’s $1.6 trillion deficit).

2011-03-04 Malaysia's Deregulation Train by Kenneth Lowe of Matthews Asia

After touching down in Malaysia last week, I was greeted with the less-than-welcoming sight of an apparently never-ending immigration line. As I progressed toward the front of the line, I began to realize the structural source of the problem—only two staff members were manning immigration booths for hundreds of passengers coming off a number of different flights. Although clearly a minor grievance, it did serve as a strong metaphor for the constraints and inefficiencies that foreigners still face when doing business in Malaysia

2011-03-03 Emerging Markets Vision 2020 by Mark Mobius of Franklin Templeton

There will always be unforeseen factors and circumstances that might become catalysts for greater changes in the global landscape, as we have seen from the current unrests in the Middle East.. No one knows what will happen in the future, but below is some of what I envision for the emerging markets landscape in the next decade.

2011-03-03 Multi-Asset Real Return: Assessing & Exploiting Price Pressures in their Many Forms by Kevin Kearns, Laura Sarlo and James Balfour of Loomis Sayles

An asset manager’s challenge is to preserve and grow the purchasing power of investors’ portfolios under a variety of economic conditions. Understanding the breadth of global inflationary or deflationary trends that can occur, and the ways different assets might perform in these environments, is critical to this objective. Based on our research, we have determined that no single asset class can protect investors from inflation. On the contrary, we believe the flexibility and diversification offered by a multi-asset-class strategy is necessary to help weather changing inflation regimes.

2011-03-02 Random Market Thoughts by David A. Rosenberg of Gluskin Sheff

Only time will tell if yesterday’s market action was a true watershed. It was the first time since last July that the stock market was down on the first day of the month. Till yesterday, the opening days in January and February had already accounted for over half the year-to-date gains in the S&P 500. It was also the first time since the last leg of the bear market rally began six months ago that “good” news failed to ignite equity prices. Yesterday we saw auto sales shoot up 6.7% to 13.4 million units, which was the best level since August 2009, and we also saw the ISM inch higher.

2011-03-02 Taps for the Dollar by Michael Pento of Euro Pacific Capital

It now appears that the United States has finally succeeded in its efforts to destroy confidence in the U.S. dollar. Given the currency's reserve status, its ubiquity in financial markets, and the economic power and political position of the United States, this was no easy task. However, to get the job done Washington chose the right man: Fed Chairman Ben Bernanke. Thanks to Bernanke's herculean efforts, investors across the globe have now been fully weaned from their infantile belief that the U.S. dollar will remain the ultimate safe haven currency.

2011-03-01 Subsuming the Efficient Market Hypothesis by Keith C. Goddard, CFA (Article)

A recent article highlighted important gaps in the efficient markets model (EMH) that limit its practical applications. It encouraged a search for a new theory of markets that builds upon EMH by rendering it as a special case within a broader, more general theory. Mordecai Kurz’ Rational Belief Equilibrium is such a theory.

2011-03-01 Simon Johnson on the Unconscionable Risks We Face by Dan Richards (Article)

Simon Johnson is a professor of economics at MIT and was the chief economist for the International Monetary Fund. In this interview, he explains why the underlying factors which led to the financial crisis remain unresolved. This is the transcript; a video is also available.

2011-03-01 Differentiated Change in the Middle East and North Africa by Mohamed A. El-Erian of PIMCO

For two months, developments in the Middle East and North Africa (MENA) have taken most by surprise. What started as an protest in Tunisia has developed into a regional phenomenon that has toppled regimes and is threatening others. Indeed, every day seems to bring an historical event that is changing the region and impacting the global economy. Governments across the globe have spent weeks playing catch up in the midst of unthinkable developments in MENA. They have organized emergency evacuations of citizens and constantly responded to realities on the ground, including the violence in Libya.

2011-03-01 The Absolute Return Letter by Niels C. Jensen of Absolute Return Partners

Two remarkable events unfolded during the month of February. One cleared the front pages all over the world. The other one barely got a mention - outside of its home country that is. Both have the ability to derail the economic recovery currently unfolding. The first one is not surprisingly the uprising in the Middle East and North Africa. The other one is perhaps less obvious; we are referring to the Irish elections. We take a closer look at both of those events and what the implications may be for financial markets.

2011-03-01 The 10% Problem by Nathan Rowader of Forward Management

Many investors continue to expect 10% returns — but these days, are doing well if they earn 5%. They need to understand why major shifts in the global investment climate are challenging them to reset return expectations and reboot their plans. After six decades of double-digit average U.S. stock market returns, many American investors may have come to expect that they will earn similar returns going forward. And why wouldn’t they? From 1948 to 1978, for example, the U.S. stock market generated an average annualized total return of 10.7%.

2011-02-28 Oil that is by Jeffrey Saut of Raymond James Equity Research

“Oil that is, black gold, Texas tea,” Jed Clampett (Buddy Ebsen) got rich in the hit series The Beverly Hillbillies by discovering oil on his property. Similarly, investors have become enriched recently by owning oil stocks. Verily, crude oil has surged from ~$84 per barrel in mid-February into last week’s peak of $103.41 with an ascent for most oil stocks. As stated in Friday’s verbal strategy comments, “Libya is particularly troubling because I think there is a fifty-fifty chance that Gaddafi, rather than cede power, will begin blowing up Libyan oil pipelines – it’s either me or chaos.”

2011-02-28 Random Thoughts by David A. Rosenberg of Gluskin Sheff

The combination of sharply higher oil prices, the global food crisis, the accelerating geopolitical risks abroad, and the switch in the United States from fiscal stimulus to restraint — all will serve to complicate the macro and market outlook further. Valuation may not be at an extreme, but most measures of market sentiment are. And some folks are beginning to notice that the wheels are starting to fall off the tracks.

2011-02-28 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The stock market fell last week, but is still doing quite well on the year. Ongoing concerns over the uprisings in Libya and elsewhere, combined with the protests over cutbacks in state budgets, served as the excuse for the market to pullback.

2011-02-28 Moment of Surrender: Regimes Fall, Oil Prices Spike by Liz Ann Sonders of Charles Schwab

Geopolitical tensions swell along with oil prices, pushing the stock market lower. The absence of a longer-term oil- supply shock suggests the price spike could be short-lived. Consumers will take a hit, but the broader economy should avoid a double-dip recession.

2011-02-27 Bank Stress Index Up in Fourth Quarter; Can China Slow Down Bank Lending? by Christopher Whalen of Institutional Risk Analyst

The Q4 2010 results from the latest IRA bank stress index ("BSI") survey are in and the US banking industry saw slightly higher stress than in the previous quarter. At the start of 2010, we wrote in The IRA Advisory Service that Q1 was likely to be the best quarter of the full year 2010. As it turns out, Q1 2010 was the lowest BSI score for the full year and since the start of 2009. Operational stress as measured by the BSI has been rising in the US banking industry steadily since Q1 2010. 

2011-02-27 Cash or Credit - Implications for the Financial Markets by John P. Hussman of Hussman Funds

From the standpoint of prospective investment returns, it is important to recognize that the main effect of quantitative easing has been to suppress the expected return on virtually all classes of investment to unusually weak levels. It's widely believed that somehow, QE2 has created all sorts of liquidity that is "sloshing" around the economy and "trying to find a home" in stocks, commodities, and other investments. But this is not how equilibrium works.

2011-02-25 And That's The Week That Was… by Ron Brounes of Brounes & Associates

First Tunisia was stricken with political unrest and investors barely noticed. Then Egypt suffered through a revolution which initiated a change in leadership, and the markets offered a collective yawn. Now Libya faces mass protests and traders are on edge. So what’s different in this case? One word…OIL. Libya is the first major oil producing state to encounter the violent turmoil that threatens a major shift in power. It produces 1.6 million barrels of oil a day and crude prices surged in the immediate aftermath of the revolution on fears of a production slowdown.

2011-02-23 Reevaluating ‘Chindia’: The Story of the Elephant and the Dragon by Arpitha Bykere, Adam Wolfe and Arnab Das of Roubini Global Economics

The emerging market powerhouse known as “Chindia” is becoming a focal point of global attention as China and India show themselves to be growth dynamos of the coming Asian Century. But examining these countries’ intrinsic differences is more illustrative than listing their similarities—and the two countries are likely to be on a divergent path over the next five years in the areas of growth, economic policy and politics.

2011-02-23 A Laughable Attempt at Cutting the Budget by Chris Maxey of Fortigent

In a sadly fitting tribute to the fiscal mismanagement occurring in Washington, D.C. these days, the National Christmas Tree, which stood in the same spot since 1978, was felled by high winds Saturday morning. Not to fear, park authorities had a contingency plan in place and a new tree is on the way. Unfortunately, politicians are not known for the same degree of contingency planning and last week’s budget proposals proved that we are in for a torrent of trouble.

2011-02-23 FPA Perennial Shareholder Letter by Eric S. Ende of First Pacific Advisors

The major issue affecting global markets continues to be the amount of debt outstanding worldwide. Governments and consumers in many of the world’s developed countries are under the microscope as lenders question whether these borrowers will be able to make interest and principal payments on their loans. We expect these concerns to remain for some time to come.

2011-02-22 Bruce Berkowitz on the Exceptional Value in the Financial Sector by Robert Huebscher (Article)

Fairholme's Bruce Berkowtiz, US stock-fund manager of the decade, discusses his large position in the financial sector and why he believes the big bets he is making do not amount to Russian roulette. He also comments on his recent nomination of former Florida Governor Charlie Crist to the board of St. Joes.

2011-02-22 The Capitalization Conundrum by Milton Ezrati of Lord Abbett

Within equity portfolios, there certainly is good reason to lean toward larger capitalization issues. Standard cyclical timing would point toward larger capitalization issues anyway, and small capitalization stocks, having led in the rally by a wide margin so far, now carry less favorable valuations than they once did. What is more, when retail investors at last return to the equity market, they will likely favor larger, better-known names. Still, in taking advantage of these circumstances, it would be a mistake to abandon small cap issues altogether.

2011-02-21 Bahrain: Time to be Truly Business-Friendly by Douglas Clark Johnson of Codexa Capital

Now more than ever, Bahrain needs to figure out how to be truly “business friendly.” If the nation’s economic strategy relies on the enthusiasm of the international business community, regaining global confidence will be critical to providing economic opportunity of any degree, let alone parity among citizens. The government has a very full plate.

2011-02-19 Viewing Chairman Bernanke’s Remarks Through the Lens of Emerging Economies by Mohamed A. El-Erian of PIMCO

Bernanke's comments will raise eyebrows among policymakers in emerging economies. His remarks highlight persistent differences in analysis that complicate policy discussions. International cooperation will not materialize unless advanced and emerging economies converge on a common analysis of the key issues. My hope is that the G-20 meeting will take an important step in this regard, and do so by recognizing that there is more than one perspective to today’s global challenges. I fear, however, that this may not materialize as yet.

2011-02-19 A Random Walk Around the Frontlines by John Mauldin of Millennium Wave Advisors

Today we do a Random Walk Around the Frontlines, surveying what’s going on in the world. The US economy continues to improve in fits and starts. Inflation for the last six months has risen rather smartly. And for the last three months inflation on an annualized basis is running over 3%. The recent drop in the unemployment rate was entirely due to rather dramatic drops in what is known as the participation rate - fewer people looking for jobs. The Fed needs to end its program of quantitative easing.

2011-02-18 Love, Marriage and Housing by Teresa Kong of Matthews Asia

Imagine the United States in the early 1920s. Henry Ford had just developed the moving assembly line to build the Model T, leading to an era of rapid growth in the automobile industry. This further stimulated industries such as oil, glass and road building. Tourism soared and consumers with cars had a much wider radius for shopping. Many people abandoned agriculture to seek new opportunities in fast-growing cities. During these “Roaring Twenties,” the construction of urban offices, factories and homes were booming and new buildings sprouted up everywhere.

2011-02-17 The News is Not All Bad, Though There are Several Caveats by David A. Rosenberg of Gluskin Sheff

If there is anything to be worried about it is really that the equity market has easily climbed so many walls of worries. Is the outlook that much devoid of risks or do we have tremendous complacency on our hands? To be sure, the news is not all bad, though there are several caveats: Deere and Comcast beat their earnings estimates; The Fed lifted its real GDP forecast; The latest retail sales data were soft but there is momentum in the payroll-tax cut; etc.

2011-02-17 Baby Steps in the Complex Global Recovery Wasatch Funds by Sam Stewart and Roger Edgley of Wasatch Funds

The U.S. recovery is generally headed in the right direction. The good news is that credit markets are easing and many economic indicators are slowly improving. The bad news is that unemployment remains stagnant, companies are hoarding cash, and we have a growing federal deficit to address. The recently passed tax bill is good psychologically. People are generally pleased that their taxes won’t be going up this year, despite other concerns they may have with the bill. More importantly, this was one of several pieces of recent legislation showing the renewed possibility of bipartisanship.

2011-02-16 Politics of Inflation by Axel Merk of Merk Funds

In arguing food inflation is not the Federal Reserve’s (Fed’s) fault, Fed Chairman Bernanke points the finger at everyone but him. Just as with a lot of Bernanke’s policies, his argument may hold in an academic setting, but the real world is a bit more complicated.

2011-02-15 India: Kingdom of Dreams by Mark Mobius of Franklin Templeton

Throughout my travels, I have visited some countries that never cease to amaze me every time I go back, and India is definitely one of them. The country is changing and growing at an incredible pace. In 2010, India’s economy grew by 9.7%, and for 2011 the IMF projects GDP growth to be 8.4%. From 2005 to 2010, India’s economy grew around 6% to 8% each year, an impressive feat for such a large economy. Looking ahead, from 2011 to 2030, EIU forecasts GDP growth to average 6.5% a year, which would make India the fastest-growing large economy in the world during that period.

2011-02-14 What Will Propel Equities Further? by Milton Ezrati of Lord Abbett

The positive outlook for equities draws on many sources, but basically rests on two pillars: 1) continued economic growth that will sustain an earnings expansion and 2) still-favorable valuations prevail, despite the great rally since March 2009. Neither point, of course, is beyond complaint. Nothing in any investment outlook is absolutely secure. Now, as ever, prospects are overshadowed by a cloud of risks. But the likelihoods still favor the earnings growth and a favorable response from equity markets.

2011-02-14 Investment Commentary by Bob Doll of BlackRock Investment Management

For many investors, the shift into equity markets is still in the early stages and equity valuations are hardly stretched, suggesting that the upward moves have further to run. While pullbacks and corrections will no doubt occur along the way, we believe they should be short and shallow and should be taken advantage of to add to positions.

2011-02-14 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

No one knows what the longer-term direction of the Egyptian state will be, and as a consequence the investment outlook now has an additional source of uncertainty. As far as the global economy is concerned, the failure of the European leaders to agree on to how to handle future sovereign debt crises has cast a shadow once again over Portugal and even Ireland. The problem that Ireland poses is that the elections to be held shortly will bring about a new government who may wish to renegotiate their bailout agreement.

2011-02-13 Rich Valuations and Poor Market Returns by John P. Hussman of Hussman Funds

At present, my view on monetary policy is that the inflation outlook following the completion of QE2 will be quite unstable, because small changes in interest rates are likely to induce very large changes in the willingness of individuals to hold base money. Any external upward pressure on interest rates beyond a fraction of a percent will have to be rapidly offset by a large reduction in the outstanding monetary base in order to avoid a deterioration in the value of money relative to goods and services (i.e. inflation).

2011-02-12 The Future of Public Debt by John Mauldin of Millennium Wave Advisors

Mauldin looks at an important paper from the Bank of International Settlements on “The Future of Public Debt.” While the debt supercycle is still growing on the back of increasing government debt, there is an end to that process, and we are fast approaching it. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability. This leads the BIS to conclude that the question is when markets will start putting pressure on governments, not if.

2011-02-12 Foreign Investments in India by Sunil Asnani of Matthews Asia

Foreign investment plays a significant role in India’s economic growth, which has historically been constrained by supply factors, and most notably, the availability of capital. Domestic savings in India have risen, but high government deficits still don’t leave enough for the private sector. The result has been a vicious cycle in which the high cost of capital prevents many businesses from flourishing, which further limits India’s capacity for capital formation. Let us examine the ways in which India can use foreign capital to emerge from this low-growth equilibrium.

2011-02-12 Balancing Act by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Strong US economic signals and solid earnings continue to provide a positive backdrop for stocks. We expect pullbacks if optimistic sentiment gets too elevated, but remain optimistic about the stock market. Inflation concerns are rising, but the Federal Reserve is unlikely to react with tighter policy. There's not much it can do to fight commodity inflation, but Treasury yields are rising in response to headline inflation, even with little near-term risk of companies passing on rising costs.

2011-02-12 Ignorance is Confidence: Fedtalk or Newspeak? Andrew Jackson on Repealing a Central Bank by Christopher Whalen of Institutional Risk Analyst

In this issue Richard Alford, Christopher Whalen and members of the Herbert Gold Society opine on the Fed's attitude toward veracity and transparency in an age when confidence is the paramount policy concern. In the process of seeking to restore and maintain confidence, in the financial system and in the Fed as an institution, the Board of Governors in Washington led by Chairman Ben Bernanke seem to follow the last of the three slogans of the Ministry of Truth in George Orwell's book, 1984: "Ignorance is Strength."

2011-02-11 The Year of the Rabbit by Craig Hester of Hester Capital Management

The global financial markets in 2011 are likely to reflect many of the characteristics of the rabbits personality: quick to react, avoiding conflicts, erratic, resilient yet determined. The year started on a fast note. The S&P 500 jumped out to a 3.3% gain before selling off late in January over concerns regarding political instability in the Middle East. Global tensions, sovereign debt, state and federal finance, the economy and earnings may affect financial markets this year. One can expect a year of volatility, but a market that will display resiliency in the face of these uncertainties.

2011-02-10 Outlook 2011 by Bill Smead of Smead Capital Management

The year 2010 took us on quite a ride and ultimately delivered acceptable returns in both the US stock and bond markets. Our returns were commensurate with the index, but did so without exposing our clients to what we consider the primary long term risks that exist today. Those two primary risks we see in 2011 involve bonds and China.

2011-02-09 Why the US employment situation matters more than any other indicator right now by David Edwards of Heron Financial Group

Americans are in a tough spot, but American business is in great shape with record profits, strong balance sheets and solid revenues from international operations. The stock market is getting frothy, as typified by increasing M&A activity. In 5weeks, the S&P 500 is up 5% on the year, and our forecast for the whole year is 8%, which gives us that “walking on thin ice” feeling. We’re not in the position to jump out of the market. We would turn bullish if we got sustainable job growth of 250K/month or better.

2011-02-08 The Downside to Venture Investing (like Facebook?) by Dan Richards (Article)

In this interview, Harvard Business School professor Josh Lerner discusses the dangers of venture capital investing and the basis behind Facebook's valuation. This is a transcript of the interview.

2011-02-08 Conundrum Investing by James G. Tillar and Steve Wenstrup of Tillar-Wenstrup Advisors

The range of possible outcomes for the economy and market is still wide. We believe QE2 is simply a continuation of a boom-and-bust regime. Fundamentals are good now but are unlikely to be sustainable. Printing money to support asset prices cannot go on forever and usually ends in disaster like it did after both the technology and housing busts. Therefore, we dont believe this is a time to be aggressive. We are maintaining our strategy of emphasizing steady-growth businesses, with strong balance sheets, healthy dividends, attractive valuations and exposure to emerging economies.

2011-02-07 Why Credit-Sensitive Bonds Still Make Sense by Milton Ezrati of Lord Abbett

Clearly if Europe’s sovereign debt problems careen out of control, a global flight to quality would likely reoccur, bringing U.S. Treasury and agency yields back down. But if as expected the European Union (EU) manages the situation, then the recent unwinding of the former flight to quality should continue, rendering Treasuries and agencies problematic investments at best, and leaving the only fixed-income opportunities in credit-sensitive investments.

2011-02-04 An Excerpt from Endgame by John Mauldin of Millennium Wave Advisors

Growth does not look that great, and people don’t feel the recovery. This is unlikely to change. The U.S. and most developed economies are currently facing many major headwinds that will mean that going forward, we’ll have slower economic growth, more recessions, and higher unemployment. Three large structural changes have happened slowly over time that we expect to continue going forward. The U.S. economy will have higher volatility,lower trend growth, and higher structural levels of unemployment (The United States here is a proxy for many developed countries with similar problems.)

2011-02-03 Egypt by Mark Mobius of Franklin Templeton

Stock markets in Egypt have been closed since January 30 and those in the Middle East/North Africa (MENA) region declined substantially between January 25 and February 1 as sentiment among some investors turned negative amid the political uncertainty. Other investors have been seeking an opportunity to buy stocks at low prices. The geopolitical ramifications of this unrest are many, not only for Egypt but also potentially for the rest of the world, and for the most part will probably be positive since political reform has been long overdue in the region.

2011-02-03 Deconstructing the Current Inflation Conundrum by Team of American Century Investments

As the old saying goes: “The best time to buy flood insurance is when the river is still running low.” We suggest not waiting until inflation pressures increase further before making sure you have some inflation insurance in your portfolio.

2011-02-03 Spain Is Not Greece and Need Not Be Ireland by Mohamed A. El-Erian of PIMCO

Spain’s success is of acute relevance to the rest of the eurozone. Unlike Greece, Spain does not have a direct public finance crisis. Spain is where Ireland was a couple of years ago, but is clearly keen to avoid Ireland’s experience. To avoid a bad outcome in Spain (and the rest of the eurozone), additional, significant and highly visible progress needs to be made within the next few weeks.

2011-02-01 Can Economics Save the Economy? by Robert Huebscher (Article)

Christina Romer, Greg Mankiw and Paul Krugman were among a group of thought leaders who spoke at a conference in Cambridge last week. They cited a lack of sufficiently powerful and politically feasible policy options, calling into question whether economists will be able to produce the clear path to the stronger recovery that the Obama administration seeks.

2011-02-01 Why Public Funding of Venture Capital Has Failed by Dan Richards (Article)

Josh Lerner is a professor at the Harvard Business School, with a joint appointment in finance and entrepreneurial management. In this interview, he discusses his research on why public-funded venture capital sometimes succeeds but other times fails. This is a transcript of the interview.

2011-02-01 Into the Great Wide Open by Whitney George of The Royce Funds

Overall, our outlook is fairly positive. Corrections in the 10% or greater range should create opportunities for us on a global scale. We think that returns will remain positive and that volatility will remain a presence which we seek to use to our advantage in the months and years ahead.

2011-01-31 Egypt: Standing in the Middle of Nowhere and Everywhere by Douglas Clark Johnson of Codexa Capital

We’ll likely recommend Egyptian equities once the current uncertainty diminishes. However skittish the political backdrop, Egypt should be a mainstay of a well structured emerging-market allocation. We see little prospect of regressive economic-policy implementation down the road. Our view might be different if current protests shift to an Islamist-led revolt, but so far that does not seem to be happening. We’re seeing grassroots discontent expressed by young Egyptians.

2011-01-31 The Investment Outlook: An Overview by Milton Ezrati of Lord Abbett

This is the first of a four-article series on the macro considerations behind Lord Abbett’s fixed-income and equity outlooks. This first installment offers an overview. The three pieces that follow will, in turn, take up the reasons behind 1) the general preference for credit-sensitive fixed-income issues; 2) the positive overall stance on equities; and 3) the call for a thorough capitalization mix within equities.

2011-01-31 Investment Commentary by Bob Doll of BlackRock Investment Management

At present, most investors appear to have increased their expectations for global growth and for growth levels in the United States. The words “double dip” have virtually vanished from investors’ vocabularies and while we agree with the generally optimistic tenor of the conversation, we are also somewhat uneasy about the positive shift in sentiment and growing sense of complacency. As last week’s events remind us, there are a number of risks to be wary of, including one we have not yet mentioned — monetary tightening in emerging markets.

2011-01-29 Schwab Market Perspective: Confidence Climbing by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Although still relatively low, confidence is returning to businesses and consumers. We believe this confidence is well-placed and could portend healthy gains for the economy and the market as the year matures. Risks remain: commodity prices are rising, housing is still moribund, and federal and local governments have severe fiscal budget crises to deal with. Confidence in developed international markets is still lagging.

2011-01-28 Thought Leaders of the Islamic Crescent by Douglas Clark Johnson of Codexa Capital

I single out thinkers based in the Islamic Crescent (roughly stretching here from Ankara to Kolkata), arranging them first by geography, then in the rank order set by Foreign Policy. Our text summarizes the magazine’s material, supplemented with our own observations and updates. We note qualifications and challenges to the list at the end of our roster.

2011-01-26 World Bank Says Developing Countries Driving Global Growth by Team of American Century Investments

During the recent Great Recession, developing countries such as China and India played a key role in sustaining global economic growth, while developed economies struggled to cope with issues such as the subprime market meltdown, sovereign debt issues, and soaring unemployment numbers. In the coming years, developing nations will continue to play an increasingly important role in driving the global economy.

2011-01-25 Zombie IPO: Is American International Group the 'Blood Doll' of Wall Street? by Christopher Whalen of Institutional Risk Analyst

In this issue of The Institutional Risk Analyst, we return to the zombie dance party to check in on the queen of the prom, American International Group ("AIG"). First a question: Vampires are all the rage now in popular culture, so allow us to offer a macabre metaphor for AIG. Do you know what a "blood doll" is? A girl who craves to be the regular victim of or willing donor to a vampire. But hold that thought.

2011-01-24 Monetary Stimulus is Gaining Traction by Milton Ezrati of Lord Abbett

The Federal Reserve’s recent recommitment to a second round of quantitative easing (aka QE2) has come at a time when past efforts at monetary stimulus seem at last to have gained traction. Accelerations in various measures of money supply suggest that the economy is finally drawing on the copious amounts of liquidity the Fed previously injected into it even before the most recent round of quantitative easing.

2011-01-24 Currency Wars: View From Beijing by Douglas Clark Johnson of Codexa Capital

Any belief in Washington that the Chinese will allow the yuan to appreciate meaningfully beyond their pre-determined framework belies a certain naivete, in our view. First, of course, is the ancient Chinese stance that any such directives constitute meddling in internal affairs. We see two overriding themes that provide more contemporary context for Chinese economic decision-making: civil stability and social security.

2011-01-24 Investment Commentary by Bob Doll of BlackRock Investment Management

A number of factors bear close watching for investors, including the potential for additional Chinese policy tightening, ongoing weakness in the housing market and ongoing European sovereign debt issues. The overall strength of the economy, however, suggests to us that a repeat of the environment of fear that surfaced last year when the Greek sovereign debt problem developed is unlikely. We believe the strength in profit margins coupled with a less-hostile regulatory posture from D.C., should spur increased confidence, which should lead to a pickup in employment.

2011-01-20 'The Feeling is... Mutual!' by David A. Rosenberg of Gluskin Sheff

As they chase performance, retail investors plowed a hefty $6.54 billion into equity funds in the week of January 12. TD Ameritrade has reported that margin lending has soared 31% from year-ago levels. Uh oh. The one industry that is being hammered right now is the municipal bond fund space — with net outflows last week of $2.37 billion, the tenth week in a row. While there is no doubt that we remain cautious on the equity market as an asset class, we like the large-cap, blue-chip, cash flow generators and reliable dividend payers.

2011-01-20 Word on the Street: Cautious Optimism by Eagle portfolio managers of Eagle Asset Management

The general consensus among Eagle managers is that companies are more optimistic than they have been in many years. Businesses are starting to loosen their purse strings, albeit slowly and deliberately, to take advantage of competitive opportunities. Eagle managers continue to believe independent, diligent research is paramount in selecting stocks right now and that this likely will prove to be an excellent opportunity for long-term investors.

2011-01-20 Addressing Concerns about a Two-Track World by Mark Mobius of Franklin Templeton

I recently had a conference call with our investors around the world. Depending on where they were from, some of them were concerned about inflation while others were worried about sovereign debt problems. Here are a few topics that we discussed.

2011-01-19 Question Marks in the Arab World by Rachel Ziemba of Roubini Global Economics

Two MENA governments have suffered massive blows in the past week. Extended protests in Tunisia forced long-time ruler Zine El-Abidine Ben Ali to flee the country, while Hezbollah pulled out of the deadlocked Lebanese unity government, causing its collapse. Using a selected group of economic, social and political indicators, we assess the resilience of the region’s institutions in our latest MENA Focus.

2011-01-19 Market and Performance Summary by Jonathan A. Shapiro of Kovitz Investment Group

The broad market, as represented by the Standard & Poor’s 500 (S&P 500), rose 10.8% for the quarter and 15.1% for the full year. We remain optimistic regarding forward returns, not because the market has been strong, but because we believe we still hold a basket full of undervalued securities even after these robust gains.

2011-01-18 Letters to the Editor by Various (Article)

A number of readers respond to Nancy Opiela's article, Tactical Asset Allocation and Market Timing: What's the Difference?, and one reader responds to Michael Lewitt's article, The Wages of Growth. Both articles appeared last week.

2011-01-18 A Market Story by Robert J. Horrocks of Matthews Asia

It is not the headline rates of growth in Asia that excite me—it’s the profit-making opportunities within those economies that are necessary to sustain reasonable rates of growth and support the changing lifestyles of Asian households. And that, I hope, is a sentiment with which both the old and the reformed Scrooge might embrace.

2011-01-18 China and the Dollar by Brian S. Wesbury and Robert Stein of First Trust Advisors

The US should not take this week’s visit as an opportunity to lecture the Chinese about the yuan. If we do, Fed Chairman Ben Bernanke may find himself on the receiving end of a lecture about the importance of price stability and how to run a central bank. And he would deserve it.

2011-01-17 Landing in Jeddah by Douglas Clark Johnson of Codexa Capital

In an international environment where fiscal recovery dominates the OECD agenda, we think Saudi Arabia is a pretty strong story. We think Western and Eastern investors tend to avoid the market because of its lack of transparency and misconstrued stereotypes. These are views generally held without context. Tremendous shifts in the economy have taken place since King Abdullah ascended to the throne in 2005, and social reforms continue to evolve.

2011-01-15 Further Fuel? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Stocks may be vulnerable to a near-term pullback thanks to elevated sentiment, and earnings season could provide an impetus for some profit taking. The economy appears to be strengthening and we remain optimistic. Despite signs of growth, the Fed seems insistent on letting QE2 play out, pointing to continued high unemployment and housing. The new congress also has to deal with these issues, while attempting to pare deficit spending. International exposure is important, but we recommend taking some profits and rebalancing if your emerging-market exposure gets above your target allocation.

2011-01-14 Quarterly Review and Outlook, Fourth Quarter 2010 by Van R. Hoisington and Lacy H. Hunt of Hoisington Investment Management

An even slower growth rate of real GDP should be recorded over the next four quarters, suggesting the unemployment rate will be essentially unchanged a year from now. As we have noted previously, this modest expansion is due to the significant over-indebtedness of the U.S. economy. We see seven main impediments to economic progress in 2011 that will slow real GDP expansion to the 1.5%-2.5% range.

2011-01-14 Creating an Illusion of Prosperity by David A. Rosenberg of Gluskin Sheff

The question really today is still one of sustainability. If the Fed and our public officials were as comforted as the financial markets now seem to be over the sustainability of the recovery, then after a full year into it the central bank would not have embarked on another monetary experiment and the government would not have dipped into Social Security as a means to put more change in people’s pockets for spending purposes. Money, as an aside, that isn’t really ours.

2011-01-11 Inflation a Growing Concern for Emerging Market Countries by Team of American Century Investments

As a group, emerging market countries have rebounded from the Great Recession in much better shape than developed economies. And driven by higher commodity prices, robust domestic consumption, and a growing middle class with buying power, the emerging market asset class appears poised for more growth heading into 2011. While investors have been focusing on the European debt crisis, however, many emerging market economies have been getting a little overheated from the rapid pace of growth, and inflationary fears are quietly becoming a daily reality.

2011-01-10 Financial markets scarily “normal” – what can we expect in 2011? by David Edwards of Heron Financial Group

As the first 5 days of January go, so goes January! As January goes, so goes the year! That’s the theory, anyway. US stocks gained 1.2% in the first week of the new year, on top of the 6.7% gained last month. That’s a year’s return in 6 weeks, which makes us think “too far, too fast.”

2011-01-07 Will The Tea Party Congress Bring Recovery? by John Browne of Euro Pacific Capital

If the Republicans make good on their campaign promises, we will see cuts in government spending and an end to fiscal stimulus. Given that short-term stock market performance is very much dependent on such government assistance, the current rally is hard to fathom. Meanwhile, gold and silver have experienced a counterintuitive correction (although to be honest, pundits are making much more of this 4% pullback than the size of the move merits). Could it be that the markets now believe that fiscal restraint in Washington is the best pathway to growth?

2011-01-07 Weekly Asia Update: Postcard from China by Xin Jiang of Matthews Asia

Automation is one of the many possible solutions for China. There is plenty of room for China to catch up with its industrialized Japanese neighbor. China’s current level of industrial automation is comparable to that of Japan in the early 1980s, based on the percentage of computerized machine tools, the market size of the core machinery components needed for factory automation, and the level of automation in vehicle manufacturing.

2011-01-05 Things Are Looking Up in LatAm by Nouriel Roubini of Roubini Global Economics

In our 2011 Outlook, we revised up our growth forecasts for Latin America, in anticipation of resilient domestic demand, improved external conditions and elevated commodity prices. We now envision annual growth rates of 4.7% in 2011 (compared to the forecast of 4.1% we set in September) and 6.1% in 2010 from 5.7% previously. If we are correct, 2010 will mark Latin America’s strongest economic performance of the last decade and its fastest growth since 1980.

2011-01-05 11 Wishes for a Better 2011 by Komal Sri-Kumar of TCW Asset Management

The beginning of a new year is a time to make resolutions. It is also a good time to set out ones wishes regardless of whether they can be actually achieved during the following months. In that spirit, here are my top wishes for the U.S. and global economy during 2011. Achievement of even a few of them would help bring about sustainable economic growth as well as reduce the level of risk in the financial system.

2011-01-04 Think International, Think Small by Wasatch Funds of Wasatch Funds

Outperforming in today’s investment climate requires taking advantage of the wealth of opportunities available globally. Foreign stocks offer strong growth potential and attractive fundamentals, particularly small cap and micro cap companies. In this paper we explore what makes international investing particularly compelling, and the unique advantages of foreign small and micro cap companies, including: higher growth potential, better valuations due to the market inefficiencies of smaller companies and lower correlation with U.S. stocks, and under representation in portfolio allocations.

2010-12-31 Pessimism was not the Winning Bet in 2010 by David Edwards of Heron Financial Group

The easy money has been made, particularly in certain economically sensitive sectors. Returns in bonds could be flat or even negative over the next several years. We’ve substantially increased our exposure to boring old consumer staples, utilities, REITs and telecomm stocks, which offer dividend yields starting at 4% and ranging up to 12%. We expect US GDP growth to range between 2-3% over the next 4 quarters. In that environment, we would forecast gains in the S&P 500 of 8-10%, but now we wonder whether December’s 6.9% gain has already accounted for most of 2011’s stock market returns.

2010-12-29 Deciphering Debt by Dr. Victoria Marklew, Richard Thies, James Pressler and Dr. Asha Bangalore of Northern Trust

2011 is likely to raise more issues about debt, with periodic market panics about debt sustainability and bailouts. We offer this primer on the issue of debt – specifically the various measures and the roles they play in determining a country’s risk of facing some form of debt-related crisis. Metrics to assess indebtedness of nations are classified as solvency and liquidity measures. Each are discussed, as is the special topic of the banking sector and its relation to public debt. We give our view of global public-debt-related challenges in 2011.

2010-12-28 Emerging Markets in 2011 – Strong Economies, Rising Prices by Mark Mobius of Franklin Templeton

I believe emerging markets are now in a secular bull market, and as discussed below, I expect this trend to continue into 2011. Even more money is likely to be directed into these markets as investors around the world realize that emerging economies on average are growing three times faster than developed economies, and generally have more foreign reserves and lower debt-to-GDP ratios than their developed counterparts.

2010-12-27 A Fed-Induced Speculative Blowoff by John P. Hussman of Hussman Funds

Why are Treasury yields rising despite hundreds of billions of Treasury purchases by the Federal Reserve? There are two possibilities in the current debate. One is that the Fed's policy of purchasing Treasuries has scared the willies out of the bond market on fears of higher inflation, and that the policy is a failure. The other is that the policy has been such a success at boosting the prospects for economic growth that interest rates are rising on anticipation of a better economy. From our standpoint, neither of these explanations hold much water.

2010-12-27 Lessons by Jeffrey Saut of Raymond James Equity Research

Lessons, I’ve learned a few over my 40 years in this business: A fool and his money are soon parted. There is no free lunch. Don’t put all your eggs in one basket. Spend interest, never principal. You cannot eat relative performance. Don’t be afraid to take a loss. Watch out for fads. Act. Take the long view. Remember the value of common sense.

2010-12-23 Global Market Commentary by Monty Guild and Tony Danaher of Guild Investment Management

Investors should continue to hold gold for long-term investment. Food and food-related shares remain a favorite of ours and we believe that oil-related investments have promise. For long-term investment, we do not like the U.S. dollar, Japanese yen, British pound, or the Euro. As we mentioned in our September 14th letter, we like the Singapore, Thai, Canadian, Swiss, Brazilian, Chinese, and Australian currencies. In summary, investors should continue to hold shares of growing companies in India, China, and Colombia. We believe U.S. stocks can rally further.

2010-12-23 No, Krugman, You're Eating America Alive by Neeraj Chaudhary of Euro Pacific Capital

Here we go again. This week, Paul Krugman, the 2008 Nobel Prize winner in economics and the go-to guy for progressives who need a morale boost, launched another misguided attack on Austrian School economists. From