ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Commentaries Focused on Investment Strategy

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2014-04-18 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust

In a currency war, everyone loses. Should monetary policy be coordinated across countries? The International Monetary Fund is at a crossroads.

2014-04-17 Designing Balanced DC Menus: Considering Diversified Fixed Income Choices by Stacy Schaus, Ying Gao of PIMCO

Sponsors of defined contribution plans face a dual challenge: They must present investment options appropriate for plan members and design menus that encourage selection of well-structured portfolios. We believe that actively managed strategies designed to potentially reduce risks, invest globally and enhance yield relative to the index may improve diversification and lower concentration risk in fixed income offerings. Plan sponsors may consider a range of return and risk measures as they evaluate current and prospective fixed income offerings.

2014-04-12 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust

The Federal Reserve’s search for stability. The patterns of world trade are undergoing important changes. Greece issued debt this week: good news or bad news?

2014-04-12 Every Central Bank for Itself by John Mauldin of Millennium Wave Advisors

Whether the FOMC can actually turn the taper into a true exit strategy ultimately depends on how much longer households and businesses must deleverage and how sharply our old-age dependency ratio rises, but markets seem to believe this is the beginning of the end. For now, that’s what matters most. Under Fed Chair Janet Yellen’s leadership, the Fed continues to send a clear message to the rest of the world: Now it really is every central bank for itself.

2014-04-05 The Lions in the Grass, Revisited by John Mauldin of Millennium Wave Advisors

Today we explore a few things we can see and then try to foresee a few things that are not quite so obvious. The simple premise is that it is not the lions we can see lounging in plain view that are the most insidious threat, but rather that in trying to avoid those we may stumble upon lions hidden in the grass.

2014-04-04 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust

For the European Central Bank, actions will speak louder than words. US hiring is back on track. The debate over unemployment and wage pressure.

2014-03-31 European Rally Has Legs by Nick Kalivas of Invesco Blog

Since hitting a low on June 1, 2012, the MSCI Europe Index has rallied 64.73%. In our view, there’s room for European equity markets to advance further, supported by strong fundamentals, positive flows and a steady uptrend from the June 2012 low.

2014-03-26 And That\'s The Week That Was by Ron Brounes of Brounes & Associates

Well, apparently Janet Yellen has her own style, her own personality, her own mixed message. Just as Fed watchers had to get used to Bernanke in the aftermath of maestro Greenspan (does that name still apply after the financial crisis?), investors will need a few meeting to figure out the new Fed Chair. An early rebound was followed by a selloff which was followed by a rebound which was followed by a late-week selloff. Nicely done, Ms. Yellen (though Russia played a role as well).

2014-03-17 Frontier Markets: Weighing the Risks by Nathan Rowader of Forward Investing

Why would investors even think about investing in fledgling, so-called frontier economies half a world away? The quick answer is that some of the best-performing stock markets in the world can be found in places like Kenya, Bulgaria and Argentina. Annual equity returns topped 40% in all three countries in 2013 while a number of other frontier markets (FMs), including Romania, Serbia and Nigeria, experienced annual returns ranging from 25% to 35%. Although past performance is not a guarantee of future results, investors in search of portfolio growth and diversification are taking note.

2014-03-14 Deflationary Pressure and Tight Credit Facilities Weigh on Eurozone Recovery? by Andrew Balls of PIMCO

The eurozone is enjoying a broadly balanced resurgence in economic output and domestic demand. Deflation risk is real, and the European Central Bank’s asymmetric attitude toward its inflation target could contribute to a decline in inflation expectations. In the current climate, we continue to favour select regional credit exposure and look to generate attractive returns across European credit and asset-backed securities.

2014-03-05 2014: A Transition Year - Back to Fundamentals by Lorenzo Pagani of PIMCO

The past several years have seen multiple regime changes in financial markets in Europe, each dominated by different factors and requiring a distinct approach to fixed income investing. As spreads tighten to pre-2008 levels, it is now time to ask whether a shift in investment style is due. Macroeconomic developments and inflation expectations are likely to be key determining factors in whether 2014 will be a good year for European bond investors.

2014-03-04 A Century of Policy Mistakes by Niels Jensen of Absolute Return Partners

A century ago Argentina ranked as one of the wealthiest countries in world. Today it is a shadow of its former self. A long string of policy errors explain the long slide from riches to rags. Europe, like Argentina 100 years ago, is facing enormous challenges - as well as potential pitfalls - and the management of those challenges will define the welfare path for many years to come. Unfortunately, the early signs are not good. Our political leaders, afraid to face public condemnation, have so far chosen to ignore them.

2014-02-26 EM and the Fragile Five: Separating the Wheat from the Chaff by Blaise Antin, David Loevinger, Anisha Ambardar of TCW Asset Management

The shift in capital flows triggered by former Fed Chairman Ben Bernanke’s tapering remarks in May 2013 set off a cascade of market events that continues to this day. His comments also birthed a cottage industry of emerging market doomsayers, who now predict regularly: 1) the end of growth in emerging markets (EM), given that it was, in their view, all a mirage fueled by carry and leverage; and 2) a wave of defaults of the kind last seen in the 1990s that threaten to bring down not only emerging but developed markets as well.

2014-02-25 Time to Worry About Europe Again? by Chris Maxey, Ryan Davis of Fortigent

The European sovereign debt crisis has all but faded from investors’ minds since ECB President Mario Draghi’s famous pronouncement on July 26, 2012 that he would do “whatever it takes” to save the monetary union. Since that time, equity markets in Europe rallied sharply as accumulated risk aversion fell away.

2014-02-25 Flirting With Deflation by Andrew Bosomworth of PIMCO

Over the medium term, we see downside risks to both growth and inflation in the eurozone, unlike the ECB’s more balanced view. However, even if eurozone inflation sinks close to 1% in 2014–2015, as PIMCO forecasts, this in itself probably would not be low enough for the ECB to consider further easing. A lack of further policy action may undermine the ECB’s credibility to anchor longer-term inflation more closely to 2%.

2014-02-24 Leading Indicators Offer a Window into Europe’s Recovery by Matthew Dennis of Invesco Blog

We’re seeing signs that the recovery in Europe is progressing. I wanted to take a moment to highlight some of the positives, uncertainties and opportunities that we believe investors should consider about the region.

2014-02-18 After a Rocky 2013, What\'s in Store for Asia This Year? by Brent Bates of Invesco Blog

Overall, 2013 wasn’t the best year for Asian markets, however there are several trends emerging that we believe will be good for the region this year.

2014-02-01 Central Banker Throwdown by John Mauldin of Millennium Wave Advisors

The Federal Reserve is signaling that it is going to end quantitative easing at some point in the future; therefore, investors are trying to find the exits before the end actually comes.

2014-01-30 Quarterly Review and Outlook - Fourth Quarter 2013 by Van Hoisington, Lacy Hunt of Hoisington Investment Management

In The Theory of Interest, Irving Fisher, who Nobel Laureate Milton Friedman called America’s greatest economist, created the Fisher equation, which states the nominal bond yield is equal to the real yield plus expected inflation. It serves as the pillar of macroeconomics and as the foundational relationship of the bond market. It has been reconfirmed many times by scholarly examination and by the sheer force of historical experience. Examining periods of both low and high inflation offers insight into how each variable in the Fisher equation affects the outcome.

2014-01-29 Fed Responsible for EM Crisis? by Axel Merk of Merk Investments

From the bully pulpits in Sao Paulo to the blogosphere in cyberspace, the Fed is blamed for the turmoil in Emerging Markets (EM). That’s a bit like blaming McDonald’s for obesity. Blaming others won’t fix the problems in EM economies, it won’t fix investors’ portfolios and it is an unlikely way to lose weight. Investors and policy makers need to wake up and realize that they are in charge of their own destiny. Let us explain.

2014-01-28 Surviving Austerity by Andrew Schiff of Euro Pacific Capital

With the Standard & Poor’s 500 Index having posted a 30% gain, it’s easy to assume that U.S. stocks easily led the world in 2013. (There is more on what is behind this rally in the latest version of the Euro Pacific Capital Newsletter). But as it turns out, the stimulus-loving U.S. markets had plenty of company. Surprisingly, this includes countries supposedly saddled by the scourge of austerity.

2014-01-27 Attractiveness of Municipal Bonds Should Not Be Overlooked in 2014 by Municipal Insight Committee of Eaton Vance

After a challenging year for the municipal bond (muni) market in 2013, we believe the underlying strength of munis has improved, making the asset class an attractive proposition heading into 2014. In our view, challenges and headwinds will continue in 2014; however, more palatable yields and the relative attractiveness of munis versus other taxable alternatives may help investors limit the volatility and downside witnessed over the past year.

2014-01-16 EM Sovereign Debt 2014: Neither Phoenix nor Failure by Paul DeNoon of AllianceBernstein

Emerging-market (EM) sovereign bonds were burned badly in 2013. Will they rise from the ashes in 2014? We believe some will and some won’t. The watchword for 2014 will be selectivity.

2014-01-12 Forecast 2014: The Killer Ds by John Mauldin of Millennium Wave Advisors

We’ll continue our three-part 2014 forecast series this week by looking at the significant economic macrotrends that have to be understood, as always, as the context for any short-term forecast. These are the forces that are going to inexorably shift and shape our portfolios and businesses. Each of the nine macrotrends I’ll mention deserves its own book (and I’ve written books about two of them and numerous letters on most of them), but we’ll pause to gaze briefly at each as we scan the horizon.

2013-12-20 Let\'s Get Physical: Gold Bullion and Bitcoin by John Hathaway of Tocqueville Asset Management

John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), discusses in his latest insights piece the disparity in price direction between gold bullion and Bitcoin, in spite of the strikingly similar rationale for holding the two. He notes that the "Bitcoin-Gold incongruity is explained by the fact that financial engineers have not yet discovered a way to collateralize bitcoins for leveraged trades."

2013-12-17 The Monster That Is Europe by John Mauldin of Millennium Wave Advisors

This week, Geert Wilders and his Party for Freedom in the Netherlands and Marine Le Pen of the Front National (FN) of France held a press conference in The Hague to announce that they will be cooperating in the elections for the European Parliament next spring and hope to form a new eurosceptic bloc.

2013-12-13 Where Have All the Savings Gone? by Giordano Lombardo of Pioneer Investments

The last six years have witnessed the most severe financial crisis since the end of World War II, with household earning capacity and saving ability experiencing significant changes due to the downturn in the real economies. This challenging economic situation definitely affected household saving behavior, although the impact has been different in various countries - for some, the impact on household earning capacity was more intense than others.

2013-12-11 Muddling Through: The \'Realpolitik\' of the Eurozone Crisis by Andrew Bosomworth of PIMCO

The long-term cost of Europe’s economic recovery is likely to challenge social tolerance and political will to achieve a fully integrated fiscal and political union. Although able to exploit the untapped potential of European treaties, the soon-to-be-elected 8th European Parliament looks more likely to continue to muddle through. We see low medium-term risk for government and corporate bonds with maturities of up to three years, but caution may be required for securities with longer maturities and lower down in the capital structure.

2013-12-06 Going Against the Grain, Again by Cindy Sweeting of Franklin Templeton

Going against the grain is never easy, particularly when it comes to investing. But if you don’t take the risk of moving out of the crowd and taking a different path, you can’t really stand out. Templeton has focused on bottom-up value investing, which often puts it at odds with the broader market consensus. We go back in history to describe how the strategy has persevered through different market cycles, and why the Templeton team has been going against the grain by investing in Europe at a time when other investors had lost faith.

2013-12-03 U.S. Economy Slowly Gaining Traction - What\'s Ahead for Year-End? by Sam Wardwell of Pioneer Investments

As we enter the final month of 2013, my themes of the last several weeks continue - the capital markets, in general, remain quiet and U.S. economic data, while mixed, shows signs of steady improvement. This week, I’ll start by looking forward to some news we’ll be watching as the year closes out...

2013-11-22 Shifting Global Fortunes by Mark Mobius of Franklin Templeton

Most investors, particularly those who live in developed markets, probably aren’t aware of the influence emerging markets have on the global economy. I’m not just talking about China or just about governments. More and more large corporations are headquartered in emerging markets, a trend that I expect to continue. In addition, more of those companies that are located in emerging markets are also joining the ranks of the top companies in the world. In fact, some might be surprised to hear that some of the world’s largest initial public offerings (IPOs) have been in emerging m

2013-11-08 Weekly Economic Commentary by Team of Northern Trust

The ECB’s rate cut signals concerns about deflation. The U.S. job numbers provide an upside surprise. How reliable are the U.S. employment data?

2013-11-05 Fed in Holding Pattern, but for How Long? by Christopher Molumphy of Franklin Templeton

At its October 29-30 policy meeting, the US Federal Reserve (Fed) again put off the so-called “tapering” of its $85 billion-a-month asset purchase plan, now over a year old, until some future date. In an official statement released at the conclusion of the meeting, the Fed cited fiscal policy issues as restraining growth and said it will continue its quantitative easing program (known as “QE”) until the job market improves “substantially.”

2013-11-04 The Great Stall of China by Steve Cao, Mark Jason of Invesco Blog

While China is without question the growth driver and the outperformer among Asian emerging markets, it’s clear the country is transitioning toward slower growth because of demographic factors and domestic rebalancing. In our view, China is entering a multiyear period of slower growth, but we consider its future growth robust and sustainable when compared with overall global gross domestic product (GDP) growth -- albeit below the annualized pace of more than 10% China experienced from 2001 to 2010.

2013-11-01 Bank Reform: Europe's Slow and Steady Progress Continues by Monty Guild, Tony Danaher of Guild Investment Management

When Spain’s real estate bubble burst in 2008, the country went into a recession. The country was returning to growth in 2010, just in time to be taken down by the continent’s emerging banking and sovereign debt crisis.

2013-10-31 The Age of Experimentation (Global Economic Outlook for Fourth Quarter 2013) by Robert Scherfke of Hartford Funds

Macroanalyst Robert Scherfke, PhD discusses the progress global economies have made since 2008 and the challenges officials face as they normalize fiscal policies.

2013-10-29 Defining the EM Corporate Bond Opportunity by Sponsored Content from Loomis Sayles (Article)

Finance is a numbers business. Investors study prices, yields, rates of return. However, when it comes to sizing up emerging markets, we think they should also pay attention to semantics. In the past, terming a country “emerging” made it synonymous with low credit quality and higher risk. But today, many emerging markets boast strong credit profiles while parts of the developed world buckle under heavy debt loads.

2013-10-29 Is This the New Normal'? by Sam Wardwell of Pioneer Investments

Markets Settle into a New “Normal” All sorts of economic data were released last week, but volatility has dropped: rightly or wrongly, market forecasts about the pace of quantitative easing (QE) and earnings growth in the U.S. appear to have coalesced around an outlook for “slow growth with ongoing QE”.

2013-10-23 Investment Bulletin: Global Equity Strategy by Team of Bedlam Asset Management

The portfolio enjoyed another index-beating month with a gain of 0.9% versus 0.6%, so improving further the long term numbers. As noted in previous Bulletins, correlations between growth and equity market returns are low. Investors remain fixated otherwise, but some confusion is reasonable given that growth in earnings per share is also slowing. Yet strong equity markets can be justified by the Free Lunch Theory.

2013-10-22 A Green Light for Gold? by Peter Schiff of Euro Pacific Capital

It is rare that investors are given a road map. It is rarer still that the vast majority of those who get it are unable to understand the clear signs and directions it contains. When this happens the few who can actually read the map find themselves in an enviable position. Such is currently the case with gold and gold-related investments.

2013-10-21 Europe Turning a Corner? by Brandon Odenath of J.P. Morgan Funds

Since late last year, investors have seen periods of strong outperformance by assets from the most impacted parts of Europe, leaving many observers wondering if Europe is turning a corner. Intervention by the ECB and the ability of those liquidity injections to stop the bleeding in the economy has helped. The reduction of austerity and drag coming from fiscal policy should be the key to faster economic growth.

2013-10-18 Headwinds Give Way to Bullishness by Scott Minerd of Guggenheim Partners

With the partial government shutdown and Washington gridlock behind us for now, interest rates should continue declining and conditions are pointing to a period of renewed strength across asset classes.

2013-10-10 Economic and Market Overview: Third Quarter 2013 by Team of Envestnet

The economic environment in the third quarter was one of growth, albeit at a slower pace than most economists, and the Federal Reserve (“Fed”), believe can be self-‐sustaining. The slow but steady gains the economy made were enough to buoy the stock market, but likely only because the Fed has seen it necessary to maintain its aggressive monetary policy. While employment gains were anemic during the quarter, the unemployment rate actually declined to 7.3%, largely due to a contraction in the labor force.

2013-10-09 Gold Strategy Investor Letter, Q3 2013 by John Hathaway of Tocqueville Asset Management

We believe the gold market is set up for a major advance, but recognize that the timing of a turn has been elusive and frustrating. The longer current Fed policies remain in force, the greater the potential disruption to financial markets when it changes, most likely due to events yet unforeseen. Still, conventional economic commentary remains confident of Fed competence to unwind its balance sheet. When this confidence dissipates, as we expect, investment demand for gold will resurface in the most forceful manner.

2013-10-07 Defining the EM Corporate Bond Opportunity by Elisabeth Colleran, Peter Frick, Peter Marber, David Rolley, Edgardo Sternberg of Loomis Sayles

Finance is a numbers business. Investors study prices, yields, rates of return. However, when it comes to sizing up emerging markets, we think they should also pay attention to semantics. In the past, terming a country “emerging” made it synonymous with low credit quality and higher risk. But today, many emerging markets boast strong credit profiles while parts of the developed world buckle under heavy debt loads.

2013-10-04 The Fire Fueling Gold by Frank Holmes of U.S. Global Investors

For patient, long-term investors looking for a great portfolio diversifier, a moderate weighting in gold and gold stocks may be just the answer. And, today, when looking across the gold mining industry, you’ll find plenty of companies that have paid attractive dividends, many higher than the 5-year government yield.

2013-09-30 Investing In Corporate Bonds: The Compelling Case For Active Management by Ed Devlin, Michael Kim of PIMCO

Passive investment returns in the Canadian corporate bond market have been unimpressive because of the way corporate bond indices are constructed and factors unique to the Canadian market. Unconstrained by these limitations, active managers with global reach may provide superior returns. The current environment presents an attractive opportunity for Canadian investors to implement a wide discretion, active approach to managing corporate bonds.

2013-09-24 The U.S. Deficit Shrank, but Will It Come Back Bigger Than Ever? by Team of Knowledge@Wharton

The U.S. deficit has fallen to its lowest level since 2008. Experts weigh in on how this will affect upcoming budget negotiations.

2013-09-19 Expect Business as Usual After the German Election by Darren Williams of AllianceBernstein

Many pundits believe the German federal election on September 22 will prove a turning point in the sovereign debt-crisis. We are less convinced. Barring a massive shock, Angela Merkel is set to be endorsed as Chancellor for another four years. If this is the case, Germany is unlikely to depart much from the playbook that has served it well in recent years and which may now be delivering positive results.

2013-09-19 A Fine Balance in the Global Profits Cycle by Saumil Parikh of PIMCO

In the U.S., we expect growth to accelerate over the cyclical horizon, but to disappoint elevated consensus expectations. In Europe, we also expect growth to accelerate, but just barely, and also below consensus. In Japan, we expect growth to remain heavily reliant on aggressive fiscal and monetary policies. And in emerging markets, we expect a stabilization in growth assisted by central banks regaining control of currency and financial market conditions. The outlook for global corporate profits is a key measure of success in determining the handoff to self-sustaining growth going forward.

2013-09-17 Charles de Vaulx: “We Have Never Been as Cautiously Positioned” by Robert Huebscher (Article)

Charles de Vaulx is the chief investment officer and a portfolio manager at International Value Advisers. In this interview, he discusses his outlook for the market and the economy, and why his fund has never been as cautiously positioned as it is today.

2013-09-16 Europe's Fragile Recovery by Tucker Scott of Franklin Templeton Investments

Investors have tentatively begun to buy into the European recovery story, but remain fearful of the region’s fragility. A few bits of upbeat economic data recently have provided grounds for optimism, and the European Central Bank’s continued commitment to holding the Eurozone together has boosted confidence. Tucker Scott, portfolio manager forTempleton Foreign Fund, still sees a few economic roadblocks in Europe but also plenty of progress. He shares where he’s finding signs of strength and investment opportunities.

2013-09-14 Nothing But Bad Choices by John Mauldin of Mauldin Economics

Crises in government funding don’t simply arrive on the doorstep unannounced. Their progress toward the eventual Bang! moment is there for all the world to see. The root cause is almost always the same: debt. And whether that debt is actually borrowed or is merely promised to the populace, when the market becomes worried that the ability of the government to fund its promises is suspect, then the end is near. Last week we began a series on what I think is an impending crisis in the unfunded pension liabilities of state and local governments in the United States.

2013-09-12 2 Unresolved Issues Challenging the Case for European Stocks by Russ Koesterich of iShares Blog

Russ explains the two key unresolved issues that are keeping his view of European stocks somewhat cautious, and he gives the next signposts to watch to gauge whether any near-term resolutions are likely.

2013-09-11 Absolute Return Letter: A Case of Broken BRICS? by Niels Jensen, Nick Rees, Tricia Ward of Absolute Return Partners

EM currencies, stocks and bonds have struggled since the Fed signalled its intent to change course in late May. This has seemingly triggered an exodus of speculative capital from emerging markets but, as is always the case, there is more to the story than that. EM countries (ex. China) no longer run a current account surplus with the rest of the world, and this hurts global liquidity. It is not yet a re-run of the 1997-98 Asian crisis, but it has the potential to become one with all sorts of consequences for bond yields in developed markets, currency wars, etc.

2013-09-09 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks finished higher last week, but August was a down month as worries about monetary policy including who will lead the Federal Reserve next year, along with the confusion surrounding the Obama administration’s Syria decisions have put a damper on things for now.

2013-09-04 The Vultures' Victory by Joseph Stiglitz of Project Syndicate

The recent decision against Argentina by a United States appeals court threatens to upend global sovereign-debt markets. Indeed, a basic principle of modern capitalism that when debtors cannot pay back creditors, a fresh start is needed has been overturned.

2013-08-27 The Price Clients Pay for Worst-Case Forecasts by Bob Veres (Article)

Clients and the world at large give inordinate attention to downside scenarios, and nobody is calling our attention to the much larger upside of our business and investment landscape. The human brain amplifies this effect, because it is hardwired to notice threats much more than opportunities. I recently spoke with Dennis Stearns – an advisor who happens to be an expert in scenario planning – about the role planners need to play to counteract media-driven negativity.

2013-08-25 France: On the Edge of the Periphery by John Mauldin of Millennium Wave Advisors

Charles de Gaulle said that "France cannot be France without greatness." The current path that France is on will not take it to renewed greatness but rather to insolvency and turmoil. Is France destined to be grouped with its Mediterranean peripheral cousins, or to be seen as part of the solid North Atlantic core? The world is far better off with a great France, but France can achieve greatness only by its own actions.

2013-08-16 Weekly Economic Commentary by Team of Northern Trust

The speculation about Fed leadership has gone too far. Eurozone growth should be placed in perspective. The velocity of money may turn around soon.

2013-08-13 Envisioning the Planning Firm of the Future by Bob Veres (Article)

Virtually all advisors operate with a value proposition built on bettering their clients’ financial future through management of their assets. But trends in the workforce and capital markets will force advisors to rethink those assumptions and, if Richie Lee is right, the planning firm of the future will adapt a four-factor service model that places much greater emphasis on helping clients maximize their human capital.

2013-08-12 Mixing Politics and Finance Is Bad News for Investors by Charles Lieberman (Article)

Investors have seen plenty of examples of governments defaulting on their sovereign debt for political reasons. This lesson is now being learned by domestic municipal bond investors. Detroit is bankrupt and its emergency manager is now trying to get concessions from investors in its water and sewer bonds, despite their separate revenue streams and independent status. No matter.

2013-08-08 Market Melt-Up Catches Defensive Investors by Surprise by Douglas Cote of ING Investment Management

Extraordinary returns in the fourth year of a bull market remind us that long-term defensiveness can’t be rationalized. July saw remarkable returns across global equity and fixed income markets, with the exception of U.S. Treasuries. Investors would be well served to ignore media drama and fear mongering and simply follow the fundamentals. Five years spent worrying about Armageddon is too long, but there’s still time to get back to a normal allocation.

2013-08-07 Japan The Land of the Rising Stock Market by Richard Bernstein of Richard Bernstein Advisors

We have been ardent bulls on the Japanese stock market since last Fall. Our thesis has been a simple one: For the first time in the history of our data, Japan began running consecutive monthly current account deficits.

2013-08-01 July 2013 Market Commentary by Andrew Clinton of Clinton Investment Management

Fixed income investors have enjoyed a steady move higher in bond prices over the past five years. Given the consistency with which bond values have increased, it is understandable if bond investors were surprised by the just over 0.60%, or 60 basis point rise in ten year Treasury yields and corresponding movement down in bond prices during the second quarter.

2013-07-31 Still High Time for High Yield? by Team of Rainier Funds

Given recent strong performance and yields hovering at historic lows, a current topic of debate has been whether the high yield bond market has become an asset bubble and how much of a risk is the potential end to the Federal Reserve’s accommodative monetary policy to high yield investors. While we at Rainier acknowledge there are current risks in the fixed income market, we believe these concerns are not unique to high yield bonds.

2013-07-26 Is Europe Ready to Take Off? by Frank Holmes of U.S. Global Investors

After the U.S.’s huge run, is it possible the country will be handing off the baton across the Atlantic for the next leg of the relay race? Here are a few areas of strength that could send European stocks higher.

2013-07-24 Active ETF Market Share Update & Weekly Market Review by AdvisorShares Research of AdvisorShares

This past week, total assets in the active ETF space increased by over $60 million. The top 3 categories (“Global Bond”, “Short Term Bond” and “Foreign Bond”) all saw increases in AUM. The “Alternative Income” category fell in AUM, after weeks of only going up.

2013-07-19 Egypt: Stating the Obvious by Michelle Shwarzman of Invesco Blog

Although the outcome may have been viewed as a surprise by many, the ongoing economic malaise that partially fueled the revolt against and eventual ouster of Egyptian President Muhammad Morsi, was not.

2013-07-17 Hopelessly Devoted To You by Bill Smead of Smead Capital Management

A journalist from Fortune magazine once asked Andy Grove, the former CEO of Intel, for the best business advice he’d ever been given. Grove provided a simple quote from a former professor at City College of New York: “When everybody knows that something is so, it means that nobody knows nothin’.”

2013-07-16 AdvisorShares Weekly Market Review by AdvisorShares Research of AdvisorShares

The market increased again last week and both the S&P 500 and the Dow Jones Industrial Average reached record highs by the end of the week. The Nasdaq Composite Index also rose significantly, hitting a 12 year high.

2013-07-13 The Bang! Moment Shock by John Mauldin of Millennium Wave Advisors

This week we resume our musings about Cyprus, to see what that tiny island can teach us about our own personal need to engage in ongoing critical analysis of our lives and investment portfolios. Cyprus is not Greece or France or Spain or Japan or the US or (pick a country). I get that. No two situations are the same, but there may be a rhyme or two here that is instructive.

2013-07-02 The 2013 Mid-Year Geopolitical Update by Bill O'Grady of Confluence Investment Management

At mid-year, we customarily publish our geopolitical outlook for the second half of the year. This list is not designed to be exhaustive. As is often the case, a myriad of potential problems in the world could become issues in the second half of the year. The lineup listed below details, in our opinion, the issues most likely to have the greatest impact on the world. However, we do recognize the potential for surprises which we will discuss throughout the year in upcoming weekly reports.

2013-07-01 \"This Country is Different\" by John Mauldin of Millennium Wave Advisors

Cyprus is a very small country, some 800,000 people. Among the leadership, everyone knows everyone. There is much to admire, as we will see. But Cyprus has had a gut-wrenching crisis, proportionately more dire than any in other European countries recently; and precedents are being established here for how future problems will be dealt with in the Eurozone and elsewhere.

2013-06-27 Currency Wars: A Case for the U.S. Dollar by Gibson Smith, Chris Diaz of Janus Capital Group

In recent years, the U.S. dollar has tended to lose value when the global economy improves, as investors are more willing to take risks. We believe that pattern has changed and that the U.S. dollar will outperform the Japanese yen, the euro and the British pound over the medium term, even if the global economy continues to improve. In our view, current conditions justify a material deviation in currency exposure compared with certain global fixed income benchmarks, such as the Barclays Global Aggregate Bond Index.

2013-06-26 The Fed\'s Dirty Little Secret: QE Does Not Work by Gary Halbert of Halbert Wealth Management

Today I hope to dispel the myth that the Fed’s massive quantitative easing (QE) policy has driven long-term interest rates lower. I will argue that the opposite is true and demonstrate that the yield on the 10-year Treasury note has actually risen during QE-1, QE-2 and QE-3. This flies in the face of most market commentators.

2013-06-14 A Sweet Find on an African Adventure by Frank Holmes of U.S. Global Investors

The heart of Africa has been beating strong in recent years due to elevated commodity prices and resilient domestic demand, despite the global economic slowdown. Among the sub-Saharan African countries, Sierra Leone was the fastest growing country last year, according to the World Bank. Its economy experienced growth that is as rare today as Fancy Red diamonds. GDP increased a whopping 18 percent.

2013-06-13 Securing a Lasting Economic Recovery by Team of Northern Trust

According to the National Bureau of Economic Research, business expansions have averaged 59 months in the past 11 business cycles. June 2013 marks the fourth birthday of the current U.S. economic recovery, and this one seems very likely to be above average on this score.

2013-06-11 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The last few weeks have seen volatility emerge as concerns about the Fed’s policy of quantitative easing and the timing of changing it have taken center stage.

2013-06-05 Will Green Shoots Flourish in U.S. and Latin America? by Josh Thimons, Lupin Rahman of PIMCO

The US economy is much further along the road to repair relative to its developed market peers, but it is still dealing with an unsustainable fiscal situation. Latin America is closely coupled to the rest of the world. What happens in the U.S., China and Europe over the secular horizon is especially critical. Our secular investment outlook calls for a more defensive posture toward risk. In U.S. fixed income, this suggests positioning for alpha rather than capital appreciation.

2013-05-31 In an Era of Uncertainty and Lower Returns, It\'s Time for Alternatives by Sabrina Callin, John Cavalieri of PIMCO

The initial economic and capital market conditions of the 1980s set the stage for a multi-decade bull market for stocks and bonds. Times have changed, however, and traditional investment portfolios are unlikely to deliver returns as healthy as those enjoyed for much of the last 30 years. It’s time to think alternatively about asset allocation and index construction, sources of alpha and beta, and risk and return objectives to increase the probability of success in what we believe is a new era for investors and financial markets.

2013-05-29 Is This the End of the World As We Know It? by Massimo Tosato of Schroders Investment Management

After five turbulent years of decline and unrelenting economic doom there are signs that change could be afoot.

2013-05-28 Economic Climate Change & the Long-Term View on Yields by Sponsored Content from Loomis Sayles (Article)

Will rates rise? It’s a logical question. US Treasury yields have been in a secular downward trend since the 1980s and almost frozen at historic lows for the last several months. While recent cyclical improvements suggest the US economy is heating up, we do not expect interest rates to start soaring to record highs. The interest rate environment will eventually undergo climate change, but the process will be gradual. There are secular headwinds cooling rates, and we expect them to persist for years to come.

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

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

2013-05-22 How to Turn the ECB Straggler into a Central Bank Pacemaker by Myles Bradshaw of PIMCO

In our opinion, the ECB will be most effective if it can design a programme that helps banks deleverage more quickly to stimulate growth in the real economy. To have a meaningful impact on Europe’s broken transmission mechanism, any ECB programme needs to not only lower the cost of credit, but also be regionally tailored or big enough to be effective. Long-term investors should remain focused on the quality of issuers’ balance sheets rather than simply taking more risk because of lower prospective returns.

2013-05-21 Developed Europe: Regional Economic Review 1Q 2013 by Team of Thomas White International

After withdrawing into the background in late 2012, the Euro-zone sovereign debt crisis resurfaced in the first quarter with the Italian elections and Cyprus’ banking crisis. In late February, Italy’s national elections resulted in a fractured mandate, and Italians voted out the incumbent, the main architect of the country’s austerity and reforms agenda.

2013-05-15 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks moved higher again last week as the data continues to reflect an economy that continues to trudge along to the consternation of many.

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.

2013-05-13 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.

2013-05-08 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.

2013-05-07 Bail-Ins, Bernanke, and Buyouts: Assessing Key Event Risks for Fixed-Income Investors by Team of Hartford Funds

While the eventual shift to less accommodative central-bank policy and a rise in global interest rates are perhaps the greatest focuses of concern today for bond investors, other risks also merit scrutiny. European sovereign debt worries have resurfaced as the tiny nation of Cyprus, representing just 0.3% of euro-area gross domestic product (GDP), joined the list of bailout recipients. Recent rhetoric from the Fed has prompted investors to consider the impact of an eventual winding down of its asset purchases.

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.

2013-05-02 The Great Gold Redemption by Peter Schiff of Euro Pacific Precious Metals

The most puzzling part of the investment business is seeing how the vast and largely economically illiterate masses interpret any given piece of news. Take the recent gold selloff: many large players were motivated to sell by news that Cyprus will have to liquidate its gold stockpiles to pay off acute debt obligations. But just a moment’s reflection shows this reaction to be knee-jerk. The real story behind Cyprus’ deal has much more profound ramifications - and they are positive for gold.

2013-05-01 There Will Be Haircuts by Bill Gross of PIMCO

It has been the objective of the Fed over the past few years to make even more innovative forms of money by supporting stock and bond prices at cost on an ever ascending scale, thereby assuring holders via a “Bernanke put” that they might just as well own stocks as the cash in their purses. Gosh, a decade or so ago a house almost became a money substitute. MEW or mortgage equity withdrawal could be liquefied instantaneously based on a “never go down” housing market. You could equitize your home and go sailing off into the sunset on a new 28-foot skiff on any day but S

2013-04-30 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks rebounded from the previous week. Earnings were not bad, and investors now appear to be focusing on this week’s Federal Reserve and European Central Bank meetings.

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 A Playbook for Investors: How to Shoot, Score, Win by Frank Holmes of U.S. Global Investors

So, in the competitive spirit of the NBA playoff season, I’ve gathered a series of plays that investors can use to shoot, score and win during this year’s market. I’m happy to say they include all the elements of an exciting game, including a comeback kid, an upset and an underdog.

2013-04-26 Financial Repression: Why It Matters by Shane Sheperd of Research Affiliates

Financial repression refers to a set of governmental policies that keep real interest rates low or negative, with the unstated intention of generating cheap funding for government spending. The ramifications of these policies will be measured in decades, not years.

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 The End of “Expansionary Austerity?” by Scott Brown of Raymond James

A few years ago, an economic paper by Harvard professors Carmen Reinhart and Kenneth Rogoff helped fuel the push for austerity. It was met with some criticism from economists, but was widely embraced by the press and by politicians on both sides of the Atlantic. The study has now been demonstrated to have had serious flaws, but will those in power fold? Or will they double down on bad economic policy?

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 Europe's Sovereign Debt Problem: A Call for a Clear Destination by Andrew Bosomworth, John Henning Fock of PIMCO

Without political commitment to a common fiscal destination, the long-term instability and market distortions within Europe’s capital markets are likely to intensify. To preserve the euro, the eurozone must develop federal fiscal policies that tackle significant economic, cultural and societal differences and define a credible roadmap to achieving structural reforms, a banking union, political union and fiscal union. Historical precedents in Europe may help guide the way.

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

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

2013-04-19 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.

2013-04-16 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 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.

2013-04-11 Emerging-Market Debt: Pure High-Yield Strategies Come of Age by Marco Santamaria of AllianceBernstein

We believe investors should be thinking about emerging-market debt in terms of credit quality buckets (investment grade or high yield) rather than sectors (sovereign or corporate). For some types of investor, pure high-yield strategies can offer significant advantages.

2013-04-09 First Quarter Market Commentary by Mark Oelschlager of Oak Associates

After a strong 2012, the market continued its ascent in the first quarter, shrugging off macro issues like the Sequester and the Cyprus “bail-in.” The S&P 500 rose roughly another 10%, reaching a new all-time high. Normally when stocks are moving higher at a fast rate, it is the economically sensitive sectors that lead and the defensive ones that lag. But the first quarter saw the reverse, as the top three performing sectors were the three traditional defensive ones: healthcare, consumer staples and utilities.

2013-04-05 PIMCO Cyclical Outlook for the U.S.: Back From the Brink by Josh Thimons of PIMCO

We expect the largest contributors to U.S. growth this year will be housing and related industries, increases in capital expenditures (albeit from very depressed levels), certain manufacturing sectors, such as the auto industry, and the energy sector. We see roughly 1.7 percentage points of drag on GDP coming out of Washington far less than the four to five percentage points of potential drag had there been no fiscal cliff resolution. We believe the Fed will continue with hyperactive monetary policy, which we now call “QE Infinity,” that does not have an explicit end date or progr

2013-04-02 Cypriots In The Streets by Peter Schiff of Euro Pacific Precious Metals

The news of the month comes from the large Mediterranean island of Cyprus, where Keynesian economic planning left the economy facing complete bankruptcy. The result was an unprecedented step forward in the financial collapse of the West: direct forfeiture of bank deposits. Despite official protestations to the contrary, this fallout will spread to a bank near you.

2013-04-01 The Global Economy on the Fly by Nouriel Roubini of Project Syndicate

In a fragile global environment, has America become a beacon of hope? While the US is experiencing several positive economic trends, Europe continues to stagnate, and China will be vulnerable to a hard landing in 2014 unless its new leaders accelerate the pace of reform.

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.

2013-03-28 Emerging-Market Debt Offers More than One Kind of Diversification by Paul DeNoon of AllianceBernstein

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 What Will Drive the Market? by Charlie Dreifus of The Royce Funds

The sequester adds to the economic headwinds caused by ending the payroll tax holiday and the boost in tax rates. However, even with the sequester, total federal government outlays will rise this fiscal year. Finally, after more than a month of daily increases for a gallon of unleaded gasoline, prices are now declining. This has been of concern as rising oil and gasoline prices were yet another headwind facing the U.S. economy. (Oil prices have also declined.)

2013-03-28 What Maslow and Rand Would Tell Investors Today by Frank Holmes of U.S. Global Investors

While gold’s performance in the short term has been counterintuitive, I plan to stick to my own advice. I simply feel safer with a small weighting in gold as insurance.

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.

2013-03-25 Still Bullish by Richard Golod of Invesco

Global equities (as measured by the MSCI All Country World Index) fell modestly in February amid reignited fears about the euro’s future, signs of distress in China’s economy and the looming sequester deadline in the US. Nevertheless, I believe the US, Japan and emerging markets may offer compelling opportunities, while Europe requires a more selective approach.

2013-03-22 Cyprus Lifts the Curtain by Peter Schiff of Euro Pacific Capital

This week financial analysts, economists, politicians, and bank depositors from around the world were outraged that European leaders, more specifically the Germans, currently calling many of the shots in Brussels and Frankfurt, could be so politically reckless, economically ignorant, and emotionally callous as to violate the sanctity of bank deposits in order to fund a bailout of Cyprus.

2013-03-21 Will the Real Unemployed Please Raise Your Hands? by John Mauldin of Millennium Wave Advisors

This week’s letter will be a very short part of a book I am writing with Bill Dunkelberg (the Chief Economist of the National Federation of Independent Businesses) on the future of employment. It has taken longer to write than I initially anticipated, for a host of reasons, chief among which is that the future is not as obvious as I originally thought. Diving into the data has brought a few surprises.

2013-03-19 The Eurozone Crisis: Time for a Reset by Giles Conway-Gordon of Cogo Wolf Asset Management

The crisis in the Eurozone (EZ) has reached a dangerously unstable condition, politically, socially, financially and economically. Without a return to growth in the peripheral economies a disorderly outcome is becoming probable as the debtor countries approach the 100% debt-to-GDP default horizon. They will not return to growth while they share a currency with Germany. It is time for a reset.

2013-03-18 M&A and Dividends Likely Drivers of the Market by Charlie Dreifus of The Royce Funds

The sequester adds to the economic headwinds caused by ending the payroll tax holiday and the boost in tax rates. However, even with the sequester, total federal government outlays will rise this fiscal year. Finally, after more than a month of daily increases for a gallon of unleaded gasoline, prices are now declining. This has been of concern as rising oil and gasoline prices were yet another headwind facing the U.S. economy. (Oil prices have also declined.)

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.

2013-03-12 We Made It. Now What? by Christian Thwaites of Sentinel Investments

What looks like a fairly settled policy in Europe is fast becoming a very dangerous situation, according to Christian Thwaites in his latest "Thought of the Week" -- "We Made It. Now What?" -- adding that the outlook for the world's second largest economic bloc is pretty week.

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.

2013-03-11 Emerging-Market Debt: Pure High-Grade Strategies Gain Popularity by Marco Santamaria of AllianceBernstein

Investors in hard-currency emerging-market (EM) bonds are starting to change the way they think about the opportunity. For some, this means moving to investment-grade-only strategies.

2013-03-07 80's Bull Redux by Richard Bernstein of Richard Bernstein Advisors

We have thought for some time that the current bull market might be one of the strongest of our careers, and could potentially rival the 1980s bull market. Although this current cycles construction is quite different from the 1980s bull market, there are many aspects of this market that are curiously similar.

2013-03-07 Freewheeling? by Dimitri Balatsos of Tesseract Partners

Ignoring threatening clouds in the distant horizon, the financial markets are wrapped in a blanket of complacency. Consider the following. The Dow Jones Index has been flirting with the 2007 record peak. Implied stock market volatility, as measured by the VIX Index, is in the basement. Junk bond yields are at record lows, compressing spreads to within shouting distance of risk-free Treasuries. Securitization is back from the dead, while the drought in M&A activity is now getting plenty of rainfall.

2013-03-05 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks drifted last week, buffeted by concerns over Europe due to the Italian elections and worries here at home as the "dreaded" sequester begins to take effect.

2013-03-01 The Fed's Tightening Pipe Dream by Peter Schiff of Euro Pacific Precious Metals

Testifying before the US Senate this past Tuesday, Fed Chairman Ben Bernanke made an extraordinary claim about its bloated balance sheet: "We could exit without ever selling by letting it run off." What Bernanke means here is that the Fed could simply hold its Treasuries and agency bonds until they mature, at which point the government would then be forced to pay the Fed back the principal amount. Through this process, the Fed's unprecedented and inflationary position will be gradually and placidly unwound.

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.

2013-02-28 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.

2013-02-27 Singapore A Wise Owl Among Currency Snakes by John Browne of Euro Pacific Capital

As China enters the "Year of the Snake," Singapore stands as a beacon of sound currency in a world gone mad. China's renminbi remains pegged to the US dollar, while even steadfast Switzerland has followed the US, UK, EU, and Japan into an impoverishing strategy of currency debasement. Singapore, alone, has been able to sustain genuine economic growth in the context of a strong national currency.

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 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.

2013-02-21 Gold Miners- Back in the Abyss- An Update by JJ Abodeely of Value Restoration Project

Back on May 18th, 2012 I wrote a piece titled Jumping Into The Abyss: A Bull Case for Gold Mining Stocks. The miners had declined 40% from their August 2011 highs and for a variety of fundamental reasons like valuation and the relationship between mining costs and the price of gold and technical reasons, like sentiment, I felt the case to buy was compelling. The stocks subsequently rallied more than 30% over the following 4-5 months.

2013-02-20 Whatever It Takes by John Mauldin of Millennium Wave Advisors

Was it only a few years ago I visited the Emerald Isle of Ireland? The collapse of its largest banks foreshadowed the demise of many other European banks that had borrowed money from British, German, and other European banks to lend against homes and property. The Irish government had to guarantee deposits and bond holders in order to prevent a bank run. I think I am correct when I state that the Central Bank of Ireland was the first central bank to avail itself of large-scale use of the Emergency Liquidity Assistance (ELA) provision of the European Central Bank.

2013-02-19 Kyle Bass on Inflation and How to Protect Against It by Mark Quam (Article)

Kyle Bass, the founder of Hayman Capital, foresaw the collapse of the sub-prime mortgage bond market in 2008 and the foreign sovereign debt crisis in Greece. Bass' latest warning is about looming Inflation – and he advises how to protect against it.

2013-02-19 Ketchup vs Cash by John Petrides (Article)

Last week Warren Buffet’s Berkshire Hathaway, along with 3G Capital, bought Heinz (ticker HNZ) for $28 billion, paying a 20% premium to the prior trading day’s closing price (as well as Buffet rewarding himself with preferred stock yielding 9%). Heinz is a mature company trying to reestablish growth by selling ketchup and other condiments in developing countries. However, Heinz is a classic "steady-eddy."

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.

2013-02-08 The Year in Review: 2012 by Richard Bernstein of Richard Bernstein Advisors

Politicians crave the spotlight, but it is unfortunate that investors watch the show. 2012, like 2011, was another year in which Washington theatrics scared investors. As a result, investors largely missed out on above average equity returns. Corporate profits and valuations, and not Washington, continue to be the primary drivers of equity returns. We think there are several important points to consider when reviewing 2012 performance, and when structuring portfolios for 2013.

2013-02-08 Unconventional Policies and Capital Flows by Ben Emons of PIMCO

Although quantitative easing has grabbed the headlines, a number of central banks around the world have enacted other extraordinary measures in attempts to manage their economies. The Swiss National Bank (SNB), for example, adopted an exchange rate peg versus the euro while increasing its foreign exchange reserves to almost 80% of Swiss GDP.

2013-02-05 2012 Equity Market Market Year in Review by Natalie Trunow of Calvert Investment Management

Equities started the year strong as global inflation remained tame, and aggressive, accommodative monetary policy by central banks around the globe helped equity markets rally hard off their lows posted in the fall of 2011. Continuously improving U.S. economic data, strong corporate earnings, and policy steps toward mitigation of the sovereign debt crisis in Europe also provided support for the equity markets worldwide.

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 Currency War or Something Altogether Different? by Niels Jensen, Nick Rees,Tricia Ward of Absolute Return Partners

"Who is afraid of currency wars?" asks Gavyn Davies in the FT. I have known Gavyn for 25 years and have to confess that he is way out of my league intellectually. He is one of the smartest people I have ever met and, thankfully, also one of the humblest. He rarely gets things wrong so, when I occasionally disagree with him, it always makes me slightly uneasy.

2013-02-04 2013 Annual Forecast by Clyde Kendzierski of Financial Solutions Group

It's that time again. January will be over by the time you read this which means we are out of holiday excuses or "just ramping up for the new year" reasons for not getting back to work. Having said that, I'd like to offer my excuse for the Annual Forecast getting to you in February instead of the first week of the year. Hand over my heart, we started early this go-round.

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.

2013-01-24 Quick Takes on the Investing Year Ahead by Sam Wardwell of Pioneer Investments

We covered a lot of market and investment topics at Pioneer's National Sales and Marketing Meeting last week. Here are some notes on a few that were popular: GDP Growth for the U.S.. Expectations for rates: Fed Funds Rate and the 10-year Treasury, EM equities favored over U.S. Equities?, Things that keep us up at night (outside of the debt ceiling, Europe, and Middle East tension.

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 Is the European Crisis Over? by Chris Maxey, Ryan Davis of Fortigent

The European sovereign debt crisis that first erupted in 2010 and stoked almost three years of intense market volatility has all but faded from the front pages. Overshadowed by domestic policy issues and European Central Bank (ECB) President Mario Draghi's pledge to do "whatever it takes" to save the Eurozone, fears that the monetary union would crumble and unleash a maelstrom of financial distress appear to have dissipated.

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 2013 International Outlook by Colin Moore of Columbia Management

We continue our outlook for 2013 with a review of select international economies and financial markets. Similar to the U.S. the road to recovery will be bumpy and we expect financial markets to continue being affected by macroeconomic uncertainties. While the overall environment remains uncertain, some of the significant headwinds in 2012, e.g. the Chinese leadership transition and a complete disintegration of the eurozone, are perhaps less concerning for markets than they were a year ago.

2013-01-18 Are Central Banks Easing Off Prematurely? by Team of Northern Trust

Are central banks easing off prematurely? Washington is girding for another budget imbroglio; Inflation is contained, for now.

2013-01-17 The Year Past, The Year Ahead by Michael Gomez of PIMCO

The multiyear run of performance by emerging market (EM) sovereign external debt has been remarkable but residual valuations look either just fair (investment grade) or expensive (high yield) versus other comparable credits. We still see abundant opportunities in EM local markets, while EM equities are poised to benefit from a relatively low starting point for both earnings and earnings expectations.

2013-01-15 The Year Past, The Year Ahead by Michael Gomez of PIMCO

While not immune to global economic headwinds, emerging market investments remain well positioned to outperform their developed world counterparts over time. The multiyear run of performance by emerging market (EM) sovereign external debt has been remarkable but residual valuations look either just fair (investment grade) or expensive (high yield) versus other comparable credits. We still see abundant opportunities in EM local markets, while EM equities are poised to benefit from a relatively low starting point for both earnings and earnings expectations.

2013-01-14 Bond Market Review & Outlook by Thomas Fahey of Loomis Sayles

The final quarter of 2012 was the icing on the cake of an exceptional year for the credit sectors. Fourth quarter credit gains stemmed in part from uncommonly aggressive monetary policy responses in the third quarter. As economic growth continued to undershoot expectations, major central banks made clear that they were dissatisfied with the status quo of tepid economic growth and high unemployment. The Federal Reserve went so far as to tie its monetary policy to the level of the unemployment rate.

2013-01-11 Special Edition: The Outlook for 2013 by Team of Northern Trust

At this time of the year we typically get warm and generous wishes for the New Year and, of course, numerous questions about what our crystal ball has in store for 2013. While many economists publish their perspectives prior to January 1, we opted to wait in the hope of having a clear fiscal picture for the United States. A lot of good that did us...

2013-01-07 An Unconstrained Approach to Bond Market Investing by Sabrina Callin, Lisa Kim of PIMCO

Investors are increasingly focused on alternatives to traditional investment strategies. Unconstrained bond portfolio construction should be driven by an outcome-oriented goal, with strategies assessed on an individual risk/reward and correlation basis, and each investment in the portfolio evaluated rigorously for the expected risk and return as well as the potential impact of the correlation to other investments in the portfolio.

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.

2013-01-03 Treasury's Last Pillar Crumbles by Peter Schiff of Euro Pacific Precious Metals

With the return of Shinzo Abe and his Liberal Democratic Party to power in Japan, the market for US Treasuries may be losing its last external pillar of support. Re-elected on September 26th, Abe has quickly set a course for limitless inflation, saying Japan must "free itself from deflation and the strong yen." This is significant to the global economy as Japan is the largest foreign power left with a strong appetite for US Treasuries. If this demand falters, the Fed may be the only remaining buyer of new Treasury issuance.

2013-01-02 Brian McMahon on Thornburg’s Investment Income Builder Fund by Robert Huebscher (Article)

Brian McMahon is the chief executive officer and chief investment officer for Thornburg Investment Management, where he the co-portfolio manager for the $11.4 billion Thornburg Investment Income Builder Fund (TIBAX). The fund's goal is income production, and it has outperformed its benchmark, the Morningstar Moderate Target Risk, over the last ten years (10.87% versus 2.88%). In this interview, he offers his views on the economy and the markets, and how he has positioned his fund.

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.

2012-12-21 "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.

2012-12-20 2012 in Review by Investment Strategy Group of Neuberger Berman

As we approach the New Year and contemplate the opportunities the investment landscape may offer in 2013, it helps to look back at the performance trends of 2012. Overall, the year-to-date period has seen impressive results from various risk assets, which is in line with the projections of our Asset Allocation Committee. However, ongoing concerns about volatility and Europe hampered the markets at times. Here, we provide a performance scorecard and consider potential developments in the year ahead.

2012-12-18 Jeremy Siegel on 'Dow 15,000' by Robert Huebscher (Article)

Jeremy Siegel was one of very few individuals to have correctly predicted the strong performance of the equity markets over the last year. The Wharton professor and author of the renowned book, Stocks for the Long Run, forecasts continued strong performance for the year ahead.

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 Roach Motel Monetary Policy by John Hussman of Hussman Funds

Monetary policy has become a roach motel easy enough to get into, but impossible to exit.

2012-12-17 2013: A Year in Global Emerging Markets by Allan Conway of Schroders Investment Management

We expect emerging market equities to deliver solid performance during 2013 and perform even better over the longer term. Emerging markets look extremely attractive in terms of valuations. We believe the Chinese economy has stabilised and will see a modest recovery next year and that tail risks in the developed world have been reduced for now by central bank policy.

2012-12-13 2012 in Review by Investment Strategy Group of Neuberger Berman

As we approach the New Year and contemplate the opportunities the investment landscape may offer in 2013, it helps to look back at the performance trends of 2012. Overall, the year-to-date period has seen impressive results from various risk assets, which is in line with the projections of our Asset Allocation Committee. However, ongoing concerns about volatility and Europe hampered the markets at times. Here, we provide a performance scorecard and consider potential developments in the year ahead.

2012-12-13 2013: A Year in Emerging Market Debt (Relative Strategies) by James Barrineau of Schroders Investment Management

Perhaps the biggest positive for emerging market debt investors is the deteriorating fiscal and economic fundamentals in the developed world. As the asset class has evolved, the opportunity set for investors has grown rapidly. Local currency in emerging markets has attracted tremendous interest but we think returns will moderate in 2013, possibly significantly.

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 In Search of the Holy Grail by Niels Clemen Jensen of Absolute Return Partners

This month's letter focuses on the short to medium term factors that drive our asset allocation and portfolio construction. All research suggests that financial markets are not driven by economic fundamentals in the short to medium term, so why should the investment process be?

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.

2012-11-30 Where Are We in the Boom/Bust Liquidity Cycle? by Thomas Fahey of Loomis Sayles

In an often cynical world, standard financial and macroeconomic quantitative models give people the benefit of the doubt. Fundamental economic theory assumes the best of us, supposing that human beings are perfectly rational, know all the facts of a given situation, understand the risks, and optimize our behavior and portfolios accordingly. Reality, of course, is quite different.

2012-11-26 Overlooking Overvaluation by John Hussman of Hussman Funds

Presently, on the basis of smooth fundamentals such as revenues, book values, dividends and cyclically-adjusted earnings, the S&P 500 is somewhere between 40-70% above pre-bubble valuation norms, depending on the measure. That's about the same point they reached at the beginning of the 1965-1982 secular bear period, as well as the 1987 peak.

2012-11-26 Japan: After the Quake, After the Floods by Richard Mattione of GMO

Japan's recovery from the Tohoku earthquake and tsunami of March 11, 2011 has been so astounding that people rarely even think about the tsunami anymore. Even fewer remember that heavy rains in Thailand further disrupted the global production chain at the end of 2011. With so much accomplished, why do so few Japanese companies see bright days ahead?

2012-11-19 Waiting for Godot by Charles Lieberman (Article)

Democratic and republican policymakers are actively negotiating over the fiscal cliff, as investors watch and wait with baited breath. They seem to be making progress, or so they suggest in their public comments. But until the situation is resolved, markets are likely to remain volatile. Other issues do seem to be moving towards resolution.

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.

2012-11-13 Bank Loans: Looking Beyond Interest Rate Expectations by John Bell and Kevin Perry (Article)

Portfolio managers of Bank Loan Strategies, John Bell and Kevin Perry, outline the major advantages and risks of bank loan investing and the roles that a bank loan allocation can play in a fixed income portfolio.

2012-11-13 Quarterly Letter by Team of Grey Owl Capital Management

The multiple hurricanes of fiscal deficits and monetary malfeasance are headed our way. Unfortunately, financial market models that seek to assess the magnitude, direction, and timing of economic tempests are far less precise than those of our scientific brethren. So, we prepare for the worst, but we dont immediately evacuate. There are still plenty of opportunities for solid investment returns and we will describe two new investments in the pages that follow. Yet, the risks are real, as we have discussed frequently in these letters, so our overall portfolio structure remains conservative.

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.

2012-11-12 Extend and Pretend by Peter Schiff of Euro Pacific Capital

Now that President Obama has been re-elected, the media is finally free to focus on something besides the clueless undecided voters in Ohio, Florida, and Colorado. The brightest and shiniest object that has attracted its attention is the "fiscal cliff" that we are expected to drive over at the end of the year unless Congress and the President can agree to turn the wheel or apply the brakes.

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 Extend and Pretend by Peter Schiff of Euro Pacific Capital

Going over the fiscal cliff is not the problem, it is part of the solution. Our leaders should construct a cliff that is actually large enough to restore fiscal balance before a real disaster occurs. That disaster will take the form of a dollar and/or sovereign debt crisis that will make this fiscal cliff look like an ant hill.

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 Obama Wins: What's Next? by Team of Janus Capital Group

U.S. President Barack Obama has been re-elected for another four years, while Democrats will continue to control the Senate and Republicans the House of Representatives. We believe this outcome was largely anticipated by the markets before Election Day. However, U.S. Treasury markets likely will gain and risk assets could decline as investors remain concerned about sluggish economic growth, the impact of the impending "fiscal cliff" and the effects of continued Federal Reserve (Fed) intervention.

2012-11-08 Developed Europe: Economic Review 3rd Quarter 2012 by Team of Thomas White International

Amid signs of a deepening economic slowdown in Developed Europe, three key events brought some cheer to the beleaguered region, raising hopes of a lasting solution to its debt crisis. In early September, the European Central Bank (ECB) announced its new Outright Monetary Transactions scheme, which is in effect a commitment by the ECB to buy unlimited quantities of sovereign bonds with up to three years in maturity, providing the bond-issuing member country agrees to a reform agenda.

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.

2012-11-05 China Forges Ahead by Team of Janus Capital Group

Economic headwinds loom on the horizon as we approach 2013, including a sovereign debt crisis in Europe and pending fiscal cliff in the U.S., but we think you can cross China off your list of worries. Economic data pointing to a slowdown in China has troubled investors. Many even question the reliability of that data, and suggest things could be worse than reported.

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 Nice Speech, Tough Crowd by Christian Thwaites of Sentinel Investments

Sandy is pummeling everything we know on the eastern seaboard. I hope everyone stays safe and we can ride this out without too much damage. Thankfully markets are closed. Meanwhile, here's our views on capital markets on Monday.

2012-10-26 October 2012: Fixed Income Investment Outlook by Team of Osterweis Capital Management

Like last year, this summer's quarter was eventful. Investors entered the quarter with high expectations that the European Central Bank (ECB) and Federal Open Market Committee (FOMC) would provide the markets with more monetary largesse. On July 26th, Mario Draghi, President of the ECB, vowed to "do whatever it takes" to preserve the euro. Risk assets then began an anticipatory rally heading into some key events in mid-September.

2012-10-26 October 2012: Equity Investment Outlook by Team of Osterweis Capital Management

Equity and other "risk" assets rallied in the third quarter in anticipation of further monetary easing by central banks around the world. The prospect of increased liquidity from the central banks appears to have focused investor attention, at least temporarily, away from the generally softer economic data that continue to emerge from Europe and Asia.

2012-10-25 Are European Value Stocks Poised for Recovery? by Tawhid Ali of AllianceBernstein

For the last few years, the sovereign debt crisis in Europe has caused equity investors to flee the continent. Today, that exodus has set up an attractive opportunity for value investors. By the end of September, European stocks were trading at a 16% discount to global equities based on price/book value, well below their average of the last 24 years.

2012-10-23 How to Change the Regulatory Debate - Before it's Too Late by Bob Veres (Article)

After almost a decade of lobbying, arguing, and posturing, the long fight on Capitol Hill over who will regulate RIAs and how to define 'fiduciary' is approaching a close. Within the next six months, there will no longer be any real excuse to put off a decision, and new players, both in Congress and at the SEC, will be eager to start fresh.

2012-10-23 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks remained sluggish last week as earnings guidance more than last quarter's reports put a damper on stock prices. In addition, the European summit was a failure and investors remain hesitant before the November elections.

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 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 ECB Needs to Rescue German and French Banks More than European Periphery: Global Macro View by George Bijak of GB Capital

Whenever we talk about rescuing overleveraged Europe it is always about Spain, Italy, Portugal, Ireland, and Greece the European periphery loaded with debt that they cannot possibly repay. But a closer look at the recent IMF data reveals that German and French banks need rescue more than anybody

2012-10-17 Q3 Investor Letter by Team of HORAN Capital Advisors

At the beginning of the third quarter, investors following the "sell in May" strategy felt vindicated as the S&P 500 Index declined over 9.0% from May 1st to June 4th. The June 4th date turned out to be the intra-year market low and the equity rally was almost uninhibited throughout the remainder of the third quarter. We have been experiencing mixed global economic data over the past several months and in response, the Federal Reserve announced a third round of quantitative easing. While the market initially responded favorably, it ultimately declined through the end of the quarter.

2012-10-16 Inflation: Washington is Blind to Main Street's Biggest Concern by Peter Schiff of Euro Pacific Capital

Journalists, politicians and economists all seem to agree that the biggest economic issue currently worrying voters is unemployment. It follows then that most believe that the deciding factor in the presidential race will be the ability of each candidate to convince the public that his policies will create jobs. It seems that everyone got this memo...except the voters.

2012-10-15 Bond Market Review & Outlook by Thomas Fahey of Loomis Sayles

Aggressive policy responses from major central banks were dominant forces in the third quarter. The European Central Bank (ECB), Federal Reserve (Fed), Bank of Japan (BoJ) and other central banks took decisive action, prompted by the escalating European sovereign debt crisis, slowing global growth, financial market volatility, and the impending US "fiscal cliff."

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.

2012-10-12 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.

2012-10-05 Economic Recovery and Debt Reduction: Faster, Please! by Chris Molumphy of Franklin Templeton Investments

It's tough to be patient in an age of instantaneous communications and instant gratification. We all want immediate answers to our questions and quick fixes to our problems. When it comes to real world tangles like the global economy, though, Chris Molumphy, CIO of Franklin Templeton Fixed Income Group, reminds us that patience, not a magic pill, is the order of the day when it comes to European and U.S. struggles to cure their economic ailments. He's realistic about these problemsbut isn't waiting to act where he does spot investment opportunities.

2012-10-04 Collective Action Clauses: No Panacea for Sovereign Debt Restructurings by Ben Emons of PIMCO

Beginning next year, collective action clauses (CACs) will become mandatory for sovereign bonds issued by European countries under U.K. law. CACs, which allow a supermajority of bondholders to agree to changes in bond payment terms, became popular following Argentina's default in 2001 and even more so after the financial crisis of 2008. On balance, the introduction of CACs in European government bond markets in 2013 is positive for investors.

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 Woody Brock on Why to Own Stocks Now by Robert Huebscher (Article)

Dr. Horace 'Woody' Brock is the founder Strategic Economic Decisions and the author of American Gridlock. In a recent talk, he explained why investors should own stocks - particularly those with stable dividends - and why bonds are very risky in today's environment. This is the transcript; a video of this talk is also available.

2012-10-02 The 2010, 2011, 2012 Corrections Were P/E Multiple Related; Earnings Were Sound by George Bijak of GB Capital

We had nasty stock market corrections in the middle of 2010, 2011 and 2012 caused by political uncertainty about Europe's debt. In times of market declines it is good to remind ourselves the difference between a correction and a bear market.

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.

2012-09-21 The Volatility Risk Premium by Graham Rennison, Niels Pedersen of PIMCO

Amid elevated global macroeconomic uncertainty and market turbulence, investors are searching for ways to diversify portfolios with non-traditional asset classes. Volatility risk premium strategies aim to capture a return premium over time as compensation for the risk of losses during sudden increases in market volatility. We believe investors seeking to diversify their equity risk exposures should consider adding volatility risk premium strategies to their portfolios, albeit with appropriate diversification across major option markets, active risk management and prudent scaling.

2012-09-19 Bank Loans: Looking Beyond Interest Rate Expectations by John Bell, Kevin Perry of Loomis Sayles

Fixed income investors may be stymied by the current mix of interest rate projections and global macroeconomic news. Interest rates remain near historical lows, and investors continue to move between risky assets and relative safe havens like Treasurys based on the latest market headlines. We believe that bank loans can be a compelling addition to fixed income portfolios in this environment and, more importantly, over the long term.

2012-09-14 Operation Screw by Peter Schiff of Euro Pacific Capital

The Fed will try to conjure a recovery on the backs of currency debasement. It will not stop or alter from this course. If the economy fails to respond to the drugs, Bernanke will simply up the dosage. In fact, he is so convinced we will remain dependent on quantitative easing that he explicitly said he won't turn off the spigots even if things noticeably improve. In other words, the dollar is screwed.

2012-09-10 The Siren Song of Growth: Why Investors Willfully Set Sail for the Rocks by Matt Malgari of Knight Capital Group

Gaining an informational edge through more efficient and effective tools of fundamental company financial analysis and relative valuation is still a crucial goal for active equity managers. This should be even truer in a lower return world, particularly when investment returns may be under transition, driven in part by difficulties in maintaining long-term growth opportunities of a given company's own capital investments.

2012-09-10 Performance Anxiety?! by Jeffrey Saut of Raymond James

In last week's verbal strategy comments I suggested participants study the chart pattern of the S&P 500 (SPX/1437.92) and then think about what it would feel like if you were an underinvested portfolio manager (PM), or even worse a hedge fund that is massively short of stocks betting on a big decline. The concurrent performance anxiety would be legend because not only would you have performance risk, but also bonus risk and ultimately job risk.

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.

2012-09-07 The ECB: No Rest for the Weary by Carl Tannenbaum of Northern Trust

The economic picture in Europe is worsening, exposing flaws in the foundation of the euro compact. The European Central Bank is trying its best, but remains hindered by its charter. European policy makers should focus on stabilizing the situation first, and seeking retribution later.

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 How to Unscramble an Egg by Niels Jensen, Nick Rees,Tricia Ward, Thomas Wittenborg of Absolute Return Partners

This month we take a closer look at the root problems behind the current crisis. Too often root problems are confused with symptoms and the wrong medicine is prescribed as a result. We identify five root problems, all of which must be addressed before we can, once and for all, leave the problems of the past few years behind us.

2012-09-06 September: A Rough Month for the Markets? by Gary Halbert of Halbert Wealth Management

September is often a bad month for the stock markets, historically speaking, and this year it could be especially turbulent. In addition to all the uncertainty about the weak US economy, there is uncertainty about what the Fed may do just ahead and what, if anything, will be done to address Europe's recession and debt crisis. In addition, there is the looming presidential election which no doubt will go hyperbolic this month.

2012-09-05 September Economic Update by Justin Anderson of Cambridge Advisors

August was characterized by relatively low volatility as stocks continued to grind higher and bond yields traded in a fairly narrow range. The economy saw little change as the slow growth theme continued. European officials mostly took the month off so the sovereign debt crisis fell off the radar for the month. Politics have dominated the headlines, but a close race hasn't provided an impetus for investors to make significant portfolio changes.

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?

2012-08-29 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 Closed-End Funds by Douglas Bond of Cohen & Steers

We would like to share with you our review and outlook for the closed-end fund market as of July 31, 2012. For the month, the total return of the Morningstar U.S. All Taxable ex-Foreign Equity Closed-End Fund Index was 3.0% based on market price and 2.3% based on net asset value (NAV). Year to date, the index had a market-price return of 11.8% and a NAV return of 8.1%. By comparison, the S&P 500 Index and the Barclays Capital U.S.

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.

2012-08-27 European Real Estate Securities: Review and Outlook by Rogier Quirijns, Gerios Rovers of Cohen & Steers

We would like to share with you our review and outlook for the European real estate securities market as of July 31, 2012. For the month, the FTSE EPRA/NAREIT Developed Europe Real Estate Index had a total return of 3.9% (in U.S. dollars, net of dividend withholding taxes). By comparison, U.S. REITs had a total return of 2.0%, as measured by the FTSE NAREIT Equity REIT Index. Year to date, the indexes had total returns of 14.0% and 17.2%, respectively.

2012-08-24 Emerging Markets Real Estate Securities: Review & Outlook by Jason Yablon of Cohen & Steers

We would like to share with you our review and outlook for emerging markets real estate securities as of July 31, 2012. For the month, the FTSE EPRA/NAREIT Emerging Real Estate Index had a total return of 2.2% in U.S. dollars (net of dividend withholding taxes), compared with 3.6% for the FTSE EPRA/NAREIT Developed Real Estate Index (net), a broad measure of the global real estate securities market. Year to date, the indexes returned 19.0% and 18.9%, respectively.

2012-08-23 Global Real Estate Securities: Review and Outlook by Jon Cheigh, Chip McKinley of Cohen & Steers

We would like to share with you our review and outlook for the global real estate securities market as of July 31, 2012. The FTSE EPRA/NAREIT Developed Real Estate Index had a total return of 3.6% for the month (net of dividend withholding taxes) in U.S. dollars. Year to date, the index returned 18.9%.

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

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

2012-08-21 Drudge Headline Indicator Surges to New High Then Pulls Back by Team of Bespoke Investment Group

The Drudge Report, with its 30,000,000 page views per day, is probably the most widely followed news source on the web. The Drudge Report is not a financial news site, however, so when a financial news story grabs the Drudge headline, it means that the story has crossed over from just a financial news story to a mainstream news story.

2012-08-17 Republicans Hope, but Don't Change by Peter Schiff of Euro Pacific Capital

While I appreciate that Ryan has the courage to take a position at the vanguard of his party in the campaign for fiscal responsibility, the modesty of his plan is just the latest reminder of how utterly divorced from reality Washington politicians remain. Like all of his brethren, Ryan is pinning his budget battling plans on the pain free "grow your way out of it plan." But as long the government consumes so much of the nation's productivity, the conditions to create that growth will never occur. Hope is not a strategy.

2012-08-17 Love Trade Cools as Central Banks Gold Demand Heats Up by Frank Holmes of U.S. Global Investors

Although the Love Trade (purchasing gold for coins or jewelry) is on ice for now, a relatively new gold buyer has been warming up to gold. Central bank purchases hit a record high since the official sector became gold buyers three years ago. If this trend continues over the remainder of 2012, central banks will be entering a new territory of gold buying that has not been seen since the early 1960s and since the end of the Bretton Woods System in 1971.

2012-08-16 The ECB Is Too Tight Absolutely and Relatively by Scott Mather, Dirk Jeschke of PIMCO

Looking at measures of the quantity of money and its transmission into the real economy reveals that ECB policy is quite tight. Growth hardly stands a chance under this scenario. Relatively tight monetary policy would perhaps be understandable if the eurozone were threatened by inflation. However, inflation is low and falling in the Eurozone. The ECB may be playing a game of chicken with European policymakers. If true, this is a dangerous strategy.

2012-08-14 The Eurozone Drama Continues by Bill O'Grady of Confluence Investment Management

In this report, we will review the political and economic structure of the Eurozone. From there, we will discuss the critical event that caused the reversal in safety assets and what this reversal likely means for the geopolitics of the Eurozone. As always, we will conclude with potential market ramifications.

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 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The rally in stocks which no one seems to believe in continued again last week. With Europe on vacation or celebrating the Olympic Games the macro background remained quiet and allowed stock prices to advance even as investor pessimism continues to grow.

2012-08-11 And Then There Is Disaster C by John Mauldin of Millennium Wave

I have contended for some time that Europe is faced with two choices: Disaster A, which is the break-up of the eurozone, or Disaster B, which is the creation of a fiscal union, which keeps the euro more or less intact. Over the last few months I have come to realize that there is indeed a third option, which now looks increasingly possible. European leaders might do nothing more than deal with the problem immediately in front of them, moving from crisis to crisis in a slow-motion drift toward fiscal union.

2012-08-10 Citius, Altius, Fortius by Carl Tannenbaum of Northern Trust

Countries across the globe seek faster, higher, stronger growth. Central banks in the United States and Europe are both seeking new ways to stimulate economic activity. Recent news from the housing market has been encouraging, but the race to recovery is likely to be a marathon, not a sprint. Headwinds blowing from Europe and China will continue to present significant downside risks to U.S. economic growth.

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 Market Surge is Amplified by Low ExpectationsAs Expected by Matt Lloyd of Advisors Asset Management

European fears have subsided a bit as the European Central Bank's (ECB) president continued to offer words of support for a more comprehensive solutionthough he appeared to dampen the statements with concessions about the ECB's ultimate subservient role to the governments.

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 Diamonds in the Rough by Mark Kiesel of PIMCO

The demand for most high-quality, income-producing assets continues to exceed supply due to a weaker growth outlook and aggressive policy action by global central banks. Yet we are still finding numerous opportunities globally through our bottom-up research that targets areas around the world where fundamentals are supportive and the outlook remains constructive.

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 Is Buy-and-Hold Dead? by Richard Bernstein of Richard Bernstein Advisors

If one searches in Google for Does buy-and-hold work?, more than 191 million results will appear.If one searches for Is buy-and-hold dead?, more than 81 million results will appear.However, if one searches for Successful buy-and-hold strategies, only about 9 million results will appear.Its pretty clear that the investing world believes that buy-and-hold strategies are basically dead and gone.

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.

2012-08-01 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.

2012-07-30 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 What Next for Spain? by Myles Bradshaw of PIMCO

As part of its bank recapitalization program, Spain has ceded fiscal sovereignty, and this is a positive step toward resolving the euro debt crisis. We believe its eurozone partners should now make good on their summit agreement to use European Financial Stability Fund and European Stability Mechanism instruments in a flexible and efficient manner.

2012-07-30 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks bounced last week on the heels of earnings which were not so bad, and perhaps more importantly, indications that the European Central Bank was ready to take the plunge as lender of last resort.

2012-07-30 The Central Bank by John Petrides (Article)

Global markets responded favorably last week to comments from Mario Draghi, President of the European Central Bank, saying that he would do whatever it takes to save the euro (this reminded me of Fed Chairman Bernanke's comments in February 2009, when the Fed started its asset purchase program, and markets responded favorably soon after). Although the world awaits more details as to what Mr. Draghi's comments entail, equity markets rallied, and the yields on Spanish and Italian bonds came in.

2012-07-27 Secular Outlook: Implications for Investors by William Benz of PIMCO

For investors, the biggest challenge now is moving from a world of normal distributions, with expected occurrences around the mean, to one of bi-modal distributions where more extreme scenarios prevail. Key institutions, including governments and central banks, were previously stabilizing forces but are now helping to accelerate underlying, destabilizing trends in the global economy and financial markets.

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 One More Dance by Neel Kashkari of PIMCO

We are witnessing a synchronized slowdown worldwide that is beginning to affect corporate profits. The most likely right-tail event is the Federal Reserve launching another round of quantitative easing. We dont believe liquidity alone can engineer sustainable, real economic growth in the context of a secular deleveraging cycle. But we acknowledge that equity portfolios would likely benefit should the Fed keep the music playing a little longer.

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 Never Lost?! by Jeffrey Saut of Raymond James

Wall Street folklore suggests that in 10 years any fool can make every mistake there is in the stock market and that a really smart person can do the same in half the time. I don't know how long it took me, but I have tried to learn from those mistakes and avoid repeating them! Indeed, everybody who finally learns how to make money in the stock market learns his own way. I like this tale.

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 Emerging Asia Pacific: Economic Review 2nd Quarter 2012 by Team of Thomas White International

Emerging Asia, which posted strong results during the first quarter of 2012 on optimism that Europe's sovereign debt problems would be solved quickly, returned to struggling ways during the second quarter of 2012 as prospects for Europe continued to wobble throughout the period. The uncertainty about Greece's fate in the European Union and the destiny of the single market itself kept industrial firms in Europe guessing for the most part of the second quarter.

2012-07-23 Economic Review: Developed Europe Second Quarter 2012 by Team of Thomas White International

Developed Europe remained on tenterhooks for the greater part of the April-June quarter, but ended the period on a high note. At their Brussels summit on June 28-29, European leaders chalked out two crucial policies. They decided that the monetary unions permanent bailout fund or European Stability Mechanism (ESM) would be allowed to provide capital to ailing banks directly rather than through the governments of the countries in which they are located.

2012-07-23 Weekly Commentary and Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stock prices recouped their early week losses, as earnings reports were not as bad as feared. Fridays session, and again today though, have seen investors reminded that Europe is a broken economic zone which cannot be repaired using the current European Monetary Union framework.

2012-07-19 Fixed Income Investment Outlook by Team of Osterweis Capital Management

Recent escalations in the euro crisis and weaker-than-expected global economic data have led to widespread calls for further stimulus. Global leaders believe they are addressing the issue, with China and the ECB lowering interest rates and the Bank of England announcing an additional 50 billion sterling of quantitative easing. We are skeptical about the benefits of such policy action and believe that the U.S. and Europe each require different solutions to solve their fiscal issues.

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 Gundlach – Avoid Riskier Assets by Robert Huebscher (Article)

Since early this year, Jeffrey Gundlach has warned investors to avoid exposure to riskier assets – among them, equities, non-dollar-denominated securities and sovereign debt. Still reluctant to move to a more aggressive position, Gundlach said on Thursday that 'substantial opportunities await,' but they may be as much as a year away.

2012-07-16 High Yield and Bank Loan Outlook - July 2012 Sector Report by Team of Guggenheim Partners

After a strong first quarter for high yield bonds and bank loans, the mixed performance of the second quarter has conjured up memories of 2011s volatility. While the lack of clarity in Europe and the looming U.S. fiscal cliff will continue to weigh on the economy, the current macro-induced price dislocations present attractive long-term opportunities for investors with patient capital.

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 Rethinking Asset Allocation by Curtis Mewbourne of PIMCO

As risk and return characteristics evolve, we believe investors need to adapt the way they think about using asset classes. Asset classes are likely to be affected by the situation in Europe and, more broadly, by high debt levels in developed countries. The related political debate about austerity vs. growth is also critical. Fixed income investors should note whether countries control their own currencies and can monetize their debts. Those that can may be greater inflation risks.

2012-07-16 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

A strong day last Friday salvaged the week for stocks despite continuing evidence of a global slowdown related to the sovereign debt crisis which shows no sign of improving in Europe. It was kind of a quiet week from the European leaders. There werent any concrete developments, of course, just a few confusing new twists and turns. The most important one is that Germanys highest court must now rule as to whether it is constitutional to agree to what was supposedly agreed to previously.

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.

2012-07-14 The Beginning of the Endgame by John Mauldin of Millennium Wave Advisors

For the last year I have been writing that it is not clear that Europe (with the probable exception of Greece) will in fact break up. The forces that would see a strong fiscal union are quite powerful. In today's letter, I will try to bring you up to date on some insights I have had in the 18 months since Jonathan Tepper and I did the final edits on our book, The Endgame.

2012-07-13 Two Tens for a Five by Dave Baccile of Sextant Investment Advisors

Going into the Summit, very little progress was anticipated thanks to clearly crafted statements from Merkel and other northern ministers. But apparently some fast talking from Monti and other leaders, such as the new French President Francois Hollande, resulted in some new concessions by Merkel. However, additional money did not find its way "South" and the concessions, while potentially significant, do not come close to solving the debt issues facing the European Union.

2012-07-13 The Pain in Spain - Is There Time for Hope and Change? by Richard Mattione of GMO

The intertwined problems of sovereign debt, European banking systems, and the euro itsself will continue to be debated despite the measures that came out of Junes meetings in Europe. Yet it is the economic and financial situation in Spain that is driving policy now. The precedents being set because of Spain are in a sense more important than discussions about the euro, for decisions about the euro can be delayed, whereas the pain in Spain is acute and the time for decisions is now.

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.

2012-07-12 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.

2012-07-10 The Plight of the Conservative Retiree by Michael Nairne (Article)

Today's extraordinarily low rates on top of a lower equity premium leave conservative retirees with the risk of heightened capital depletion as poorer portfolio returns may be inadequate to offset the combined impact of withdrawals and inflation.

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 Weekly Commentary and Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks around the world have spent the past two weeks reacting to various announcements from government leaders and central bankers. Additionally, the economic news has certainly been found wanting both here and around the globe.

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 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.

2012-07-04 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 European Summit - Something for Bulls and Bears by Fred Copper of Columbia Management

The European summit outcome was fascinating; it had something for everyone, both bulls and bears. The net result was a positive surprise with at least one major concession by Germany. In concurrent news, three of the four semifinalists in the Euro 2012 soccer tournament were PIGS (Portugal, Italy, Greece and Spain) and the other was Germany. Spain won the competition on Sunday, symbolic of the PIGS power within Europe it isnt all about Germany.

2012-07-03 After the EU Summit a Host of Unresolved Questions by Russ Koesterich of iShares Blog

Last weeks European summit went better than it might have, according to Russ, but it fell far short of solving the regions structural issues. Here he outlines the big questions facing the European Union and why the regions crisis will drag on.

2012-07-03 Let's Twist Again by Daniel Kurland of Corby Asset Management

Ben Bernanke must be nostalgic for his childhood. On June 19th in the summer of 1961, when Chairman Bernanke was only 8 years old, Chubby Checker released his smash hit, Lets Twist Again. Chairman Bernanke, citing decreased inflationary concerns and heightened employment weakness, announced that Operation Twist, which had been set to expire at the end of June, would be extended until the end of the year.

2012-07-02 Has Housing Stabilized? by Ryan Davis of Fortigent

In the past two weeks, several important indicators have illustrated a market that, while not quite in a state of recovery, appears to be stabilizing. This sentiment was echoed in the latest Beige Book released by the Federal Reserve, which reported, several Districts noted consistent indications of recovery in the single-family housing market, although the recovery was characterized as fragile.

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.

2012-06-27 United States of Europe has Arrived! by Axel Merk of Merk Funds

A fiscal union, a banking union, a United States of Europe has arrived! Dont believe it? Just like many newborns, this one has its shares of wrinkles, but what you see is what you get. We discuss a tough love approach to move forward in Europe, as well as implications for currencies.

2012-06-27 Q3 2012 Outlook by Asset Allocation Committee of Neuberger Berman

The second quarter experienced a return to volatility as heightened concerns over the European sovereign debt crisis and an aura of pessimism around the pace of global economic growth have reverberated through financial markets. The year began on a positive note, with all major equity indices posting strong double-digit gains.

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.

2012-06-26 Playing Against the House by Shane Shepherd of Research Affiliates

Some observers have compared the stock market to gambling in a casino. This issue of Fundamentals examines how investing in sovereign debt markets can resemble playing against the house.

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 Jilted Investors Unsure Where to Turn by Chris Maxey and Ryan Davis of Fortigent

Institutional and individual investors are at an uncertain juncture, waiting to see what the next shoe to drop is. With an important series of events occurring soon, such as the US Presidential election this fall and the fiscal cliff facing the US at years end, investors may need to wait to get more clarity on the market outlook.

2012-06-20 Growth Versus Austerity: A U.S. Dollar Perspective by Axel Merk of Merk Funds

Austerity versus Growth? Which economic model is sustainable? If it werent for those pesky bond vigilantes, it may be only politics. Lets not get too excited that either path will work. Lets look at the implications for investors with a focus on the U.S. dollar.

2012-06-19 Consumers Remain Perplexed by Chris Maxey and Ryan Davis of Fortigent

Consumers have long been the cog behind the American economic engine. After suffering a terrible fate in 2008, there was a long, slow build to post-recession normalcy. Consumer balance sheets are in a better place, but remain tenuous and suggest there continues to be a long distance to travel before we can once again depend on the American consumer to be the buyer of last resort.

2012-06-19 Is China Running Out of Steam? by Matthew Rubin, Ing-Chea Ang, Justin Gaines of Neuberger Berman

The Chinese growth story is especially impressive. At a time when many economies have struggled, China has continued to expand rapidly, helped by its dominant position in manufacturing, growing middle class and, after the 2008 credit crisis, its successful injections of capital and stimulus to ward off recession. Nevertheless, recent data have suggested that the Chinese expansion is now slowing more quickly than most investors expected.

2012-06-18 Cohen & Steers Large Cap Value Strategy by Team of Cohen & Steers

We would like to share with you our review and outlook for the U.S. large cap value market as of May 31, 2012. For the month, the Russell 1000 Value Index had a total return of 5.9%, compared with a total return of 6.0% for the S&P 500 Index. For the year to date, the Russell 1000 Value Index had a total return of +3.5%, compared with +5.2% for theS&P 500 Index.

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 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.

2012-06-16 The Bang! Moment is Here by John Mauldin of Millennium Wave Advisors

We know that money is simply flying out of Greek banks. A number of them are clearly insolvent, yet they are meeting demands for withdrawals. Where is the cash coming from? The answer is in the form of yet another acronym from Europe, called the ELA.

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 Saving the Euro by Axel Merk of Merk Funds

The management of the Eurozone debt crisis is dysfunctional. In our assessment, to save the Euro, policy makers must focus on competitiveness, common sense and communication. If policy makers strived to achieve just one of these principles, the Euro might outshine the U.S. dollar.

2012-06-11 Atlas Shrugged?! by Jeffrey Saut of Raymond James Equity Research

The call for this week: Over the weekend the eurozone agreed to lend Spain up to 100 ($126 billion) to shore up its teetering banks. That decision prompted this from my friend David Kotok, captain of Cumberland Advisors: The fact is the absence of banking collapses is good news. That is correct. Good news! We establish that good news by what we DO NOT see on TV. We do not see banks collapsing and failing to pay depositors. This means we may not witness the euro system collapsing and failing. Bank runs and deposit failures are symptoms of liquidity constraints.

2012-06-11 Weekly Commentary and Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stock markets rebounded last week on the perception (which turned into reality over the weekend) that Europe would find some sleight of hand method of rescuing the Spanish banking system.The reality this morning is that Spains sovereign debt (which this bailout money will be added to) is trading down and its credit default swaps are trading higher. This is not a very good sign for the bailout at this point. On top of that, now Ireland and Greece (which votes again this weekend) want similar and more lenient terms to their previously negotiated bailouts. Thus, Europe remains a total quagmire.

2012-06-11 China Toes a Delicate Balance by Chris Maxey and Ryan Davis of Fortigent

Markets posted their best returns of 2012 last week as investors anticipated additional policy action from global central banks. A series of events during the week heightened optimism that central banks would once again step in to support financial markets. In a Wednesday release, the European Central Bank did not cut its policy rate, but ECB President Mario Draghi said the bank was ready to act in response to the deteriorating state of the Eurozone.

2012-06-09 A Dysfunctional Nation by John Mauldin of Millennium Wave Advisors

European leaders launched the euro project in the last century as an experiment to see whether political hope could become economic reality. What they have done is create one of the most dysfunctional economic systems in history. And the distortions inherent in that system are now playing out in an increasingly dysfunctional social order. Today we look at some rather disturbing recent events and wonder about the actual costs of that experiment. What type of "therapy" will be needed to treat the dysfunctional family that Europe has become?

2012-06-08 The Global Debt Crisis by Greg Hahn of Winthrop Capital Management

The Financial Crisis of 2008 represented a turning point for the capital markets, financial regulation and global central bank policies. For the twenty years leading up to the Financial Crisis, accommodative monetary policies of the developed countries resulted in prosperity, higher wages, increased asset prices and an overall higher standard of living. However, this false sense of perpetual prosperity resulted in unbalanced social service and pension benefits that are now more difficult to rationalize in the economic environment following the Financial Crisis.

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 Specter of Default: How Safe Are U.S. Treasuries? by Team of Knowledge @ Wharton

Just how solid are U.S. Treasury bonds, long considered a "riskless" investment? Is a default possible? Desirable? Unthinkable? And what are the options for reducing the annual government deficits that cause the country's debt to grow? Those and other questions were the subject of a recent Wharton conference titled, "Is U.S. Government Debt Different?" The conference was set up in the wake of last summer's debt-ceiling showdown in Washington, which highlighted the risk of a default on government bonds.

2012-06-07 Bullish Case for Europe: Joint-Eurobonds by George Bijak of GB Capital

Here we go again for the third time in as many years. Comes European summer and, instead of planning holidays in southern Europe, investors are confronted with supposedly irreparable debt problems in Greece. The bears claim Greece is bankrupt and with the 30% or so interest on its debt and anti-growth austerity being imposed on them there is not much hope for recovery despite the recent large debt write-off. Gloom and doom outlooks prepare us once again for Greece defaulting on their debt, leaving eurozone followed by economic collapse of Spain, Ireland, Portugal etc.

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.

2012-06-06 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 When OK is Good Enough by Team of BondWave Advisors

The US economy continues to grow, but in recent months manufacturing and employment indicators have remained positive but have been flagging. While there might not be a lot to get excited about economically here in the US, OK is better than elsewhere, like Europe. We discuss the situation in the US and Europe and provide a commentary of the US Treasury, Corporate and Municipal bond markets.

2012-06-02 ECRI Recession Call Update: Another Weekly Leading Index Decline by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) dropped to 122.4 from last week's 123.0 (a slight downward revision of 123.1). The WLI growth indicator also slipped, now at -0.6 as reported in Friday's public release of the data through May 25, down from the previous week's 0.1. The latest data release to the general public continues to command focus in the wake of Lakshman Achuthan repeated reaffirmation of ECRI's recession call in live interviews around the major business networks on May 9th.

2012-06-02 First Deflation, Then Inflation. But the Timing? by John Mauldin of Millennium Wave Advisors

One of the more frequent questions I am asked in meetings or after a speech is whether I think we will have inflation or deflation. My ready answer is, Yes. Then I stop, which I must admit is rather fun, as the person who asked tries to digest the answer. And while my answer is flippant, its also the truth, as I do expect both outcomes. So the follow-up question (after the obligatory chuckle from the rest of the group) is for a few more specifics. And the answer is that I expect we will first see deflation and then inflation, but the key is the timing.

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 Are my methods unsound?...I don't see any method at all, sir. by Christian Thwaites of Sentinel Investments

This week we can add the lowest ever level of GT10, which touched 1.44%, and the 7-year note firmly below 1%. German 10-Year Bunds fell to 1.12%, brining the total return close to 20% over the last year. Over in Switzerland, it will cost you nearly 0.5% for the privilege of holding a two year bond. If negative rates are on offer, distress and fear are not far behind.

2012-05-30 The What-Why-When-How Guide to Owning Emerging Country Debt by Tina Vandersteel of GMO

As GMO looks forward to its 20th year managing emerging debt portfolios, we offer our perspectives on the frequently-asked questions that have come up over the years, including: What is meant by emerging debt (external, local, corporate)? Why and when to own it: portfolio fit considerations, alpha, and absolute and relative value. How to own it: dedicated external, local, or corporate; blended; or multi asset (including emerging equities).

2012-05-29 Featured Video from Henderson Global Investors by David Jacob (Article)

Henderson's David Jacob, Chief Investment Officer, provides an update on the banking and sovereign debt crisis across Europe.

2012-05-29 Into the Great Unknown by Andrew Balls of PIMCO

Amid great uncertainty and huge challenges in Europe, it can be helpful to cut through all the detail and map out what we know and what we dont know. This is at best depressing and, at worst, terrifying. Taking together the known knowns and the known unknowns, it seems likely that the eurozones big four Germany, France, Italy and Spain as well as other German satellite countries will find a way to hang together in a smaller currency union backed by stronger regional co-ordination and financing mechanisms.

2012-05-29 The Reality of the Situation by John P. Hussman of Hussman Funds

If one steps back from the trees to observe the forest, the reality of the situation is that Europe is already largely in recession, the global economy is slipping quickly toward the same outcome, and in my view, the U.S. is also entering a recession that will ultimately be dated as beginning in May or June of 2012 (i.e. now). The economic headwinds already in place are likely to make any meaningful budget progress virtually impossible in the Eurozone, and without meaningful budget progress, the likelihood of continued bailouts to peripheral European states is slim.

2012-05-29 Unraveling the Mess in Europe by Charles Lieberman (Article)

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.

2012-05-26 ECRI Recession Call Update: Weekly Leading Index Declines Again by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) dropped to 123.1 from a slight downward revision of 124.4 (see the fifth chart below). The WLI growth indicator also slipped, now at 0.1 as reported in Friday's public release of the data through May 18, down from the previous week's 0.4. The latest data release to the general public continues to command focus in the wake of Lakshman Achuthan repeated reaffirmation of ECRI's recession call in live interviews around the major business networks on May 9th.

2012-05-24 Why Invest in Asian Credit? by Showbhik Kalra of PIMCO

Asian sovereign and corporate credit offer more attractive yields than a number of other global fixed income sectors as investors take on additional risk. Given Asian markets diversity and the global macroeconomic environment, investors may wish to consider investment managers with a strong global macro process coupled with strong relationships with local stakeholders and experience in local portfolio management and markets.

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 The Real Crash by Peter Schiff of Euro Pacific Capital

I first came to national attention back in 2008 and 2009 when the housing and credit markets imploded. I became known as the guy that other market "experts" laughed at when I warned of trouble brewing in the seemingly indestructible American economy. After the wheels ground to a halt in mid-2008, people noticed that my bookCrash Proof, originally released in early 2007, read like a detailed preview of many of the events that eventually unfolded.

2012-05-24 Jumping Into The Abyss: A Bull Case for Gold Mining Stocks by JJ Abodeely of Sitka Pacific Capital Management

Gold mining stocks, as measured by the AMEX Gold Bugs Index (HUI), are down nearly 40% from their August 2011 high. Representative ETFs such as GDX and GDXJ as down similar amounts, if not more. Mining company stock prices look to be falling into the abyss. While buying mining stocks here could certainly look foolish in the near-term, NOT accumulating positions, or selling them for that matter, is likely to be the bigger mistake over the long term.

2012-05-23 Global Investment Outlook by Mike Turner of Aberdeen Asset Management

Investors continue to focus on the global macroeconomic backdrop, which is still relatively positive despite slightly disappointing data recently. There are signs that some of the imbalances within the Eurozone are starting to ease as competitiveness is improving in some of the peripheral countries and this is beginning to be reflected in trade figures. Looking further ahead, we feel that global consumption should be supported by falling headline inflation.

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.

2012-05-22 Goodbye Planet Rates, Hello Planet Quantity: Credit Markets in a Zero Rate World by Luke Spajic of PIMCO

There is a sense that developed market economies are somehow undergoing a reversed metamorphosis reverting from butterfly back to caterpillar where growth is crawling as opposed to flying. The fear of credit destruction, perhaps triggered by deflationary scares, becomes a bigger obsession for central banks. The culture of credit risk-taking changes as rates go lower and approach zero with a perennial risk of the economy tipping into deflation.

2012-05-21 Liquidation Syndrome by John P. Hussman of Hussman Funds

Presently, the market remains richly valued on normalized earnings, and is coming off of a speculative peak with an abrupt and persistent initial decline. All of this reflects what might be called a "liquidation syndrome" that is selective for awful drops that began in 1969, 1972, 1987, 2000, 2007, and the more moderate but still steep losses in 1998, 2010, and 2011.

2012-05-21 Facebook IPO Not a Flop; Underwriters Priced it Right by John Buckingham of AFAM

he social media giant ended its first day of trading up a measly 23 cents, or 0.6% from its $38 offering price, and technical difficulties at Nasdaq delayed the opening of trading and impacted market activity throughout the day, I give kudos to the underwriters for actually pricing the deal as best they could to match the relatively limited supply to the unprecedented demand. Certainly, Facebook could eventually grow into its lofty valuation, but it is eye-opening to think the disappointing first day of trading still left the company with a $100 billion+ market capitalization.

2012-05-21 Markets Fall on Negative Europe Sentiment by Chris Maxey and Ryan Davis of Fortigent

Worries over the European sovereign debt crisis worsened this week as Greeces political instability increased concern that the country could depart the Eurozone. Greece saw a virtual run on its banks during the week, as depositors withdrew 1.2 billion in two days on fears of massive devaluation from a return to the drachma. While this represented just 0.75% of Greek deposits, it foreshadows a potentially larger crisis if a Greek Eurozone departure becomes imminent.

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 U.S. Large Cap Value Investment Commentary As of April 30, 2012 by Team of Cohen & Steers

The economic expansion is likely to continue, but at a pace that is modest both in absolute terms and relative to previous recoveries. Many stocks are still attractively valued, in our view, and they have the potential to advance in the coming months. At the same time we are watchful of global economic developments, particularly in Europe and the Middle East. A winding down of monetary stimulus (such as the Federal Reserves Operation Twist program) could create headwinds.

2012-05-17 Our Fixed Income Insights on Yield Traps by Team of American Century Investments

From a fixed income perspective, we explain why aggressive yield-enhancing strategiesresulting from this extended period of historically low U.S. interest rates and yieldscan threaten the potentially valuable long-term portfolio benefits from holding fixed income positions. In particular, chasing yieldand stumbling into yield trapscan derail the important volatility reduction and diversification benefits offered by carefully selected and well-managed fixed income holdings.

2012-05-17 Rules of the Game Have Changed for Euro High-Yield Investors by Douglas J. Peebles of AllianceBernstein

Although we think financials will be a potential driver of volatility of high-yield returns in the coming year, were not suggesting that investors should shun the sector altogether. Its true that, in some cases, the expected returns may be outweighed by both systemic and idiosyncratic risks. For example, we might have a negative outlook on both a financial institution and the country in which it is domiciled. But in many cases, levels of country and idiosyncratic risk may be acceptable.

2012-05-15 Ponzi's Children by Michael Lewitt (Article)

Europe, whose economic condition is nothing less than terminal, is about to receive what physicians refer to as a 'zetz' of morphine in the form of M. Hollande. A 'zetz' is the final dose that doctors give to dying patients to hasten their passage to the afterlife. In Europe's case, however, the medicine is not going to be painless, and its administration is not based on mercy but on resentment and stupidity.

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.

2012-05-14 Dancing at the Edge of a Cliff by John P. Hussman of Hussman Funds

Our recession concerns remain intact, as do our separate concerns about extreme stock market risk. I've emphasized that our estimate of prospective market return/risk in stocks has slipped into the most negative 0.5% of historical data. Last week that estimate actually deteriorated, but I am reluctant to make comments on such a small sample, as the only more negative estimate in post-Depression history was on September 16, 2000. Even in the conditions that match the worst 2% of our return/risk estimates, the market has lost an average of 20-25% just in the following 6-month period.

2012-05-12 Waving the White Flag by John Mauldin of Millennium Wave Advisors

Europe has embarked on a program that will require multiple trillions of euros of freshly minted money in order to maintain the eurozone. But the alternative, European leaders agree, is even worse. Today we will look at the recent German shift in policy, why it was so predictable, and what it means. This is a Ponzi scheme that makes Madoff look like a small-time street hustler.

2012-05-11 ECRI Update: Reaffirming the Recession Call ... Again by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 0.1 as reported in todays public release of the data through May 4. This is essentially unchanged from last week. However, the underlying WLI again rose fractionally from an adjusted 124.6 to 125.4 (see the fourth chart below). The big news this week, however, is not the weekly data update but ECRI's latest reaffirmation of its recession call in a Bloomberg interview with ECRIs Lakshman Achuthan earlier this week. Ive embedded a link to the nine-minute video on the Bloomberg website.

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.

2012-05-08 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.

2012-05-04 Trading Volumes in Perspective by Team of Neuberger Berman

NYSE Euronext recently reported a 44% decline in quarterly earnings, due largely to a 23% drop in the exchange operators trading volumes from a year earlier. The development confirmed something already known to many in the investment communitythat equity trading volumes have been depressed, which is traditionally a technical indicator of bearish sentiment. Curiously, this light volume has come in the midst of a 29% advance by S&P 500 since its October 4, 2011 market low. In this edition of Strategic Spotlight, we discuss the reasons for the meager volume and what it could mean for investors.

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 ECRI Weekly Leading Indicator: Third Consecutive Decline by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 0.0 as reported in today's public release of the data through April 27. This is the third consecutive week-over-week decline since January 6th. However, the underlying WLI again rose fractionally from an adjusted 124.0 to 124.7.

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 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.

2012-05-02 Its Good To Be The King by Chris Richey of Neosho Capital

The sovereign Greek debt default will ultimately lead to a sovereign Spanish debt default, and thus we tell you why sovereign debt should not be viewed as risk-free.

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 Why MLPs Belong in Your Portfolio by Geoff Considine (Article)

One would think that an asset class yielding 7% and carrying less volatility than do equities would be popular with investors. Yet, despite those attributes, master limited partnerships (MLPs) remain unknown or ignored by large numbers of investors. The case for MLPs is compelling, so it's time for a deep examination of the special properties of this asset class.

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.

2012-04-30 Release the Kraken by John P. Hussman of Hussman Funds

The problem for the stock market is that the 13-year journey of underperforming T-bills - with wicked collapses and break-even recoveries - is most probably not over.

2012-04-27 Managed Futures and Macro: Q1 2012 Market Commentary by Jon Sundt of Altegris Investments

With Eurozone concerns receding and the macroeconomic picture showing strength, the market outlook at the end of Q1 is notably brighter than at the end of last year. Reduced correlations, lower volatility and the prospect of less government intervention have led some players to hope for a return to a new old period in which fundamentals drive the markets. If that theme does indeed prove to be sustainable, we expect that: a) more managed futures managers, would profit from stronger trends; and b) more circumspect global macro managers may take advantage of increasingly bullish positioning.

2012-04-27 Happy (Third) Anniversary: Now What? by Jon Quigley of Advanced Investment Partners

During the trading day on March 6th, 2009, the S&P 500 Index hit its intraday bottom of 666.79. In the ensuing three years the Index has advanced over 100%. Along the way, weve witnessed the collapse of some of the older and more hallowed names in the financial industry buh-bye Lehman Brothers, so long Merrill), endured the most severe recession in at least 25 years, suffered through incredible spates of market volatility, and gathered a few gray hairs (or lost some hair) along the way.

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.

2012-04-27 ECRI Weekly Leading Indicator: The Growth Index Slips Again by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 0.6 as reported in today's public release of the data through April 20. This is the second consecutive week-over-week decline since January 6th. However, the underlying WLI rose fractionally from an adjusted 123.8 to 124.1.

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 One Step Closer: Fed Keeps Rates Low But Gets More Hawkish by Liz Ann Sonders of Charles Schwab

The Federal Reserve's Open Market Committee (FOMC) made no change to short-term interest rates, but provided no hints that a third round of quantitative easing (QE3) was in the offing. As usual, the committee repeated its comment about keeping the Fed's balance sheet under review and being willing to act "as appropriate," while also confirming its pledge to keep rates "exceptionally low" through 2014. For the third consecutive meeting, there was one dissenterRichmond Federal Reserve Bank President Jeffrey Lackerwho believes the first increase in rates will be necessary in 2013.

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.

2012-04-24 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 The Dutch Debacle and the Market Ramifications by Monty Agarwal of MA Capital Management

The Dutch governing coalition collapsed on Saturday when far-right politician Geert Wilders pulled out of budget cut talks, saying it was not in the Netherlands interest to meet the deficit limit of 3% imposed by the new European fiscal pact. Highlighting widespread voter anger over EU-imposed budget cuts, Mr. Wilders said he could not allow Dutch citizens to "pay out of their pockets for the senseless demands of Brussels". "We dont want to follow Brussels orders. We dont want to make our retirees bleed for Brussels diktats," Mr. Wilders said.

2012-04-23 Emerging Asia Pacific: Economic Review 1st Quarter 2012 by Team of Thomas White International

Emerging Asia Pacific economies, which reported dismal economic numbers during the fourth quarter of 2011, recovered some lost ground during the first quarter of 2012. Export-led growth in many Asian countries, which had come under pressure during the last months of 2011, witnessed slight improvements in 2012 thanks to receding fears about a sovereign debt crisis in the EU and a stronger-than-expected recovery in the U.S. China, the regions largest economy, however, signaled that it will accept a slightly lower growth rate of around 7.5 percent over the coming years.

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 Spring 2012 Quarterly Commentary by Jonathan A. Shapiro of Kovitz Investment Group

Theres an old adage about a six-foot tall man who drowned crossing a stream that was five feet deep on average. We believe the lesson here is well worth heeding. In investing, its not enough to survive on average. Investment survival depends not on how well one performs during periods of market euphoria, but how well you navigate through the rocky episodes. One of the byproducts and, indeed, one of the most important aspects of investing scared is that it obliges us to make sure the downside risk of our portfolios is limited in bad times.

2012-04-20 Monthly Investment Commentary by Team of Litman Gregory

Stocks and other risk assets surged in the first quarter, continuing the strong run that began in the fourth quarter of last year. In each of the past two quarters, domestic stocks gained about 12%, marking one the strongest runs over the October-March span going back to the 1920s. Developed foreign stocks increased nearly 12% in the quarter, emerging-markets stocks gained 14, small-cap U.S. stocks were up 12%, high-yield bonds rose 5%, and emerging-markets local-currency bonds added 8%.

2012-04-20 Whats Ahead for the Fed? by Team of Neuberger Berman

Although growth could slow from here, we do not believe economic conditions will deteriorate enough to provoke further accommodative measures from the Fed. The Fed may be on hold for the time being, but we also believe that Bernanke is acutely aware of the potential consequences of reversing monetary policy too quickly. As a result, interest rates may stay lower for longer. In this type of yield-constrained environment, we continue to favor segments like high yield fixed income and emerging market debt, which both offer attractive sources of income and upside potential.

2012-04-20 Equity Investment Outlook April 2012 by Team of Osterweis Capital Management

We think stocks are reasonably priced on an absolute basis and extremely attractive relative to bonds. Bonds have performed well over the past three decades, but with interest rates at record lows, there is not much room for bonds to continue outpacing stocks on a total return basis. Meanwhile, companies are steadily increasing dividends. Even Apple recently instituted a dividend. For some time, investors have been lowering their exposure to U.S. equities. We believe this trend should reverse, especially once interest rates start to rise and bond market returns turn negative.

2012-04-20 Fixed Income Investment Outlook April 2012 by Team of Osterweis Capital Management

The Feds easy money policy will likely not reverse in the near term, but may do so before 2014, if economic growth strengthens meaningfully; some inflation is also acceptable to the alternative deflation. We are seeing some economic strength in the U.S., which is translating into higher equity prices (and hopefully higher capital gains). We are still generally avoiding exposure to interest rate risk found in Treasuries and investment grade bonds. We believe the easy money has been made there and we are not currently being compensated for the risk of rising interest rates.

2012-04-20 ECRI Weekly Leading Indicator: The Growth Index Slip by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 1.2 as reported in today's public release of the data through April 13. This is the first week-over-week decline since January 6th, over three months ago. The underlying WLI contracted more dramatically from an adjusted 125.9 to 123.9 (see the fourth chart below). This is the largest decline, in percentage terms, since August 19th of last year.

2012-04-20 Global Listed Infrastructure Investment Commentary by Team of Cohen & Steers

Infrastructure securities predictable income, modest volatility and long-term growth potential have always attracted income-focused, risk-averse investors. If market volatility increases in the second half of the year, we expect these qualities will exert an even greater pull.

2012-04-20 U.S. Large Cap Value Investment Commentary as of March 31, 2012 by Team of Cohen & Steers

Valuations are still attractive, in our view, if somewhat less so than at the beginning of the year, and volatility has subsided. We expect to see an increase in dividend payers; Apple has opened the door for other technology companies, a sector that has had a relatively low proportion of dividend-paying companies. We are also seeing solid dividend increases among industrials companies.

2012-04-18 Balancing Perception, Reality, Equities and Fixed Income by Team of Franklin Templeton

Never underestimate the power of perception to influence peoples fiscal behavior. Perception is such a significant influence, in fact, that economic tea-leaf readers have developed a myriad of surveys and indicators to monitor individuals perceptions of the investing environment because perceptions canand domove markets. When sentiment is negative, investors tend to shift out of assets they perceive as risky and into assets they perceive as safe. Ed Perks, portfolio manager of Franklin Balanced Fund and Franklin Income Fund, is well aware of the role perception plays in the markets.

2012-04-17 The Elusive Equilibrium: How Financial Markets Shape Global Rebalancing by Ramin Toloui of PIMCO

The mental and organizational infrastructure in the asset management industry has been built for a world with a sharp dichotomy between developed countries and emerging markets. Effective portfolio management requires an integrated approach that eschews the traditional dichotomy between developed and emerging markets. Emerging markets account for about 36% of global output and 68% of global GDP growth, but only represent about 4% of the equity portfolios of U.S. investors. We believe the representation in bond portfolios is even lower.

2012-04-16 No... Stop... Dont by John P. Hussman of Hussman Funds

In the classic version of Willy Wonka and the Chocolate Factory, Gene Wilder watches one child after another ignoring every cautionary warning, with predictably bad consequences. His deadpan appeals become increasingly halfhearted and emotionless because he knows they won't listen anyway.

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 ECRI Weekly Leading Indicator: The Growth Index Continues to Improve by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 1.4 as reported in today's public release of the data through April 6. This is the thirteenth consecutive week of improving data for the Growth Index and the highest reading since August 5th of last year. However, underlying WLI contracted slightly, decreasing from an adjusted 126.3 to 125.7

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 Evolution, Impact and Limitations of Unusual Central Bank Policy Activism by Mohamed A. El-Erian of PIMCO

I will speak in a central bank and to central bankers about the role of their institutions particularly the Federal Reserve and the European Central Bank in todays highly complex, perplexing and historically unusual policymaking environment. I will go further and try to link actions to motivations. And, when it comes to implications, I will attempt to put forward questions and hypotheses that, I believe, are critical for the future of the U.S. and global economies but for which I, like others, have only partial answers.

2012-04-12 Global Investment Outlook - March 2012 by Team of Aberdeen Asset Management

Global economic growth sustains its momentum for now. Fiscal policy remains a global focus. Further monetary policy accommodation should support markets. Recent positive momentum within the U.S. economy is driving the global economic recovery, overwhelming the negative sentiment emanating from peripheral Europe. Real incomes, boosted by employment growth and easing inflation, are showing signs of turning positive in the U.S., feeding through to the broader economy.

2012-04-11 Will Baby Boomers Wreck the Market? (The Sequel) by Gary D. Halbert of Halbert Wealth Management

The basic premise behind the idea that Baby Boomers might lay waste to the stock market makes sense intuitively. The idea is that as Boomers retire, they will shift assets away from stocks to less risky alternatives such as bonds, annuities, CDs, etc. and begin living on the interest. All of this selling activity, the story goes, will put downward pressure on stock prices and lead to a major selloff.

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 Municipal Bonds: What a Difference a Year Makes by Team of Franklin Templeton

Nows an exciting time for investors to consider this asset class, which is on firmer footing today. In brief: We believe the fear and dire predictions about municipal bonds last year were largely unfounded and misguided. We think the municipal bond market is now trading on strong fundamentals. Fiscal constraints remain in the marketplace; we need to be disciplined and responsible in our investing. In our opinion, its nonsensical to compare the U.S. municipal marketplace to sovereign-debt countries. We are staying more defensive; we think its the most prudent course of action.

2012-04-09 The Global Debt Crisis by Gregory Hahn of Winthrop Capital Management

A major part of our investment thesis is that the developed countries in the world have too much debt relative to the size and historical growth rates of their economy. However, the costs of continued borrowing have risen as the amount of debt has increased. Furthermore, the economies of these developed countries are growing too slowly for revenues to offset the burden of increased expenditures. We expect that these countries will have significant difficulty reducing their debt burdens through continued stimulus initiatives as they attempt to inflate their economies.

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 ECRI Weekly Leading Indicator Growth Is Now Positive by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 1.0 as reported in today's public release of the data through March 30. This is the twelfth consecutive week of improving data for the Growth Index and the first postive reading since August 12th of last year. The underlying WLI also improved, increasing from an adjusted 125.8 to 126.5 (see the fourth chart below).

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.

2012-04-04 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 The Easy Money Saloon by Michael Lewitt (Article)

When two of the world's soundest central banks (Israel and Switzerland) start investing their reserves in stocks (the Bank of Israel is run by the highly respected Stanley Fischer for God's sake!), one has to wonder what the world is coming to. Apparently the global saloon is expanding its boundaries. No doubt we will soon hear the ECB is merging with the London Stock Exchange.

2012-04-03 Risk On by Jim Tillar, Steve Wenstrup and Tim Roesch of Tillar-Wenstrup Advisors

Overall both risk and return seem muted until something in the current environment changes. As long as yields on assets like bonds and cash remain low, it is hard for stock markets to collapse. But those yields are so low because central banks are frightened about the economic outlook which makes it very hard for a bull run to be sustained. While there has been improvement is some areas of the economy some are struggling to grow beyond previous levels.

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 When Will Corporate Cash Flow? by Milton Ezrati of Lord Abbett

One of the great constants in this otherwise inconstant environment is the strength of corporate finances. Financial excesses and the need to de-leverage concern governments and households, not the corporate sector, which actually came out of the 200809 financial crisis and recession with its finances in good order, and has only strengthened them since. The question now is how and when companies will deploy these impressive financial resourceswhether on capital spending, hiring, or, especially, on the mergers and acquisitions (M&A) that typically proceed from strong corporate finances.

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 ECRI Weekly Leading Indicator Is Poised for Growth by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 0.0, the pivot point between growth and contraction, as reported in today's public release of the data through March 23rd. This is the eleventh consecutive week of improving data for the Growth Index and the highest level since August 12th of last year. The underlying WLI also improved, increasing from an adjusted 125.4 to 125.9 (see the fourth chart below).

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.

2012-03-29 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 Asset Allocation Committee Outlook by Team of Neuberger Berman

The resurgence of risk appetite witnessed in late 2011 has continued, with most major equity indices up in double digits for the year-to-date. In contrast, fixed income indices have posted very modest and, in some cases, negative returns in the first quarter. Much has been accomplished in the U.S. and globally that has contributed to the now six-month-old equity rally. However, concerns remain. Given this picture, the Asset Allocation Committee's core view remains steadyunderweight bonds, overweight equities.

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 Revisiting the Liquidity Cycle with the Minsky Model by Thomas Fahey of Loomis Sayles

Once an extreme event occurs, standard models offer limited insight as to how the ensuing crisis could play out and how it should be managed, which is why policy responses can seem disjointed. The latest policy responses to the European crisis have been no exception. To understand and respond to a crisis like the one in Europe, perhaps we need to consider some new models that include the human factor. Economic historian Charles Kindleberger can offer some insight

2012-03-27 Our Current Perspective on the Global Economic Outlook by American Century Investments (Article)

As we proceed through the first quarter of 2012, the U.S. economy continues to drift— not in recession, but far from the level of growth and dynamism we would like to have. Meanwhile, global economic growth has slowed as the world anticipates a solution to the European sovereign debt crisis. In short, we are in a period of uncertainty, not only about how key events will unfold, but about the timing associated with their future progress and resolution.

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.

2012-03-26 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 Postcards from the Edge: Central Banking in the Age of Policy Extremes by David Kelly, David M. Lebovitz and Brandon D. Odenath of J.P. Morgan Funds

Major developed world central banks have taken extraordinary action over the last few years, leaving us in uncharted territory, close to the edge with little experience or history to rely on. The move to todays extremes was forced by the impotence of conventional monetary policy tools, as well as the breadth and depth of the crisis-causing issues. Uncertainty about the probabilities and range of possible outcomes resulting from current extremes has, and will, impact both capital markets and decision making in the real economy.

2012-03-23 Whats Next for Equities? by Matthew Rubin and Justin Gaines of Neuberger Berman

In 2011, the S&P 500 finished essentially flat on a price-return basis. That return, however, would not have been achieved without a 15% gain over the last three months of the year. Equities have since picked up where they left off and, year-to-date, most major indices are up by double digits. Front-of-mind for investors is whether this momentum can be maintained. We offer the bear and bull cases as well as our thoughts on what may lie ahead.

2012-03-23 Preferred Securities - February 2012 Review and Outlook by Team of Cohen & Steers

We are encouraged by the trajectory of U.S. economic data and credit trends, as well as positive developments in Europe that have somewhat brightened the outlook for risk assets. However, we are closely monitoring various macro risks that could weigh on the global economic recovery, including a recession in Europe, high oil prices and slowing growth in China. Our portfolio remains more heavily weighted towards domestic issuers and is somewhat conservative relative to credit. That said, we continue to add to certain European issues and other higher-beta securities.

2012-03-23 ECRI Indicators Improve, But Beware the ''Yo-Yo Years'' by Doug Short of Advisor Perspectives (dshort.com)

The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) came in at -0.4 in today's public release of the data through March 16th. This is the tenth consecutive week of improvement (less negative) data for the Growth Index and the highest level (i.e., least negative) since August 12th of last year. The underlying WLI also improved, increasing from an adjusted 125.0 to 125.7 (see the fourth chart below).

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.

2012-03-21 The Scarcity of Income: A Hobsons Choice by Alan Dorsey, Juliana Hadas and Leah Modigliani of Neuberger Berman

The post-global financial crisis environment has resulted in rock-bottom yields for U.S. Treasuries and other sovereign debt deemed to be either liquid or low risk. This situation leaves income seekers in some markets with a negative real yield (inflation adjusted), which could become more manifest during periods of rising interest rates in eventually recovering global economies. Alternatively, these investors may want to consider migrating a portion of their asset allocation to less senior income-producing securities.

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.

2012-03-20 Transmission Channels by Neel Kashkari of PIMCO

We believe the European debt crisis will likely flare up again, and equity investors should consider positioning portfolios to be more resilient against such a shock. A disorderly Greek default, if it occurs, would likely shock the eurozone and the globe via at least four transmission channels: the European banking system, European sovereign debt markets, corporate financing markets and regional trade. The shock of a massive Greek default would likely swing investor sentiment strongly toward risk off, putting pressure on equity markets globally.

2012-03-20 New Normal Still Part of the Vernacular by John Buckingham of AFAM

Have to say that I chuckled a bit when I read in Saturdays New York Times that most professional investors think that a black swan event is possible, even as a black swan was described as an unlikely event that too few people plan for! The comments accompanied a piece entitled, A Forecast for Low Returns, in which several investment pros put forth the argument that people should plan for single-digit investment returns for the next five to as many as 20 years.

2012-03-19 Western Medicine by Neel Kashkari of PIMCO

Liquidity is buying time for European countries, but their economies are growing too slowly to support their debt loads. Just as there is no reason to assume U.S. household debt levels will continue to climb, there is also no reason to assume companies that benefitted from that debt-fueled spending will grow at historical rates. Until we see sustainable, real economic growth in America, we believe equity investors should carefully scrutinize the assumptions underlying consumer discretionary stocks and consider global companies that are selling into higher growth markets.

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.

2012-03-19 Did You See The 10-Year? by John Petrides (Article)

This week the US 10 year Treasury note spiked from 2% yield on Monday to 2.4% by the end of Wednesday. Around the office we were marveling at this move. Given the recent volatility in the equity market, that might not seem like much to stock investors, but to those in the fixed income world thats quite a change. The sudden spike in Treasuries has several implications: 1. Those investors who rushed into U.S. Treasuries over the past four months out of fear and panic (presumably not in hopes of achieving income) in search of safety, actually have an unrealized loss in their position!

2012-03-16 February Leaps to a Multi-Decade Market Open by Doug Cote of ING Investment Management

The markets YTD success has been fueled by a dramatic reduction in global risk and upbeat economic data. The fence to contain the euro crisis has been definitively established. Oil prices are a concern, but the real economy has the wind in its sails. Though equity fund outflows continue, its never too late for investors to do the right thing.

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 And Thats The Week That Was by Ron Brounes of Brounes & Associates

The Fed gets together next week as analysts eagerly await the (more transparent) recap of the behind-the-scenes discussions between the (dissenting) parties. Rumors have policymakers debating a new type of bond buying program (sterilized QE) in which the Fed would print money to purchase long-term securities, but investors would face certain restrictions over how those proceeds can be used. As always, the Feds aim is to keep rates low and encourage more spending and investing by consumers and biz.

2012-03-14 Systemic Risk, Multiple Equilibria and Market Dynamics What You Need to Know and Why by Mohamed A. El-Erian and A. Michael Spence of PIMCO

In assessing the possibility, duration and impact of systemic risk factors, we need to analyze the interaction of expectations with market (endogenous) and policy (exogenous) circuit breakers. In the current environment, the prevalence of some subjective bimodal expectation distributions (e.g. Europe related) speaks to the multiple equilibrium features of sovereign debt markets. Multiple equilibria give rise to a range of scenarios, each quite different and each with its own distribution of returns, risks, correlations, and market functioning.

2012-03-13 Europe's “Back-door QE”: Good News for Global Bond Investors by OppenheimerFunds, Inc. (Article)

By restoring confidence in the global financial system, the European Central Bank's Long Term Refinancing Operation has allowed global bond investors to participate in attractive opportunities around the world.

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 Economic Update by Mark Oelschlager of Oak Associates

As one might expect after a near-doubling of the market in three years, investor sentiment, by many measures, is much more positive these days. These psychology indicators had reached worrisome levels (too much optimism often augurs below-average stock returns) a few weeks ago but have since come in a bit, which is healthy. The recent bullishness is hard to square though with the general anxiety individuals still have toward stocks. While some are returning to the market, many are still spooked by the volatility of recent years.

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 In Japan, Eventually is Getting Closer by Robert McConnaughey of Columbia Management

On the anniversary of the devastating tsunami and earthquake in northeastern Japan we wish to express our sympathy and support for the people of Japan. With the rightful attention on the anniversary of this tragedy and on the Greece/European debt/growth challenges, it is easy to forget about the massive structural challenges faced by Japan. Japans total debt load surpasses even the U.S. in absolute terms and is second (and a close second) only to Zimbabwe in terms of debt to gross domestic product (GDP) at over 200%.

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 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 Of Tulips and Treasuries. Treasuries Securities Entering Bubble Zone. by Scott Colyer of Advisors Asset Management

U.S. Treasury securities could take their place alongside other bubble assets like tulip bulbs did in the 1630s. There are signs of a secular change afoot in the U.S. Treasury market as rates set historic lows. The U.S. Treasury market is indeed a crowded market as Euro-singed capital is being tucked behind the ultimate safety of the U.S. obligations. Add to that the Feds own record setting buying binge in these securities and you have an asset that may have well crossed the line of what its long-term value could possibly be.

2012-03-08 Global Forecast Update: Growth Upgraded, But Problems Remain by Azad Zangana and Keith Wade of Schroder Investment Management

We have upgraded our forecasts for global growth in response to better data and a further easing of policy. In particular, the success of the European Central Banks (ECB) long term liquidity operations and surprising resilience of Germany mean that we expect the recession in Europe to be shallower than before. However, it is still a weak picture. We do not see US activity taking off as the de-leveraging process has further to run. Much of the recent improvement in growth reflects an inventory cycle as the factors which held the economy back last year fade and go into reverse.

2012-03-07 The Truth Behind High Gasoline Prices by Gary D. Halbert of Halbert Wealth Management

While the latest report on 4Q GDP came in a bit better than expected, most economists agree that growth in 2012 will not be as good as the 4Q of last year. Following that, we look at some remarks from Fed Chairman Ben Bernanke in his recent Senate testimony. While he defended quantitative easing, it doesnt sound like the Fed is going to do QE3 anytime soon.

2012-03-05 Investors Are Skeptical, and Pace of Gains Slows by Bob Doll of BlackRock Investment Management

Even with the S&P setting new post-crisis highs, we don't think stocks are ahead of themselves. While we may not be pricing in a recession like we did last October, markets are in the same place as last April but earnings are up nearly 15%. The October market bottom also seemed to have technical characteristics of an important low. While there remain plenty of problems, including rising oil prices and profit margins at very high levels, we recommend overweighting equities. For investors that are underweight equities, we recommend continuing to dollar-cost-average to increase exposure.

2012-03-03 Unintended Consequence by John Mauldin of Millennium Wave Advisors

This week we wonder about the consequences of the European Central Bank (ECB) issuing over 1 trillion in short-term loans to try and postpone a banking credit crisis and lower sovereign debt costs for certain peripheral countries in Europe. What if, instead of holding the European Monetary Union (EMU or Eurozone) together, that actually makes a breakup more likely? That would certainly fall under the rubric of unintended consequences, and be worth our time to contemplate in this week's letter.

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.

2012-02-27 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 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks moved higher last week in anticipation of a deal over Greek sovereign debt, as well as evidence the economy is not falling into a double-dip recession. As the charts above illustrate, the Dow Jones Industrial Average gained over one percent, while the NASDAQ Composite moved higher by 1.65% led by Apple, Inc.

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.

2012-02-24 Global Listed Infrastructure - January 2012 Review & Outlook by Team of Cohen & Steers

We have a positive near-term outlook for infrastructure securities based on improving U.S. economic data and stabilizing credit conditions in Europe. But there are still headwinds. The road to Europes recovery is unlikely to be smooth; and in the United States, state and local government debt may dampen growth. Emerging markets are likely to be somewhat stronger, in our view, driven by better structural demand. For this reason, we have increased our investments in Brazil, China and Mexico.

2012-02-24 Large Cap Value Strategy - January 2012 Review & Outlook by Team of Cohen & Steers

January was a quiet but strong month for equities. Investors moved away from defensive sectors and into somewhat riskier names as sentiment about the global economic outlook improved. There was no bad news from Europe. Indeed, global markets expressed relief that Europes banks now have access to additional liquidity through the Long-Term Refinancing Operations program (LTRO) announced in December. The U.S. economy continued to show self-sustaining growth that, while modest, allayed fears of recession.

2012-02-24 Preferred Securities - January 2012 Review & Outlook by Team of Cohen & Steers

Preferred securities had their best month in more than a year in January, driven largely by significant improvement in European credit markets. Investors also gained encouragement from positive U.S. economic data, as well as improving credit trends for U.S. banks despite their lackluster profitability. In Europe, yields on bank and sovereign debt declined sharply in the wake of the European Central Banks long-term refinancing operation. The program reduced systemic risk in the financial system by improving European banks liquidity, while also giving banks the capacity to buy sovereign debt.

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 PIMCO by Ed Devlin of PIMCO

Given the bimodal nature of the expected distribution of outcomes, it is important for investors to remain nimble so they can respond to high frequency data and global public policy developments. We expect the Bank of Canada to remain in wait-and-see mode until it is clear which way the economy is tipping. In our base case scenario, we estimate Canadian bond market returns in the range of 2%-4%, and if we tip into a virtuous cycle of economic recovery, we anticipate the possibility of negative absolute returns.

2012-02-22 Closed End Funds - January 2012 Review and Outlook by Team of Cohen & Steers

The U.S. economic picture has brightened meaningfully since December, and we expect the trend to continue, albeit at a modest pace. We are also encouraged by progress in Europe, but continue to monitor developments closely, as the issues there are complex and will take considerable time to resolve, while economic austerity measures are likely to weigh on growth. In this period of extended easy monetary policy by the Federal Reserve, we believe the yield advantage of leveraged closed-end funds will continue to draw investor interest, as demonstrated by the IPO in January.

2012-02-22 Rethinking Risk: Pension Plans Should Adjust to Global Realities by Jeff Helsing of PIMCO

Many governments are carrying higher levels of debt, which can increase both economic and asset volatility as well as default risk. The resulting incremental increase in default risk suggests pension portfolios may have less duration than implied by traditional measures. Pension plans with high levels of equity exposure should consider increasing durations and credit exposure. Investment guidelines may need to be adjusted so they dont measure credit risk simply by the World Banks definition of emerging markets.

2012-02-21 Good News Cant Keep a Lid on Investor Fear by Kristina Hooper of Allianz Global Investors

The outlook for the stock market keeps getting brighter, but investors are still letting fear cloud their judgment. In the United States, the jobs picture a rather bleak scenario less than a year ago has improved substantially. The euro-zone debt crisis has also improved. We havent seen any real contagion from Greece, as evidenced by sovereign debt yields. And despite prominent investors such as Warren Buffett and Jeremy Grantham favoring stocks over bonds, a lot more money flowed into bond funds in January. This disconnect reveals a continued tug-of-war between fear and fundamentals.

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 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.

2012-02-15 When Capital Shrugged by David Baccile of Sextant Investment Advisors

if I were given a time horizon of 10 years or more and had only two options, own 100% bonds or 100% stocks, I would choose stocks. But we are not limited to those two choices. The current fragility of the global economic and financial environments will surely create opportunities for investors to shift funds between asset classes in a way that should substantially improve their risk-adjusted rates of return over the next ~10 years. With equities, individual stock selection also provides investors with real possibilities to earn an acceptable rate of return now.

2012-02-15 Double Recovery? by Neil Hennessy of Hennessy Funds

The past three years have certainly had their low points, but they have also seen a number of amazing high points, and I believe those highs have been adding up to a true recovery in the financial markets. Since the market lows of March 2009 the markets have rallied back, with the Dow Jones Industrial Average returning over 110% (through February 6th). I am not an analyst or an economist, I am an economic realist. Using common sense as my guide I continue to see signs of recovery.

2012-02-13 Around the World of Investing Opportunity by Milton Ezrati of Lord Abbett

Among those choices, credit-sensitive fixed-income instruments would seem to offer superior returns with reasonable security. Opportunities also present themselves in the equity markets. In the developed markets, North America seems to offer the best risk/reward balance. Though stock valuations are better in Europe and Japan, the former still needs to deal with its debt crisis and the likelihood of recession, while the latter faces the very fundamental matter of severely aging demographics as well as the immediate adverse impact of an expensive currency.

2012-02-10 Western Medicine by Neel Kashkari of PIMCO

Liquidity is buying time for European countries, but their economies are growing too slowly to support their debt loads. In the U.S., household debt is declining, but remains high. There is also no reason to assume companies that benefitted from that debt-fueled spending will grow at historical rates. Until we see sustainable, real economic growth in America, we believe equity investors should carefully scrutinize the assumptions underlying consumer discretionary stocks and consider global companies that are selling into higher growth markets.

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.

2012-02-09 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.

2012-02-09 European Update: Volatility Will Remain High Amidst Rating Agency and Political Uncertainty by Team of Standish Mellon Asset Management Company

S&P downgraded nine of the 16 Euro area countries on credit watch negative. Germany is now the sole AAA country with a stable outlook. The primary drivers of the downgrades were reduced political and external scores. The near-term market impacts have been relatively muted, as the downgrades were not as bad as investors may have feared. However, the negative outlooks across the region and potential for further downgrades. Within the Euro area, further volatility is likely to be reflected in lower German yields relative to other Euro area bond markets.

2012-02-07 Neel Kashkari on PIMCO's Equity Strategy by John Heins (Article)

Bond titan PIMCO has been methodically building its equity-investing expertise. Here the architect of that effort, Neel Kashkari, and his first major hires describe their strategy and how they're uncovering value in today's market.

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.

2012-02-06 Capturing the ECB by Joseph E. Stiglitz of Project Syndicate

There are several explanations for the ECBs insistence on a "voluntary" restructuring of Greece's sovereign debt, none of which speaks well for the institution. Indeed, as we have seen elsewhere, institutions that are not democratically accountable tend to be captured by special interests.

2012-02-06 The Value in Fear by Milton Ezrati of Lord Abbett

It is hardly an insight to note that markets today are beset with fears. What is less widely acknowledged and critical to investment strategy, however, is that the level of anxiety has driven market segments to different extremes of valuation. On the one side, widespread fear has driven up the prices of the usual safe havens, such as U.S. Treasury bonds, gold, even the debt of other presumably stronger governments. On the other, the anxiety has severely held back relative pricing on equities and credit-sensitive bonds. This divergence presents potentially remarkable investment opportunities.

2012-02-03 The U.S. Economy Marches On To An Unsteady Beat by Team of BondWave Advisors

Despite the misgivings by the Fed about the recovery, and with much of Europe teetering on recession, domestic economic data continues to suggest moderate expansion in both output and employment. We discuss this situation along with the positive performance of the Treasury, Corporate and Municipal bond markets.

2012-02-03 Global Markets Rally on Moderating Global Risk and Positive Fundamentals by Doug Cote of ING Investment Management

The so-called January Effect typically causes equity markets to explode out of the gates only to fizzle out after the second week of the month. January 2012 was different, however, as the equity market delivered four weeks of moderate but relentlessly positive returns on the back of easing global risks. Meanwhile, volatility broke below 20 for the first time since last May. Investors on the sidelines barely noticed the explosive performance, nor did a media that nonchalantly labeled it a stealth rally There is nothing stealthy about a 4.5% monthly return!

2012-02-03 In the Bullring With Gold by Frank Holmes of U.S. Global Investors

We anticipated that the Year of the Dragon would spur an increase in the buying of traditional gifts of gold dragon pendants and coins. Gold buying did hit new records, says Mineweb, with sales of precious metals jumping nearly 50 percent from the same time last year, according to the Beijing Municipal Commission of Commerce. This should serve as a warning to all of golds naysayers. Gold bullfighters bewareyou now have to fight the gold bull while fending off a golden Chinese dragon.

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.

2012-01-31 Barry Eichengreen on the End of the Dollar - Video 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 video of the interview.

2012-01-31 America's Economic Engine Still Healing by Chris Maxey of Fortigent

A thin week of economic data and renewed focus on the European sovereign debt crisis may have prompted profit taking by some investors. Arguably, the biggest development last week was the Federal Open Market Committees (FOMC) press release on Wednesday. For the first time, the central banks decision makers released forecasts for the federal funds rate and the timing for the first rate increase. In that release, the FOMC unexpectedly announced that it expected to hold rates near zero until at least late 2014. This far exceeded previously stated expectations of a mid-2013 rate hike.

2012-01-31 The ECB to the Rescue by Milton Ezrati of Lord Abbett

Though a good deal of concern over European downgrades has emerged, markets actually have received reason to anticipate relief in Europes financial crisis. The old risks and fears remain, of course, but the ECB has at least changed the equation, signaling that it had jettisoned its former hands-off policy and begun, at last, to support European financial markets. The remarkable nature of the change received only a few headlines, and even less commentary, but it deserved then and deserves now more attention. The ECBs help is crucial.

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.

2012-01-30 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The New Years rally continued last week. Solid earnings reports, for the most part, along with the belief that the Federal Reserve Board will offer up some policy changes this week served to support stock prices across the board. As the charts above illustrate the Dow Jones Industrial Average gained 2.4% and the NASDAQ Composite jumped 2.8% last week to extend their early year gains.

2012-01-30 Tide Turns for Structured Credit by Joshua Anderson and Carrie Peterson of PIMCO

Many investors remain skeptical, but the market environment for structured products has changed markedly since the financial crisis of 2008. Current pricing now reflects a more realistic view of the underlying fundamentals, including weakness in the global economy and U.S. housing market. We believe now is the time to consider entering the structured credit market.

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.

2012-01-28 The Transparency Trap by John Mauldin of Millennium Wave Advisors

We look at the shift in Fed policy, and at the balance sheets of central banks, US GDP, Portugal and the ECB, the LTRO policy, and yes, theres even a tidbit on Greece. Unemployment will be higher than we are comfortable with; it is just a product of the current environment and simple math. The US economy is in a Muddle Through range of around 2%. If not for a potential shock coming from a serious European crisis and real recession, the US should not slip into outright recession this year.

2012-01-27 Adding to Our Pro-Muni Arguments by Team of American Century Investments

Last month, we outlined multiple reasons why investors and investment advisors should consider high-quality muni investments as core fixed income portfolio holdings. In support of owning funds vs. individual securities, we focused primarily on credit-quality issueshow we believe most of the muni market remains fundamentally sound and resilient, but pressured by the economic and fiscal environment. We think this has created a heterogeneous muni market with generally strong credit quality but dotted with potential credit risks and pitfalls in select areas that require professional vigilance.

2012-01-27 Europe Investment Commentary - Full Year 2011 by Team of Cohen & Steers

Our global macro outlook has turned positive given the shift toward monetary easing as well as U.S. economic data steadily improving growth. However, Europes central role in fiscal crises has made for a difficult backdrop in the region. We have begun to envision a recession in Europe as a base-case scenario. Given this, we seek to invest in companies that are best able to shield themselves from the most adverse effects of a slowing economy. Broadly speaking, opportunities to invest in companies with good balance sheets that are trading at meaningful discounts to their property values.

2012-01-27 Global Infrastructure Investment Commentary - December 2011 by Team of Cohen & Steers

We are entering 2012 with a positive outlook for infrastructure securities based on better-than-expected U.S. economic data and credit conditions in Europe that show some signs of stabilizing. Even so, we recognize that it will take time for the global economy to achieve sustained growth. We will continue to monitor global monetary policies, having already seen the beginning of the next easing cycle. Despite the fact that the sector still carries meaningful political and regulatory risk, we believe infrastructure companies should perform well in 201

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

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

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

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

2012-01-27 LCV Web Commentary - December 2011 by Team of Cohen & Steers

We continue to believe that the crisis in Europe is far from over; that the improving U.S. economic data, while encouraging, signal something well short of a robust recovery; and consequently, that the first half of 2012 remains highly uncertain. For these reasons, we still expect (1) more intervention by politicians and central bankers, (2) continued historically low interest rates in the US, (3) modestly positive U.S. economic data, (4) high but slowing growth in China and emerging markets, (5) short-term measures to address Europes long-term debt crisis.. and others.

2012-01-27 Heart of China Bull Beats Strong by Frank Holmes of U.S. Global Investors

With rising incomes and increasing urbanization, we believe China is pursuing the American Dream, and the government has shown great determination to build the necessary infrastructure along with a robust urban labor market. On a purchasing power parity basis, Chinas share of world GDP has risen significantly, from around 3 percent in 1985 to a current world share of nearly 16 percent.

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 Is There Value in U.S. Equities? by Team of Emerald Asset Advisors

The importance of asset allocation and timing was again evident last year. After rallying earlier in the year, stocks took investors on a gut-wrenching ride over the summer before rallying again in the fall. And for all of the twists and turns, in the end the S&P 500 essentially ended the year where it began. But that's history. What do we expect looking ahead? As we examine today's investment landscape, we believe opportunities can be found in U.S. stocks, particularly large-cap stocks. There are several trends in place that support our view.

2012-01-25 The Fed Plays with Fire by Milton Ezrati of Lord Abbett

The Federal Reserve recently announced plans to publicize its interest rate expectations. The new approach, according to the Fed, should give investors and businesses a more reliable basis on which to plan. The Fed argues further that people, acting on those plans, will enable monetary policy to have a prompter and more thorough impact on longer-term bond yields and on the overall economy. Reasonable as all this sounds, matters may not go quite as smoothly as the Fed seems to think. On the contrary, the new open approach could cause more harm and more confusion than the former secrecy did.

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.

2012-01-25 Emerging Markets Real Estate Investment Commentary Full Year 2011 by Team of Cohen & Steers

Over the long term, we believe emerging market real estate securities are well positioned to benefit from secular trends such as expanding urban centers and the rise of the consumer class. In the near term, however, we expect volatility to continue as markets grapple with uncertainty about Europe and further deceleration in economic growth. In this challenging market environment, we continue to favor commercial landlords over developers.

2012-01-25 U.S. Real Estate Securities Investment Commentary - December 2011 by Team of Cohen & Steers

We expect GDP growth of between 1% and 2% in 2012, with modest but steady gains in employment. This should support continued gradual improvement in real estate fundamentals, given low new supply in most sectors. In this environment, we seek to identity markets with above-average employment (and income) trends. And in an election year that should present opportunities and risks, we will monitor how the results might affect employment in the financial and health care industries, and the Washington, D.C. market generally.

2012-01-24 Michael Lewis on the True Depth of the Crisis in Europe by Larry Siegel (Article)

Michael Lewis is a financial writer and author, most recently of Boomerang: Travels in the New Third World, in which he reported on the European debt crisis from several of the affected countries. In this interview, he discusses a range of topics, including the future of Wall Street and the challenges of great financial writing.

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 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.

2012-01-23 Dodging a Bullet, from a Machine Gun by John P. Hussman of Hussman Funds

The interpretation best supported by the data is that recession risk remains very high based on the leading evidence and the typical outcomes that have resulted, but that the rate of deterioration has eased significantly, and it is simply unclear whether this is a temporary pause or a reversal. Rather than overstating the case one way or another, we remain strongly concerned about recession risk, but recognize the recent stabilization and the potential for a low-level continuation of that.

2012-01-23 Who's Afraid of the Big Bad Sovereign Debt Wolf? by Monty Guild and Tony Danaher of Guild Investment Management

Last Friday, the sovereign debt of nine European nations was downgraded by S&P. Now, there are only four European nations whose sovereign bonds carry the highest AAA rating: Finland, Germany, Luxemburg and the Netherlands. Since the sovereign debt refinancing and potential default problem still goes unsolved, we foresee the markets having to keep digesting more waves of bad news. Yet the fear created by such news is diminishingnot because of a shortage of negative news headlinesbut because European banks are more protected by the many lifelines that central banks keep throwing them.

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.

2012-01-21 Staring into the Abyss by John Mauldin of Millennium Wave Advisors

Europe's leaders are committed to keeping both the euro and the eurozone as it is. But for it to do so, everything must change, as the wonderful quote from the 1958 Italian novel suggests. This is no easy task, as no one wants a change that will impact them negatively; and there is no change that will allow things to stay the same that does not impact all severely, as we will see. In the third part of a continuing series, we look at the actual options that are available on the menu of choices, or as one group called it, the menu of pain.

2012-01-20 European Sovereign Downgrades by Azad Zangana and Bob Jolly of Schroder Investment Management

Last Friday ratings agency Standard & Poors announced the credit rating downgrade of nine of the eurozones seventeen sovereigns. Though the downgrades could have a marginal negative impact on the cost of borrowing for these countries, the key issue is the implication for the EFSF. There is now a high risk that the EFSF will also lose its AAA rating, as the only way to avoid a downgrade would be either to increase the amount of collateral member states are offering, or to reduce the amount the fund is borrowing - both of which are detrimental for the eurozones stability.

2012-01-20 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The first full week of trading in the New Year was uneventful but positive as the market awaits corporate earnings and next weeks Federal Reserve Board Meeting. As the charts above illustrate, the Dow Jones Industrial Average extended its gains for the year by an additional half of one percent last week, while the NASDAQ Composite jumped nearly 1.4% on excitement in many of the technology shares.

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.

2012-01-19 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 Asia-Pacific Portfolio Managers Discuss PIMCOs Cyclical Outlook by Robert Mead, Isaac Meng and Raja Mukherji of PIMCO

We expect emerging Asia growth below the market consensus due to its less aggressive policy responses compared to 2008-2009. The Asia-Pacific region is less affected than others by eurozone turmoil but contagion is still a risk through direct trade and the regional production chains that characterize Asias export-oriented economies. In this environment, we favor Australian government bonds for their high credit quality, low-beta currencies such as the Chinese yuan, corporate issuers that have delevered, covered bonds and mortgage-backed securities.

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.

2012-01-18 A Little Cold Water Thrown on the Recovery by John Buckingham of AFAM

The economic data out last week was hardly terrible, but the positive momentum seen in the past couple of months was slowed as the Commerce Department reported that higher prices for imported oil and a 7% drop in exports to Europe caused the U.S. trade deficit to expand sharply in November.

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 Double-Digit Market Returns in 2012? by Bob Doll of BlackRock Investment Management

Skeptics would suggest that the solid start to 2012 is little more than a typical "January effect" in which stocks tend to rise at the beginning of the year, but we think there is more to it than that. In part, we believe the upward moves of the last two weeks can be attributed to the fact that many investors (including active fund managers) came into the year underexposed to risk assets following a disappointing 2011, and who are at this point beginning to put their cash to work.

2012-01-17 European Nations Stripped of Credit Rating by Matt Lloyd of Advisors Asset Management

S&P announced they were cutting the credit rating of nine European countries and stripping Austria and France of their AAA credit rating. Reminiscent of the removing of the AAA status from the US nearly six months ago, all eyes are on what will happen to their debt markets and currency. The markets had long expected some sort of credit rating warning or downgrade with regard to the United States. So too is the reaction from the European downgrades on Friday. Consider what has occurred in the debt markets over in Europe and you can then compare it to the United States movement.

2012-01-17 Fixed Income Investment Outlook by Carl Kaufman and Simon Lee of Osterweis Capital Management

An incongruity developed during the 2nd half of 2011. As Treasuries continued their rally that began after the S&s, US equity markets also rose from their August lows. Normally, a rally in Treasuries implies that investors are in a risk off mode, fear of economic weakness causes investors to seek safe havens, like US Treasuries. Conversely, a rally in equities is perceived as a risk on mode, meaning that the sky is clearing and it is safe to invest again. With the Q4 rally in both the risk on and the risk off markets, the question arises: What is causing this anomaly?

2012-01-14 The End of Europe? by John Mauldin of Millennium Wave Advisors

The peripheral countries have no choices that allow them to grow and prosper without first suffering (for perhaps a long time) some very real economic pain. Leaving the eurozone has severe consequences; but the economic pain of leaving would go away sooner and allow for quicker adjustments, than if they stayed. However, the initial pain would be worse than the slow pain they'd suffer by staying in the euro. Their choice is, simply, which pain do they want or maybe, which pain do they think they want? Because whatever they choose, they are not going to like it.

2012-01-13 The Year that Was and The Year to Come by Mark Mobius of Franklin Templeton

From a long-term perspective, we continue to have a positive outlook on emerging economies. In our opinion, balancing growth, inflation and global competitiveness will be the task ahead for many emerging countries in the months to come. We believe that emerging stock markets could be much larger than they are today, and over the long term, their combined value could potentially exceed the combined value of the U.S., Japanese and European equity markets.

2012-01-13 What the Next Decade Holds for Commodities by Frank Holmes of U.S. Global Investors

What will happen over the next 10 years? I believe the supercycle of growth across emerging markets will continue with rising urbanization and income rates. This bodes well for commodities, especially copper, coal, oil and gold, and well continue to focus on companies that will benefit the most from these much-needed resources.

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 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 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.

2012-01-11 Emerging Asia Pacific: Economic Review 4th Quarter 2011 by Team of Thomas White International

Emerging Asia Pacifics economic expansion slowed considerably beginning in October 2011. In many economies, export growth along with investments grew at their slowest pace since the summer of 2009. Although the Purchasing Managers Index improved across key economies in November the index was still under the 50 mark, which generally means a contraction in manufacturing activity. Almost all the countries in emerging Asia Pacific posted slower third quarter expansion over the year-ago period.

2012-01-11 Developed Asia Pacific: Economic Review by Team of Thomas White International

Developed Asia Pacific economies faced economic headwinds for the greater part of the fourth quarter of 2011 beginning in October. Major export-oriented economies such as Japan, Hong Kong, and Singapore witnessed slowing export growth as consumer confidence in key markets such as the U.S. and the EU remained weak. Although China boosted exports from Developed Asia Pacific economies, overall exports to emerging economies across the world came under pressure. Furthermore, the resilience of the labor market was also tested by the slowing export and domestic markets.

2012-01-11 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Happy New Year to everyone and it was for stock investors. The stock market, at least here in the United States, ended on a positive note last year and has started on a positive note this year. As the charts above illustrate, the New Year saw a first week gain of over one percent for the Dow Jones Industrial Average. while the NASDAQ Composite jumped 2.65% in the first four trading days of 2012.

2012-01-10 The Misreading of Reinhart and Rogoff by Robert Huebscher (Article)

If the cry for deficit reduction rests on an intellectual framework, it would be the work of Reinhart and Rogoff, whose book, This Time is Different, has been hailed for its historical study of financial crises. A key finding - that growth slows once the ratio of debt-to-GDP exceeds 90% - has been widely cited by those calling for decreased government spending. But those calling for deficit reduction have largely ignored a number of caveats that Reinhart and Rogoff gave with respect to their 90% threshold, and as a result many warn that the US faces a Greek-like sovereign-debt crisis.

2012-01-10 The Dollars Lucky Streak by Peter Schiff of Euro Pacific Capital

All self-perpetuating virtuous cycles are vulnerable to a sudden break in the positive feedback loop. When reality rears its ugly head, and the spell breaks, the reverses can be vicious. It happened with dot com stocks, it happened with real estate, and I believe it will happen with the dollar and Treasuries. Even if Europe does not resolve its problems, the day of reckoning will still eventually arrive. The unfortunate truth is that the longer it takes, the worse it will be, as we will have that much more debt to reckon with.

2012-01-09 Corporate Market Transparency Report: December 2011 by Chris Shayne and Farshad Mashayekhi of BondDesk Group

December was a relatively calm month on Wall Street, particularly compared to the extreme volatility of 2011. Concerns about Europe surfaced briefly, but by the end of the month all three major U.S. stock indices had recovered their losses. Corporate yields and spreads were essentially flat last month while transaction volumes were down slightly due to the holiday season. Demand for taxable (i.e., corporate) bond funds was moderate during December. According to the Investment Company Institute, mutual funds received $9.3B in net inflows vs. $15.5B during November.

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 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 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 2012 Market and Economic Commentary and Outlook by Multiple of Various

This is a compilation of economic and market forecasts from managers at 14 individual mutual fund companies.

2012-01-05 U.S. Dollar & Currencies: Review and Outlook by Axel Merk and Kieran Osborne of Merk Funds

In 2012, policy makers around the world may be driven by the realization that the theme of 2011 was not a Euro-specific crisis, but simply another stage in a global financial crisis. Central bankers may ramp up their printing presses in an effort to limit contagion concerns. As such, the currency markets may be the purest way to take a view on the mania of policy makers. Market movements may continue to be largely driven by political rhetoric. We dont believe this trend will abate over the foreseeable future, especially given the likely leadership changes throughout several G-7 nations.

2012-01-05 New Year, Old Worries by Team of BondWave Advisors

2011 was a volatile year where the old guard of the global economy was plagued by weak economies, bloated debt levels, tight credit, and action against normally stellar credit ratings. Europe dominated the headlines, both in December and 2011 overall, and continues to struggle. We discuss these issues and provide additional insight into the US Treasury, Corporate and Municipal Bond Markets.

2012-01-04 Towards the Paranormal by Bill Gross of PIMCO

The New Normal, previously believed to be bell-shaped and thin-tailed in its depiction of growth probability and financial market outcomes, appears to be morphing into a world of fat-tailed, almost bimodal outcomes. A new duality credit and zero-bound interest rate risk, characterizes the financial markets of 2012, offering the fat left-tailed possibility of unforeseen policy delevering or the fat right-tailed possibility of central bank inflationary expansion. Until the outcome becomes clear, investors should consider ways to hedge their bets.

2012-01-03 Ghosts of Christmas Past by Michael Lewitt (Article)

While Europe desperately needs the liquidity that the latest bailout scheme provides, nobody should mistake liquidity for solvency and think for a moment that the crisis is over. Much more work is needed to heal the wounds that European policy makers and business leaders have inflicted on their societies since the European Union was formed.

2012-01-03 The Triumph of Optimism by Scott Minerd of Guggenheim

Over the course of history there is a certain triumph of optimism. Betting against the column of progress of human history and the innovation of mankind has always proven to be a losing proposition. In the short run, there are times to become cautious, as the past five years have exemplified. Broad-based economic expansion and its attendant outsize investment returns follow contraction and panic just as the day follows the night. As dark as the current environment may seem, the sun will come up tomorrow. When it does, I believe it will shine favorably on the optimists of today.

2012-01-03 The Right Kind of Hope by John P. Hussman of Hussman Funds

We enter the year with great hope. But our hope is not for continued speculation and the maintenance of rich valuations (that only look reasonable because long-term cyclical profit margins are at a short-term peak about 50% above their historical norms). Our hope this year is for a return to a proper investment opportunity set - where saving is encouraged and rewarded by sufficiently high prospective returns, and the cost of capital is high enough to discourage high-risk, low-return investments and unsustainable fiscal deficits.

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 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stock markets here in the USA and Europe are ending the year on a positive note. The concerns of the European sovereign debt issue have been put aside for now as the European Central Bank is essentially embarking on a quantitative easing policy. The Dow Jones Industrial Average gained 3.6% last week and is positive for the year while the NASDAQ Composite jumped by 2.5% and is more or less break even for the year with a few trading days left in 2011.

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 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 PIMCOs Scott Mather Discusses the Global Implications of the Eurozone Crisis by Scott A. Mather of PIMCO

The ECB does not want to be a bridge to an unsustainable and adverse economic destination. They would rather force politicians to address the critical problems of the currency union now. Greece will continue to have an unsustainable debt load until policymakers can come up with a credible plan to generate economic growth. Ultimately, the eurozone countries and many other developed economies have very similar problems: unsustainably rising debt loads coupled with structurally weak and imbalanced growth.

2011-12-27 The Ten Most-Read Articles in 2011 by Robert Huebscher (Article)

As is our custom, we conclude the year by reflecting on the 10 most-read articles over the past 12 months.

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

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

2011-12-27 Letters to the Editor by Various (Article)

Readers respond to three recent articles and commentaries: Wade Pfau's article, GLWBs: Retiree Protection or Money Illusion?, which appeared on December 13; PIMCO's commentary, Hot Potato, which appeared on December 21; and Kay Conheady's commentary, Does the Trend Matter?, which appeared on December 20.

2011-12-23 Should the Definition of the Central Bank Lender of Last Resort Function Be Expanded? by Paul Kasriel of Northern Trust

If the ECB needed to expand its balance sheet to maintain the specified rate of growth in combined ECB and MFI credit, the ECB could purchase in the open market the requisite amount of pan-euro bonds rather than individual-country sovereign debt. In this way, the ECB could fulfill its expanded lender-of-last resort function without taking on individual-country sovereign-debt credit risk.

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

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

2011-12-23 European Investment Commentary by Team of Cohen & Steers

Our global macro view 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, we expect Europe to struggle in the intermediate term as austerity measures introduced by a variety of governments continue to hinder growth.

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

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

2011-12-23 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.

2011-12-23 Large Cap Value Commentary by Team of Cohen & Steers

We expect the markets to do better through year-end (although most of November gave us pause), but the outlook for the first half of 2012 remains wildly uncertain. Modestly improving U.S. economic data have not fully offset the European debt quagmire that is now inhibiting growth around the world. Recent economic news from the continent has been decidedly weaker, and is beginning to show up in data from Germany, the regions economic juggernaut and stalwart defender of a unified Europe.

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

The investment environment is likely to continue to be characterized by heightened risk, including political risk as governments institute austerity measures and posture ahead of upcoming elections. The delay in the Keystone XL pipeline in the United States and Canada and the challenge faced by Central Japan Railway in confirming government financial assistance underscore these risks. Positive fundamental trends do continue, such as in the North American pipeline space, where companies continue to benefit from the need to reshape the regions energy grid.

2011-12-22 Continued Austerity to Hamper EU Growth by Neil Dwane of Allianz Global Investors

The euro zone will continue to struggle as fiscal dieting and debt reduction are likely to mean slim chances of economic expansion, but strong consumption trends in emerging markets may temper their ill effects. The European Central Bank (ECB) is at the heart of market solutions to the European Union (EU) crisis but stands resolute against printing money to alleviate debt. Despite the ongoing crisis, there are many growing and profitable opportunities for European corporates especially in emerging markets.

2011-12-21 Fiscal Pressures Could Lead to European Solution by Matt Lloyd of Advisors Asset Management

As we and many have noted during the debt crisis in Europe, the ultimate end to the current dilemma requires a comprehensive and coordinated solution from all of its members. In an article over night from Bloomberg we read that, a measure of ECB leverage may grow from a record 30 times, raising the risk of a widening in sovereign bond spreads unless governments commit a detailed rescue plan for members. The two challenges we have seen from Europe is the conscious effort to do just enough to get by which doesnt instill confidence and inability to comprehend the severity of the situation.

2011-12-20 Gundlach on the Key Threat to Global Economies by Robert Huebscher (Article)

If class warfare is to be the dominant theme in next year’s presidential campaign, it will revive the premise of Ernest Hemingway's 1937 novel, To Have and Have Not, which he wrote in the midst of the second downturn of the Great Depression. That was also the title Jeffrey Gundlach gave his conference call with investors last week, during which he warned that wealth inequality will threaten European and domestic economies. Last week also saw Morningstar pass over Gundlach as a candidate for its fixed-income manager of the year award, so we’ll look at whether that decision made sense.

2011-12-20 Some Questions For 2012 And Beyond by Scott Brown of Raymond James Equity Research

The U.S. economy is expected to advance at a moderate rate in 2012, but Europe presents a key downside risk to the outlook. That aside, there are longer-term uncertainties about potential growth over the next several years. Next year will be an election year and income inequality could be an issue. Like any good horror movie, the European crisis has carried an ongoing feeling of dread. The potential for a catastrophic collapse is palpable. For the U.S., a meltdown would hit exports, but the bigger fear is possible financial market disruptions.

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 Three Rs of Investing by Marc Seidner of PIMCO

The inability to achieve sustainable levels of economic growth raises the risk of recession in many developed world economies. Under financial repression, market interest rates are kept very low for a very long time period with the hope of stimulating investment, but repression also starves savers to the benefit of borrowers. Increasing risk with an uncertain distribution of possible outcomes should lead to caution regarding traditional models and asset allocation practices.

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 Loose Monetary Policy Paves Way for Growth by Scott Migliori of Allianz Global Investors

Continued volatility in early 2012, but an increasingly accommodative monetary policy globally could jumpstart growthparticularly among export-driven companiesin the second half of the year. Energy and health care sectors stand out as likely outperformers.

2011-12-16 Making Sense Of The European Chaos by Monty Guild and Tony Danaher of Guild Investment Management

Developments in Europe have dominated the worlds economic headlines in recent days and have obscured some good news from China. In this weeks newsletter, we will cover the background of these important events and their meaning to global investors. We are recommending using the gold market decline to add to gold positions, we continue to hold other long term positions.

2011-12-16 De-stressing Balanced Fund Investing by John West of Research Affiliates

Balanced fund management has largely become a benchmark-hugging exercise, with asset allocations confined within a tight band. This month's Fundamentals examines what can be done to improve the added value investors can obtain from balanced fund investments.

2011-12-16 Downward Spiral by Mohamed A. El-Erian of PIMCO

Europe's crisis is morphing again -- for the third time in only 12 months -- and the implications for the global economy are even more complex, unsettling, and troubling.

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.

2011-12-15 The European Overhang and Odds of a Meltdown by Russ Koesterich of iShares Blog

Earlier this week, I noted that very elevated Italian and Spanish bond yields remaina short-term risk for both the European and global economies.Several other major European-related risks also continue to threaten markets.1)In the short-term, a key risk remains European banks. While bank funding needs have been addressed by European leaders, capital adequacy still is an issue. 2)A broader risk remains in the form of the interplay between economic policy and domestic politics. In efforts to solve Europes debt problems, domestic political considerations have too often trumped economics.

2011-12-13 Fed Policy Outlook Changes On The Way? by Scott Brown of Raymond James Equity Research

The Federal Open Market Committee will meet on Tuesday to set monetary policy. The Fed is widely expected to leave short-term interest rates unchanged and the wording of the economic assessment should be largely the same as in the previous statement. However, we could see another round of asset purchases or some changes to the Feds communications. The inflation outlook is moderate. It doesnt look like well see substantially higher inflation in 2012, but (barring a large negative shock to growth) were unlikely to see a threat of deflation.

2011-12-13 The Third Dimension by Team of Beacon Pointe

The uncertainty generated by the ongoing sovereign debt crisis in Europe and policymakers' deadlock in the U.S. is likely to persist for a while, but it should not drive long-term investors out of the market. We believe it is prudent to stay focused on the third dimension -- time -- and to remain committed to one's long-term investment strategy with an emphasis on diversification, capital preservation, and careful manager research and selection.

2011-12-13 The Borrowing Has Finally Begun by Milton Ezrati of Lord Abbett

Since all the financial troubles began in 2008, the Fed has pumped massive amounts of liquidity into the economy: first to stem financial collapse, then to ameliorate the effects of the recession, and more recently to spur the all too sluggish recovery. For a long time, this liquidity remained bottled up in banks and other financial institutions, where it helped, but less than it otherwise might have. Now however liquidity seems to have begun to flow more generally, suggesting 1) that Fed policy is finally having its looked-for effect and 2) that in future, the economic climate will improve.

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 One Step at a Time by Charles Lieberman (Article)

Rising profits and cheap valuations make stocks very attractive, but concerns over Europe will offset these solid domestic fundamentals, particularly when developments increase the risk of widespread credit defaults. So, volatility should remain high, as investors respond these events. Stock prices will move higher, but it will remain a roller coaster ride. As Europe resolves its finances, risks of a meltdown should fade and volatility should decline, clearing the way for stocks prices to move meaningfully higher.

2011-12-12 Rethinking Asset Allocation: PIMCOs Strategy for a Changing World by Mohamed A. El-Erian, Vineer Bhansali and Curtis Mewbourne of PIMCO

Alpha generation is a distinct component of the strategy because it is critical to actively seek opportunities in all global markets in this challenging environment. Explicit tail risk hedging is essential to prepare for more frequent significant downturns, both to mitigate their effects and to potentially benefit from them. The strategy is positioned to navigate a world of muted growth in the Western economies, significant market volatility, recurring balance sheet issues and continued income and wealth convergence of the emerging world with the developed world.

2011-12-12 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Markets continue to be whipsawed by headlines out of Europe which much of the time are confusing and contradictory. Overall, however, the stock market here in the United States continues to outperform other global markets, and as evidenced by the charts below showed gains for the week. Last week saw the Dow Jones Industrial Average gain 1.4% while the NASDAQ Composite moved higher by three quarters of a percent.

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.

2011-12-10 Neither a Quick nor Comprehensive European Fix by Mohamed A. El-Erian of PIMCO

European leaders still need to do a lot more, and quickly, if they are to catch up and get ahead of the crisis. Accordingly, and regrettably, the specter of volatility caused by European headlines will not recede for long. Investors need to continue to watch and worry about Europe.

2011-12-09 Markets Rolling Look For More Of The Same by Monty Guild and Tony Danaher of Guild Investment Management

During the last two weeks, global markets have moved their way to higher ground and indications point to a healthier finish than expected to an otherwise sickly 2011. We see several developments supporting a continued equity market rally. They have to do with measures taken in China, Europe, and by central bankers around the globe. The Canadian and Singapore dollars are well-managed currencies in countries with conservative banking systems. They are good candidates for continued long- term appreciation versus the Euro and U.S. dollar.

2011-12-09 Emerging Markets Bonds and Currencies in an Uncertain World by Ignacio Sosa of PIMCO

Even if global risk deteriorates significantly, emerging markets may continue to offer compelling risk-adjusted return characteristics. Emerging markets external sovereign debt, along with receiving interest rates in higher-quality EM countries, could be the best relative performers. EM currencies would likely sell off sharply in risk-off periods but would also tend to rebound robustly when risk appetite returns. Several Asian currencies are likely to be the best relative performers. Emerging markets assets remain a risk asset class and will not be immune to waves of global jitters.

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

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

2011-12-08 Some Perspective on Recent Stock Market Volatility by Team of American Century Investments

Both October and November exhibited substantial price volatility. For the full month of October, the index was up 10.9% on a total return basisthe best October performance for the S&P 500 in nearly 20 years. In contrast, for November the index was down -7.5% through Friday the 25th before a substantial rally the last three trading days of the month. Well take a closer look at the volatility of the S&P 500 from a historical perspective to provide some insights about market volatility its history, trends and causes.

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.

2011-12-08 Global Economy and Market Summary Third Quarter 2011 by Stephen Hammers of Compass EMP Funds

The world economy has continued to slow during the last few months. The next several quarters are likely to be weak for three reasons. First, fiscal policy will continue to be restrictive as plans to trim excessive federal budget deficits continue to unfold. Second, private sector demand looks gloomy because households will continue to deleverage from high debt levels while unemployment remains a problem. Third, the uncertain future of the Euro-zone debt situation remains a major setback to future economic growth.

2011-12-08 2012: A Gut Check for Global Markets by Andreas Utermann of Allianz Global Investors

We are clearly facing a significant slowdown in economic activity in 2012, but we do not expect most developed economies to fall into recession. However, growth risks are increasingparticularly in Europe, where a recession is becoming increasingly likely. We do not expect a return of deflationary fears despite weakening growth, nor is inflation likely to be a threat in the foreseeable future. We expect rates to come down further in the euro zone and emerging markets; in the U.S., U.K. and Japan, we expect extremely low interest rates to continue.

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.

2011-12-07 After the Flood: Surviving in a Sea of Debt by David Fisher and Olivia Albrecht of PIMCO

Since 2009, developed country governments have run fiscal deficits unprecedented outside of wartime, and their debt levels have reached epic heights. Investors accustomed to considering only the interest rate risk associated with their developed government bond holdings have been shocked to find that credit risk has become dominant in many cases. For investors in government bonds, inflation and currency debasement have the potential to be just as costly as outright default. Investors should consider focusing on GDP, or national income, as a measure of a countrys ability to service its debt.

2011-12-07 Waiting for All In by Mark R. Kiesel of PIMCO

Without a more forceful and coordinated policy response, Europe now faces an increasing risk of a hard landing. In this uncertain environment, volatility will likely remain high, liquidity poor, risk premiums wide and the global economy fragile as financial and credit conditions tighten. Easier monetary policy as well as the potential for more balance sheet support from a larger consortium of global central banks is now needed over our cyclical horizon. If these actions are coordinated and timely, investors and risk takers would be more likely to move off the sidelines.

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 Storm Clouds Across the Globe by Komal Sri-Kumar of TCW Asset Management

Major world equity markets had their best weekly performance in three years, boosted by economic numbers from the US, and by hopes that European leaders may find a solution to the debt crisis. U.S. manufacturing showed signs of regaining momentum, with both new orders and exports coming on strong. At weeks end, jobs numbers for November indicated that the open unemployment rate had dropped from 9.0% to 8.6%. Healthy sales on Black Friday (November 25), the traditional beginning of the holiday shopping season, also cheered investors during the following week.

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 Adding Some Holiday Gloss to a Not-So-Super Month by Team of BondWave Advisors

November began with a European shakeup that did little to bolster the confidence of investors. Fear raged as Greece and Italy threatened to roll back efforts made by the ECB and IMF. In the US, all eyes were on the supercommittee, which was tasked with reducing the deficit over the next 10 years. BondWave Advisors discuss the US economic indicators that brought a coat of gloss to the pessimism and provide additional insight into the US Treasury, Corporate and Municipal Bond Markets.

2011-12-06 European Bond Markets Offer Glimmer of Hope by Matt Lloyd of Advisors Asset Management

Not that we havent been whipsawed by the procrastination from European leaders before, but the last week and half of trading in the European bond markets are offering a glimmer of hope that there might be push to come to a resolution. At this point, there is no sense in calling for the end to their dilemma as all long-standing concerns usually require drawn out solutions. However, the confirmation today of more austerity measures from Italy coupled with generally better global economic numbers is causing a large rally in Spain and Italys sovereign debt.

2011-12-05 Have We Avoided A Recession? by John P. Hussman of Hussman Funds

Recent U.S. economic reports have improved modestly from the clearly negative momentum that we saw in late-summer. Unfortunately, the underlying recessionary pressures we observe are largely unchanged. When we take the present set of economic evidence in its entirety, we see very little evidence of a meaningful reduction in recession risks. Indeed, the evidence from the rest of the world, both developed and developing, reinforce the expectation that the global economy is approaching a fresh contraction.

2011-12-05 Solid Improvement by Charles Lieberman (Article)

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 European Crisis by Bob Rodriguez of First Pacific Advisors

Early this morning there was a coordinated response by several foreign central banks to provide liquidity to Europe and European financial institutions. These actions were not factored into the market but were always a possibility. I've been looking for some type of European bilateral fiscal agreements, along with ECB and IMF participation, to help stem the crisis. My estimate has been that something had to be done between December 2 and 9 that played into key upcoming ECB meetings. Any announcement that did not contain a response from these meetings could unravel the markets further.

2011-12-02 What Does Risk Mean in Today's Market? by Francis of The Royce Funds

While many investors continue to focus on daily volatility, seizing on every piece of macroeconomic or political news to gain a sense of the overall shape of the economic futureand position their portfolio accordinglywe remain focused on individual companies and the opportunity each presents. From our perspective, the small-cap environment is fraught with opportunities. Today's attractive absolute valuations are an opening to find bargains that will drive results for the next three to five years.

2011-12-02 The Markets are Encouraged by the Actions of the Worlds Central Banks by Thomas S. White, Jr. of Thomas White International

Six of the worlds major central banks, led by the Federal Reserve, this week announced an expansion of a program to increase the availability of U.S. dollars to European banks and lower their cost of borrowing these funds. While this action was not designed to solve the central challenge the European governments are experiencing - the spiking interest rates they must pay when issuing their sovereign debt - it will likely calm the tangential problems this has caused within the European banking system.

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 Week in Review: Worst Thanksgiving Week for Equities Since 1932 by Team of American Century Investments

The continuing European sovereign debt crisis and the failure of the Joint Select Committee on Deficit Reduction to reach an agreement on the U.S. budget deficit weighed on the major equity indices, with the S&P 500 Index down 4.69%, and the Dow Jones Industrial Average down 4.78%. The European debt crisis continues to take center stage. While the peripheral countries of Greece, Portugal, and Ireland have dominated headlines for months, the bigger core countries of Italy, France, Germany, and Spain were the main acts this past week.

2011-12-01 On Money and Confidence by Andrew Foster of Seafarer Capital

At this moment, the worlds central banks have undertaken what appear to be coordinated efforts at relief, easing liquidity by boosting money supply. This is a welcome move, as liquidity has been strained. My concern is that while this monetary stimulus is necessary, it is not sufficient to achieve financial stability. Unless confidence is restored specifically, by repairing balance sheet solvency growth will remain tepid, and markets range-bound.

2011-11-30 Guide to Save the Euro by Axel Merk of Merk Funds

Can the euro be saved? Is it possible to stem the flight of money from the periphery into the core? With a botched German auction in mind, investors are now wondering whether its possible to prevent a flight out of all things euro? We examine the dual challenges of fiscal sustainability and bank solvency in this analysis, with the not-so-modest title Guide to Save the Euro.

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.

2011-11-30 Markets Surge As World Engages In Global Bailout by Lance Roberts of Streettalk Live

Today, the remaining survivors of the global financial rout have coordinated an "all in" gamble to save the world from the next impending crisis. This morning's announcement that the Fed, European Central Bank, Bank of Japan, Bank of England, Swiss National Bank and Bank of Canada will lower the rates on currency swaps as well as lower pricing on existing US Dollar swaps provides a massive liquidity canon for the global financial system. While the markets are surging, the important take away here is that the world is in FAR WORSE shape than has previously been discussed.

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 The Euro-Recession? by Russ Koesterich of iShares Blog

Stocks and the euro rose as efforts heated up to help ease Europes debt crisis. Germany and France increased a drive for coercive powers to reject euro zone members budgets that breach EU rules, while a rout of European debt eased on hopes of outside help for Italy and Spain. Despite this progress, a general erosion in confidence coupled with an ongoing deleveraging by the European banks are raising the odds that Europe will experience at least a mild downturn in 2012. For many investors one to two quarters of negative growth now represents the best case scenario for Europe.

2011-11-29 Deja Vu? Eurozone Crisis Today vs. 2008 Subprime Crisis by Liz Ann Sonders of Charles Schwab

News flow on the eurozone debt crisis is speedy, and the latest news of a fiscal pact brings cheers by stock investors for now. There are many similarities between the 2011 and 2008 crisesbut even more differences. The end of the "Debt Supercycle" has ushered in a period of heightened risk and shortened economic/market cycles.

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.

2011-11-28 Stressed Out About the Stress Tests by Scott Colyer of Advisors Asset Management

The market is trying to better understand the Feds announcement yesterday regarding seemingly new stress tests for U.S. banks. Many posit that the Fed is worried about the health of the U.S. banking system in light of the issues in Europe. Some feel that it is an attempt to show the market that the U.S. banks are actually healthy in light of the potential economic hazards. The truth here might be a bit more innocent than many think. The stress tests are actually part of the requirements of Dodd Frank. They are not new and this is actually the third set that will have been routinely done.

2011-11-28 Stocks Buffeted by Euro Fears and Super Committee Failure by Bob Doll of BlackRock Investment Management

Equity markets sank sharply last week as the European debt crisis worsened and the US super committee failed to come to an agreement. Congress still has an opportunity to address deficit reduction, but of course the fact that all of this is occurring with the backdrop of the 2012 elections means that uncertainty levels are elevated. As a result, unless and until more clarity emerges, markets are likely to remain somewhat trendless in the near term.

2011-11-28 The Global High Yield Opportunity by Matt Eagan, Kathleen Gaffney and Elaine Stokes of Loomis Sayles

The shifting characteristics of US, European, Asian and emerging markets high yield assets have contributed to an expanding opportunity set. This has prompted many institutional investors to broaden their high yield investment guidelines, often giving portfolio managers the flexibility to include exposures to these markets within one portfolio. The days of silo investing, in which non-US investors sought exposure to US high yield and emerging market debt through separate mandates, may be giving way to an era of sector allocation driven by investors.

2011-11-26 Innovation Always Trumps Fear by J Michael Martin of Financial Advantage

While the stock market is behaving fearfully, we want to examine the thesis that the human capacity for innovation is an inexhaustible source of power that routinely topples seemingly intractable challenges. Our genius for betterment has flourished in the social arrangement known as democratic, free-market capitalism. Its promise of rewards for our efforts tends to subdue our baser instincts of fear and envy, and to stimulate the powerful creativity with which we are endowed. Capitalism has raised the standard of living wherever its been tried.

2011-11-26 3 Reasons Europe is Failing to Act by Russ Koesterich of iShares Blog

Its not just US politicians who are failing to adequately address sovereign debt problems. European politicians and policy makers are too. Russ provides three reasons why. 1.Reforms alone arent enough, 2.A lack of firepower and 3.The savior hasnt stepped up. What does this mean for investors? If a politically acceptable solution is not found, Europe risks turning a liquidity problem for smaller peripheral countries into a solvency problem that infects most of the continent. As the European failure to act continues, volatility is likely to remain high in the near term.

2011-11-26 The Case for Optimism: Our Top 25 Dividend Growth Stocks are Dirt Cheap by Chuck Carnevale of F.A.S.T. Graphs

Within each challenge there has also been accompanying opportunity.And in most cases, the opportunities tend to dwarf the risks. The opportunities that we believe our recent challenges are bringing us are unnecessarily low valuations on some of our highest-quality companies.Yet, it is a fact that investors are flocking to bonds in droves at precisely a time when the risk of owning bonds is perhaps the greatest it has ever been. Most investors want to defy the cardinal rule of investing-buy low, sell high.

2011-11-26 Beyond the Supercommittee by Team of Charles Schwab

After months of negotiations, the Joint Select Committee on Deficit Reduction announced that it could not reach agreement, stating: "we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline" The supercommittee had a deadline of November 23 to make recommendations to trim at least $1.2 trillion from the budget deficit. What's beyond the supercommittee? Schwab answers the key questions. Such as, why did the supercommittee fail? and are US Treasuries still a safe-haven investment? among others.

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.

2011-11-23 Manipulated U.S. Rates See Saw Gold Prices by John Browne of Euro Pacific Capital

The Super Committee has followed the path of least resistance and maximum irresponsibility. Given the likely after-effects, the outcome should be judged as criminal dereliction of duty. It should now be crystal clear to even the most casual observer that a solution to the U.S. debt crisis will not come from within, but will be imposed, perhaps brutally, from without.

2011-11-22 Investment Trends in the Financial Advisory Profession by Robert Huebscher (Article)

Advisors are optimistic about the returns Treasury bonds will provide over the next decade, but they are less sanguine about the projected performance of US equities. Their inflation expectations are consistent with the historical data. These findings and many others arise from our study, Investment Trends in the Financial Advisory Space: Key Implications for the Investment Management Industry, a research report now available from Advisor Perspectives.

2011-11-22 Europe Is in for a Long Recession by Paul Kasriel of Northern Trust

Collectively, the 27 sovereign nations that make up the EU most likely entered a recession this quarter. Given that the EU represents the largest economy in the world, a recession there is no small beer for the rest of the world. The Greek tragedy morphed into an Italian comedy. Now, it has become a French farce. The plot behind all of these theater forms is how an economy struggles when deprived of adequate bank credit. Although eurozone MFI credit is growing, its growth is much slower than it was prior to the global recession.

2011-11-22 Debt Story by Scott Brown of Raymond James Equity Research

Loan growth plays a key role in economic expansion. Simply put: no loan growth, no economic growth. However, theres a downside. Debt doesnt matter until it does. Debt has played a key part in the economic downturn and in the gradual recovery. Europes sovereign debt crisis has continued to escalate, with no easy way out. In the U.S., the government has borrowed more, but the markets have not punished it for doing so. Theres no sign that that is going to change anytime soon.

2011-11-21 Why the ECB Does Not Bail Out Distressed Debt by John P. Hussman of Hussman Funds

Investors are not likely to be treated with a "surprise" announcement that the ECB is going to expand its purchases of distressed European debt. Any significant ECB intervention would likely follow a formal revision of EU treaties that trades greater ECB flexibility in return for more centralized fiscal control.

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 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 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.

2011-11-17 Supercommittee Update by Team of Charles Schwab

New this week: the real deadline for the supercommittee; why we think there's still hope for an agreement; President Obama's vow to veto legislation to "undo" automatic cuts if an agreement isn't reached. What are the different deadlines for the supercommittee, and what do they mean? November 23 is the deadline by which the supercommittee must put forward recommendations to cut at least $1.2 trillion from the deficit. However, the supercommittee must post its recommendations publicly 48 hours prior to November 23, meaning the true deadline for finishing its work is Monday, November 21.

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 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 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.

2011-11-14 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

News from Europe continued to roil markets on a daily basis, but when all was said and done there were new governments in Greece and Italy (same governments just different leaders), and the stock market advanced on the week as economic data and earnings continued to impress investors. As the charts above illustrate the Dow Jones Industrial Average gained 1.4% while the NASDAQ Composite was flat as concerns over Apple held back that average.

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.

2011-11-14 Italian Job Redux by Jeffrey Saut of Raymond James Equity Research

On Wednesday, Enel, the major Italian oil company, said, Its time to tell the truth to Italians. Number 1: The party is over. The party referenced is the welfare state that has careened so many Mediterranean countries down the entitlement road. Recently, driven by the sovereign debt markets, reality has arrived at the crossroads along with the realization that the welfare-state needs major austerity reforms. Ignoring lessons our union leaders steered us down the same road as Ohio voted to reverse a law designed to curb the bargaining power of unions representing public employees.

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 Just as Domestic Demand Picks Up, Foreign Demand Weakens by Asha Bangalore of Northern Trust

The Commerce Departments first estimate of Q3:2011 real GDP growth was 2.5% annualized. Although this headline was better than the 0.8% annualized real GDP growth in the first half of 2011, underneath the headline, the news was even cheerier. Real final sales to domestic purchasers grew at an annualized rate of 3.2% in Q3:2011, the fastest growth of this measure since the 4.9% posted in Q2:2010. So, is it onward and upward for the U.S. economy going forward? Unlikely. Although things may be looking up for domestic demand, foreign demand for U.S. exports is expected to wane.

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.

2011-11-10 Tipping into Recession? Not Yet by Russ Koesterich of iShares Blog

If you think this is a bad economy, you havent seen anything yet. Thats what the Economic Cycle Research Institute said on Monday when it warned investors that the US economy is tipping into a recession. But heres why Russ does not agree. As ECRI recently pointed out, recessions can begin in periods of positive GDP growth. Im closely watching a big uncertainty looming over the global economy-whether Europe will be able to resolve its crisis. If Greece does end up defaulting on its debt in a disorderly fashion, then the US economy could end up very well tipping into a recession.

2011-11-09 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The stock market took a breather last week given the number of so-called macro issues to deal with as well as the usual stuff such as Federal Reserve Board meetings and employment reports, etc As the charts above illustrate, both the Dow Jones Industrial Average and the NASDAQ Composite dropped around 2 percent for the week, but remain positive for their year to date performance.

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 Bill Gross' Revised Paradigm: The New Normal Minus by Robert Huebscher (Article)

Following the financial crisis of 2008, PIMCO articulated its 'new normal' forecast of slow growth and mediocre capital market returns. Appending the even drearier modifier 'minus' to that outlook, Bill Gross said that expectations now appear worse than even he previously feared. Gross was pessimistic in both the near and long terms, and he startled the audience with his premonition that 'capitalism is at risk.'

2011-11-08 Municipal Market Transparency Report: October 2011 by Team of BondDesk Group

The big muni news last month was that Harrisburg, the capital of Pennsylvania, filed for Chapter 9 bankruptcy protection. But the incident didnt have much impact on the retail markets. In fact, trading activity in October recovered from the ultra low levels of August and September, though it was still a relatively quiet month. Mutual funds had a solid October, receiving $1.8B in net inflows according to the Investment Company Institute.

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.

2011-11-07 And That's The Week That Was by Ron Brounes of Brounes & Associates

Any more surprises, Prime Minister Papandreou? Then again, will you even still be in office next week (is lame duck supposed to be hyphenated?). Europe, unfortunately, continues to earn more than its fair share of global headlines and rest of the world seems content to stand back and watch. With the G-20 meeting now in the rearview mirror, the sales tactics must move to a different venue as Europe seeks much-needed investments in its rescue fund. A slow week on the domestic economic calendar gives investors too much time on their hands to dissect the mindless gibberish out of Europe.

2011-11-04 The Story of MF Global - Capitalism Works by Brian S. Wesbury of First Trust Advisors

The $41bil bankruptcy of MF Global, led by CEO Jon Corzine, is obviously front page headline news these days. While there are many things to learn from MF Global, the idea that capitalism failed is not one of them. There is, of course, the lesson that serving customers and earning money the hard way is the best way to create wealthmaking proprietary bets to try and strike it rich is not. The idea that someone understands the market better than the market itself is an age old problem, created and supported by blind ego. This problem-ego-has taken down companies before and will again.

2011-11-04 Supercommittee Update by Brad Sorensen of Charles Schwab

What is the supercommittee?; What is the committee's official task?; What happens to the budget if the committee can't reach an agreement?; Is the committee making any progress?; If the committee can't come to an agreement, what effect could this have on the stock market?; If the committee does come to an agreement, what effect could this have on the stock market?; Is there a chance that Moody's will downgrade US debt as a result of the committee's work?; Will the supercommittee deliberations affect the municipal bond market?

2011-11-04 3 Drivers, 2 Months, 1 Gold Rally? by Frank Holmes of U.S. Global Investors

Combine the central bank purchases of gold with the fact that we are now entering the strongest months of the year for gold. While the spot gold price has differed from the S&P/TSX Composite Index of gold equities during the first 10 months of the year, their historical pattern is very similar during the last two months. November has historically been the strongest month of the year for gold equities, with mining stocks increasing 8.1 percent.

2011-11-03 Households Continue to Reduce Debt and Embrace Frugality by Team of American Century Investments

Many things are different about the current economic recovery compared with past. One of the most important differences is the lack of any meaningful resurgence in consumer spending. Households continue to reduce their debt levels, which can be good for our long-term economic outlook. But in the near term, deleveraging means consumers cannot play the same role they have of driving strong economic growth by a surge in spending that satisfies their deferred consumption during the downturn. Well take a look at how households and consumers are faring in their efforts to reduce debt.

2011-11-03 A Gravity Test for the Euro by Kenneth Rogoff of Project Syndicate

Although I appreciate that exchange rates are never easy to explain, I find todays relatively robust value for the euro mysterious. Do the gnomes of currency markets seriously believe that the eurozone governments latest comprehensive package to save the euro will hold up? The new plan relies on a questionable mix of dubious financial-engineering gimmicks and vague promises of modest Asian funding. I can think of one very good reason why the euro needs to fall, and six not-so-convincing reasons why it should remain stable or appreciate. Lets begin with why the euro needs to fall.

2011-11-02 Nuclear Option Back On the Table for Europe? by Scott Colyer of Advisors Asset Management

We have seen a violent reaction in the equity and bond markets globally over what seems to be a return to chaos in Europe. After seemingly removing the nuclear option by levering up the EFSF (European Financial Stability Facility) and the 50% voluntary haircut for holders of Greek debt the markets are once again headed south. Compounding the problem is the Monday morning bankruptcy of MF Global was not necessarily unexpected but the magnitude of the leverage embedded on the firms balance sheet is remarkable.

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.

2011-11-01 What, Me Worry? by Scott A. MacKillop (Article)

As we gnash our teeth over the latest crisis du jour let's remember that difficulties do not, ultimately, prevent progress. On the contrary, over my lifetime progress has continued unimpeded despite a more or less constant stream of difficulties.

2011-11-01 ProVise Bullets by Team of ProVise Management Group

October is a month that has provided much drama in the stock market through the years and this year is no exception. The S&P 500 was up over 11%, which is the second best October in history, and ended a five month losing streak. The S&P 500 was up 17.1% from October 3rdthrough October 28th. Those 19 days were better than 9 of the last 11 calendaryears. Do you see why market timing is virtually impossible?

2011-10-31 And That's The Week That Was by Ron Brounes of Brounes & Associates

Europe apparently has solved all of its financial challenges While Greek protests continue daily, the EU leaders held a contentious summit that teetered between storming out with nothing and completing a breakthrough deal. In the end, the group agreed to significantly write-down Greeces sovereign debt held by private investors, recapitalize the banking system, and expand the bailout fund. The ministers hope that China and Japan will embrace the new deal and even throw a few bucks their way as an investment in the global economy, but nothing definitive has been determined at this time.

2011-10-31 Pennies from Heaven by Bill Gross of PIMCO

Growth is the commodity that the world is short of at the moment. Once interest rates inch close to zero and discounted future cash flows are elevated in price, it's difficult to generate much more return if economic growth doesn't follow. Equity markets should be dominated by dividend yields and the return of capital via share buybacks, as opposed to growth. In fixed income assets, we suggest that portfolios should avoid longer dated issues where inflation premiums dominate performance.

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 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks continued to advance as stellar earnings reports continue to overshadow the macro worries. These include the European crisis as well as many of our domestic problems such as the protests in the streets, And the confusion caused by President Obama starting his reelection campaign so early. This has created total grid lock in Washington DC. The Dow Jones Industrial Average gained 1.4% last week while the NASDAQ Composite fell slightly due to confusion around Apple Computers earnings release. I doubt the disappointment for Apple will prove to last for long.

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.

2011-10-28 Euro Bailouts - The Good, The Bad & The Ugly by Axel Merk of Merk Funds

The markets appear euphoric about the ability for European policy makers to deliver on new promises. Low market expectations were met. We, too, have a positive takeaway, but only because of one detail of the grand plan; actually, lets call it a grand sketch, as many details are still unknown. When the current euphoria is over, the bond market will have little mercy with those ducking from their responsibilities. Long live the euro! Talking about leadership: Has anyone noticed that the Federal Reserve might be paving the way for QE3?

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

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

2011-10-27 Third Quarter Investment Commentary by Team of Litman Gregory

Since 2008, we have been in a period where macroeconomic forces are particularly influential and must inform our portfolio strategy. This quarter's developments in which we saw heightened concerns about a global economic slowdown, political gridlock, and serious concerns about shorter-term European and longer-term U.S. debt problems are consistent with the risk scenarios we've been discussing the past several years.

2011-10-27 Outlining the U.S. Economys Growth Dichotomy by Team of American Century Investments

David MacEwen describes the growth dichotomy that has developed during the recovery from the Great Recession, and how its restricted the recovery, softened consumer sentiment, influenced the fixed income teams macroeconomic outlook, and shaped some of the teams sector outlooks. One of the key characteristics of the subpar, slow-growth recovery we have experienced since the Great Recession has been the clear divide between the recovery rates of the business and consumer sectors. Businesses have bounced back faster and stronger than the U.S. consumer who buys their goods and services.

2011-10-27 Asia-Pacific Portfolio Committee Discusses Cyclical Outlook for Globe and Region by Robert Mead, Tomoya Masanao and Isaac Meng of PIMCO

China will likely focus more on rebalancing of the investment-focused domestic economy this time, rather than on reflating of the economy to engineer higher growth as it has done in 2008 to 2009. Japans fiscal policy will need to be expansionary to facilitate reconstruction efforts. We believe Australian government bonds have the potential to outperform U.S. Treasuries on a local currency basis, particularly in a left-tail global economic scenario.

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.

2011-10-26 The Long ViewBuilding The 3-D Shelter by Robert Arnott of Research Affiliates

The third quarter was harsh not only for stocks but for asset classes that provide valuable protection against inflation. Our view is that, in the long run, the combination of rising debts and deficits and aging demographics will create a 3-D hurricane affecting capital markets. In this issue of Fundamentals, we look at how investors can start erecting inflation shelters to protect themselves from the coming storm.

2011-10-26 Who Benefits from Eurozone Progress? Hint: Look North, Not South by Russ Koesterich of iShares Blog

Many investors are asking this question as speculation increases that policy makers may be moving closer to containing the crisis. While you might assume the answer would be Italy, Spain or Greece, I have a different take. In short, look to the north, not the south: Perhaps somewhat surprisingly, countries in Northern Europe not directly involved in the sovereign debt crisis will likely benefit disproportionately from any credible progress.

2011-10-25 Miccolis, Bengen and Evensky on the New Challenges in Portfolio Construction by Michael Skocpol (Article)

Conventional wisdom about the best way to construct a portfolio has been discredited, according to three industry thought leaders – Jerry Miccolis, Bill Bengen and Harold Evensky. Each has distinct visions of the ways in which advisors should build portfolios in the wake of the financial crisis of 2008, but all three agree that traditional methods must be scrutinized.

2011-10-25 Fed Outlook More Asset Purchases? by Scott Brown of Raymond James Equity Research

The Federal Open Market Committee, the Feds policymaking arm, will meet on November 2-3. Clearly, there are some differences of opinion among senior Fed officials regarding the appropriate path for monetary policy. However, the dissenters (those wanting to do less) are a small minority. The FOMC will come together with a somewhat less troublesome near-term economic outlook (no recession in the near term), but there are more concerns about growth in 2012.

2011-10-25 Europe: What to Look for on Wednesday by Komal Sri-Kumar of TCW Asset Management

European leaders ongoing crisis summit in Brussels, Belgium is the 13th such meeting since 2010. The ultimate resolution of the European debt crisis, repeatedly promised during the past year and a half, is now set to be announced on Wednesday. What are some of the central elements of the solution likely to be? Even though we are just two days from the self-imposed deadline, some of the important decisions have yet to be made. Frances President Nicolas Sarkozy insisted yesterday that more long hours of discussion were necessary before the European leaders could announce major decisions.

2011-10-25 A Matter of Sentiment by Christian Thwaites of Sentinel Investments

Greece is no longer the issue. It's a proxy for how to manage the other sovereign debts and recapitalize the banks. In this, all roads lead to Germany. It is the only economy capable of leading or backstopping the various funding institutions. In the last week, bond markets almost gave up on France. Until Germany agrees to some sort of European-wide bond or bank recapitalization, expect more of the same. Meanwhile, banks will reduce their loans to replenish capital and the economy will teeter on recession.

2011-10-24 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Big oil takes center stage in earnings as Exxon-Mobil and Chevron make a run at record profits. Amazon.com gives an early glimpse into the holiday season. Euro-zone leaders try to make progress on the rescue plan and France and Germany have sworn that the matter will be rectified by mid-week (or at least a course of action will have been set). The initial release of third quarter GDP highlights the economic releases. Somehow 9.1% growth rate (like Chinas) is not likely to be in the cards.

2011-10-24 Penny Wise and Euro Foolish by John P. Hussman of Hussman Funds

The bottom line is a) Euro leaders will likely initiate a forced bank recapitalization within days; b) Greece will default, but the new hold-over funding may give the country a few more months; c) the EFSF will not be "leveraged" by the ECB; d) banks are likely to take haircuts of not 21%, but closer to 50% or more on Greek debt; e) much of the EFSF will go toward covering post-default capital shortfalls in the European banking system following writedowns of Greek debt; f) the rest will most probably be used to provide "first loss" coverage of perhaps 10% on other European debt.

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.

2011-10-24 Looking A Bit Healthier by Charles Lieberman (Article)

Important uncertainties remain, but our domestic economys performance appears to be improving. Third quarter GDP, which will be reported this week, is expected to be the strongest of the year, suggesting that growth held up despite battles over the budget that scared investors and induced a downgrade by S&P. Nonetheless, job growth remains anemic and Europe is still working to contain its sovereign debt crisis and the damage it could inflict on its banks. So, more progress is necessary to restore confidence and enable growth to pick up to more desirable levels.

2011-10-21 European Real Estate by Global Real Estate Team of Cohen & Steers

European real estate securities fell sharply in the risk-averse environment that defined the third quarter. The region underperformed North America and Asia Pacific, which also had double-digit declines amid slowing global growth and concerns regarding Europes unresolved sovereign debt problem. We believe the European financial system is in need of substantial equity recapitalization. Until banks are able to achieve this, corporate financing in Europe, combined with austerity measures introduced by a variety of governments, is likely to remain restrictive.

2011-10-21 Emerging Markets Real Estate by Global Real Estate Team of Cohen & Steers

Emerging market real estate stocks were hit hard in the risk-averse environment that defined the third quarter. The asset class underperformed its developed-market counterpart, which also had a double-digit decline amid slowing global growth and concerns regarding Europes unresolved sovereign debt crisis. Slowing global growth is taking some pressure off emerging markets in terms of inflation containment. A trend of policy easing appears to be underway. This could result in improved performance for recently problematic sectors. We have been incrementally adding to such sectors.

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 Libya, Ghaddafi and the Arab Spring by Doug Short of Advisor Perspectives (dshort.com)

While the US and Europe have remained fixated on the simmering sovereign debt crisis in Euroland, the Arab world has been experiencing waves of demonstrations, protests and civil wars that have seen the fall of three major regimes thus far in 2011, with several others struggling to find equilibrium. The underlying forces behind the Arab Spring are complex and vary from country to country. But a key factor is demographics, as a glance at the population pyramids below suggests.

2011-10-21 Do Bullish Investors Have an Ace in the Hole? by Frank Holmes of U.S. Global Investors

You may not be able to count cards at the blackjack table, but counting historical trends of the stock market and discovering inflection points are not only legal strategies, they are essential to successful investing. One card worth counting is the Purchasing Managers Index (PMI), which measures the manufacturing strength of any given country. A rising PMI indicates a growing economy and is considered a leading indicator.

2011-10-20 Preferred Securities by Bill Scapell of Cohen & Steers

This is our review and outlook for the preferred securities market as of September 30, 2011. For the quarter, the BofA Merrill Lynch Fixed Rate Preferred Index had a total return of 3.1% and the BofA Merrill Lynch Capital Securities Index returned 6.2%. Year to date, the indexes had total returns of +2.1% and 2.4%. In general, we prefer nonfinancial sectors, such as utilities, pipelines, real estate, telecommunications and media. That said, we are also seeing new opportunities in U.S. bank trust preferred securities, many of which reached attractive levels following the recent selloff.

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 Global Infrastructure by Global Infrastructure Team of Cohen & Steers

Global infrastructure stocks are in a position to perform well in the current economic environment as historically, their cash flows have been relatively resilient in the face of slowing economic growth. On a regional basis, we remain overweight the U.S. and underweight Europe, given the high degree of uncertainty regarding a solution to sovereign debt issues and the long-term impact of austerity on the regions growth outlook. Our Asia Pacific outlook is mixed: our investments in Japan remain defensive, and we are cautious on Australia, given the potential impact of a slowdown in China.

2011-10-20 Global Real Estate by Global Real Estate Team of Cohen & Steers

We would like to share with you our review and outlook for the global real estate securities market as of September 30, 2011. The FTSE EPRA/NAREIT Developed Real Estate Index had a total return of 17.4% for the quarter (net of dividend withholding taxes) in U.S. dollars, and 12.7% for the year to date. Global 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.

2011-10-20 Europe The Plan to Have a Plan by Fred Copper of Columbia Management

We are at a critical point in Europe and the outcome of the situation has the potential to resonate around the globe and across all the asset classes. When evaluating Europe, there are two main considerations: First, a recession is likely over the course of the next 12 months. Many of the metrics of economic activity in the stronger core markets such as Germany are hovering right on the border of contraction. Second, the ongoing sovereign debt crisis is now morphing into a banking crisis.

2011-10-20 Absolute Strategies Fund Q311 Portfolio Commentary by Jay Compson of Absolute Investment Advisors

Looking out over the next several weeks and months, we have no idea what to expect or where the markets will go. We feel fairly certain that there will be continued attempts to bailout XYZ country, to recapitalize the European banks, or to engage in money-printing. There will be many that will hold up the "all clear" sign and this may prompt the crowd to speculate short term, resulting in powerful market rallies. In the end, there is no money. Only the true action needed to solve the crises will result in a sustainable recovery: broad debt and asset write-downs. We remain skeptical.

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 Equity Investment Outlook by Team of Osterweis Capital Management

During the third quarter, the stock market plunged as investors hopes for a sustained U.S. economic recovery dissipated and fears of a world-wide economic slowdown and possible U.S. double-dip recession increased. The U.S. faces several major structural headwinds including a moribund housing sector, high unemployment, bank credit restraint, and a growing and worrisome federal debt. Underlying these and other problems is the depressing effect of the end of the debt super cycle.

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 U.S. Dollar and Euro - Review and Outlook by Axel Merk and Kieran Osborne of Merk Funds

With so many global dynamics playing out, and the worlds financial markets fixated on the political process (or lack thereof) in the Eurozone, driving market sentiment around the world, it may be a good time to take a deep breath, take a look back at where weve come from, and assess the likely implications going forward. Specifically, what are the implications for the U.S. dollar and currencies globally? With continued expansionary monetary policy here in the States, and lack of such policies elsewhere, the divergence in monetary policy is likely to further erode the U.S. dollar.

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 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 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?

2011-10-18 Volatility Rears its Ugly Head by Jeremy Blackman of Hester Capital Management

The major debate in the financial markets today revolves around whether or not the U.S. is going to experience a double-dip recession. We do not expect a recession, but if that does happen it should be a shallow one. We remain cautiously optimistic that the politicians in the US and Europe will eventually do the right thing as the consequences of not acting in a prudent and responsible manner are not pretty. We anticipate that markets will continue to be volatile until Europe finds resolution for its problems and until politicians across the globe learn to compromise across party lines.

2011-10-14 European Financial Crisis: Approaching Dnouement by Komal Sri-Kumar of TCW Asset Management

The French word dnouement connotes a form of final resolution of a problem or an issue. We may be approaching such an end point in the European debt crisis. After repeated bailouts of debt-ridden countries through the imposition of austerity and adding to debt levels-actions which only worsened the countries debt ratios-European leaders are discussing seriously, for the first time, the possibility of significant haircuts for creditors. Kicking the can down the road, the trite phrase used to describe the European policy reaction, may no longer be the path for debt-ridden economies.

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 The Bottom Line #6 by Paul Azeff and Kory Bobrow of Euro Pacific Capital

What we can learn from the past is that in the current environment, being nimble, buying at major fear-induced selloffs and, even more importantly, selling into strength, is a strategy that will outperform the buy-and-hold crowd. For nimble traders, volatility represents opportunity. Having someone by your side to help calm the fear and quell the exuberance helps the returns a lot. Its when you have volatility like weve seen of late, or after the Great Depression, or experienced in the Japanese market over the last 20+years, when you really need a good execution strategy to stay profitable.

2011-10-14 A Hair Trigger Rally by John Browne of Euro Pacific Capital

While a meeting between two Euro leaders (Sarkozy and Merkel) may have galvanized Eurozone politicians into more dramatic group action, the new Facility fails to address the intractable political problem that solvent countries are tiring of funding profligate neighbors. It also fails to reverse the fundamental structural problems that plague the euro. Just a few weeks ago, when the EFSF bailout fund was announced, it was widely trumpeted as a cure-all. However, even $2 trillion would be a paltry sum with which to confront any debt problems erupting from larger countries such as Italy.

2011-10-14 Fall 2011 Quarterly Commentary by Jonathan A. Shapiro of Kovitz Investment Group

The world is a mess. There, we said it. Yet we continue to hold stocks and even look to purchase more of them. Why would we do this if we just admitted what we admitted? The answer lies in the critical distinction between having an investment philosophy and having a market outlook.

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 A Standby Program for the Eurozone by Raghuram Rajan of Project Syndicate

With luck, Italy may soon get a credible government of national unity, Spain will obtain a new government in November with a mandate for change, and Greece will do enough to avoid roiling the markets. But none of this can be relied upon. So, what needs to be done? First, eurozone banks have to be recapitalized. Second, enough funding must be available to meet Italys and Spains needs over the next year or so if their market access dries up. And, third, Greece, now the sickest man of Europe, must be treated in a way that does not spread the infection to the other countries.

2011-10-13 The Great Deleveraging: Will Consumer Spending Ever Recover? by Team of Knowledge @ Wharton

U.S. households are a critical contributor to economic health. But the financial downturn of recent years has hit consumers hard, and they are more hesitant than ever to spend, borrow or seek access to credit. Although a more debt-conscious outlook has positive implications for the individual, experts say the widespread deleveraging is making it difficult for the business sector and the economy as a whole to get back on its feet.

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.

2011-10-13 Why Is Financial Market Volatility Increasing? by Alan A. Fustey of Index Wealth Management

While price movements in financial markets are largely unpredictable, there are periods where volatility tends to cluster. The flash crash shows that high frequency trading does have the potential to heighten volatility given the right circumstances, however knowing when these circumstances are present can only be detected in hindsight. There are structural changes that are occurring in the global economy, technology and securities trading that have the potential to make the recent increase in market volatility a new permanent standard.

2011-10-12 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks rebounded last week and are off to a very strong start this morning as the economic data shows few indications of recession and because Europe is beginning to disclose their intentions as to how to deal with their sovereign debt crisis. As the charts above illustrate, the Dow Jones Industrial Average gained 1.7% last week while the NASDAQ Composite did even better with a jump of 2.7%.

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 Investing in an Environment of Extremes by David Kelly of J.P. Morgan Funds

The volatility of the last few months along with very negative headlines have caused a stream of assets to leave equity funds and move into cash and high-quality fixed income assets. However, this has left assets at extreme valuations. Indeed, by the end of the Q3, U.S. stocks were selling at lower prices than at the end of any quarter in 21 years. 10-year Treasury yields were running below the core year-over-year inflation rate for the first time in 31 years. Long-term investors may want to be somewhat over-weight in equities and under-weight in fixed income relative to a normal portfolio.

2011-10-12 The Euro is Dead. Long Live the Euro by Axel Merk of Merk Funds

To ensure the European sovereign debt crisis doesnt go to waste, the markets have kept policy makers and bankers on their toes. The naysayers of a European turnaround have become so overwhelming that it is stunning Europe hasnt submerged into the Atlantic Ocean yet. It appears that German Chancellor Angela Merkel, is about to turn the tide. A month ago, we turned cautious on the euro. However, in a world where policy makers are throwing billions and trillions at the problems, market fundamentals can quickly change. And so it is that our assessment of the outcome for the euro has changed.

2011-10-11 The European Debt Crisis: Our Perspective by American Century Investments (Article)

One of the most significant factors impacting the investment landscape over the past 18 months has been the sovereign debt crisis in Europe. Fiscal stress in a number of eurozone countries has weighed on the global economy, put pressure on the banking sector, and roiled financial markets worldwide. The following is a look at how the crisis has unfolded, what is likely to happen next, and what that means from an investment perspective.

2011-10-11 A Q3 Client Letter Drawing on Buffett’s Optimism 'The U.S. is coming back now' - and why three inves by Dan Richards (Article)

Since 2008, each quarter I have posted a template for a letter to clients; these are consistently among my most popular articles. This quarter's letter provides clients with perspective on the recent market turmoil.

2011-10-11 The Economy Takes a Sudden Turn by Chris Maxey of Fortigent

A busy economic week brought much-needed relief for investors. With 75% of domestic economic reports beating expectations over the past two weeks, equity markets were able to find stable ground. Additionally, outside the US, new QE measures by the Bank of England and progress on the European sovereign debt situation bolstered investor confidence. Re-anchoring domestically, the news was largely positive across a range of data series, from manufacturing and services to labor. Similar to last year, economic data severely disappointed in the summer but is now showing improvement.

2011-10-10 And That's The "QUARTER" That Was... by Ron Brounes of Brounes & Associates

Yes, the quarter was bad for the markets, but earnings season will go a long way toward revealing if companies are truly hurting. Many are thought to be sitting on plenty of cash, just waiting for calmer times to invest in operations (and hopefully human capital). Meanwhile, Dr. B. still claims to be ready to jump in with more stimuli if deemed necessary. As for Europecan they ever get their house in order? Their politicos may be just as bad as ours?

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 Third Quarter 2011 Market Commentary: This is Not 2008 by Robert Stimpson of Oak Associates

The discussion on how to contain the sovereign debt crisis torments the market, which would prefer a decisive solution administered by a powerful and determined financial authority. While stringing the situation along is painful in the near-term, it may actually allow other struggling countries in Europe time to right their budget problems and enact measured reform before bailout funds are required to force them to act. Regardless, an end to the debate will come and financial markets will recover. We intend to benefit from it.

2011-10-07 Market Dimensions by James Damschroder of Gravity Capital Partners

I believe that the market activity of the last two weeks of the 3rd quarter represents an acquiescence of leading financial institutions to the likelihood of a recession. A recession is probably two thirds priced into the stock market levels as of October 4th. Several indicators have turned south and the Federal Reserve is out of bullets. Operation Twist introduced in late September was met with a vote of no confidence from Wall Street as investors sold stocks.

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

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

2011-10-07 Bond Market Review and Outlook by Thomas Fahey of Loomis Sayles

Amid the ongoing debate, the financial markets are signaling a need for liquidity. Until Europe and the US are able to demonstrate economic growth, the financial markets are likely to remain skittish, leaving risk premiums high. In the interim, policy-makers will be in the spotlight. In our opinion, central banks should supply more liquidity on a global basis in this turbulent environment. We believe such intervention can help assuage the markets.

2011-10-06 Worry and Volatility Continue in September by Team of BondWave Advisors

September was a continuation of the fear and anxiety that plagued August. Worries about a global slowdown and the fiscal situation in Europe drove a volatile month. Fears of a double-dip recession have been growing as economic data has moderated. These fears were stoked after the September FOMC meeting when the Fed downgraded the state of the economy by announcing a new plan intended to stimulate growth. The IMF also adjusted its global outlook down, revising its estimate for global growth in 2011 and 2012 to 4% from 4.3% Estimates for the US were revised from 2.5% to 1.5%.

2011-10-06 Global Investment Outlook: October 2011 by Team of Aberdeen Asset Management

Global growth momentum continues to decline but is worst in Europe. Solvency of national governments and now banks is creating fears of a crisis. Coordinated policy action is key to stemming adverse market reaction. Although economic data has continued to demonstrate slower business activity, this is most obvious within Europe which has suffered from fiscal contraction as well as diminishing export demand from the emerging world. Unemployment levels remain elevated, and the reluctance to create new jobs is proving the Achilles heel of policymakers efforts to kick start private sector demand.

2011-10-05 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks were mixed last week as global growth concerns trumped the continuing mix of ok economic reports and on-balance good corporate news at least in terms of dividends and so on. As the charts above illustrate, the Dow Jones Industrial Average gained 1.3% last week while the growth centered NASDAQ Composite fell by 2.7% as concerns about a double-dip recession moved further onto the front burner.

2011-10-05 And That's The Week That Was by Ron Brounes of Brounes & Associates

While investors are still trying to figure out just what is going on in Europe, they must change their news feeds to follow events closer to home.The economic calendar will be quite hectic and investors have recently shown a propensity to over-react to each big release. Manufacturing and labor highlight the weeks data. Investors want to see a rebound in sector activity since the factory slowdown after the Japan earthquake; optimistic analysts hope the jobless claims report was not an aberration and the unemployment rate could fall below 9%. Any chance the third quarter was just a bad dream?

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 To Cure the Economy by Joseph E. Stiglitz of Project Syndicate

As the economic slump that began in 2007 persists, the question on everyones minds is obvious: Why? The prescription for what ails the global economy follows directly from the diagnosis: strong government expenditures, aimed at facilitating restructuring, promoting energy conservation, and reducing inequality, and a reform of the global financial system that creates an alternative to the buildup of reserves. Eventually, the worlds leaders and the voters who elect them will come to recognize this. But how much pain will we have to bear in the meantime?

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 Is Recession a Certainty in the U.S.? by Scott Colyer of Advisors Asset Management

There is certainly much greater economic risk out there than there was just a month or two ago. My sense is that any recession that the United States may experience would be associated with a slowing of U.S. GDP because of a fall of in Europe, and potentially China. I believe that China would act quickly to reverse their tightening bias to spur growth. Calling recessions is a dangerous game. We all try to make logical sense of markets and try to forecast the future. All I know is that folks that have done well decade over decade, like Buffet, are buying and not selling.

2011-10-03 Waiting on the Super Committee by Milton Ezrati of Lord Abbett

Along with continuing concerns over the strength of the economic recovery and the fate of Europes sovereign debt market, investors also share abiding anxieties over the deliberations in Congresss Super Committee on deficit reduction. Of course, the group of 12 congressmen and senators will wait to report out their recommendations until late November. But rumors and leaks have already begun. Though there are no guarantees, these leaks can at least help investors prepare for what might actually make it into the final recommendations. Not all the indicators are disappointing, either.

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 The Coming Euro Bail by Monty Guild and Tony Danaher of Guild Investment Management

If the optimists are to be believed, Europe will come to grips with its critical financial problems and conduct a massive restructuring of the banking system and bail out the irresponsible countries that overspent. If the pessimists are correct, the world is a mess and will stay that way. We are moving toward the optimistic side. We see that Europe is finally recognizing that the all-is-well charade is no longer working. Investors are too smart and more cynical than in the past. European banks need capital. If they get it, investors may see a sizeable stock market rally in much of the world.

2011-09-30 Don't Panic on Metal Tumble by John Browne of Euro Pacific Capital

Given the swift rise of gold and silver during the first half of 2011, precious metals were due for a correction especially following the parabolic increases that we saw in August. Markets never go up in a straight line, and often the biggest downward movements occur in bull markets. These sharp movements are common in gold, especially during short periods of financial panic. For instance, gold fell more than 25% in the second half of 2008, and almost 15% from February to April 2009. Yet after the dust settled in those earlier corrections, gold resumed its upward march with even more gusto.

2011-09-30 Extreme Divergence Between Coal Rocks and Stocks Unwarranted by Frank Holmes of U.S. Global Investors

Coal was relatively flat for the quarter, but whats interesting is that coal companies were severely discounted. Over the last two years, coal stocks and the commodity have closely tracked each other, until this summer, when worries about a global slowdown caused coal stocks to fall off a cliff, not once, but twice, in August and again in early September. This extreme divergence between coal companies and the commodity seems unwarranted when the long-term drivers of coal remain supportive.

2011-09-30 Is a More Integrated Europe the Answer? by Andrew Goldberg and David M. Lebovitz of J.P. Morgan Funds

Germany has voted for an expanded EFSF to stabilize the European Sovereign debt crisis, an important step towards reducing near-term concerns. However, broader problems still loom. In recent weeks, mounting skepticism has exacerbated fears of recession in developed economies, sending risk assets plunging and volatility soaring. In the following update on the situation in Europe, well consider: The underlying issues plaguing Europe, A summary of steps taken to address them thus far, A look at possible next steps and solutions and a few thoughts on investing in such difficult times.

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.

2011-09-28 On Flexibility, and Why the World Needs More of It by Andrew Foster of Seafarer Capital

I hold no illusions about the gravity of the current sovereign crisis. The intractable nature of such large debts has sapped confidence. Most of Europe is saddled with unsustainable obligations, and a decade of fiscal profligacy has put the U.S. on a trajectory to match Europes worst. The West must put its fiscal house in order. All that stated, I want to be clear about what I view as our central problem today: the world is not growing fast enough. The challenge we face is, first and foremost, one of growth, and not necessarily one of debt.

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 Darkest Before the Dawn by Bill Smead of Smead Capital Management

Even though we are not traders or short-term oriented, we would like to throw out a few opinions which cause us to be very positive about the stock market over the next one to two years. While market participants look to the US government and the Fed for answers, US Households are doing remarkable and historical work of getting their finances in order. Insiders have been as aggressive in their purchases of their own companys stock as they were in early in 2009.We believe many of our stocks have held up quite well in this environment, but some of them look especially attractive at this point.

2011-09-26 Corporate Cash by Milton Ezrati of Lord Abbett

It will take time before a return of confidence can move matters beyond the recent, tentative expressions. Cash and the lack of confidence it reflects remain high. But investors should, nonetheless, remain aware of the tremendous potential for dramatic expansion in corporate spending, hiring, and M&A activity from even a modest improvement in confidence. Especially since equity market valuations these days make it cheaper to buy than to build, the M&A potential, with its always immediate market impact, looks particularly powerful.

2011-09-26 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks jumped higher last week as the central bank took steps to ease the European sovereign debt crisis which relieved the concern about a short-term run on the European banking system. The week was a very strong one for stock prices with the Dow Jones Industrial Average moving higher by 4.7% while the NASDAQ Composite (a more growth oriented index) jumped 6.3%.

2011-09-26 Full Twist, With 2.0 Degree of Difficulty by Charles Lieberman (Article)

The Feds new twist strategy applies a new (or very old) tool to lower long-term interest rates to promote easier financial market conditions and economic growth. The equity market sold off nonetheless. Investors seemed to be reacting to the Feds economic bearish assessment, which suggested that the risks of recession had increased. However, the Fed was merely acknowledging what most analysts had been saying over the past few months. The key message is that the Fed remains committed to doing whatever it can to promote a healthier pace of growth and that its actions speak louder than words.

2011-09-23 Germany and the Euro Bailout Fund by Monty Guild and Tony Danaher of Guild Investment Management

Last week, five important central banks offered one-time funding lines to large commercial banks. Why? Access to capital from money markets was drying up and liquid first aid was needed. The commercial banks were having a hard time borrowing dollars needed to repay loans in U.S. currency made by U.S. money market funds that decided not to renew the loans. U.S. money market funds had been huge lenders to large European banks. Now, bad news about Europes sovereign debt situation is scaring U.S. money market institutions away. The greater fear is trumping higher returns.

2011-09-23 All Eyes on Europe by Mark Kiesel of PIMCO

The longer policymakers wait, the more likely Europes financial crisis will deteriorate. The risk of a global liquidity trap has also increased as many healthy balance sheets around the world are also refusing to engage. Germany and other strong sovereign nations in Europe have to make a choice: continue to provide financial assistance to countries with more debt and assist in helping to restructure the debt of some European peripheral countries, or potentially move forward with a smaller, stronger group of countries-or at the extreme walk away from the Euro and the EU all together.

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 The Dangerous Phase by Bill Mann of Motley Fool

A falling stock market is one of the few arenas where the human instinct of flight is a net negative. Two homilies that you hear over and over from investors are 'dont catch a falling knife" and 'wait out the uncertainty.' Consider this: August had the biggest monthly fund outflows since March 2009. It's easy to forget now, but there was nothing to signify that March was the bottom. In fact, the news during that month was horrible. People who deployed capital into the market in March 2009 were doing something extremely uncomfortable, when every sinew screamed at them to run.

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 With the Economy Weak, the Fed Steps Up to the Plate by Chris Maxey of Fortigent

With the Fed potentially considering new easing measures this week, economists paid particular attention to last weeks inflation reports, looking for any clue that the Feds current programs are feeding higher inflation. Thus far, the Fed is in the clear, but there is budding inflationary pressure under the surface that is raising cause for concern. In August, the Consumer Price Index rose 0.4%, led by higher food and energy prices. That follows an equally strong increase of 0.5% in July. Consumer prices received a slight reprieve earlier in the summer, but that softness is dissipating.

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 Europes Confidence Game by Milton Ezrati of Lord Abbett

Of the three big issues dragging markets up and down these daysWashingtons ongoing budget uncertainties, the threat of a second recessionary dip, and Europes sovereign debt crisisthe latter is most dangerous. It not only carries a direct risk of wealth destruction but also of bank insolvency and, consequently, the prospect of a return to the liquidity shortages of 2008. Probabilities suggest that Europe will work its way through this mess, not without pain, of course, but more successfully than many now fear. Until it does so, however, risks remain.

2011-09-19 Uncertainty Remains, but so too Does Opportunity by Bob Doll of BlackRock Investment Management

In contrast to Europe, the United States economy remains in reasonably good health. The United States does, of course, have its own sovereign debt issues to deal with and the future state of the federal deficit is an obvious source of concern. The difference between the United States and Europe is that the United States has the ability to solve its own fiscal problems, even if coming to an agreement about how to do so is a significant challenge. Given this backdrop, its hardly surprising that US stocks have been outperforming on a relative basis over the past couple of months.

2011-09-17 Twist and Shout? by John Mauldin of Millennium Wave Advisors

What in the wide, wild world of monetary policy is the Fed doing, giving essentially unlimited funds to European banks? What are they seeing that we do not? And is this a precursor to even more monetary easing at this next weeks extraordinary FOMC meeting, expanded to a two-day session by Bernanke? Can we say 'Operation Twist?' Or maybe 'Twist and Shout?'

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 Big European Leaders Flex Muscle by Peter Schiff 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 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.

2011-09-13 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.

2011-09-12 Fed Policy: No Theory, No Evidence, No Transmission Mechanism by John P. Hussman of Hussman Funds

One of the main factors prompting a benign response to what is now a recession and virtually certain Greek default is the hope that the Fed will launch some new intervention. Many view the present weakness as a replay of 2010, however, the evidence tells a different story. While we have to allow for the possibility of a knee-jerk response in the event of further Fed intervention, it is also much clearer now than it was in 2010 that quantitative easing does not work. To a large extent, the only basis for further Fed action here is superstition in the absence of either fact or theory.

2011-09-12 Policy Issues, II by Charles Lieberman (Article)

The Presidents job proposals were a savvy mix of ideas, some of which were borrowed from Republicans, to avoid a wholesale dismissal of his initiative. Still, he left the problem of how to finance the ideas to the super-committee Nevertheless, the President will probably get some of his proposals approved, notably the reduction in payroll taxes for employees and employers. The Fed is likely to approve an operation twist initiative that may reduce lower interest rates slightly. But any near-term focus ought to remain on Europe and its efforts to avoid a Greek default.

2011-09-12 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks ended the week once again on a sour note over the problems looming in Europe and the non-reaction to President Obamas annual jobs speech. As the chart above illustrates the Dow Jones Industrial Average dropped over two percent last week while the NASDAQ Composite was relatively calm with a decline of just one half of one percent.

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 Market Comment by Keith Goddard of Capital Advisors

Whether measured objectively through indicators for valuation, trend and risk; or subjectively by pondering all that might go wrong in the euro zone, we come to the same conclusion about the current market climate proceed with caution.

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 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 Can You Hear Me Now? by Jeffrey Saut of Raymond James Equity Research

In last weeks verbal strategy comments I cautioned to not pay up for stocks since the NYSE McClellan Oscillator was about as short-term overbought as it ever gets. Additionally, I stated that if this is a replay of the October 1978/1979 bottoming sequence we will have opportunities over the coming weeks to buy select stocks at lower prices. Given the European news over the weekend, and yesterdays Euroland equity markets meltdown, it should come as no surprise that the S&P 500 preopening futures are sharply lower this morning.

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.

2011-09-08 Emerging Europe: Economic Review August 2011 by Team of Thomas White International

Economic growth in the Eastern European region faltered during the 2nd quarter. With this sputtering growth, the central banks are feeling pressured to reduce borrowing costs for consumers and businesses alike. Significantly, the economic recovery in the region is currently facing its most serious threat amid the burgeoning Euro-zone debt crisis and the recent downgrading of the U.S. credit rating. The woes of these former communist states are compounded further by the fact that most of these economies are dependent on their exports to the industrial powerhouse Germany.

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

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

2011-09-06 No Way Out by Michael Lewitt (Article)

There aren't enough Steve Jobs and Mark Zuckerbergs to innovate our way out of the Everest of debt we have built for ourselves (and will continue to build for the foreseeable future). The good news (a purely relative evaluation) is that astute investors will find enormous opportunities in today's markets as they increasingly reflect unsustainable fiscal and monetary imbalances.

2011-09-06 A headwind blows: Septembers seasonal stock weakness by Russ Koesterich of iShares Blog

In recent days, a number of market watchers have issued warnings about economic data and events that could roil markets this September. Investors might also want to consider an additional headwind: The seasonal pattern of equity market weakness in September. While most easy-to-find seasonal patterns fall apart when subjected to a bit of scrutiny, this seasonal pattern does appear to be both statistically significant and fundamentally justified. Most academics attribute the September weakness trend to a combination of tax-loss selling and window dressing ahead of the fiscal-year end.

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 Double-Dip Scorecard by Milton Ezrati of Lord Abbett

Three issues have dragged the market around of late: 1) Europes sovereign debt crisis, 2) Washingtons budget debate, and 3) fears that the American economy will fall into a second recessionary dip. This Economic Insights takes up the third of these pressing issues, offering a kind of scorecard on double-dip likelihoods by peering behind the latest, admittedly weak, economic data to assess causes and likelihoods. The conclusion admits to the possibility of a second recessionary dip, but nonetheless settles on the probability that growth will continueslow to be sure, but growth nonetheless.

2011-09-06 Economic Recovery Poised to Improve by Bob Doll of BlackRock Investment Management

The U.S. will avoid a deep slump, but it remains an open question as to whether growth is modestly positive or if the US flirts with a recession. In any case, however, we do not expect to see a period of economic weakness that is anything like what we saw in 2007 and 2008. Unlike then, the US financial system is much better capitalized, the housing market is no longer overvalued and there is some demand in the cyclical parts of the economy. Additionally, we would point out that temporary factors are at least somewhat responsible.

2011-09-03 How to Find Opportunities from Blood, Debt & Fears by Frank Holmes of U.S. Global Investors

For the long-term investor, the risk/reward profile for owning stocks appears positively skewed. Equity investors have suffered through one of the most difficult decadesrivaling even the Great Depressionwhile bond investors have enjoyed a 30-year bull market. Long-term mean reversion is a powerful tool that investors can use to help them attain their long-term goals.

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 Q&A with Litman Gregory Research by Team of Litman Gregory

We regularly use a Q&A format to address questions from readers about our investment views and current strategy. This format permits us to address a range of different topics and allows readers to focus on areas that are of interest to them. This Q&A piece was worked on jointly by members of our research team and tackles questions received during the past several weeks. We have grouped the questions into broad categories for convenience. The main topics include the Fairholme Fund, Investment-Grade Bonds, Floating Rate Loans, Municipal Bonds, International Bonds, China and Commodity Futures.

2011-08-30 Austerity is not Enough by Andrew Balls of PIMCO

Before the Jackson Hole meetings over the weekend, it was no surprise that all eyes were on central banks. They have demonstrated in recent years that they can act swiftly and decisively when they choose to. While eurozone governments have failed to maintain a united front to deal with a sovereign debt crisis, and American politicians have concocted their own budget crisis, central bankers have retained the moral and operational high ground. Yet, given the problems of growth in the U.S., and of growth, solvency and the coherence of the eurozone, there is a limit to what central banks can do.

2011-08-29 Warren Buffett Gets It by Charles Lieberman (Article)

Warren Buffetts decision to call the CEO of Bank of America to invest $5 billion in newly issued preferred shares reveals how a canny investor can take advantage of market psychology. The decline in bank stocks reflects latent fears. It was driven by the experience of 2008, when the credit markets froze up and banks suffered large, unknowable losses on their mortgage portfolios. The fear of today is that the same thing could happen. The credit problems in Europe are a major source of concern. Unlike US banks, European banks did not raise a lot of capital following the market meltdown in 2008.

2011-08-26 The US Financial Sector in an Environment of Turbulence by Team of Loomis Sayles

US financial companies have spent the past three years trying to improve their balance sheets. We saw this trend reflected in company reports of asset quality improvements, increasing capital and strengthening liquidity. Heightened anxiety about the European debt crisis, a potential slowdown in the global economic recovery and the US credit downgrade appears to have overshadowed financial company fundamentals. Fundamental improvements by financial companies have fortified the sector, leaving it substantially stronger than in 2008. Currently, we think financials are well positioned.

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 Perspective on the Fed, Inflation, and the Economy, as Well as Implications for Income Investors by Team of American Century Investments

The Fed recently took the unprecedented step of declaring their interest rate policy for the next two yearsthey will be holding their short-term rate target essentially at zero well into 2013. Well give our perspective on why the Fed has taken this unusual step, and what these policy decisions tell us about the state of the economy, inflation, and the bond market. Finally, well address potential solutions for income-oriented investors in todays environment of record-low bond yields.

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 Will the U.S. Economy Face Recession in 2011? by Scott Colyer of Advisors Asset Management

The question I am now most often asked is, Will the United States slip into a second economic recession this year? The risks have definitely risen such that the current soft patch in the U.S. economy may translate from slightly positive GDP to a negative reading. Investors are faced with a huge opportunity to buy risk assets at a great entry point. We believe that the probabilities are that the markets will be significantly higher in the future. Market participants are net short this market and cash on the sidelines is at record highs. That is a recipe for a rare opportunity.

2011-08-24 Much Ado About Debt: Dollar vs. Euro by Axel Merk of Merk Funds

A key reason for recent market turmoil may be the long overdue untangling of important debt-driven interdependencies between the U.S. and Europe. Not only has the Feds ultra-low monetary policy taken away any incentive to engage in meaningful reform in the U.S., but the easy money also spilled far beyond U.S. shores, providing European banks with hundreds of billions of reasons not to shore up their capital bases. With volatility riding high, investors appear to be chasing emotions rather than facts.

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 Letters to the Editor by Various (Article)

A reader responds to our article, Jeremy Grantham Guarantees Gold will Crash, which appeared on May 18, 2010. Another reader responds to Michael O. Kokesh's Letter to the Editor, published last week, which was in response to Paul Kasriel's July 26 commentary, Washington Had a Spending Problem.

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 Outlook: Cautiously Optimistic For Economy & Markets by Bob Doll of BlackRock Investment Management

Despite the overall negative tone among investors, not all of the news has been bad in recent weeks. Data regarding July pointed to the beginnings of a stronger economic second half of 2011, including better payroll figures, industrial production, unemployment claims and retail sales. Additionally the Index of Leading Economic Indicators actually rose in July and was ahead of expectations. However, it is important to remember that August is when all of the stresses in the credit markets and equities spiked, so it is very possible that this may negatively impact Augusts economic statistics.

2011-08-20 The Recession of 2011? by John Mauldin of Millennium Wave Advisors

If we are headed into recession, and I think we are, then the stock market has a long way to go to reach its next bottom, as do many risk assets. Income is going to be king, as well as cash. Well know several things. Recessions are by definition deflationary. Yields on bonds will go down, much further than the market thinks today. And while the Fed may decide to invoke QE3 to fight a deflation scare, the problem is not one of liquidity; it is a debt problem.

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

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

2011-08-19 A Need For Leadership by Charles Lieberman (Article)

Markets struggle when there is a need for strong policy action and leaders respond reluctantly, slowly and behind the curve. Europe needs to help calm markets with regard to both its sovereign borrowers and its banks. Domestically, we need stronger economic growth. Market declines in Europe and at home are likely to push policymakers to make the policy decisions that are needed, but it doesn't inspire confidence that such market declines are necessary as a precondition.

2011-08-19 Paper Currencies Finally Redeemed for Gold by John Browne of Euro Pacific Capital

The basic unwillingness of politicians to face economic and financial realities has caused the United States and European Union to face currency collapse. The politicians are content literally to paper over the problem with massive amounts of newly printed currency. This means that savvy investors, facing major real losses, are turning increasingly to gold. In essence, even though currencies are no longer on a gold standard, they are increasingly being redeemed for gold in the marketplace.

2011-08-18 Where the Debt Crisis Could Spread by Russ Koesterich of iShares Blog

Investors are facing an unprecedented situation. Virtually all the major advanced economies the US, Japan and Europe have simultaneously undergone a significant fiscal deterioration, thanks to the after-effects of the financial crisis and worsening demographics. In addition, investors are wrestling with the implications of the recent US downgrade by S&P, as well as a slowing economy. Markets are rattled and many are wondering: what is the new riskless asset? A new index called the BlackRock Sovereign Risk Index provides just such a framework.

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 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The volatility in share prices was quite extraordinary last week on a daily basis. However, when the week was over and as the charts below indicate the Dow Jones Industrial Average had declined by just 1.5% while the NASDAQ actually fell by less than one percent. Given this mornings strong opening (Europe is quiet due to a religious holiday), all of last weeks losses have now been reversed, which is hard to believe.

2011-08-17 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The volatility in share prices was quite extraordinary last week on a daily basis. However, when the week was over and as the charts below indicate the Dow Jones Industrial Average had declined by just 1.5% while the NASDAQ actually fell by less than one percent. Given this mornings strong opening (Europe is quiet due to a religious holiday), all of last weeks losses have now been reversed, which is hard to believe.

2011-08-16 Gundlach - 'The Cusp of a Global Banking Panic' by Robert Huebscher (Article)

Don't interpret last week's volatility as merely a reaction to S&P's downgrade of US Treasury debt, according to Doubleline founder and chief investment officer Jeffrey Gundlach. Investors are actually fearful of a global banking crisis, he said, because many countries face a perilous choice - defaulting on their sovereign debt or inflating their way out of trouble.

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 Bull Run Done? by Mike Boyle of Advisors Asset Management

To put it mildly, the equity markets have been extremely weak and extremely volatile over the last three weeks. We expected some weakness into the summer. However, the levels we have seen surprised us somewhat given the vast majority of market moving events came as no surprise and were, we believed, priced into the market. Regardless, we do believe, despite the magnitude of the markets movements, that we are still in a bull market. That isnt to say we go straight up from here but we do think we have put in a summer low.

2011-08-15 Two One-Way Lanes on the Road to Ruin by John P. Hussman of Hussman Funds

The reason we are facing a renewed economic downturn is that our policy makers never addressed the essential economic problem, the need for debt restructuring. There are two one-way lanes on the road to ruin, and these are unfortunately the only ones on the present policy map: 1) Policies aimed at distorting the financial markets by suffocating the yield on lower-risk investments, in an attempt to drive investors to accept risks that they would otherwise shun; 2) Policies aimed at defending bondholders and lenders who made bad loans, which they now seek to have bailed out at public expense.

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 Intense Volatility Rattles Investor Confidence by Bob Doll of BlackRock Investment Management

We believe investors are overly pessimistic about the possibility of a renewed recession in the U.S. It is important to remember that equity markets have a poor track record as acting as predictors of recessions and corporate fundamentals remain strong. Since 1950, the U.S. has never entered a recession with corporate balance sheets as flush with cash as they currently are-at present, nonfinancial companies are holding cash in the amount of around 11% of their balance sheets, the highest level in over 60 years.

2011-08-13 The Beginning of the Endgame by John Mauldin of Millennium Wave Advisors

In short, there are no easy solutions. We have just about used up all our rabbits in the hat as far as fiscal and monetary policy are concerned. We now need to focus on what we can do to get out of the way of the private sector, so it can find ways to create new businesses and jobs. And that means figuring out how to get money to new businesses, because that is where net new jobs come from. But that takes time...

2011-08-12 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Markets around the world fell last week as Europe crumbled over the bankruptcy of Italy and what to do about it. As the charts above illustrate, the Dow Jones Industrial Average fell 5.8% while the NASDAQ Composite dropped an astounding 8.1% last week on both sovereign debt issues as well as global growth concerns.

2011-08-12 Gold is Antidote for Treasury Trap by John Browne of Euro Pacific Capital

Last week Fed Chairman Bernanke raised eyebrows and denied history when he asserted in front of Congress that gold doesn't qualify as money. Yesterday he took the unprecedented step of announcing that the Fed would keep interest rates near zero for at least the next two years. In very short order thereafter it required much more of the money that he believes in (U.S. dollars) to buy the money that he doesn't believe in (gold). It was beyond unusual for the Fed to make such an explicit time commitment on monetary policy.

2011-08-12 Insider Buying Trends. Should You Follow Suit? by Scott Colyer of Advisors Asset Management

Current headlines are suggesting that recent market hits have created a buying opportunity. Yesterday, Bloomberg reported that Insiders Buy Stocks at Highest Rate Since 2009. The scare this morning still surrounds the European banking system which is being tested, much like those in the US were tested in 2008. Back then, the U.S. instituted a number of actions to return confidence to our banking system. A combination of TARP and a guarantee by the FDIC of all bank obligations overcame the market attacks. The ECB does not have FDIC, so its looking on how to shore up confidence.

2011-08-12 I was sent to Washington to Change the Trajectory of Government Spending by Paul Kasriel of Northern Trust

In the 12 months ended Jul 11, cumulative total federal outlays were 2.7% higher than cumulative federal outlays in the 12 months ended Jul 10. The average year-over-year % change in 12-month cumulative outlays from 1956 through today has been 7.6%. And with 12-month cumulative total federal receipts growing at 8.7% the cumulative deficit in the 12 months ended Jul 11 was $1.225 trillion, $36 billion less than the cumulative deficit in the 12 months ended Jul 10. With continued fiscal progress of this nature, S&P will beupgrading U.S. debt faster than the Fed can change its forecast!

2011-08-12 Developed Market Banks: Why PIMCO Pathfinder Takes a Selective Approach by Charles Lahr of PIMCO

The Pathfinder Strategy is currently limited to only a handful of banks that are best characterized by PIMCO as deep value opportunities. We generally do not see meaningful upside potential in equity positions of developed market banks over the secular horizon. Our concerns primarily revolve around three factors: loan growth, balance-sheet risk along with capital levels and regulation.

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 Buy, Sell or Hold? Relax and Don't Panic by Frank Holmes of U.S. Global Investors

There was more blood in the streets Monday as the world continued to digest S&Ps downgrade of US debt, the two-week market selloff, and the likelihood the US economy could possibly slide back into recession. These concerns, combined with continued political/economic struggles in the eurozone from socialist policies, have created a potent concoction of fear across global markets and sent volatility skyrocketing Monday to its highest level since the May 2010 Flash Crash. While many investors are running for the exits, others have chosen to ride the wave of volatility or buy depressed shares.

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.

2011-08-11 Ron Muhlenkamps Market Commentary by Ron Muhlenkamp of Muhlenkamp & Co.

Sovereign debt problems and the possibility of a European-led banking crisis are the focus of the markets, because effective action isnt being taken. You see this in the velocity of money, which has fallen dramatically, and the move into U.S. Treasury bills, bidding their prices up and creating the negative yield mentioned earlier. Banks are having difficulty making money on depositors funds so they are passing those costs along to their depositors. Yesterdays decline was accelerated by some margin calls on leveraged hedge funds, but the market is primarily concerned about Europe.

2011-08-11 Breaking Commentary: Fed Gains Disappear by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Stocks fell sharply again today, continuing the extreme volatility seen recently. Concerns over the state of the financial industry in France drifted into the United States, contributing to the sell-off. Confidence appears very fragile right now and investors should use this volatility to judge their level of risk tolerance and adjust long-term allocations as appropriate.

2011-08-11 US Treasury Downgrade by Brian Horrigan of Loomis Sayles

Given the nature of how the political system is handling the fiscal situation and the views of the rating agencies, I could make a strong case that there will be no downgrade by Moodys or Fitch before December 2011. But Treasurys are likely to remain on a negative outlook. I dont think that S&P will issue another downgrade this year. If Congress fails to follow through on recommendations from the Super Committee, we could get a downgrade from Moodys or Fitch. Congress has a strong incentive to implement the recommendations from them in order to help avoid automatic spending cuts.

2011-08-11 Market Flash: "Everybody Stay Calm" by Jason B. Leach of Cravens Brothers Wealth Advisors

In the wake of this debt crisis sell-off, our political leaders need to come up with long-term structural ideas not only for budget cuts and tax reform, but for jobs, housing, education, infrastructure, real Wall Street reform, and a comprehensive energy policy. Our nation is at the point of maximum pain and the time has come for big, structural solutions, not temporary fixes. Washington must be wrested from the rule of the banking oligarchs and all manner of lobbyists during this process or we will be digging out of the holes we have put ourselves in for much longer than we would like.

2011-08-11 Saying No to Keynes and Fiscal Folly by Tony Crescenzi, Ben Emons and Lupin Rahman of PIMCO

​Taxpayers have been hoodwinked into believing the cost from profligate government spending is low relative to the benefits. The Keynesian revolution ignited a decades-long abuse of the core principle of Keynesian economics: for government to increase spending when private sector aggregate demand weakens and stymies job growth. The central banker is left to shoulder the burden, seeking all the while to pressure the fiscal authority to amend the abuse of Keynesian economics and decades of fiscal folly.

2011-08-11 Saying No to Keynes and Fiscal Folly by Tony Crescenzi, Ben Emons and Lupin Rahman of PIMCO

​Taxpayers have been hoodwinked into believing the cost from profligate government spending is low relative to the benefits. The Keynesian revolution ignited a decades-long abuse of the core principle of Keynesian economics: for government to increase spending when private sector aggregate demand weakens and stymies job growth. The central banker is left to shoulder the burden, seeking all the while to pressure the fiscal authority to amend the abuse of Keynesian economics and decades of fiscal folly.

2011-08-10 Despite Recent Darkness, Long-Term Picture Brighter for Equities by Bob Doll of BlackRock Investment Management

A review of some of the data provides valuable perspective on the recent extreme market volatility. The recent weeks correction has taken US equities down about 18% from their April high. About 11% of that decline has come in the past three days. In comparison, when equity markets began to price in a double-dip recession last summer, US stocks fell 17%, a decline of virtually identical magnitude. Following sharp reversals of this sort, we have in the past seen the market quickly recover 33% to 50% or more of its losses.

2011-08-10 A Crisis of Confidence, but No Time to Panic by Larry Maddox of Horizon Advisors

The economy is in much better condition than it was in 2008 and 2009. While we may have a slowly growing economy, we have successfully emerged from a very deep recession. GDP and corporate earnings have both exceeded peak levels set before the recession began. Both corporate and individual balance sheets have improved dramatically and the overall leverage in the financial system has been greatly reduced. In addition, the slow recovery is due in large part to lingering weakness in employment and housing, making further sizable declines in these vital areas of the economy far less likely.

2011-08-10 Global Investment Outlook: Aberdeen's monthly outlook for economies and markets. by Team of Aberdeen Asset Management

Eurozone crisis threatens financial stability Global industrial production momentum may be turning back up Fiscal policy and sovereign indebtedness is the major medium-term issue Monetary policy remains accommodative with emerging countries becoming less restrictive

2011-08-10 Aftermath of a Debacle: Raising the Debt Ceiling by Andy Friedman of Washington Update

The deadlines are not over. When Congress returns after Labor Day, it will have three weeks to settle on a federal budget for 2012. If Congress fails to pass a budget, on October 1 the federal government will shut down. The budget cuts incorporated into the debt ceiling compromise should smooth the way toward a 2012 budget agreement. But it is quite possible that the hard line Republicans -- having avoided Armageddon by agreeing to raise the debt ceiling -- shut down the government for a few weeks this fall to make their point.

2011-08-10 Should the US Credit Downgrade Concern You? by Kevin D. Mahn of Hennion & Walsh

While many validly fear that the downgrade may impact borrowing costs for our country, the larger potential risk, in my opinion, could be related to the types of assets that certain institutions (Ex. Banks) can hold on their respective balance sheets. Such a downgrade, or future downgrades, could force a large scale liquidation of these holdings due to changes in the underlying credit quality. With this said, no such panic selling of U.S. Treasuries has occurred. In fact, yields on 10-year U.S. Treasuries have fallen significantly.

2011-08-10 The Economic Recovery Has No Clothes by Kevin D. Mahn of Hennion & Walsh

What likely transpired yesterday was that investors finally siad, The economic recovery has no clothes, despite repeated claims by the Federal Government and certain economists to the contrary over the past 6-12 months. While historical research has shown that typical stock market recoveries generally precede economic recoveries by 6-9 months; perhaps it was too soon. While many encouraging signs pointing to a sustainable economic recovery have emerged over this timeframe in terms of corporate earnings GDP growth and M&A activity, many headwinds for the U.S. economy still exist.

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.

2011-08-10 S&P Drops a Bomb on an otherwise OK week for the Economy by Chris Maxey of Fortigent

Volatility will be the word of the week as the US is now entering unprecedented territory after being downgraded for the first time. Postulating what happens next is complete conjecture at this point. Investors should prepare for heightened volatility for the near future. Several central banks will meet this week, including those in Indonesia, Norway and South Korea. In addition, the Federal Reserve meets on Tuesday with no expected change to its 0-0.25% fed funds rate stance. Markets will closely watch for any language about the pace of the recovery or clues about its balance sheet.

2011-08-10 Rumours by Jeffrey Saut of Raymond James Equity Research

When asked how he made his money, Mr. Rogers answered, I sell euphoria and buy panic. Currently, gold and Treasuries are gapping on the upside; and, stocks are gapping on the downside. The implication, though I believe gold is in a secular bull market, suggests positions should be sold in metals and the freed-up cash should be used to buy sound stocks with decent dividend yields. The weeks ahead will determine if this is the correct strategy. All said, IMO it is too late to panic. The time raise cash, was months ago. Now it is time to selectively redeploy that cash into select equities.

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 S&P's Downgrade of Long Term U.S. Debt by Ronald W. Roge of R.W. Roge

Expect the markets to remain volatile between now and the 2012 election. Over the next few weeks, there will be plenty of talk about the impact of the S&P downgrade. Clearly it's not positive, but I don't buy into the catastrophic talk. Many insurance, trust companies, money market funds and municipalities (Muni Bond Issuers) will have to review their contracts and trust documents to see exactly how they are worded as far as the quality of the bonds they are required to hold. Until this legal review is completed, there is no way of assessing the impact of the downgrade on the markets.

2011-08-09 Implications of the Debt Downgrade by David A. Rosenberg of Gluskin Sheff

As we had suggested in recent weeks, a U.S. downgrade was going to likely be more negative for the equity market than Treasuries, and that is exactly how the week is starting off. The reason is that history shows that downgrades light a fire under policymakers and the belt-tightening budget cuts ensue, taking a big chunk out of demand growth and hence profits. It is not just the United States the problem of excessive debt is global, from China to Brazil to many parts of Europe. And lets not forget the Canadian consumer.

2011-08-09 US Credit Rating Downgrade Q&A by Team of Loomis Sayles

Will foreign investors, who own almost half of US Treasurys, suddenly lose confidence in the US? We think not. The US is not the only nation struggling with a debt burden. But the US Treasury market is the largest, deepest, most liquid bond market in the world, by far. Investors may talk about diversifying their holdings away from the US dollar, but it is tough to execute. This is particularly true for countries who wish to maintain a fixed exchange rate or manipulate their currencies.

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 Recession Warning, and the Proper Policy Response by John P. Hussman of Hussman Funds

As of Friday the S&P 500 was below its level of November 2010, when the Fed initiated its second round of quantitative easing. Aside from a brief bump in demand that kicked the recession can down the road a bit, the U.S. economy is not much better off. Meanwhile, countless individuals in developing countries have been injured by predictable commodity hoarding and global price instability. The Fed has leveraged its balance sheet by over 55-to-1. As policy makers look to address the abrupt deterioration in U.S. , we should ask ourselves: Do we really long for more of the Fed's recklessness?

2011-08-08 What does the Downgrade of U.S. Debt Mean? by Matt Lloyd of Advisors Asset Management

The downgrade potential was not mitigated with the overly dramatic yet not surprising game that Congress and the President partook in. Losing the AAA status has some fundamental and some theoretical impacts. The obvious facet is the increase in interest costs for the U.S. government and every interest based instrument. Estimates for increased interest expense have ranged from 25 billion annually to as high as 100 billion annually. Any measuring is sure to have flaws when one considers past rating cuts and the significance and uniqueness of the Treasury market.

2011-08-08 S&Ps Downgrade of U.S. Sovereign Debt Some People Actually Pay Them for these Opinions? by Paul Kasriel of Northern Trust

S&P stated the obvious after the U.S. markets closed on August 5 - the projected growth in U.S. public debt is on a long-term unsustainable path. Rather than paying S&P for this opinion, all you need to do is look at some past CBO projections and you would have arrived at the same opinion years ago.

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.

2011-08-08 Everyone Forgot the Basic Laws of Economic by Richard Bernstein of Richard Bernstein Advisors

The consensus over the past month of so was that Washington would come to a last minute debt limit resolution and the equity markets would rally once the cloud of uncertainty regarding the US's finances was removed. Washington did come to its last minute resolution, but the markets have sold off. What happened?

2011-08-06 The Case for Going Global Is Stronger Than Ever by John Mauldin of Millennium Wave Advisors

If we have learned anything from the current financial mess, its that building wealth is dependent on rational analysis, careful decision making, and risk management. Thats why sticking close to home at a time when our markets are more uncertain than ever is a recipe for disaster and absolutely the wrong thing to do. Not only will you miss out on the worlds fastest-growing markets, but the odds are exceptionally high that you will miss as much as 50% or more in potential returns over the next decade.

2011-08-05 Are We Heading Back to Recession? by Russ Koesterich of iShares Blog

With the inventory build no longer driving the economy, growth is now reflecting real end-user demand. Unfortunately there isnt much of it. Personal consumption is by far the largest component of the economy, accounting for roughly 70% of economic activity. As everyone is well aware, the consumer has been on strike for much of the past three years. Consumers can spend from income, accumulated wealth or borrowing. For much of the previous decade, consumers were able to compensate for the lack of real income gains. Unfortunately, those factors cannot be relied on today.

2011-08-05 Markets Enter Correction Territory as Economic Concerns Set In by Bob Doll of BlackRock Investment Management

Two weeks ago, we did not think that stocks were expensive. Now, with markets lower by 10%, stocks are pricing in a more negative scenario than we expect. To us, this suggests that the present market could represent an opportunity to accelerate moves out of cash and Treasuries and into risk assets.

2011-08-05 Advisor Alert - Placing This Week's Selloff Into Context by Frank Holmes of U.S. Global Investors

The major market indices were lower this week. The Dow Jones Industrial Average lost 5.75 percent. The S&P 500 Stock Index decreased 7.19 percent, while the Nasdaq Composite fell 8.13 percent. Barra Growth outperformed Barra Value as Barra Value finished 7.53 percent lower while Barra Growth decreased 6.88 percent. The Russell 2000 closed the week with a loss of 10.34 percent. The Hang Seng Composite Index finished lower by 6.80 percent, Taiwan fell 9.15 percent, and the KOSPI declined 8.88 percent. The 10-year Treasury bond yield closed 24 basis points lower at 2.56 percent.

2011-08-04 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Concern over the debt ceiling debate had the stock market down each and every day last week despite stellar earnings reports. The Dow Jones Industrial Average fell by 4.2% while the NASDAQ Composite dropped 3.58% last week as Washington dithered. Today is a new week, and with the erstwhile deal announced last night, the stock market should enjoy a very sharp snap back. Fears about the financial system not being able to function normally should dissipate despite some worry that the deal will not be approved in the House of Representatives.

2011-08-04 What the Debt Deal Means for Investors by Russ Koesterich of iShares Blog

While the deal is a step in the right direction, there are still some potential risks for the market related to it. First, theres the chance that the deal did not go far enough and could ultimately help lead to an eventual downgrade of US debt. Though credit agencies Fitch and Moodys both confirmed the federal governments AAA rating Tuesday. Theres also the risk that the cuts in the deal are too frontloaded to one or two years from now and will dampen an already fragile recovery. In fact, on Monday and Tuesday, US stocks traded lower despite news of the debt deal.

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.

2011-08-03 Default? by Jeffrey Saut of Raymond James Equity Research

We have many great campaigners inside the D.C. Beltway, but far too few have the ability to govern given that their main concern is to get reelected. Maybe Warren Buffet had the right idea when he said, I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than three percent of GDP all sitting members of congress are ineligible for reelection. As for the Nations AAA rating status, I think we are in for a downgrade no matter what happens inside the Beltway as the pendulum always swings too far in each direction.

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.

2011-08-02 ProVise Bullets by Team of ProVise Management Group

Recently, the Tax Court affirmed a tax deduction a family had taken for the 24 hour supervision needed for an elderly family member. Caregivers were hired-even though they were not licensed healthcare providers-and the family took a tax deduction for the cost of these caregivers. The IRS denied the deduction, but the Tax Court affirmed it. The Court went further by stating that the costs of maintenance and personal care services could qualify as a medical expense if a healthcare professional certifies that at least two of the six activities of daily living cannot be done without assistance.

2011-08-01 More Than Meets the Eye by John P. Hussman of Hussman Funds

Our concerns remain focused on significant "core" issues facing the markets and the economy, including overvaluation, compressed risk premiums, over-reliance of investors on the maintenance of record profit margins, unresolved mortgage strains, and sovereign debt problems. Valuations remain rich on the basis of normalized earnings, market internals have deteriorated considerably, and recession risks are increasing. There are certainly various policy developments that are likely to provoke investor enthusiasm from time to time. What is important to us is the weight of the evidence.

2011-08-01 And That's The Week That Was by Ron Brounes of Brounes & Associates

A month ago, the DC deficit/debt debate was amusing political theater. Partisan hacks earned brownie points with loyal constituents, while preparing for next years election. Two weeks ago, the theater turned into a game of chicken as Main Street and Wall Street watched with interest to see which party would blink first. Today, theater and chicken are no longer amusing. A complete and utter inability to compromise and a win-at-all-costs attitude have brought government and economy to the brink of disaster. Are there any grown-ups left in Washington?

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.

2011-07-30 An Economy at Stall Speed by John Mauldin of Millennium Wave Advisors

The economy is at stall speed, it is quite possible well see further downward revisions to the already anemic growth numbers, and Congress and the President are dithering over the debt ceiling. It will not take much to push us into an outright recession. We can go a few days, I think, with the latter problem, but not too long or the markets will throw up.

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.

2011-07-29 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 Rough Waters? Trim the Sail by Team of Emerald Asset Advisors

These are interesting times, to say the least, for politicians, businessmen and investors alike. Given the systemic challenges and political standoffs in the U.S. and Europe, we believe it's wise to keep a little extra powder dry. While we generally prefer to be fully invested, we believe our more conservative stance may help dampen the impact of what could be some extreme market volatility in the time ahead. The situation is fluid and we intend to redeploy the cash and short exposure into the markets as some of these risks dissipate, but for the time being, we're trimming the sail.

2011-07-25 Name That Tune?! by Jeffrey Saut of Raymond James Equity Research

Last week saw the U.S. Dollar Index decline by ~2.6% and gold tag a new all-time high of $1610.70. The real star of the week, however, was Sugars Surge of 7.87%. I cant imagine the President would want to go down in history as the Captain whose watch saw America lose its AAA status. Accordingly, I would continue to cautiously favor the upside, on a risk-adjusted basis, for if the debt ceiling is not raised we see another downside "hit." And this morning it looks like another hit, at least on a short-term basis, as our elected leaders continue to talk to the wind.

2011-07-25 Down to the Wire, Of Course by Charles Lieberman (Article)

Investors are focused on three concerns: the financial situation in Greece and the risk of contagion, the pace of growth of the U.S. economy, and the risk of a default by the U.S. Treasury. It appears that Europe is getting control over its sovereign debt problem. The economic data is looking a bit better. Unfortunately, we have every reason to expect politicians to continue to squabble over budget issues until the very last minute, no matter how uncomfortable we might be over these negotiating tactics. Keep your helmets on and remain prepared.

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.

2011-07-23 Kicking the Can Down the Road One More Time by John Mauldin of Millennium Wave Advisors

I hope Europe pulls it off. I really do. They have done the US a huge favor by adopting this latest plan, as it keeps their banking system from imploding; because their banks are essentially insolvent with all the sovereign debt on their books. Such a banking crisis, which would be worse than 2008, in my opinion, would no doubt plunge a world already slowing down back into recession and pull our own slow-growth economy down into recession with them. How long can they kick the can down the road? My guess is that it will be longer than we suspect.

2011-07-22 Debt Ceiling Myths by Michael Pento of Euro Pacific Capital

With the Tea Party gaining traction in Congress, and causing nightmares for incumbents, Republicans have little incentive to raise the debt ceiling (although they raised it 7 times under George W. Bush). Democrats arent going to reduce entitlements without raising taxes on the rich and Republicans arent going to raise taxes when the unemployment rate is 9.2%. Theres your stalemate and anyone expecting a significant deal to cut more than $4 trillion in spending by the August 2nd deadline will be severely disappointed.

2011-07-22 Knightsbridge Summer 2011 Market Commentary by Alan T. Beimfohr and John G. Prichard of Knightsbridge Asset Management

Investors too are growing weary with disasters as macro forces whip them side to side, up and down. Be they of the sovereign risk variety or closer to home such as the potential extension of the $14.29 trillion federal debt ceiling. Rational heads assume the debt ceiling will be increased at the last minute. Lines in the sand have been drawn. Moodys and Standard & Poors have issued stern warnings that a downgrade from AAA is imminent should progress not materialize quickly. In the face of this, few investors want to do anything other than sit on the sidelines and wait until its over.

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.

2011-07-21 The Shape of Market Bubbles (with a Footnote on Gold) by Doug Short of Advisor Perspectives (dshort.com)

In my weekly updates of major worlds markets, one of the charts includes an overlay of the amazing bubble in the Shanghai Composite Index. In this commentary we'll build an overlay of four major bubbles across market history to see the variety of shapes a bubble can take. But first let's take a long view of the index.

2011-07-21 Running in Place by Christopher J. Singleton of Kanawha Capital Management

Financial markets have been choppy this year, as investors wrestle with many of the same issues they faced a year ago. Once again, the specter of a double dip here in the US has collided with renewed fears of a European financial crisis. It is a testament to the severity of the last recession that, two years after its official end, the recovery remains grudging and uneven. This is hardly surprising. History tells us that downturns prompted by financial crises linger much longer than garden-variety recessions. Why? Primarily because the crisis severely interrupts and alters the flow of credit.

2011-07-21 Kovitz Investment Group, LLC Summer 2011 Quarterly Commentary by Jonathan A. Shapiro of Kovitz Investment Group

People tend to suffer greater pain from losing a given amount of money than they experience pleasure from gaining the same amount. The typical investor is therefore a pain avoider who shuns certain stocks when there is any hint of trouble. This tendency results in consistent overreaction to bad news that we believe creates opportunity. Inefficient pricing results from the excessive focus on short-term that we believe sets up a unique time arbitrage. By capitalizing on situations where uncertainty is high, but risk is low, we can put ourselves in a position to earn above-average returns.

2011-07-20 Golds Value Made Powerful by the Dollar, Euro and Yen by Matt Lloyd of Advisors Asset Management

In reviewing the weekend headlines and data points released, it appears the gold rush fever is alive and well. It is almost as if a sequel to Shakespeares Merchant of Venice is about to be revived for reality TV... One might expect to read: It appears that what ever side of the Atlantic you lay, gold and gold only appear the play. Gold has crossed over $1600 per ounce, a mere 125% increase over where it stood a little over 2 years ago.

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 Global Overview: July 2011 by Team of Thomas White International

The most recent economic indicators suggest a moderation in global economic activity growth, and forecasts for the current year have been lowered. Manufacturing activity decelerated for the second successive month in June across most major economies, except the U.S. Even Japan, which was expected to bounce back, reported slower growth. Among the emerging economies, economies suggest a decline in the pace of expansion. Consumer sentiment has weakened across the developed world over concerns about income growth as the labor market slipped again in select countries, most notably in the U.S.

2011-07-19 Staring at the Ceiling by Liz Ann Sonders of Charles Schwab

Everyone's focused on the debt-ceiling negotiations, impacting everything from market action to consumer confidence. Default remains unlikely, but investors are wondering about portfolio positioning in the event the unthinkable occurs. Behind the scenes, the news isn't all bad, as some economic readings and most corporate earnings releases have been pleasant surprises.

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 Fixed Income Investment Outlook by Team of Osterweis Capital Management

The equity and high yield markets seem to be reacting to renewed fears of sovereign debt defaults in Europe and slower economic activity in the U.S. The duration and ultimate severity of our economic slowdown is still in question, as inflation fears seem to have temporarily abated and the yield curve in the U.S. is steep, which has historically preceded economic growth. We are avoiding highly leveraged companies and longer-dated bonds, which may be vulnerable if a double-dip recession were to occur. There seem to be many sellers of shorter-dated bonds from which to choose.

2011-07-18 Worried by Jeffrey Saut of Raymond James Equity Research

Last Monday proved to be a 90% Downside Day whereby 90% of the total volume traded came on the downside, while 90% of total points were likewise negative. Typically, 90% Downside Days are followed by rally attempts lasting five to seven sessions. Obviously, that wasnt the case last week and it concerns me. Also concerning is the fact the often mentioned 1320 level was violated and despite the three separate rally attempts that were staged to recapture 1320, it was all of no avail. This brings us to this week, where 2Q11 earnings reports will be Wall Streets focus.

2011-07-18 Amid Crosscurrents, the Positives Outweigh the Negatives by Bob Doll of BlackRock Investment Management

In addition to heightened levels of unease over the sovereign debt crisis in Europe and escalating noise over the debt ceiling in the United States, market volatility has been driven by uneven economic data. While the economy is in a recovery mode, it is important to remember that recoveries that occur in the aftermath of financial crises tend to be bumpy and slow. If we were in the midst of a normal recovery, real US GDP growth should have averaged around 6% over the last two years. It has averaged less than half of that. For the first half of 2011 will have expanded at a less-than-2% pace.

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

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

2011-07-15 The Fraying European Union by Monty Guild of Guild Investment Management

Gold, oil and food prices will rise much higher in an inflationary climate where pivotal currencies are depreciating and astronomical sums of money are being infused into sick economies. The U.S. banking crisis of 2008 was by no means a first-of-its-kind. The most immediate previous example was in Japan in 1990, a crisis that generated a long-term economic malaise. Now, the U.S. and Europe are following precisely in Japan’s ill-fated footsteps.

2011-07-15 We See This Slowdown as Temporary Too by Team of American Century Investments

We’re experiencing another mid-year economic slowdown, with renewed fears of a double-dip recession. Will the recovery regain momentum, like last year? The fixed income team, thinks so. Two years after the Great Recession ended, we’re still struggling to escape its lingering grip. Major facets of that struggle include the market and financial extremes the recession generated. U.S. economic growth and financial market benchmarks are striving to shift back to more normal/average levels. These cyclical shifts from historic extremes interest us as sources of potentially value-adding positioning.

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.

2011-07-14 The Brightening Air by Christian Thwaites of Sentinel Investments

A casual empiricist would conclude that the US economy is troubled: weak GNP, employment, housing and slowdowns in the important ISM and Fed surveys. But a longer perspective shows this is entirely in keeping with a recovery from a deep-seated financial and borrowing crisis. There are many signs that the US is picking itself up: manufacturing productivity, private sector job creation, corporate profitability and household deleveraging. Monetary policy has saved the economy from the insidious threat of deflation. Fiscal policy is meandering. Some of the answers are right in front of us.

2011-07-14 Sovereign Debt Blows Big Holes in Big Banks by John Browne of Euro Pacific Capital

The past few days have been very bad for the world’s largest banks. American behemoths Citigroup and Bank of America are down about 7% each. Across the Atlantic, things are far worse. BNP Paribas, Barclays, and Banco Santander are all down 13% or more... and Société Générale is down an astounding 16%! Some pundits warn of an overreaction and suggest this is a buying opportunity for the beat-up financials. I disagree. Rather, I think the financials should now be considered toxic assets. Caution is justified.

2011-07-12 An End-of-Quarter Letter to Clients by Dan Richards (Article)

Given recent unrest in Europe and uncertainty about economic growth, many clients are looking to their advisors for direction. This template for an end-of-quarter letter is a starting point for your own letter to clients, one that can be a catalyst for a conversation about how to position portfolios.

2011-07-12 The Titanic Has Sailed by Michael Lewitt (Article)

It was entirely predictable that the U.S. equity market would rally on the news that Greek would not default this month, but it does little to convince me that the long-term outlook for European sovereign debt or the global economy has improved. Markets - particularly the equity markets - are trying to pretend that the global economy is experiencing a self-sustaining recovery. A hard look at the economic numbers would tell an objective observer that no such recovery is occurring.

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.

2011-07-11 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 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.

2011-07-08 Bond Market Review & Outlook by Thomas Fahey & David W. Rolley of Loomis Sayles

We are experiencing a case of déjà vu with another economic soft patch and a Greek solvency crisis. We saw this movie in the spring and summer of 2010, but then we got a major policy response (a European bailout, QE2, and tax cuts) that helped lift us out of the doldrums. There is no major policy response coming in 2011. In fact, many countries are pursuing tighter macro policies by raising interest rates or cutting public spending to reduce swollen budget deficits. The European response to the sovereign debt crisis has been messy, and that has been a major contributor to the recent anxiety.

2011-07-08 Don't Miss Your Chance to Catch a Bull Market by Frank Holmes of U.S. Global Investors

Many people missed the market’s enormous appreciation during the latest equity bull market because they were late to the game or chose to sit on the sidelines. The sideline is a crowded place these days as investors have been reluctant to fully embrace equities. Household savings for the past 12 months totaled $711 billion, the highest level ever recorded in dollar terms. You can see from the chart that’s roughly double the amount of savings recorded following the Tech Bubble. In fact, household debt-to-savings ratios are currently at levels so low, they’ve not been seen since the mid-1990s.

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 The Drudge Headline Indicator by Team of Bespoke Investment Group

The Drudge Report is not a financial news site, so whenever a financial news story grabs the Drudge headline, it means that the story has crossed over from just a financial news story to a mainstream news story. And when a financial news story crosses over into the mainstream media, it means that those that don't follow the market on a regular basis are suddenly following the market. This nearly all of the time occurs when the market (or economy, etc.) is going down and not up.

2011-07-05 Chutes and Ladders by John P. Hussman of Hussman Funds

We are all playing a game of Chutes and Ladders where it is not at all clear which game-board is applicable. To believe strongly in a certain investment outcome is to imagine that there is only one correct model of the world, and that the correct model is in hand. Investors appear very eager to apply post-war norms to the economy, and to apply the elevated valuation norms of the past two decades to the stock market. I doubt that these models represent the correct view of the world, but our approach is to allow for these possibilities and dozens of alternate ones.

2011-07-05 Second Half Equity Market Rally? by Mike Boyle of Advisors Asset Management

We only have a few trading hours left in the 1st half of 2011 and, barring any late day meltdowns, we should end up solidly in the black as the S&P 500 is currently up 5.85% (includes re-invested dividends). On an annualized basis, this equates to 12.14% which is below the 15 – 20% we predicted at the beginning of the year. However, as we have reiterated many times before, equity returns never come in uniform fashion, and we still are holding to our prediction as we expect, a better 2nd half than 1st half, in our opinion.

2011-07-02 China Opens World\'s Longest Cross-Sea Bridge by Frank Holmes of U.S. Global Investors

When the new Qingdao Jiaozhou Bay Bridge opened to traffic this week in China, it made the Guinness World Records for the longest cross-sea bridge in the world. The 26.4-mile long and 110-foot wide bridge stretches across the bay, linking the Huangdao district to the city of Qingdao and Hongdao Island. China spent 17 years planning and designing the engineering marvel to be able to withstand the bay’s high salt content and icy winters. Yet, it only took four years to build, with at least 10,000 workers on the construction team.

2011-07-01 Expert Roundtable on Interest Rates by Mark W. Riepe, Liz Ann Sonders, Kathy A. Jones, Rande Spiegelman & Brad Sorensen of Charles Schwab

US short-term interest rates have hovered near zero percent for a record period of time. The Fed has kept the funds rate extremely low, not only to boost economic growth, but also to ward off the threat of a deflationary spiral. Given the economy's recent soft patch, we don't expect the Fed to raise rates too soon. But, at some point rates will rise, it makes sense for clients to start planning now. With this in mind, Mark Riepe, led a roundtable discussion of investment and debt strategies for both the current low-interest rate environment and a future point when rates begin to tick up.

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

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

2011-06-30 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.

2011-06-29 Covered Bonds: Strong Demand, New Regulations Create Global Momentum by Ben Emons and Kris T. Mierau of PIMCO

Basel III’s long-term funding and liquidity coverage requirements could boost demand, create technical support for valuations. The EC has proposed an exemption excluding covered bonds from private sector participation in post-insolvency burden sharing. The Covered Bond Act could alter the way regional banks in the U.S. rely on the Federal Home Loan Bank (FHLB) system for funding.

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 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.

2011-06-25 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 Contagion Risk of Europe by John Mauldin of Millennium Wave Advisors

Europe would be better off just taking the money they are giving to Greece and using it to recapitalize their banks. Let Greece go. Give it up. Let them enter a 12-step program or whatever it is that insolvent nations do. That is harsh, but it is also the truth.

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 Fed Benefits from Global Fears by John Browne of Euro Pacific Capital

This week, in the second in a series of less-than-impressive press conferences, Fed Chairman Ben Bernanke offered market observers little hope that any additional quantitative easing programs are on the horizon. The Chairman continues to cling to the position that the economy is improving (with the recent “soft patch” attributable to external forces) to the extent that additional Fed support will be unnecessary. Left unsaid was any guidance as to who the Chairman believes will buy the massive amounts of Treasury debt formerly swallowed up by the QE II program?

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 A New Era of Global Financial Repression by Scott A. Mather of PIMCO

Investors need to be especially alert to increasing financial repression. Any sovereign policy that interferes with free market activity and the pricing of debt or currency can be thought of as financial repression. Repressionary policy rates percolate through the global financial markets and affect asset prices across the risk spectrum. Many emerging market countries use repressionary tactics to capture a larger share of global growth.

2011-06-22 Default or Not; What Happens After Greece? by Scott Colyer of Advisors Asset Management

The markets are preoccupied with the potential of Greece defaulting on its debt. Just what are we worried about? Greece is unable to access the capital markets, which are necessary for them to continue funding their expenditures and roll their debt forward. The EU outlined an assistance package that is being handed out in pieces to Greece. The next piece is coming due and the EU is pushing Greece to raise taxes and cut expenditures. The Prime Minister is up for a confidence vote tomorrow and the world seems to be waiting to see if Greece has the political will to stand up to their debt.

2011-06-21 The Greek Comedy by Michael Lewitt (Article)

It is no longer prudent to dismiss the possibility of a worst-case outcome for the Greek debt crisis. Greece is not only laying bare the flawed structure of the European Union, but the fragility of the global financial system. An interconnected and networked global economy cannot ignore problems on its so-called periphery because there is no longer any periphery. Derivatives and other counterparty relationships have seen to that.

2011-06-21 Euro: Safer than the U.S. Dollar? by Axel Merk of Merk Funds

Which one is safer: the euro or the U.S. dollar? Before jumping to a conclusion one way or the other, let’s look at different sides of the respective coins. We have been warning for years that there may be no such thing anymore as a safe asset and investors may want to take a diversified approach to something as mundane as cash. We believe Greece has rather serious issues, but concerned investors may want to take a closer look at their dollar holdings for potential “contagion” risks.

2011-06-20 Game Change for Bond Investors? by Scott A. Mather of PIMCO

Over the next three to five years, we argue that market behavior may be vastly different than what typical cyclical models would predict. Sovereign debt, which is at the core of our global financial system, is undergoing a seismic shift. Governments practicing financial repression may be transferring wealth from creditors (citizens) to debtors (governments) to the detriment of creditors, fixed income investors and savers.

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 Update on The Case for Equities: The Slowing Recovery by Russ Koesterich of BlackRock Investment Management

Last month, we described why we believe that over the long term, there’s a case for the outperformance of equities. But what does the slowing recovery mean for equities? While we have been arguing that the summer is likely to be characterized by higher volatility, we believe that absent a dramatic economic slowdown, equity markets still appear reasonable. The fact that equity valuations reflect much of the bad news should help cushion the near-term downside for stocks. And long-term, equities still appear to better reflect the world’s risks and worries than their pricier cousin, bonds.

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.

2011-06-15 Russ Koesterich Reviews ‘This Time is Different: Eight Centuries of Financial Folly’ by Russ Koesterich of BlackRock Investment Management

The recent recession has been, and will continue to be, very different from the typical post-World War II recessions. Since there are so few recent examples to guide us, it’s important not to draw conclusions about the current recovery just by examining the last 50 years or so. Taking a longer-term perspective is key and that’s precisely what economists Carmen Reinhart and Kenneth Rogoff do. While the book came out in 2009, it is especially relevant to today’s investors as it helps put the effects of the recent credit crisis in the right historical context: a very long-term one.

2011-06-15 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Last week the market continued its reaction to the indisputable evidence of a global slowdown, as well as the farcical leadership being shown in Europe, as to how to deal with their various sovereign debt problems. As the charts above illustrate, the Dow Jones Industrial Average dropped 1.6% while the growth-oriented NASDAQ Composite fell 3.3% on the week and is back to even for the year.

2011-06-15 GOLDRelic or Real Money? by J Michael Martin of Financial Advantage

In the past 10 years, the price of one ounce of pure gold has risen from less than $300 to $1,500, far outpacing the return on stocks and bonds. And yet, in most gatherings of professional investors it is not respected. Why is that? What drives the price of gold, anyway? And is gold really an appropriate investment in the 21st century? We set out to better understand this unique metal. Well explore the reasons that some consider gold an important asset class with unique and valuable investment characteristics, while many professionals regard it as a sort of investment sideshow.

2011-06-14 The Consequences of Policy Failure by Michael Lewitt (Article)

Investment performance for the rest of the year will be determined by the macro-economic views of investment managers. While microeconomic factors are always extremely important in charting investment strategies, they are particularly important today as the U.S. and global economies continue to fight their way through the detritus of the global debt crisis. A compelling case can be made for weaker 2Q112 growth based on a combination of factors.

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 A Cautionary Tale from the World's Most Influential Economist - Video 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 video 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.

2011-06-14 Heartbreaker: Soft Patch Hits Stock Market by Liz Ann Sonders of Charles Schwab

We remain in the soft patch versus double-dip recession camp, believing a lot of the weaker growth has been from temporary factors. Investor sentiment has become decidedly pessimistic… a contrarian positive for stocks. Market breadth also shows the market at extremes typically followed by a bounce.

2011-06-13 How Strategic Deficit Reduction Could Spur Growth by Saumil H. Parikh of PIMCO

Much of the evolution of our secular economic outlook for advanced economies will depend upon the degree and success of structural policy changes. To date, few such policies have been implemented. We think the U.K. is implementing what is probably the best combination of fiscal and monetary policies to address deficit reduction with an eye to structural issues. In the U.S., we see great economic benefit from shifting some public spending from consumption to investment – for example, to the energy sector, where the U.S. has a large deficit vs. the rest of the world.

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.

2011-06-10 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.

2011-06-07 The Federal Debt Limit, the Markets, and Taxes by Andy Friedman of Washington Update

Yesterday I appeared on CNBC Squawk Box to discuss the ongoing debate about raising the government borrowing limit. I made three points: 1. Congress is likely to enact meaningful deficit reduction legislation only upon the occurrence of an external "forcing event", such as the rating agencies downgrading U.S. debt or China slowing purchases due to concern about our fiscal situation.2. Government stimulus and QE2 contributed to the market run-up over the past few years. But this month -- for the first time in almost three years -- the economy must stand on its own, without any stimulus help

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 Five Misconceptions Squashed by Niels C. Jensen of Absolute Return Partners

DSK is not the only one in need of a bailout! As the sovereign crisis intensifies - and it will - bond yields in some countries will go higher. But they won’t go higher everywhere. Demographic as well as technical factors (e.g. Solvency II) will drive ever more money towards bonds, and that money will have to go somewhere. Germany, Switzerland and Scandinavia are probably the safest bets in terms of where sovereign bond yields could fall further. You should also expect high quality corporate bond yields to trade through sovereign yields in many countries. The trend has already begun.

2011-06-03 Economic Update by Team of Cambridge Advisors

A consensus of economic analysts expected 1st quarter economic growth to be revised up to 2.2% but instead the final reading was left unchanged at 1.8%. This was a disappointment but the data hints that a good part of the slow growth is attributable to the earthquake/ tsunami / nuclear meltdown in Japan which created very significant supply chain disruptions that led to lower economic activity. These disruptions continued into the 2nd quarter so it is likely we will see disappointing growth continue a little longer.

2011-06-03 And That’s The Week That Was… by Team of Brounes & Associates

Congress failed to pass a bill to raise the government’s debt ceiling and help avoid a default in early August. Republicans refused to support any legislation that is not tied to specific deficit reduction, even though there is a potential downgrade on US debt without any progress on a deal. The bickering continued in the aftermath of the unemployment data as both parties blamed the other for the weaker results. Republicans questioned the “binge of taxing, spending, borrowing and over-regulating,” while Democrats claimed their counterparts are too focused on “tax breaks for millionaires.”

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.

2011-05-31 Positive Forces Should Win Out, But It Will Take Some Time by Bob Doll of BlackRock Investment Management

Economic data has continued to come in on the weak side, which caused stock prices to slide yet again last week. In our opinion, some of the recent weakness in economic data can be attributed to temporary factors such as the spike in oil prices, the natural disasters in Japan and flooding in the Southern United States. In any case, however, the soft patch in the economy has dented the pace of economic acceleration and we expect to see some continued signs of weakness in the weeks ahead, including perhaps in this Fridays labor market report for May.

2011-05-28 And That’s The Week That Was … by Ron Brounes of Brounes & Associates

While Memorial Day starts summer, many traders got a jumpstart on the season by skipping town early as volume was quite thin on the exchanges. Earnings announcements continued (though folks stopped paying attention long ago) and Tiffany and Guess both bested expectations, a nice sign for luxury retail. As the season comes to a close, the results spoke well for the state of Corporate America. For the quarter, profits increased by almost 6% to $1.45 trillion. The IPO world did not fare as well after investors thought the LinkedIn success of last week had ushered in a new “exuberance.”

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 Prediction Market Contracts on the Debt Ceiling and 2012 Elections by Team of Bespoke Investment Group

Everyone is following the debt ceiling story at the moment, and you can bet on whether and when Congress will approve its increase over at Intrade. While investors recognize the seriousness of the issue, Congressmen are unfortunately treating it as a political game. As we saw when Congress failed to pass TARP I, the market doesn't like political gameplay. At the moment, Intrade traders are putting the odds of a debt ceiling increase by the end of July at just 27%. Odds for an increase by the end of August are at 67%, and odds for an increase by the end of September are at 75%.

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.

2011-05-23 And That's The Week That Was… by Tom McIntyre of McIntyre, Freedman & Flynn

The market showed its third consecutive weekly decline as the concerns over Europe’s sovereign debt issues and the now convincing evidence of a global slowdown has traders taking some short-term profits. As the charts illustrate, the Dow Jones Industrial Average dropped .7% last week while the NASDAQ Composite declined an even larger .9%.

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.

2011-05-19 Explaining U.S. debt levels, credit ratings, and recent bond market behavior by Team of American Century Investments

This week, we discuss the U.S. debt ceiling and the credit ratings for U.S. sovereign debt, plus explanations for seemingly counterintuitive bond market behavior. To fully comprehend the ceiling, we should first review the U.S. federal debt it’s attempting to cap, and why. The U.S. federal debt reflects what the U.S. government has to borrow to help pay for its multitude of operations, services, and financial commitments. Like some of its citizens, the U.S. government has been living beyond its means in recent years, spending more money than it has in reserve or receives in tax revenues.

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.

2011-05-16 Secular Outlook: Navigating the Multi-Speed World by Mohamed A. El-Erian of PIMCO

It is a world that heals slowly and unevenly, and remains structurally impaired. Balance sheets, both across and within economies, are still out of equilibrium. We expect advanced economies will face sluggish growth and persistently high unemployment over the secular horizon. Emerging economies will achieve higher growth but face recurrent inflationary concerns. We do not expect policymakers to boldly address structural problems. By targeting negative real interest rates, they will pursue financial repression that undermines the “real return” contract that savers expect.

2011-05-14 Kicking the Can to the End of the Road by John Mauldin of Millennium Wave Advisors

A crisis is brewing in the US and one is coming to a slow boil in Europe. We visit Greece and Ireland and ponder how this will end. It is all well and good to kick the can down the road, but what happens when you come to the end of the road? The European answer seems to be to haul in the heavy equipment and extend the road. In short, we are watching the biggest bubble of all time, the bubble of government debt, try to keep from popping. My bet is that it can’t. And while the ride will be bumpy, the world our kids get will be better off at the end of the process.

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.

2011-05-12 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.

2011-05-10 And That’s The Week That Was … by Tom McIntyre of McIntyre, Freedman & Flynn

A spike down in commodity prices including oil and a jump in the dollar over European sovereign default worries combined to send the overall stock market lower last week. the Dow Jones Industrial Average fell 1.34% while the NASDAQ Composite.

2011-05-10 Developed Asia Pacific: Economic Review April 2011 by Team of Thomas White International

Developed Asia Pacific economies that were hit by natural disasters during the initial months of 2011 registered mixed economic performance with some countries in the group recovering faster even as other countries are still dealing with the aftermath of the crisis. While Japan, finalized a fiscal and monetary plan, investment-led growth was helping Australia recover from floods. New Zealand, which also suffered a devastating earthquake, showed a considerable rise in dairy exports. Other advanced economies continued to do well, although strong growth has been stoking inflation.

2011-05-10 Global Overview: May 2011 by Team of Thomas White International

Global economic growth now appears more sustainable, as the developed economies continue to recover and the emerging economies maintain their rapid pace of growth. The Euro-zone economy is expanding faster than expected while the U.S. growth slowdown in the first quarter is widely believed to be due to seasonal factors. The IMF acknowledged that global economic activity is set to accelerate again, and maintained the global growth forecasts for both this year and 2012 at 4.5 percent. However, the IMF warned that growth remained unbalanced and that inflationary risks have increased.

2011-05-09 Despite Economic Soft Patch, Bull Market Should Persist by Bob Doll of BlackRock Investment Management

Stocks fell last week amid a great deal of economic crosscurrents. The major story in the headlines is, of course, the death of Osama bin Laden. While the news can be viewed as beneficial from an overall perspective of improving the mood of the general public (which could have a positive impact on investor confidence), it is unlikely to have any meaningful impact on the economic or financial outlook. In our view, issues such as corporate earnings trends and economic data releases are almost certain to overshadow the impact of bin Ladens death.

2011-05-03 The Caine Mutiny (Part 2) by Bill Gross of PIMCO

Low policy rates and the increasing negative real yields that they engender as inflation accelerates represent an immediate threat to investment portfolios. Bond prices dont necessarily have to go down for savers to get skunked during a process of debt liquidation. PIMCO advocates a renewed vigilance, stressing bond market alternatives available globally, including developing/emerging market debt at higher yields denominated in non-dollar currencies.

2011-05-03 Lucky People by Jeffrey Saut of Raymond James Equity Research

Since last June my unencumbered observation has been, You can get cautious from time to time, but dont get bearish. That mantra has served us well, especial since last September, because beginning on September 1, 2010 the senior index has not experienced anything more than a one- to three-session pause/pullback making today the 174th session in its upside skein. Such a stampede is unprecedented in my notes of over 40 years. Still, It looks like its going up to me.

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?

2011-04-29 And That’s The Week That Was … by Ron Brounes of Brounes & Associates

With Dr. B. explaining “moderate pace”, earnings season moved forward and the results have been quite appealing thus far. About half of the S&P 500 companies have reported and the quarter looks to be on track to be record-setting and the seventh straight period of double-digit gains. Of note, solid revenue growth is replacing “cost-cutting measures” as the primary driver of the strong season. Exxon Mobil, RD Shell, and Chevron are all benefiting from higher oil prices and better refining margins. One down note…Research in Motion (Blackberry) seems to be struggling against rival Apple.

2011-04-26 Republicans Draw Budget Battle Lines by Milton Ezrati of Lord Abbett

Now that the debate on the 2011 budget has largely run its course without the much-feared government shutdown, the more serious and substantive debate on the 2012 budget has begun. Though less suspenseful than the issues of 2011, the 2012 budget debate will determine basic fiscal directions in the United States for years to come. The Republicans recently offered their counter to the budget that the president unveiled some weeks ago. Having already examined the White House proposals, this third in Lord Abbett’s occasional series on fiscal issues takes up the Republican plans.

2011-04-26 Rude Crude by Jeffrey Saut of Raymond James Equity Research

Oil that is, black gold, Texas Tea; yet, rude crude still feels a bit stretched in the short-term given that West Texas Intermediate (WTI) is ~30% above its 200-day moving average (DMA). Indeed, over the past few weeks oil has become almost as extended above its 200-DMA as it was in July 2008, and we all know how that ended. Not that I am predicting a similar collapse in the price of Texas Tea, but rather that a consolidation/pullback period is likely, which could provide the backdrop for another leg up in stocks (even the energy stocks).

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 Equity Market Review and Outlook by Richard Skaggs and Thomas Davis of Loomis Sayles

The global equity bull market continued in the first quarter despite significant global strife. Most major US indices posted total returns of about +5.0% to +8.0%. Continuing the trend since the March 2009 low, small cap and mid cap stocks outperformed their larger brethren. US markets were among the best in the world, although the MSCI World Index also posted a solid gain of 4.9%. Emerging markets were among the weaker equity asset classes. As the returns demonstrate, however, emerging market stocks remain the winners by a wide margin over the past five- and ten-year periods.

2011-04-20 Kovitz Investment Group, LLC Spring 2011 Quarterly Commentary by Jonathan A. Shapiro of Kovitz Investment Group

Over the past several years, we have often written about our penchant for owning high quality, large capitalization stocks. Our affinity is not due to a belief in an inherent investment superiority of large companies versus their smaller brethren. Rather, our collection of large companies is solely based on the discrepancies between price and value we are currently witnessing in the marketplace. Skipping to the punch line, we believe that at current prices large-caps (not all, of course, but those that meet our investment criteria) are a buy while small-caps are generally a sell.

2011-04-19 Managing Exposure to Extreme Markets by Geoff Considine (Article)

Volatility in the equity markets has subsided, courtesy of a strong bull market and fading memories of the 2008 financial crisis. Risks remain, however, ranging from the turmoil in northern Africa to sovereign debt instability in Europe. Investors can take advantage of the complacency in the equity markets by purchasing inexpensive insurance against adverse events.

2011-04-19 Higher Energy Prices Continue to Constrain Market Gain by Bob Doll of BlackRock Investment Management

It has been a while since we have experienced two consecutive weeks without market gains. Given recent higher energy prices and some softening of economic data, however, that now has indeed come to pass. Over the last several weeks, expectations for first-quarter economic growth have been ratcheted down. Several areas of the economy have been pointing to slowing growth, including a softening of business spending on equipment and software, a slower-than-expected rise in inventories, weakening trade data and contracting construction activity for both the residential and nonresidential sectors.

2011-04-19 Inflation Destroys Real Wages by Michael Pento of Euro Pacific Capital

In the same vein as medieval physicians believed bloodletting would cure illness, modern snake-oil economists still perilously cling to their claim that rising wages and salaries are the cause of inflation. With my recent debates with these mainstream economists, I’ve heard the following: “without rising wages, where does the money come from to push prices higher?” I was tempted to respond, “where do the employers get the money to pay those higher wages?” But economists tend to get a little nasty when you make them feel stupid.

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 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 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.

2011-04-19 Standard & Poor’s Downgrade Outlook on US Sovereign Debt – Initial Reflections by Asha Bangalore of Northern Trust

S&Ps changed in its outlook on US debt to negative but reaffirmed the AAA rating of the nation's debt. Todays market response to this action includes equity prices viewing this in negative light. The markets response is not entirely consistent with a downgrading of sovereign debt because the decline in rating implies that the financial situation of the federal government is less secure and there are doubts creeping in about the federal governments ability to meet its debt obligations. If this was the case, the dollar should have declined and Treasury security yields should have risen.

2011-04-18 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Last week saw the stock market drop slightly over ongoing European default concerns as well as the sting of high oil prices feeding through into inflationary pressures. The Dow Jones Industrial Average fell just .3% while the NASDAQ Composite dropped .57%. The few earnings announcements also caused some investors to lock in some trading profits.

2011-04-18 Late to The Party…Once Again by Peter Schiff of Euro Pacific Capital

The only thing more ridiculous then S&P’s downgrade of U.S. sovereign debt was the market’s severe reaction to the announcement. Has S&P really added anything to the debate that wasn’t already widely known? In any event, S&P’s statement amounts to a wakeup call to anyone who has somehow managed to sleepwalk through the unprecedented debt explosion of the last few years. Given S&P’s concerns that Congress will fail to address its fiscal problems, on what basis can it conclude that the U.S. deserves its AAA credit rating? If S&P has genuine concerns, the AAA rating should be reduced now.

2011-04-16 The Cure for High Prices by John Mauldin of Millennium Wave Advisors

Today we once again think about the inflation/deflation debate, turn our eyes to Europe and the very interesting election happening there this Sunday, and speculate a little about what could derail the US economy. The old line is that the cure for high prices is high prices. When prices rise, businesses tend to respond by producing more. If the price of something gets too high, then people buy less, which then leads to too much supply, which lowers prices. Rinse and repeat. Last week I wrote about what I think is the potential for inflation in the US to rise to uncomfortable levels (4-5%)

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

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

2011-04-16 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 Is the US Headed for a Japanese-Style Deflation? by Daphne Gu of FundQuest

The Great Recession of 2008 ended in June 2009. However, for the majority of 2010, the market was directionless, mired with shocks from European sovereign debt and mixed economic indicators. Inflationary concerns, born of massive liquidity from monetary authorities of the developed world, drove real assets to sky-high levels. Conversely, the traditionally lagging indicator of unemployment, sitting near 9%, has increasingly become a leading indicator of the broad market. Thus, many investors are pondering the possibility that the US might be on the path to a Japanese-style deflation scenario.

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.

2011-04-12 Been Down So Long It Looks Like Up To Me by Michael Lewitt (Article)

"The budget crisis is a crisis of leadership," writes Michael Lewitt in the latest issue of the HCM Market letter. "There is no intellectual mystery involved in cutting the budget - entitlement spending must be reduced through the adoption of tighter eligibility standards... The markets will also have to evaluate whether Congress and the Obama administration can make any meaningful progress on budget reform, which will mean tackling the entitlement issue. The failure to rein in federal deficits remains a profound threat to the dollar and interest rates."

2011-04-12 Equity Market Review & Outlook by Richard Skaggs and Thomas Davis of Loomis Sayles

The global equity bull market continued in the first quarter despite significant unrest across parts of Northern Africa and the Middle East, a massive earthquake in Japan, sovereign debt issues in Europe, and inflationary pressures in certain emerging economies. US markets were among the best in the world, although the MSCI World Index also posted a solid gain of 4.9%. Emerging markets were among the weaker equity asset classes. As the returns demonstrate, however, emerging market stocks remain the winners by a wide margin over the past five and ten year periods.

2011-04-11 Bond Market Review & Outlook by Thomas Fahey, Teri L. Mason and David W. Rolley of Loomis Sayles

The power of easy money policy to dampen volatility is evident in the global bond markets. There has not been any systemic credit spread widening or major jump in risk aversion on the back of the significant political upheaval or natural disaster. The collective investor conclusion seems to be that the impact of the losses will not derail global growth, and Japanese reconstruction may even contribute to it later this year. Specifically, Chinese growth still looks on track for a strong year, and labor markets in the US have at last begun to show something like a normal recovery.

2011-04-09 The Curve in the Road by John Mauldin of Millennium Wave Advisors

We have chosen deliberately to take the inflation road. We have not traveled that road for some time. The Fed may think they know what is around the curve and what to do if inflation comes back, but no two crises are the same. I worry about these things. If the Fed and the US government wanted a weaker dollar, the return of inflation, and the potential for yet another boom-bust, they could not have designed better policies than the ones they’re pursuing.

2011-04-08 Near-term Outlook For A Troubled World by Victoria Marklew, Richard Thies and James Pressler of Northern Trust

Although 2011 is only three months old, the world has changed dramatically. Along with the evolving European debt crisis, seemingly -isolated Tunisian protests grew to varying levels of upheaval throughout the Arab world, and an historic earthquake and subsequent tsunami have left Japan’s outlook under a cloud of uncertainty. Each of these situations is significant in its scope and magnitude, but by focusing on just the key elements, the main risks can be appreciated.

2011-04-07 ECB Takes Away Punch Bowl by Axel Merk of Merk Funds

Today, the European Central Bank raised its main refinancing rate by 0.25% to 1.25%. ECB President Trichet has long argued that its monetary policy is independent of the "extraordinary measures" put in place to support the financial system. However, it was only earlier this year that the market took Trichet's suggestions that he may raise rates seriously, even as the sovereign debt crisis remains unresolved. The role of a central bank is to take away the punch bowl when necessary, to pursue its mandate, not to be a cheerleader.

2011-04-05 Two Critical Lessons from Japan An End-of-Quarter Letter to Clients by Dan Richards (Article)

Given recent events in Japan and North Africa, many clients are looking to their advisors for direction on what they should do. This template for an end-of-quarter letter is intended to be a starting point for your letter to clients.

2011-04-05 And That's The "QUARTER" That Was... by Ron Brounes of Brounes & Associates

“It’s a small world after all.”  The past quarter was proof positive that developments across the world truly impact the global economy and investment markets (or do they?).  A pro-democracy movement spread across the Middle East, crude prices surged to levels not seen in 2 ½ years and inflation fears resurfaced.  Japan suffered an earthquake that brought the economy to a virtual standstill and the initial price-tag for reconstruction stands at over $200 bln.  While analysts claim the rebuilding process will prove positive for global trade, excessive debt could slow a “speedy recovery.” 

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 And That’s The Week That Was … by Ron Brounes of Brounes & Associates

New quarter…renewed optimism…ongoing challenges.  The second quarter 2011 kicked off with promising news on the labor front as more private sector hires and a lower jobless rate confirmed that employers have enough confidence to begin adding to the payroll.  While the favorable outlook has long been apparent in the corporate boardrooms, the labor market had remained a big concern, leading consumers to hold off on major purchases.  Since November 2010, however, the unemployment rate has dropped by a full percentage point, a trend that speaks nicely to the recovering economy as a whole. 

2011-03-31 Skunked by Bill Gross of PIMCO

Medicare, Medicaid and Social Security now account for 44% of total federal spending and are steadily rising. Previous Congresses (and Administrations) have relied on the assumption that we can grow our way out of this onerous debt burden. Unless entitlements are substantially reformed, the U.S. will likely default on its debt; not in conventional ways, but via inflation, currency devaluation and low to negative real interest rates.

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 The Profit Boom is Over by David A. Rosenberg of Gluskin Sheff

A seven-quarter run of positive profit growth ― six were double-digits ― came to an end in the fourth quarter as pre-tax corporate profits in the U.S.A. sagged at a 10% annual rate (looking at corporate earnings before tax without inventory valuation and capital consumption adjustments). That was the first decline since the fourth quarter of 2008. The YoY growth rate is still healthy at +16% but off the boil, that is for sure.

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.

2011-03-25 Bullish Sentiment Entrenched by David A. Rosenberg of Gluskin Sheff

A mini corrective phase in the equity market came and went. Investors have been groomed to buy the dip this cycle, and this is not just a mere observation. The flare-up in the Middle East, the tragic nuclear disaster in Japan, and not even a recent slate of poor U.S. economic data have put much of a dent in what is still an extremely positive sentiment readings. Bob Farrell’s Rule 9 seems to be facing a stiff headwind from the Fed’s overt policy stance on lifting valuation levels for risk assets. The bulls are fully in control and can now see new highs in sight for the major averages.

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.

2011-03-21 Buy on the Cannons and Sell on the Trumpets by Charles Lieberman (Article)

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 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 And That's the Week That Was... by Ron Brounes of Brounes & Associates

March Madness (basketball) could not have come at a better time. For weeks, folks have focused on developments in the Middle East as prospects for (some sort of) Democracy spread, but oil prices ballooned and investors fear Saudi Arabia may fall victim to revolution as well. Then, Japan pushed Libya to the backburner as fears of an economic slowdown (and nuclear radiation exposure) raised concerns across the globe. Markets reacted to the headline, often on mere speculation as no one knows how the global developments will play out.

2011-03-18 Has the Game Changed? by David A. Rosenberg of Gluskin Sheff

An object at rest will remain at rest unless acted on by an unbalanced force. An object in motion continues in motion with the same speed and in the same direction unless acted upon by an unbalanced force. This is otherwise known as Newton’s first law of motion. In market parlance, this implies that a trend remains in force until such time as an exogenous shock causes it to either stall or reverse. Economic, geopolitical, and natural disaster events aside, equity markets around the world have definitely broken their intermediate-term uptrend.

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

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

2011-03-15 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 An Uneven Global Recovery - Lingering Effects of the Credit Crisis by Bill Hester of Hussman Funds

The health of the global recovery depends on which country it is viewed from. When compared to the decade ending in 2007, a majority of developed countries are growing more slowly, have higher rates of unemployment, and have higher levels of inflation. There are exceptions. Notably, Germany is growing at twice its long-term average, with very low relative levels of unemployment. Stock market investors are showing growing sensitivity to differences in macro-economic risks. These may soon be further aggravated by monetary policies from the major central banks that are about to diverge noticeably

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.

2011-03-14 Japan Default Risk by Team of Bespoke Investment Group

This piece examines 5-year credit default swap prices for Japanese sovereign debt. As shown, there has been a small increase in default risk in the days since the earthquake and tsunami hit, but default risk is still below levels it was at in May 2010 and February 2009. At the moment, it costs $95 per year to insure $10,000 worth of Japanese sovereign debt for five years. Japan remains at the low end of default risk compared to other countries around the globe. With the resilient country fighting to get back on track, investors don't appear to be worried about Japans financial problems.

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.

2011-03-09 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.

2011-03-07 Quantitative Easing and the Iron Law of Equilibrium by John P. Hussman of Hussman Funds

If you think about equilibrium, it helps to clear up all sorts of fallacies that people hold about the financial markets. For example, the currency and money market securities that are held by investors will - in aggregate - never "find a home" in any other form or market. If one takes their cash and tries to buy stock, they get the stock and the seller gets the cash. Nothing disappears, and nothing is created. The money-market securities held by investors is not a reflection of "liquidity looking for a home," but is a measure of how borrowers are on short-term sources of credit.

2011-03-07 Random Post-Employment Thoughts and Consensus On Oil Impact by David A. Rosenberg of Gluskin Sheff

The consensus is that the U.S. labor market is healing. That may well be the case but the slack in the job market remains huge allowing for a structural rise in the unemployment rate. Only 15% of the recession job losses have been recouped despite the fact that expansion has surpassed the downturn. The consensus is that the world economy has gotten used to high levels of oil prices so this latest run-up in crude poses little risk to the economic outlook. But it is change that matters to growth, not levels. As for the macro impact, do not understate the potential for economic contraction.

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.

2011-03-02 Two-Bits, Four-Bits, Six-Bits, a Dollar by Bill Gross of PIMCO

A successful handoff from public to private credit creation has yet to be accomplished, and it is that handoff that ultimately will determine the outlook for real growth and stability. Because quantitative easing has affected all risk spreads, the withdrawal of nearly $1.5 trillion in annualized check writing may have dramatic consequences. Who will buy Treasuries when the Fed doesn’t? The question really is at what yield, and what are the price repercussions if the adjustments are significant.

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 Simon Johnson on the Unconscionable Risks We Face - Video 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 video; a transcript is also available.

2011-02-26 When Irish Eyes Are Voting by John Mauldin of Millennium Wave Advisors

Mauldin reviews the Irish economy, citing a recent Vanity Fair article by Michael Lewis. Ireland's housing bubble caused prices to rise approximately 500%. More than 20% of the Irish workforce was employed in construction. Irish banks financed this, using selling bonds to other European banks. The Irish government made good on those debts, burdening its taxpayers. The end results is excessive debt for the EU, which appears to be unsupportable. On the crisis in the Middle East, Bahrain is the key country to watch out for.

2011-02-20 December 2010 Semi-Annual Report by John P. Hussman of Hussman Funds

For the third time in a decade, the Federal Reserve has embarked on a policy that addresses structural economic problems by provoking speculation in asset prices. The first two attempts were ultimately followed by stock market declines greater than 50% each. As we enter 2011, the stock market remains in what we view as an already strenuously overvalued advance, which has driven our estimates for S&P 500 Index total returns to less than 3.2% annually over the coming decade. My expectation is that this attempt to create “illusory prosperity” will end no better than it has in the past.

2011-02-17 Responding to the Stubbornly Steep U.S. Treasury Yield Curve by Team of American Century Investments

Disciplined, active investment managers are constantly on the lookout for capital market extremes, which can provide value-adding opportunities for investors. One such market extreme has been developing in the U.S. Treasury market for the past three years, reaching historic levels in 2010 and earlier this year. We’re talking about the very wide, stubbornly persistent gap between short- and longer-maturity U.S. Treasury yields.

2011-02-15 The Stuxnet Paradigm by Michael Lewitt (Article)

Michael Lewitt discusses the situation in Egypt, the economy, rising risk appetites in the market, sovereign debt and municipal bonds. 'It might be very easy,' he writes, 'to be impressed by the 'two years and thousands of man hours' that Ms. Whitney spent researching the fiscal condition of the 15 largest states. What in the world required so much time and effort? It shouldn't have taken nearly so long to determine that these states are in severe financial trouble and that their options for dealing with it are limited.

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 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.

2011-02-11 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.

2011-02-08 Undoing Meredith Whitney's Damage by Hildy Richelson, Ph.D. (Article)

Meredith Whitney did the municipal bond market an immense disservice with her misguided comments on 60 Minutes when she predicted massive defaults. Two recent articles in this publication provided accurate rebuttals to her analysis, but they failed to clarify important reasons why muni bond investors do not face the imminent peril that Whitney predicted.

2011-02-08 Muni Market Bargains? A Closer Look at Municipal Debt, Deficits and Pensions by Christian Stracke and Joseph A. Narens of PIMCO

Although real, pension problems will not lead to an immediate debt crisis this year or the next five years. A default by Detroit, for example, would not precipitate bankruptcy filings by large cities across the nation. The municipal market will continue to migrate from being a low-risk asset class to a credit asset class.

2011-02-07 Strong News and Stronger Markets by Charles and Louis Vincent Gave of GaveKal

Bears have little to munch on right now: economic activity is bouncing back strongly, jobs are being created (albeit at a slow pace), global trade is soaring, the great majority of companies are reporting better than expected sales, and US profit margins are making new all-time highs. Given this plethora of good news, financial intermediaries are responding coherently and once again expanding their balance sheets.

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.

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

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

2011-02-04 Portfolio Commentary : Fourth Quarter, 2010 by Jay Compson of Absolute Investment Advisors

For our 4Q commentary we have decided to alter our approach and provide direct insight into our managers’ thoughts by pro­viding portions of their commentaries in a series of indepen­dent “short stories.” Collectively they represent many of the thoughts that we have utilized for writing our quarterly com­mentaries, but we feel the current environment offers a unique time to hear things “directly from the horse’s mouth.”

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 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 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 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

In addition to strong corporate earnings being reported last week, there was also the government’s estimate of GDP growth for the fourth quarter of last year. The headline number showed a growth rate of 3.2%, which was lower than expected. The reason though was a rundown in inventories and an improving trade deficit. These are inherently positive developments, which perversely count against growth in the calculation.

2011-01-29 And That's The Week That Was by Ron Brounes of Brounes & Associates

Consumer confidence in January rose to its highest level in eight months as individuals seemed to overlook the ongoing labor concerns. The long-ailing housing sector received a bit of good news as new home sales jumped to the best showing since May and home prices even surged to levels not seen since early 2008. Though claims for jobless benefits rose in the most recent week, analysts believe that harsh winter weather may have temporarily halted hiring and the recent improvements on the claims front should resume in the weeks to follow.

2011-01-26 Strategic Redux by Richard Michaud of New Frontier Advisors

The key questions are whether the US and the global economic recovery will continue and whether it is now time for sidelined investors to return to investing in risky assets. How much return can be left of the nearly two year bull market as reflected in an 86% rise in the S&P since early March 09? Can improving market sentiment and consensus for a sustained though fragile economic recovery point to a limited opportunity? Some positive signs include a normal short and long term risk-return relationship for NFA’s six risk profile funds that is consistent with normal functioning capital markets.

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 A Reality Check by David A. Rosenberg of Gluskin Sheff

We will probably end up with a few years of stable to moderately deflating consumer prices once the effects of the latest commodity surge starts to fade. It appears that we are in the process of seeing another down-leg in national home prices. Equities are wildly overbought and may suffer the same fate before long, with all deference to the recent leg-up in valuations. The U.S. unemployment rate is unlikely to come down much, if at all, if real GDP growth does not accelerate beyond 3%. If it couldn’t do it in 2010, then we have no idea why it would be the case in 2011.

2011-01-24 A Malicious Mix of Economics and Politics by Charles Lieberman (Article)

I suspect 2011 will continue to produce its ups and downs (much like the past few years). The European debt crisis is still a big issue. The US Municipal debt (particularly in Illinois) issue is lingering. Congress is still Congress. When and if these issues present themselves and the markets react, we could view those situations as continued buying opportunities since the underlying fundamentals of stocks improve. However, long term investors should not wait for dips to begin investing, but rather start a systematic plan of redistributing cash back into the market.

2011-01-24 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Earnings are coming in at a very strong pace. The problem is that stock prices in many cases have risen in anticipation of these results. As far as the economy is concerned the bulk of the evidence released last week was encouraging, but the impact of higher oil prices is really starting to be interpreted as a negative for future consumer spending and corporate hiring plans.

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.

2011-01-24 The Great Debt Shift by John Browne of Euro Pacific Capital

If one were asked to describe the major global economic changes that have unfolded since the financial crisis began, a good starting place would be the massive shift of debt from the private to the public sector. Attempting to arrest a deepening crisis, governments all around the world have bailed out businesses and companies by transferring bad debts to the public books. Although these moves have provided some current stability (after all, governments are much less likely to default), the long-term consequences may be dire.

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 2011 Capital Markets Outlook by Joseph V. Amato of Neuberger Berman

During 2010, macroeconomic factors largely dominated the financial markets, creating a volatile, emotional environment as investors appeared at times to be thinking less about what stocks to own than whether they should own stocks at all. As a result, many equities with very different fundamental characteristics often showed very high correlations to one another, while valuations converged. Over time, we believe that the market will differentiate these stocks based on their individual fundamentals. A similar statement can be made about other assets as well.

2011-01-18 Refuting Meredith Whitney by Robert Huebscher (Article)

Wealthy investors, seeking safe tax-free income, have historically centered their portfolios on municipal bonds. The fiscal problems faced by many states and local governments, however, are leading many to question that strategy, none more vocally than the analyst Meredith Whitney, who predicted 'hundreds of billions' in municipal bond defaults in a recent 60 Minutes interview. We present the rebuttal to Whitney.

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.

2011-01-18 Investment Commentary by Bob Doll of BlackRock Investment Management

As we indicated earlier, we expect that the more bullish forces will prevail over the coming months, but we acknowledge that risks remain. The strong run-up we have seen since the August lows could mean that markets are overdue for a pullback, but should that occur, we would argue that any near-term weakness would be an opportunity for increasing equity positions since the cyclical backdrop is likely to remain equity-friendly.

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.

2011-01-17 Europe Is Running Fast to Stand Still by Mohamed A. El-Erian of PIMCO

The sequencing of Europe’s debt crisis is depressingly similar – the plot stays the same, with a slightly different cast depending on the country in the spotlight. Yet, judging by the run-up to the meeting of European Union finance ministers in Brussels on Monday, European officials seem intent on repeating it over and over again.

2011-01-15 Thinking the Unthinkable by John Mauldin of Millennium Wave Advisors

Mauldin criticizes Bernanke's comment that a benefit of QE2 has been rising equity prices, arguing that this would amount to a third mandate for the Fed. He commends Richard Fisher of the Dallas Fed for his comments that monetary policy is not a tool to solve the country's fiscal problems. Mauldin then says that a big treat to his growth forecast is continued sovereign debt problems in Europe. Lastly, he questions whether China can engineer a soft landing for its economy, given rising inflation.

2011-01-14 2011 Outlook: International and Emerging Market Equities by Benjamin Segal and Conrad Saldanha of Neuberger Berman

We anticipate modest but positive global economic growth in 2011. Economic growth in emerging markets should benefit developed-market firms with global reach as well as emerging-market companies. Issues we are closely watching: the potential for currency/trade wars, asset bubbles and inflation in the emerging markets, increasing regulation and possible negative impacts of monetary tightening. Many overseas corporations are profitable and healthy, with cash available for M&A, higher dividends and other corporate activities.

2011-01-12 Call it the Wile E. Coyote Market by David A. Rosenberg of Gluskin Sheff

While Bob Farrell’s rule number nine warns us to be wary of widespread consensus opinions, it may well turn out that all the bullish Wall Street analysts end up being correct that 2011 proves to be another wonderful year. But the one thing we can assure you, as was the case in 2010, is that it will not be a straight line up. In fact, we would argue that there are more headwinds, potholes, and event risks this year than there were last year.

2011-01-12 Equity Market Review and Outlook by Richard Skaggs and Thomas Davis of Loomis Sayles

Global equity markets continued the uptrend that began in the third quarter and finished the year with solid gains across all major equity categories. Such a powerful second half of 2010 seemed improbable just last summer, when concerns over a potential double-dip recession dominated investor thinking. Other macro issues, such as the ongoing financial challenges within the European Union, remain unresolved. However, these macro concerns have remained manageable in the eyes of equity investors.

2011-01-11 Global Outlook and Strategy by Team of Loomis Sayles

After being challenged in November by renewed Eurozone sovereign debt concerns, global risk markets ended 2010 on a strong note. The key to the late-2010 and early-2011 optimism was the potential for the two biggest engines of global growth – the US and Chinese economies – to pull together this year.

2011-01-10 Global Instability by David A. Rosenberg of Gluskin Sheff

With inflation in China over 5%, Chinese policymakers are going to spend 2011 in restraint mode. Count on it. We are in the throes of a global currency war and late last week we saw Brazil move aggressively to rein in the real’s strength by imposing reserve requirements on domestic banks’ foreign exchange positions. We have food prices surging and this is very likely going to cause social strife in the emerging market world - India, China and Indonesia come to mind. The Eurozone sovereign debt situation is looking increasingly tenuous.

2011-01-10 Investment Commentary by Bob Doll of BlackRock Investment Management

We see a number of potential risks for the economy and the markets in the year ahead, including sovereign debt issues, emerging markets inflation and the possibility of higher tax rates, but we remain positive on the overall environment. Inflation should remain low throughout 2011, economic growth should accelerate slightly with the quality of that growth improving, and corporate earnings should remain strong an environment that should provide a solid backdrop for stocks to post further gains over the course of the year.

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

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

2011-01-05 And That's The 'Year' That Was by Ron Brounes of Brounes & Associates

While the consumer has emerged from hibernation, an improved labor picture would boost this favorable trend. The Fed hopes that QE2 will help build on the recent economic momentum, though many doubters surely remain. Earnings comparisons get more difficult in the coming quarters, though analysts expect improved revenue growth to contribute to the positive results. The tax “compromise” means a continuation of the bullish mindset in equities (for now). Developments abroad will impact the domestic markets as the EU looks to move beyond its debt issues, and China leads the global recovery.

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.

2011-01-05 What The Bulls May Be Ignoring ... At Their Peril ... Plus Some Ideas For 2011 by David A. Rosenberg of Gluskin Sheff

The bullish case is pretty well established right now and there is no sense repeating them but what may be ignored are these half-dozen. Nothing of course says that the market can’t keep going up over the near-term. risks, I list. Just as the onus was on the double-dippers last summer given the sentiment and market action, the onus now is clearly on the V-shaped enthusiasts.

2011-01-04 Glory Days: Another Good Year in 2011? by Liz Ann Sonders of Charles Schwab

Setting targets doesn't make sense to us, but we do believe in reading the market's tea leaves, and the outlook is healthy. However, frothy sentiment has us a little concerned in the very near-term. Investors need to be mindful of complacency, but also to make sure they're not still loaded up on bonds—a major capitulation from bonds to stocks is possible.

2011-01-03 Economic Outlook 2011—Inching Our Way Toward Recovery by Milton Ezrati of Lord Abbett

For all the complexities and undeniable risks, the outlook is reasonably upbeat. Continued, if slow, economic growth will raise earnings and, in time, gradually will begin to improve the labor market. Inflation, though a longer-term risk, will remain well contained in the coming year. Questions about monetary and fiscal policy will continue to hang over the economy and the markets, but circumstances nonetheless seem set to generate further advances. If, at the end of the year, few would declare themselves as rich and secure as they once felt, they still will have experienced improvement.

2011-01-03 New Year Fraught with New Risks? by Chris Maxey of Fortigent

With 2010 officially behind us, it is time to consider what risks and opportunities lay ahead for investors for 2011. Just as 2010 proved to be the year of the sovereign credit crisis, 2011 will not be forgotten as a year without its own potholes. From the economic side of the ledger, the biggest concern remains employment. Despite improving economic growth and a Federal Reserve that has shown a penchant for doing everything in its power to stimulate the economy, employment growth is virtually nonexistent since the recovery began.

2010-12-31 The Enigma Decoder by Ronald W. Roge of R.W. Roge

Our outlook for 2011 remains cautious, as we were last year. We will continue with most of our 2010 strategies for 2011, with the exception of bonds and municipal bonds which may present problems. We have already lowered our allocation to bonds in the third quarter, lowered our bond duration, and may lower it further, especially in the municipal bond area. We are still formulating our strategy as we gather more information.

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.

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

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

2010-12-27 Treasury Moves—Four Reasons Why by Milton Ezrati of Lord Abbett

Treasury bonds recently have made an impressive and, to some, frightening move—a sudden reversal of the long flight to quality that previously had so bid up Treasury prices and reduced the yields to ridiculous lows. Many explain this sudden reversal in terms of Washington’s recent decision to extend the Bush-era tax cuts for another two years. Certainly, there is reason to make such a link, but there is more going on than just this compromise, enough to keep the trend in place for some time to come. Here are four references on what lies behind this reversal.

2010-12-23 Ten Reasons To Be Cautious For The 2011 Market Outlook by David A. Rosenberg of Gluskin Sheff

1) In Barron’s look-ahead piece, not one strategist sees the prospect for a market decline. This is called group-think. 2) The weekly fund flow data from the ICI showed not only massive outflows, but in aggregate, retail investors withdrew a RECORD net $8.6 billion from bond funds during the week ended December 15. 3) Bullish sentiment has now reached a new high for the year and is now the highest since 2007 ― just ahead of the market slide.

2010-12-23 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Anyone reading this commentary needs to get home for the holidays (or for some Chinese food and a movie for those non-Christmas celebrators). A few numbers, some last-minute window-dressing, announced global transactions, and a race to end with double-digit gains. Let’s close 2010 on a high note. Have a nice season and a very happy new year

2010-12-22 The Waves of 2011 by John Browne of Euro Pacific Capital

2011 likely will open with a deepening recession, increasing austerity, and falling asset prices. If this is met by a new round of inflation creation and yuan revaluation, then investors should weigh whether to redeploy assets in anticipation of potential rising commodity prices. I expect these developments not to happen gradually, but to come in great waves. Smart investors will tie their fate to an investment vessel with a solid hull, because in these seas, even a hint of rot could tear a ship asunder.

2010-12-22 2011 Outlook: Fixed Income by Fixed Income Investment Team of Neuberger Berman

Entering 2011, there is no shortage of potential issues that could ignite periods of extreme market volatility. While short-term market gyrations are unsettling for both novice and experienced investors alike, for the year as a whole, we believe the outlook for the economy and the fixed income market is generally positive. In particular, certain non-Treasury sectors have compelling fundamentals going into the New Year. In our opinion, these areas could benefit generally from an increased risk appetite, should investors seek incremental yields given a continued low interest rate environment.

2010-12-21 All That Glitters by Howard Marks of Oaktree Capital

I have ave no doubt: gold is the ideal investment. It serves as a reliable store of value, especially in challenging and uncertain times. It’s a hedge against inflation, since its price rises in sympathy with the general level of prices. It exists without the involvement of man-made constructs such as governments. And it’s desired and accepted all around the world (and always has been.) The supply of gold is finite. It can’t be created out of thin air. Thus it’s not subject to dilution or debasement, as is paper currency when governments decide to print more.

2010-12-21 Ed Hyman: We Are Not Japan by Katie Southwick (Article)

Despite his worrisome outlook earlier this year, the ISI Group's Ed Hyman provided an upbeat forecast of the US economy, arguing that we are in the midst of an economic recovery that will lead to expansion. We are demonstrating that we are not Japan, he said.

2010-12-21 Demographics and Sovereign Debt by Team of American Century Investments

Events surrounding what the press calls the European Sovereign Debt Crisis have been in the news for much of the past year. Unfortunately, this label masks an underlying major contributing factor: demographics. The combination of long life expectancies, relatively early retirement ages, generous retirement benefits and a shrinking base of workers to support the growing proportion of retirees in the population will put tremendous burdens on the budgets of these countries.

2010-12-20 The European Union—Will It Hold Together? by Milton Ezrati of Lord Abbett

With an Irish rescue seemingly in place, Europe must now look to Portugal, Spain, and Belgium. The continent’s sovereign debt crisis threatens the euro—and the EU itself. We can make some tentative conclusions: 1) Europe’s existing rescue resources are more than ample for Greece, Ireland, and Portugal. 2) The great danger lies with Spain, less because of government profligacy and more because of the potential fallout from that country’s collapsed real estate bubble. 3) The EU has shown determination to deal with the problem and protect the euro and the union.

2010-12-17 Capital Markets Brace for Exciting 2011 by Andreas Utermann of RCM

Andreas Utermann, global chief investment officer at RCM, a company of Allianz Global Investors, highlights key themes likely to shape the direction of capital markets in the coming year and provides a brief outlook on how he expects major asset classes to perform.

2010-12-17 Fed Decision: Stick to the Status Quo by Liz Ann Sonders of Charles Schwab

The stock market may not be fighting the Fed, but are bonds? Treasury yields and stocks can rise simultaneously, but dollar strength could bite. Investors are being driven to reallocate away from bonds and toward stocks.

2010-12-17 Kicking the Can Down the Road by John Mauldin of Millennium Wave Advisors

A collapse of a major European bank could trigger counterparty mayhem in the US banking system, at least among our major investment banks. The ECB is now earnestly continuing to kick the can down the road, buying ever more debt off the books of banks, buying time for the banks to acquire enough capital. If the ECB were to keep this up, even in a deflationary, deleveraging world it would eventually bring about inflation and the lowering of the value of the euro against other currencies. One country after another in Europe is coming under pressure. This week the debt of Belgium was downgraded.

2010-12-16 Germany in a Lose-Lose Situation by Mohamed A. El-Erian of PIMCO

The problem is that Germany's current approach – centered on dealing with liquidity problems now and solvency centered later – is not working. A liquidity approach that delays the day of reckoning may be good regional politics, but it's bad economics. It does not restore sustainable growth to the periphery, and it exposes the core to contamination. Rather than simply doubling up on a faltering liquidity approach, the time has come for Germany to lead a more holistic solution focused on addressing the periphery’s debt overhang and competitiveness problems.

2010-12-14 Looking Back at a Year of Policy Mistakes by Michael Lewitt (Article)

As we approach the end of 2010, the global economy remains captive to a boom-and-bust cycle resulting from years of pro-cyclical monetary, fiscal and regulatory policies. With very limited exceptions, the same policies that contributed to the 2008 financial crisis remain in place. The only difference is that government balance sheets are far more leveraged than they were heading into that crisis.

2010-12-14 A Notable Year of Emerging Market Growth by Mark Mobius of Franklin Templeton

I view 2010 as a year of economic resurgence. Many emerging markets recorded strong GDP growth as they continued to recover from the impact of the 2008 financial crisis. In several cases, robust domestic consumption, government expenditure and intra-regional trade offset weak external demand from developed markets. This led many countries in Asia and Latin America to return to pre-crisis growth levels much faster than expected. China and India were among the world’s fastest-growing major economies during the year, with China overtaking Japan as the world’s second-biggest economy.

2010-12-14 The Case for Dividend-paying Stocks by David A. Rosenberg of Gluskin Sheff

Despite all the noise that the Democratic left is making, the tax bill is going to pass very soon. There is a tangible positive effect here from the tax bill and pertains to dividends. Under the deal, the top tax rate on dividends will stay at 15%. If most of the spasm in the bond market is behind us, one would have to think that a focus on dividend growth is going to have some payoff with the taxation uncertainty put to bed. The U.S. nonfarm nonfinancial corporate sector is sitting on $1.93 trillion of cash/equivalents, which is at a 51-year high representing 7.4% share of total assets.

2010-12-13 Perception versus Reality by David A. Rosenberg of Gluskin Sheff

I've been a secular bond bull and am not yet changing my view of the fixed-income market, but the perception that the economy will grow vigorously is now extremely strong. I think it will only grow about 2% next year and that core inflation will continue declining. These are the primary downside risks: 1. The U.S. Treasury market becomes unglued. 2. Further sharp increases in energy prices. 3. Renewed fiscal problems in Europe. 4. Bad inflation news out of emerging markets. 5. U.S. state & local cutbacks become more severe. 6. Latest down-leg in home prices accelerates.

2010-12-11 Unintended Consequences by John Mauldin of Millennium Wave Advisors

The recent rise in interest rates is due to the reallocation of globally indexed funds away from sovereign debt and into something else. The may be a prelude to a sovereign default or a more rapid rise in rates, which could unfold very quickly. Global deleveraging is not over. QE2 and the nervousness of investors around the world are pushing up interest rates.

2010-12-07 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Frankly, there are many cross currents and news items floating around today. The bailout of Europe and presumably other European countries continues to be a headline risk that impacts the currency markets greatly which heavily determine the daily direction of stock market futures. Tomorrow’s vote in the Irish parliament to ratify the conditions of the bailout package will be another reminder of the unpredictable nature of the overnight headlines.

2010-12-06 Cutting Through the Noise by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic data is rarely clear-cut, but we believe the weight of the evidence indicates a strengthening US economy. The negative rhetoric surrounding the Federal Reserve's recent decision reached a crescendo, but while we were among the first to voice our belief that it wasn't necessary, we believe the dire warnings of potential consequences from a second round of quantitative easing (QE2) are overblown. The European debt crisis continues to plague world markets. Finally, we believe the European Central Bank (ECB) needs to be more proactive instead of continually reactive.

2010-12-03 More Stimulus Means Fewer Jobs by Peter Schiff of Euro Pacific Capital

Unless politicians can be roused from their stupor, we will soon confront an imminent sovereign debt and currency crisis that will make the credit crisis of 2008 look like a happy interlude. Hopefully, when the first major shock strikes in the US, as is currently happening in Ireland and Portugal, it will finally provoke a 180-degree change of policy in Washington. Hopefully, it won't be too late to spare millions from a life of subsistence, or worse. These are my hopes, but my fear is that we are on the cusp on the largest economic downfall in modern history.

2010-12-03 Texas, Ireland and Ten Little Indians by John Mauldin of Millennium Wave Advisors

Mauldin contrasts the plights of Iceland and Ireland in dealing with excessive leverage. Iceland devalued its currency, while Ireland must accept a bailout package. Iceland's economy is recovering; Ireland's may take years. Mauldin compares the situation in Spain and Portugal to those two countries. The stronger EU countries must rescue the weak, just as Texas is being asked to rescue fiscally troubled states like California.

2010-12-01 A Spanish Inquisition by Nouriel Roubini of Roubini Global Economics

Spain shares some of Ireland's key vulnerabilities, including a housing bubble more pronounced than that in the United States and large nonperforming loan overhang in the banking sector. Though Spain's housing bubble is less severe than Ireland's, and though the Spanish banks' commendable loan-loss provisioning system is providing a buffer, a comparison of price-to-rent ratios shows that the bulk of the housing price correction and loss recognition has not yet come. Thus, the pressure on the banking system is bound to increase going forward.

2010-12-01 The U.S. Dollar Is A Poor Alternative To The Euro by Monty Guild of Guild Investment Management

The U.S. dollar is poorly managed, Congress has already saddled the U.S. with enough debt to keep the dollar under pressure for years, and the Federal Reserve has made it clear that it is their intention to devalue the dollar. The U.S. sponsored a 2nd round of QE, which was implemented to improve exports, to stop a deflationary psychology from forming and to create enough inflation in the U.S. economy to inspire the populace to begin investing to stay ahead of inflation. When investors begin to focus upon these obvious points, the inflation benefitted investments will rocket ahead.

2010-11-30 Currency Focus: QE2 and the Course Ahead by Ugo Lancioni of Neuberger Berman

We believe the dollar is likely to move higher on an intermediate-term basis. QE2, in our opinion, could lead to stronger economic growth in the U.S. and eventually drivehigher yields, making the dollar more attractive to investors. In our view, the impact of QE2 was already in the price of the U.S. dollar at the time of the announcement. And the market is generally still shorting dollars.

2010-11-29 Ireland Rescue Is Not a Game Changer by Mohamed A. El-Erian of PIMCO

Ireland's new liquidity package does little to deal with its debt overhang, or to reduce the embedded cost of its debt. Instead it aims to introduce stability into market conditions. It took time for Europe to recognize the severity of the peripheral debt crisis. Now it is also recognizing that liquidity support (while necessary) may not be enough.

2010-11-29 Ripeness is All by Jeffrey Saut of Raymond James Equity Research

Shakespeare once wrote, “Ripeness is all.” And timing is “all” when it comes to Wall Street as any whipsawed investor will tell you.

2010-11-29 A Time to Invest in Africa by Nile Capital Management of Nile Capital Management

In this report, I will summarize my answer to the often-asked question: “Why is this a good time for investors to focus on Africa?” I also will explain why the best way to participate in African markets and manage their risks is through an actively managed fund that offers “feet-on-the-ground” expertise in Africa.

2010-11-29 Not Fade Away: European Debt Crisis Hits Markets by Liz Ann Sonders of Charles Schwab

Optimism is waning as global concerns are taking center stage, notably in the euro-zone. Investors shouldn't be complacent, but should heed the more-positive message coming from the US economy.

2010-11-28 Recessions are on the Margin by John Mauldin of Millennium Wave Advisors

We had a slate of good news over the past few weeks, including data on business confidence, housing, and unemployment. GDP growth is slowing, but it is still north of 2%. The economy may be able to handle only taking away the tax cuts for those with over $250,000 in income. It will slow things down, but probably not enough to cause a recession. Given that government spending is going to go down (at least I hope so), unemployment is going to take time to get under control; and with the whole developed world in a mess, it is hard to see an environment where we can average 3.5% for this decade.

2010-11-23 Stop Front-Running the Fed by Keith C. Goddard, CFA (Article)

A change of mindset is in order for bond investors, who must recognize that it is no longer wise to 'front-run' monetary policy by purchasing the same bonds the Federal Reserve is targeting with its latest round of quantitative easing.

2010-11-23 Global Tensions Rising Over Fed's QE2 Initiative by Team of American Century Investments

QE2 represents a dramatic intervention in the capital markets, and its ultimate impact is hard to predict at this point in time. Critics of the plan, including some Fed members, believe that too much monetary stimulus might lead to runaway inflation, which in turn could derail economic growth or even create future asset bubbles. Alternatively, a weaker dollar could create incentives for other countries to implement capital controls and foreign exchange interventions that negatively impact global trade.

2010-11-22 Economic Insights: Five Reasons to Give Thanks by Milton Ezrati of Lord Abbett

Custom at this time of the year asks people to look back for reasons to give thanks. Though for investors the political-economic turmoil and risk of the times seem at first blush to yield little along such lines, a dispassionate reprise of the last year does, in fact, offer more material for thanks. To be sure, economic and financial matters are far from perfect or even second best. But still, they have improved during the last 12 months, in some instances, dramatically. Here are five reasons for thanks.

2010-11-22 Weekly Investment Commentary by Bob Doll of BlackRock

We believe that equity markets should continue to head unevenly higher over the next several months. Earnings expectations have been on an upward trend and the economic backdrop seems to be improving. Economic projections were weaker in the Apr to Aug period, stabilized in Sept and Oct and have since been moving higher. Our view is that global growth will continue to improve in 2011. There are a number of risks; ongoing sovereign debt issues, escalating inflation in China and the potential breakdown in global policy coordination, but our baseline scenario is for a continued cyclical recovery.

2010-11-19 Philly Fed Up, NY Empire Down by David A. Rosenberg of Gluskin Sheff

Despite mixed indicators, it looks like real GDP is chugging along at a tepid though still above-water annual rate of between 1% and 2% at an annual rate. The fragility is what is important. Gold still looks very good in this uncertain and unstable environment.

2010-11-18 The Dollar Survives Again by John Browne of Euro Pacific Capital

As far as investors are concerned, the G-20 provided little new information, but confirmed the continuing drift. The international monetary system is still based upon the gravely flawed U.S. dollar. The Yuan will not be allowed to rise in the near term, the euro faces great political challenges, and the U.S. dollar seems continually to be devalued. Meantime, precious metals, key commodities, and hard currencies should continue to benefit.

2010-11-16 Touch of Grey: Market Takes a Breather by Liz Ann Sonders of Charles Schwab

My best guess as to the scenario that is unfolding is that the economy is gaining traction, which could cause the Federal Reserve to pull QE2 into the dock sooner than expected. It could also lead to a lift in the dollar, a related pullback in commodity prices, and rising bond yields. Given the high correlation recently between bond yields and stock prices, if yields were to continue to rise, they could take stock prices up with them; especially if the reasons are a better economy and lessened deflation fears.

2010-11-13 First, Let's Lower the Bar by John Mauldin of Millennium Wave Advisors

Mauldin responds to criticisms of a recent email he sent regarding healthcare reform. Next, he notes that for the last 18 months the trade-weighted yuan has dropped well over 10%, which he calls extraordinary. On the recently announced unemployment results, he says government "fiddling" with seasonal adjustments distorted the numbers. Last, he comments on the Irish sovereign debt issue.

2010-11-12 And That\'s the Week That Was... by Ron Brounes of Brounes & Associates

Investors surveyed the landscape in the aftermath of two major market moving events (Fed stimulus and midterm election), retreated from their recent optimism, and booked profits heading into the homestretch of the year. Despite the overall success of another earnings season, investors fretted over the global progress (or lack thereof) from the G20 meeting of world finance ministers and news that China may have inflationary problems on its hands.

2010-11-09 Waiting for Superman: The Fate of Teachers’ Unions by Charlie Curnow (Article)

In 'Waiting for Superman,' the new documentary film about the shortcomings of American public education, director Davis Guggenheim argues that, in order to compete with rival school systems in Asia and Europe, the U.S. must rein in its teachers unions and embrace the free market principles of private schools and privately managed charter schools. Is this a fair assessment?

2010-11-08 What Has the Fed Really Done? by David A. Rosenberg of Gluskin Sheff

In the Fed’s latest QE quest, by targeting the front- and mid-part of the U.S. Treasury curve, it is only really influencing yields that were already at microscopic levels before anything was even announced. It is hard to figure out what a 0.3% yield on the 2-year T-note or a sub 1 % yield on the 5-year T-note is really going to accomplish as far a spending stimulus is concerned. The Fed’s action seems to have unleashed a wave of speculative trading activity in risk assets — from stocks, to commodities, to emerging markets

2010-11-02 A Top Economist's Nightmare Scenario by Charlie Curnow (Article)

Remember the 1970s? Stagflation like we saw then could return to the U.S. if unsustainable public debt levels trigger a selloff of government bonds and dollar-denominated holdings, according to a recent study by John C. Cochrane. Cochrane, a finance professor at the University of Chicago, is perhaps best known for his response to Paul Krugman's article in the New York Times on why mainstream economics failed to anticipate the financial crisis.

2010-11-02 The New Abnormal by David A. Rosenberg of Gluskin Sheff

We are definitely in an abnormal economic environment. We just came off a 2 percent real GDP growth performance in a quarter - the fifth in this nascent recovery - where the economy is usually humming along at a 4.3 percent clip and on a lot less government stimulus. Make no bones about it, heading into year two of the post-recession recovery, the pace of activity is usually accelerating, and doing so at a 5 percent rate. The Federal Reserve with its continued monetary expansion just may well see something in the economic outlook that has yet to fully register with Mr. Market.

2010-11-01 The Servicer of the First Part; Dick Alford on the Fiscal Illusion by Christopher Whalen of Institutional Risk Analyst

This week the Institutional Risk Analyst features a comment by the FRBNY's Richard Alford. Alford provides a very revealing look into the brave new world of macroeconomics and how the members of the priesthood of imprecision see the 'multiplier' associated with fiscal spending. When you realize just how poor the methodology is behind these economic debates, both in terms of the mathematical assumptions and the understanding of human action, the fact that these distinctions underpin fiscal policy is truly frightening.

2010-11-01 Investors Ready for a Ghoulishly Busy Week by Chris Maxey of Fortigent

Investors are wondering whether the recent market rally is built on a solid foundation or merely another in a long line of illusionary rallies should heed a bit of caution. Investors are largely bidding risk assets higher on the belief that the Federal Reserve will inject significant amounts of liquidity into the economy through a second round of asset purchases. This is an extremely dangerous and poor investment thesis.

2010-10-29 Four Critical Investment Themes for the Next Decade by Robert Huebscher (Article)

Four investment themes will dominate market behavior over the next decade, according to Martin Murenbeeld, the chief economist at DundeeWealth Economics, a Canadian investment manager and financial advisor. Investors, he said, would be wise to overweight gold and other commodities.

2010-10-29 Asset Allocation: Fall 2010 by Tony and Rob Boeckh of Boeckh Investment Letter

Excess liquidity will continue to act as a tailwind for equities, commodities and non-dollar currencies well into 2011. Deflation will dominate in the short term; the inflationary threat is probably further away than most investors expect. Gold is expensive relative to the inflationary outlook. Fixed income markets are heavily influenced by government intervention. While it is likely that continued intervention will succeed in depressing bond yields below market levels, even a modest increase in inflationary expectations would undermine these actions. We recommend shortening duration.

2010-10-22 Portfolio Strategy by Bradley Turner of Chess Financial

The risk profile of stocks relative to bonds has improved markedly in recent months. Add to this the fact that the S&P component companies are holding almost one trillion dollars in cash and are trading at a reasonable multiple of current earnings, and we conclude that bonds will be hard-pressed to outperform stocks on a total-return basis in the decade ahead.

2010-10-18 Fixed Income Investment Outlook by Team of Osterweis Capital Management

Low yields, high corporate debt issuance, increased monetary stimulus and the rising dollar do not mean that growth will accelerate any time soon; the outlook of a slow and meandering recovery still holds. Corporations continue to rebuild balance sheets and margins at the expense of hiring and investment. While this bodes well for future debt repayment, the outlook is not rosy for job seekers. When the job outlook does change, however, and the economic pulse quickens, the era of low interest rates could end quickly.

2010-10-16 The Subprime Debacle: Act 2 by John Mauldin of Millennium Wave Advisors

The housing market has not yet begun to recover, and it is not only going to take longer but the decline in prices may be greater than many have forecast. But the real problem is the foreclosure crisis, where banks have foreclosed in situations where they had no right to do so. Several options exist for resolution, including sorting out the details of each case in a legal forum. A more ominous outcome would be to force investment banks to buy back securities with faulty titles.

2010-10-12 Capitulation to Uncertainties – Does a Bond Bubble Really Exist? by Frank Wei of FundQuest

The recent near-record low in Treasury yields may be largely attributable to investors' capitulation to today's unusual and uncertain economic environment. While investments in Treasury bonds involve less uncertainty than other asset classes, their valuation is typically rich when yields are low. There remains a vast amount of potential for more lucrative investment opportunities in this low-yield environment, with only slightly more risk involved.

2010-10-11 Commodities - More Signs of Life by Milton Ezrati of Lord Abbett

The rise in commodity prices during the past few weeks offers yet another sign that the U.S. economy will avoid the dreaded double-dip recession and continue to grow, albeit slowly. Some of the commodity price rise, of course, reflects little on the economy. Gold's price increase, for instance, mirrors generalized fears on a number of fronts. The surge in agricultural prices stems from particular crop failures. However, industrial commodities, including energy, are connected to the economy, giving broader economic significance to their healthy price gains.

2010-10-01 Claims of the 'Death of Stock Picking' Are a Good Sign for Value Investors by Team of Grey Owl Capital Management

A recent Wall Street Journal article highlights the macro-driven nature of today’s stock market. Long-time value investors lament the current environment where stocks appear to trade in unison based on unemployment data or European bank stress test results. If stocks are driven by macro factors instead of company fundamentals, stock pickers can’t get an edge. We think stock-picking is very much alive. Call us contrarian, but we couldn’t think of a better sign that fundamentally-driven, bottom-up stock-picking is likely to make a comeback sooner rather than later.

2010-09-28 A Candid Appraisal of the Recovery by John Browne of Euro Pacific Capital

Over the last two weeks, seemingly good economic news offered some shreds of optimism to a stock market that was desperate for a pick-me-up. Although it hard to begrudge the punch drunk for grasping at a little hope, however, investing is a dispassionate endeavor that calls for close and realistic analysis. Any structural changes to the economy will come slowly – and perhaps too late. Meanwhile, whatever actions the Fed takes in the name of further stimulus will sacrifice long-term sustainability in favor of a short-term boom.

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

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

2010-09-14 Does the Fed Ultimately Control Interest Rates? by Michael Pento of Euro Pacific Capital

In forecasting the consequences of current economic policy, many pundits are downplaying the risks associated with the surging national debt and the rapid expansion of marketable Treasury securities. In the end, central banks can only temporarily distort the savings and demand equation. The more the Fed prints, the higher the eventual rate of inflation will be. If mainstream pundits truly believe the Fed can supplant the entire public and private market for debt indefinitely, then we won't want to be around when that fantasy inevitably becomes a nightmare.

2010-09-13 All Aboard the European Debt Express by Chris Maxey of Fortigent

A recent paper from the Organization for Economic Cooperation and Development found that the European bank stress tests were less than stressful. This was because they only considered sovereign debt held on banks' trading books, not on banking books. The trading book of Greek banks, for example, only represents 6.7 percent of the overall Greek sovereign debt exposure on their books. The ignored banking book exposure represents the other 93.3 percent. On a cumulative basis, that translates into a sovereign exposure to Tier 1 capital ratio of more than 225 percent.

2010-09-10 Do Countries 'Graduate' From Crises? Some Historical Perspective by Rong Qian, Carmen M. Reinhart and Kenneth Rogoff of VoxEU

Are declarations of victory against the global crisis premature? This column argues that 'graduation' - the emergence from recurrent crisis bouts - is a long and painful process which neither developed nor developing countries look close to completing. Two centuries of evidence suggests that most countries need 50 years before the chances of further crises subside.

2010-09-02 Learning From Past Crises by Mark Mobius of Franklin Templeton

Although it is unrealistic to assume that the structural changes implemented in some emerging markets can completely shield them from the effects of future global crises, they seem to have borne the most recent global financial crisis reasonably well. While risks have not disappeared, things look a lot better today than they did 20 years ago. The growing use of derivatives contracts is just one of the many reasons to remain cautious, but some emerging markets' strong fiscal health is cause for hope and optimism.

2010-08-30 Weekly Investment Commentary by Bob Doll of BlackRock

While the recovery has been slow, we have made significant progress. On a real basis, U.S. gross domestic product has regained 70 percent of what was lost during the recession and on a nominal basis, GDP has regained all of it, meaning that the United States is in a nominal expansion. In any case, investors in U.S. stocks can expect continued volatility ahead. The S&P 500 Index has remained in a rough trading range of between 1,020 and 1,120. While a dramatic breakout from this range is unlikely for now, as economic conditions slowly improve, the positive forces should win out.

2010-08-27 Debt Be Not Proud by Rob Arnott of Research Affiliates

The looming sovereign debt crisis may be the defining influence on capital market returns over the next 10 years. Greece recently hit a wall and had to break a lot of promises to its citizens, including retirees and prospective retirees from government employment. Greece certainly won't be the last. An exploration of the relationship between sovereign debt levels and the economic might of debtor nations reveals a scary situation, particularly for investors who cap weight their government bond market exposure.

2010-08-27 Increasing Risks by Tony and Rob Boeckh of Boeckh Investment Letter

Capital preservation is of critical importance in this volatile, highly uncertain world. Within that conservative context, Boeckh has been relatively bullish on risk assets. The time has come to add another layer of caution to portfolios. The S&P 500 may well remain in an extended trading range, but we may be much closer to the upper boundary than the lower. Seasonally, we are heading into a period when markets tend to be weak, and some important declines have occurred.

2010-08-26 In Which Direction Will the Next Panic Come? by Chris Lightbound of GaveKal

Good 'panic indicators' may be the cheapest way to monitor fat-tail risks. One of the most reliable panic indicators is the EUR/CHF exchange rate and the daily volatility of this cross rate, especially as compared to the Spain 10-year government bond spread over German Bunds and the volatility of U.S. long bonds. As charts presented in this commentary show, there are signs that today's only crowded trade is on the sidelines. So what are the odds that either of these two concerns - another sovereign debt crisis or a U.S. double dip - will reach a tipping point and become a panic?

2010-08-25 The Fed's Biggest Bubble by Michael Pento of Euro Pacific Capital

Even top-flight Wall Street analysts seem to believe that the Fed's doubling of the monetary base after the credit crunch has not had an inflationary impact on our economy. Their logic can be summed up like this: "The money the Fed created and dropped from helicopters has all been caught in the trees." In other words, the Fed is creating money, but it is just being held as excess reserves by the banking system instead of being loaned to the public.

2010-08-24 Build America Bonds Power the US States by Hildy Richelson, Ph.D. (Article)

A skeptical attitude toward new products has long served the best interests of advisors and their clients, almost without fail. However, in this guest contribution, Hildy Richelson argues that advisors should not be afraid to embrace one of the market's most prominent recent innovations: the Build America Bond (BAB).

2010-08-24 'Federal Debt and the Risk of a Fiscal Crisis' - Important Takeaway by Asha Bangalore of Northern Trust

U.S. government debt held has reached a level not seen since World War II. There will be consequences to this elevated level of public debt. In addition to the well-known outcomes of higher interest rates and the crowding out of private investment, at the extreme, high debt levels could trigger a sovereign debt crisis similar to the recent situation in Europe. Northern Trust presents charts of federal debt as a percentage of GDP, with projections extending to 2020.

2010-08-21 How We Get Through This Mess by John Mauldin of Millennium Wave Advisors

Don't expect a v-shaped recovery, but GDP may still grow in Q3. Unemployment and deficits will remain high. It is going to be a tough environment for the next 6-8 years. Growth opportunities will be in entrepreneurial ventures that can adapt to this environment and to future unforeseen hurdles.

2010-08-20 EM Corporate Debt: Ready for Prime Time by David I. Robbins and Javier Segovia of TCW Asset Management

Emerging Market corporate debt is rapidly growing into a significant asset class backed by the world’s fastest-growing economies. These bonds benefit from strong fundamentals, improving credit quality, declining default rates and superior prospects for economic growth across most of the emerging world. One of the most compelling aspects is their consistent outperformance relative to other fixed income asset classes since 2002. Currently, they offer a yield pick-up over comparably rated corporate issues in the U.S., despite the fact that they frequently enjoy stronger credit fundamentals.

2010-08-19 Debt and Growth Revisited by Carmen M. Reinhart and Kenneth Rogoff of VoxEU

With the advanced economies at a critical juncture, some economists are urging more fiscal stimulus while others argue that raising debt levels will stunt growth. This column presents the Reinhart-Rogoff findings on the relationship between debt and growth based on data from 44 countries over 200 years with a focus on the debt-growth link during high-debt episodes.

2010-08-19 Summer Camp For Stock Traders (But Will the 'Fall' Arrive Before Summer Ends)? by Team of Emerald Asset Advisors

There is no shortage of reasons to believe that the environment for stocks is weak, if not outright dangerous. Debts and deficits, for example, have climbed to record proportions. Consumers are learning what 'austerity' means. And governments in developed markets are acting as if they can continue to delay enforcing real, sustainable improvements. Maybe these real world concerns will matter this autumn, when stocks are historically very vulnerable. But the world's troubles seem to have little meaning to the summer campers.

2010-08-13 Q2 Economic and Market Outlook: “Soft Patch” or “Double-Dip”? by Ken Taubes of Pioneer Investment Management

Inflation should remain well-contained for the next year or two, but a credible plan to cut budget deficits and a return to positive real interest rates will be needed to prevent the bond market from pricing in rising inflation in the medium term. In this environment, the U.S. dollar can continue to strengthen versus other major currencies, and capital markets, especially equity markets, can deliver attractive returns.

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

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

2010-08-06 August Monthly Economic Update by Justin S. Anderson of Cambridge Advisors

Compared to U.S. government bonds, stocks may be a better investment if we stay in a slow-growth rather than negative-growth environment. Yields are low and the Federal Reserve is expected to keep short-term rates low for quite some time. Higher yields may be found in corporate bonds or foreign government bonds. Emerging market governments have lower debt as a percentage of their growing GDPs and may also provide higher yields to investors.

2010-08-03 Richard Koo: Lessons from Japan's Decline by Dan Richards (Article)

Richard Koo is the Chief Economist of Nomura Research Institute, and has served as an advisor to the Japanese government. In this interview with Dan Richards, Koo explains why Japan's recovery was thwarted by inadequate stimulus spending. This is a transcript of the interview.

2010-08-03 Roller Coaster Economics: Prepare for the Next Downturn by Brian Reading of Boeckh Investment Letter

This commentary features a piece by Brian Reading, former advisor to the Bank of England, former economics editor of The Economist magazine and founding partner of Lombard Street research service, on what should be done about massive fiscal deficits and spiraling debt-to-GDP ratios. Reading argues that no amount of exchanging domestic imbalances within the U.S., UK and other deficit countries between the public and private sectors can prevent a resumed recession. The prerequisite for sustained global recovery is increased consumption in Eurasia and a reversal of payment imbalances.

2010-08-02 Growing Federal Debt Will Cause Major Challenges in the Years Ahead by Team of Litman Gregory

A combination of sharply declining tax revenues and a surge in stimulus and bailout spending, both stemming from the financial crisis, caused the federal budget deficit to soar to almost 10 percent in 2009. Total debt to GDP ratios are climbing sharply, and could pass 90 percent by next year. The growth track of entitlement programs has led many to conclude that growing federal debt levels are unsustainable in the long term. Additionally, the Greek debt crisis could trigger increasing awareness of sovereign default risk with investors demanding higher rates for owning government debt.

2010-07-31 Bull/Bear Standoff by Liz Ann Sonders of Charles Schwab

Bulls and bears both have strong cases. With earnings results and economic data indicating continued growth, we lean toward the bullish side—although risks to the bullish case are elevated. Uncertainty and concern regarding government actions continue to weigh on sentiment, while the Federal Reserve leaves all options on the table. Some questioned the credibility of European stress tests, but the market responded favorably. Meanwhile, China's growth appears to be moderating but remains relatively robust.

2010-07-29 Absolute Strategies Fund Q210 Portfolio Commentary by Jay Compson of Absolute Investment Advisors

If deleveraging trends persist and embed themselves into the economy, markets will need to adjust to the reality that the potential for deflation is a real risk. Labor, real estate, and state and local governments are structurally challenged as a result of weak consumer activity and limited credit availability. Heightened volatility in the credit markets is likely given the re-pricing of troubled sovereign debt and the potential for those concerns to catch up with the 'Amend, Extend & Pretend' refinancing of corporate debt.

2010-07-28 Still Stressed After Tests by Nouriel Roubini of RGE Monitor

According to the Committee of European Bank Supervisors, only seven of the continent's banks failed to pass muster out of the 91 assessed in recent stress tests. These tests contained a crucial flaw, however: the absence of a sovereign default scenario. Optimistic commentators point to the rebound in U.S. markets after the Supervisory Capital Assessment Program, which faced significant criticism, as Europe's equivalent is now. However, while the U.S. SCAP tests modeled the key concern of the market - future property risk - and forced banks to recapitalize, the European tests did neither.

2010-07-27 Robert Shiller: A Cautious Outlook for Stocks (Video) by Dan Richards (Article)

Dan Richards recently spoke with Robert Shiller, the Yale economist who foresaw the financial crisis and created the Case-Shiller housing index. Shiller discusses the potential for a double-dip recession, valuations in the US equity market, and the outlook for a housing recovery. This is the video of the interview.

2010-07-27 We're All Chartists Now by David A. Rosenberg of Gluskin Sheff

Fed chairman Ben Bernanke may not be the world's best forecaster. He has the deepest rolodex, however, deeper than that of any CEO. And when he uses the phrase 'unusually uncertain' to describe the economic outlook, it is irrational to ascribe anything fundamental to the current market rally. The technical picture has indeed improved. The market gets it wrong, however, as often as it gets it right. There is still potential for many disappointments in earnings reports to come.

2010-07-26 Betting on a Bubble, Bracing For a Fall by John P. Hussman of Hussman Funds

Investors who will need to fund specific expenses within a short number of years - retirement needs, tuition, health care, home purchases etc. - should not be relying on a continued market advance. If your life plans would be significantly derailed by a major market decline, get out. In contrast, if you are pursuing a disciplined, long-term investment strategy, and you know from your own experience of the past decade that you are diversified enough to ride out periodic losses without abandoning that strategy, ignore my views (and those of everyone else) and stick to your discipline.

2010-07-26 Earnings Season Masks the Slowdown in Q2 Economic Growth by David A. Rosenberg of Gluskin Sheff

Program trading, algorithms, momentum trading, technicals – all are at play. Meanwhile, the Treasury market has steadfastly refused to budge from a double-dip view, with real rates still under downward pressure, and while the breadth of the market has been decent, this rally has continued to lack volume – down a further 2 percent on Friday on the NYSE. We are also at another key technical juncture – the Dow and Nasdaq have retaken their 200-day moving averages while the S&P 500 and the Nasdaq are caught between the 50-day and 200-day m.a.'s.

2010-07-24 Some Thoughts on Deflation by John Mauldin of Millennium Wave Advisors

We face the deflation of the Depression era, and central bankers of the world are united in opposition. This is due to excess capacity, high unemployment and massive wealth destruction. Deflationary pressures are the norm in the developed world (except for Britain, where inflation is the issue). The US has mild (1 percent) inflation now, but if it trends to deflation, the Fed will react by monetizing the debt.

2010-07-24 And That's the Week That Was... by Ron Brounes of Brounes & Associates

After riding high for the first few months of the year, investors faced the uncertainty of another major market downturn and watched those early profits disappear. In more recent times, they have been clawing their way back to breakeven territory. After some favorable earnings news and some decent economic (and banking) reports from Europe, the Dow and Nasdaq are virtually flat for the year and the S&P 500 is nearing the breakeven point. The small-cap Russell 2000 has fared a bit better thus far.

2010-07-22 It's Greek to Me by Howard Marks of Oaktree Capital

The current positives for investors include moderate valuations, rising corporate earnings and the likelihood we're already in a recovery. On the other hand, consumers are still too traumatized to resume spending strongly. Conservatism, austerity and increased savings are good for individuals but bad for a stagnant overall economy. Anyone who invests today in a pro-risk fashion out of belief in the recovery must be confident he'll be agile enough to take profits before the long-term realities set in.

2010-07-22 A Precious Metals Bubble? by John Browne of Euro Pacific Capital

In the first few days of July, the prices of gold and silver appeared to break a five-month upward trend by drawing back about 5 percent from the record June peaks. Despite many similar corrections that have occurred frequently during the long bull market in precious metals, pundits nevertheless looked to draw bold and significant conclusions from the drop.

2010-07-21 Fixed Income Investment Outlook by Team of Osterweis Capital Management

It is unlikely that the Federal Reserve will soon reverse its easy-money policies amidst worries about the European government debt crisis, meager job growth and low inflation in the U.S. In light of all these concerning developments, Osterweis continues to take a conservative approach by focusing on securities that will experience less volatility in the current unpredictable environment. These include short duration bonds and certain 'cushion' bonds, which are longer-term, high coupon bonds that will likely be refinanced in the near term, well in advance of their maturities.

2010-07-21 No Golden Ticket by Nouriel Roubini of RGE Monitor

Why aren't we giddy about gold? In the abstract, gold is most attractive as a hedge in one of three extreme scenarios: high inflation, persistent deflation, or when the risk of global financial meltdown is large. Once national balance sheets are repaired through a protracted and gradual deleveraging of households and governments following the relatively rapid deleveraging of the financial sectors, particularly in the United States, excessive deflation and inflation fears will subside.

2010-07-20 Cash Investing: Considerations for Investing in a Low Interest-Rate Environment by Northern Trust Investments (Article)

Northern Trust's chief economist, Paul Kasriel, forecasts that interest rates will remain low for the remainder of 2010. Investors are looking for guidance on how they should best position their cash and fixed income portfolios to take this environment into consideration, and should consider the tradeoff between liquidity and yield. We thank Northern Trust for their sponsorship.

2010-07-20 World Growth on the Rise but Europe's Weakened Economy Threatens Global Recovery by Team of American Century Investments

Global economic activity is improving, but significant headwinds remain, particularly within the developed world, where mounting sovereign debt threatens long-term economic gains. So far, government responses to the crisis have varied, and this lack of coordination may lead to divergent economic performance in the year ahead. Emerging markets have held up relatively well, primarily because they have managed their economies frugally throughout the past several years. Globally, corporations are generally enjoying expanding profit margins, while balance sheets remain solid.

2010-07-20 Summer Essays by Jeremy Grantham of GMO

This is a summary of Jeremy Grantham's 2Q 2020 newsletter. Grantham says that weak a weak economy and declining or flat prices are likely for the immediate future. A global equity portfolio with annual returns of 6 percent plus inflation is still possible, however, by overweighting high quality U.S. stocks and underweighting other U.S. stocks. Grantham also comments on the financial reform bill, fear and speculation in the stock market, global warming, the 'seven lean years' hypothesis, aging populations and health care costs.

2010-07-19 Double-Dip? Seven Reasons Why Not by Milton Ezrati of Lord Abbett

It seems these days that half the headlines in the financial media fear a double-dip recession, as do half the conversations on Wall Street. There certainly are risks, not the least in Europe's financial difficulties. But still, there are reasons to question such widespread concerns. History, after all, offers only one true double-dip experience, and that grew out of a policy error. Moreover, the actual data on the economy flies in the face of such an outlook. Milton Ezrati outlines seven reasons to doubt the double-dip outlook.

2010-07-19 Weekly Investment Commentary by Bob Doll of BlackRock

Stock prices have corrected sharply since mid-April and have remained in a broad trading range for the past several weeks. Equity markets appear to be caught between a number of positive and negative forces. Over time, the positive forces should win out and stocks should grind higher, but it would not be surprising to see equity markets remain in their current trading range until there is more clarity around the severity of the current economic slowdown.

2010-07-17 And That's the Week That Was... by Ron Brounes of Brounes & Associates

So much information; so little time to digest. While earnings season kicked off to some mixed results, investors also eyed critical news from BP, Goldman, Apple, the Fed, and even Playboy as they attempted to determine the next direction for the markets. The early weak euphoria was replaced by newfound late-week concerns and stocks did another about-face as the game of streaks continued. Aren’t the summers supposed to be slow and boring?

2010-07-17 The Debt Supercycle by John Mauldin of Millennium Wave Advisors

The Debt Supercycle, as posited by the Bank Credit Analyst, is the decades-long growth of debt from small and easily-dealt-with levels, to a point where bond markets rebel and the debt has to be restructured or reduced or a program of austerity must be undertaken to bring the debt back to manageable proportions. The consequences for each country will be different, and the U.S. is a long way off from "the end." A key point will be the 2014 elections, when critical budget decisions must be made.

2010-07-16 Global Government Spending Hits the Tipping Point... by Jason R. Graybill and Neil D. Klein of Carret Asset Management

A combination of spending cuts and tax increases could weigh on economic growth. This is important to bond investors over the short term, as global deleveraging will create slower global GDP growth and provide lower levels of inflation. In the longer term, governments will probably use their printing presses to inflate their way to lower debt levels while investors will demand greater returns relative to the interest rate and credit risks they assume. Thus, with an outlook towards higher rates in the years to come, Carret remains focused on short-duration, high quality portfolios.

2010-07-15 Emerging Asia's On/Off Switch by Nouriel Roubini of RGE Monitor

In 2009 and the first half of 2010, low interest rates and an uncertain global outlook led to strong, volatile capital inflows into some of Asia's most promising economies. Policymakers in these places - which include, among others, Hong Kong, Taiwan, Singapore, South Korea, Indonesia and India - need to tighten monetary policy sooner rather than later. New inflows from the rest of the world might prove problematic, but at present low or negative real interest rates seem to be fueling speculative investment by domestic players, and that too is a dangerous dynamic.

2010-07-15 Facts on the Ground by Paul McCulley of PIMCO

What the developed world faces is a cyclical deficiency of aggregate demand, the product of a liquidity trap and the paradox of thrift, in the context of headwinds borne of ongoing structural realignments. Front-loaded fiscal austerity would only add to that deflationary cocktail. And that's what the market vigilantes are wrapped around the axle about: They are not fleeing the sovereign debt of fiat currency countries but rather fleeing risk assets, which depend on growth for valuation support.

2010-07-15 Stress Test Is No Shortcut to Stability by Mohamed A. El-Erian of PIMCO

Will the testing of 91 European banks by regulators stabilize the region's finances? After all, a similar approach in the U.S. last year may have helped normalize financial markets there. The U.S. stress test, however, applied to institutions that were the main cause of the financial instabilities, and the government had budgetary room to support the sector. Europe's concern about banks is a derived concern, reflecting worries about sovereign debt in some countries and the overall economic situation; and there are greater limits today on budgetary resources.

2010-07-14 U.S. Equity Newsletter by Team of W.P. Stewart

One thing is certain - there is a lot of bad news around and many people are now forecasting a double-dip recession. 'Bad news,' however, may already be factored into prices. Global growth is still expected to be solidly positive in 2010 and 2011, albeit somewhat skewed to the emerging markets. Corporate balance sheets are very robust, productivity has never been higher and earnings growth remains strong even on somewhat reduced estimates. Equities should therefore offer significantly better returns than bonds or cash.

2010-07-06 Implications of a Likely Economic Downturn by John P. Hussman of Hussman Funds

Instead of directing savings toward investments in real, productive assets that we would observe as physical output, fixed capital, and equipment (and claims on those assets in the form of corporate stocks and bonds), our economy has been forced to choke down a massive issuance of government liabilities in order to bail out bad debt. For every dollar of debt that should have defaulted, we now have two dollars of debt outstanding: the original debt, and a newly issued government security. What appears to be 'sideline cash' is simply the evidence of past spending.

2010-07-02 And That's the Quarter That Was... by Ron Brounes of Brounes & Associates

As the quarter began, the economy continued its trek toward recovery; confidence had returned to corporate boardrooms; and investors were pouring their “cash-on-the sidelines” back into risky assets. Just when all seemed right in the world again, tiny Greece (and huge BP) began dominating the headlines. (Remember when a mere volcano was big news?)

2010-06-30 Will Debt Problems Metastasize to ‘Core’ European States? by Nouriel Roubini of RGE Monitor

One of the major issues is whether the problems of the PIIGS will metastasize from the eurozone periphery into the “core” countries of the continent. This commentary focuses specifically on Belgium, which has the third highest debt-to-GDP ratio in Europe. It is uncertain how Belgium’s necessary belt-tightening measures can be implemented, particularly given the dim prospects of a durable political consensus.

2010-06-30 Asset Allocation Thoughts by Tony and Rob Boeckh of Boeckh Investment Letter

This commentary provides an asset allocation framework for investor’s portfolios that reflects our macro view, concerns about the general riskiness of the financial world and a variety of issues that go into the asset allocation process. In general, we continue to be positive on risks assets in the context of our continuing focus on wealth preservation and diversification. Probabilities favor a recovery in stock and commodity prices rather than an extended bear market.

2010-06-29 Inflation Protection Investment Strategies by Vern Sumnicht (Article)

The value of the dollar is sure to erode, and investors will be left to grapple with the inflationary consequences. As Vern Sumnicht shows in this guest contribution, recent policies suggest steep inflation may be just around the corner. Fortunately, investors have some options to bolster their portfolios against the threat of inflation.

2010-06-29 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

‘The stock market registered its concern for a slowing economy by falling nearly every day last week, at least in terms of the Dow Jones Industrial Average,’ explains Tom McIntyre. Between the Gulf oil spill, the housing market, increased costs on business and tax hikes, investors are on their heels. Yet, these factors also produced a very strong dollar, record low interest rates and energy costs. McIntyre agrees with ECRI predictions that it is too early for a double dip, however a slowdown will occur and advisors will respond by the composition of their portfolios.

2010-06-28 Recession Warning by John P. Hussman of Hussman Funds

Warning: the US economy appears to be headed into a second round of decline. Looking at lessons learned across countries and centuries, Dr. John P. Hussman argues that that ‘the economy is again turning lower, and that there is a reasonable likelihood that the U.S. stock market will ultimately violate its March 2009 lows before the current adjustment cycle is complete.’ The current argument that this outcome is ‘unthinkable’ is not evidence but rather reflects reliance upon incomplete data and narrow-minded perspectives.

2010-06-25 The Big Picture by David A. Rosenberg of Gluskin Sheff

Escalating global economic imbalances have dramatically increased the vulnerability of the global recovery. The chances of a growth relapse in the second half of the year are higher than the equity market and credit market have priced in. Treasury bonds seem to be the asset class that most closely shares these cautious views. Anyone with a pro-cyclical bent has to answer for why it is that the yield at mid-point on the coupon curve is below 2 percent, a year after a whippy rally in equities and commodities and what appeared to be a sizeable policy-induced GDP jump off the bottom.

2010-06-25 Beyond the Growth Vs. Austerity Debate by Mohamed A. El-Erian of PIMCO

This weekend’s G-20 meeting will likely fuel, not resolve, the heated debate triggered by a combination of exploding debt and deficits in industrial countries, and the recognition that many now face a future of muted growth and high unemployment. In one corner stand the 'growth now' camp, arguing that expansion is a prerequisite to service their debt sustainably. Against them stand the 'austerity now' camp, who want budget cuts to lower risk premiums and stave off disruptive debt restructurings. The two sides are both right, and wrong.

2010-06-22 Niall Ferguson on Japan, China, and the US by Dan Richards (Article)

Harvard's Niall Ferguson is arguably today's leading economic historian. In part two of this interview, Ferguson explains why he fears the future is bleak for Japan, why China may someday be the leading global superpower, and what all this means for the US. We provide a video and a transcript.

2010-06-22 Odds of a Double-Dip Recession Remain Low by Bob Doll of BlackRock

Equity markets should be able to make additional gains over the course of this year. This outlook is not so much a forecast of significantly improving economic news as it is an expectation that many of the risks facing investors will fade over the coming months. The direction of financial regulatory reform in the United States should become clearer and the slowdown in Chinese growth should result in a soft landing. The uncertainty surrounding European sovereign debt, however, remains the chief wild card.

2010-06-22 Navigating Fears of the Bond Market by James Pressler of Northern Trust

The need to keep the bond market happy while implementing often far-reaching fiscal reforms is most acute across Europe, where the outlook is for weak real GDP growth into 2011 – albeit with significant variations between countries. Conversely, the recoveries in Asia and in the Americas have effectively eliminated fears of sovereign defaults but now concerns over economic overheating will dominate. The U.S will eventually have to address its own public debt overhang, but for now is enjoying a temporary safe-haven status.

2010-06-21 Talking the Economy: Alex Pollock, Bruce Bartlett and Josh Rosner by Christopher Whalen of Institutional Risk Analyst

This commentary features snippets from interviews by IRA co-founder Chris Whalen for his upcoming book, Inflated: How Money and Debt Built the American Dream, which is scheduled for release in November. Alex Pollock of the American Enterprise Institute, Bruce Bartlett, a domestic policy adviser to President Ronald Reagan and Treasury official under President George H.W. Bush, and Josh Rosner, principal of Graham-Fisher, all discuss the economic outlook.

2010-06-18 And That's the Week That Was... by Ron Brounes of Brounes & Associates

As politicos took shots oil company execs, the joint strategy from the oil giants seemed apparent…throw BP under the bus: “…a dramatic departure from the industry norm in deepwater drilling…,” “what went wrong at this well that did not occur at the 14,000 other deepwater wells that have been successfully drilled around the world…,” “an independent investigation of the accident will show that this tragedy was preventable.” BP’s chairman and CEO expressed “deep regret” over the spill’s impact (though both denied any involvement in key decisions leading up to the disaster).

2010-06-17 The New Economic Reality - Part III by Monty Guild and Tony Danaher of Guild Investment Management

Inflation can occur in either an economic expansion or a depression. In either case gold, currencies of countries with conservative financial management and stable banking systems, real estate, and other real assets can do well. In an inflationary expansion fast growing companies and producers of commodities will also do well. During deflation, bonds will do well if the issuer can make the payments. Gold often holds its value in terms of buying power even in a depression.

2010-06-15 June Economic Update by Team of Cambridge Advisors

Former hedge fund manager Keith McCullough compares America's current situation to Lehman in 2008 in that it is borrowing short to fund long-term liabilities. We can see the effect that high sovereign debt is having in Europe, and the U.S. is heading down a similar path. U.S. debt as a percentage of GDP is already higher than that of troubled Spain. Analysts have warned that higher taxes alone will not be enough to solve America's debt problem. Reduced government spending is needed and higher inflation may be unavoidable.

2010-06-14 Twelve Weeks Later, The Recovery Remains On Track by Bob Doll of BlackRock

Equities have already priced in the likelihood of somewhat slower economic growth in the coming months. Volatility measures will remain high because markets still remain subject to many risks, not the least of which is the high degree of uncertainty surrounding the European debt crisis. In any case, the bulk of the current correction should be behind us, while the positive macro backdrop and improving valuations will provide a floor for equity prices. Investors will need to remain patient, since it will still take some time before base-building can allow markets to regain ground.

2010-06-14 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The Economic Cycle Research Institute's year-over-year growth rate has turned negative. Their interpretation is that the growth rate will slow soon, but it is too soon to conclude whether or not a new recession is in the cards for 2011. The market is pleased with the stability in the currency exchange rates, while the lower interest rate outlook is helping many sectors of the economy along with lower gasoline prices for the summer driving season. So the news is mixed, but it looks like the next move for the stock market will be up.

2010-06-11 And That's the Week That Was... by Ron Brounes of Brounes & Associates

So just who is corporate public enemy number one these days: BP? Goldman Sachs? AIG? While BP has been garnering much of the negative attention these days, Goldman’s unfavorable image resurfaced (and, of course, AIG always remains lurking in the background, especially whenever Goldman’s challenges are revealed). This week, the markets tried to disregard that negativity and equities enjoyed their first “up” week in the past month. Even a late-week lower-than-expected retail sales release couldn’t overcome the new-found optimism of some well-timed ECB and Fed comments.

2010-06-10 Addressing Investor Concerns after Heightened Volatility by Mark Mobius of Franklin Templeton

Mark Mobius shares responses to investor questions on emerging markets. Emerging markets continue to be fundamentally strong, with high growth levels, a lower debt-to-GDP ratio compared to developed markets, higher foreign reserves and declining risk. Credit default swaps in many emerging market countries now trade at lower spreads than those of some European countries. On average, however, investors still have a weighting of just 3-8 percent toward emerging markets in their portfolios, while emerging markets now represent about 30 percent of the global market capitalization.

2010-06-10 Bull Market Should Continue, But Patience is Warranted by Bob Doll of BlackRock

Markets remain caught in a tug of war between reasonably strong economic fundamentals and escalating threats of external shocks. As long as the world economy does not sink back into an unlikely recession, however, equity markets should be able to weather the current period of uncertainty. The economic recovery should continue, although the pace should be relatively slow and interrupted along the way by periods of disappointing data. Investors will need to see a recovery in European debt markets and evidence that contagion can be contained before confidence can be restored.

2010-06-08 Five Strategies for a Rising Rate Environment by Kane Cotton, CFA and Jonathan Scheid, CFA (Article)

The Federal Reserve can't accommodate forever, and the global stimulus effort will likely lead to inflation. Our growing indebtedness can only result in increased borrowing costs. That much we know. What we don't know is when and how quickly interest rates will rise. In this guest contribution, Kane Cotton and Jonathan Scheid examine five strategies for a rising rate environment.

2010-06-08 Dan Fuss: What Keeps Bond Managers Up at Night by Dan Richards (Article)

Highly respected fixed-income manager Dan Fuss of Loomis Sayles recently spoke with Dan Richards about what keeps bond managers up at night. Fuss identifies the critical issues bond investors face. We provide a video and a transcript of the interview.

2010-06-08 The Phantom Recovery by Peter Schiff of Euro Pacific Capital

Once the euro finally stabilizes against the dollar, commodity prices should resume their rise, especially oil. Normally, the uncertainty created by the disastrous oil spill in the gulf and the resulting moratorium on deep-water drilling would have sent crude oil prices skyrocketing. However, fears of a global slowdown, euro weakness, and general risk aversion have held prices in check. As Asia continues its growth and Europe regains its footing, there should be a delayed surge in oil prices, which will put yet another obstacle on the road to US recovery.

2010-06-08 Weekly Commentary & Update by Tom McIntyre of McIntyre, Freedman & Flynn

The year-over-year advance in current indicators is at a 50-week low and could be ready to turn negative soon. This has happened 12 times in the past and it produced only 3 recessions. Consequently, it is too early to predict a double dip for this year, but clearly a slowing down is in the cards and this along with the absence of temporary census workers will make for several months of disappointing employment numbers. President Obama needs to get some better advice from his advisers as to how to handle this situation.

2010-06-07 The European Disease by Niels C. Jensen of Absolute Return Partners

It should be blatantly clear that Greece is by no means the only country at risk of falling into the much dreaded debt trap. The United Kingdom, the United States, New Zealand, Spain, France, Portugal and Australia are all in dangerous territory and Ireland is in very deep trouble on this account. This cross-European contagion risk threatens the very existence of our banking system, and it is this risk that French and German leaders are thinking about when they say that Greece will not be allowed to go down.

2010-06-04 The New Economic Reality - Part II by Monty Guild and Tony Danaher of Guild Investment Management

Some investors believe that deflationary influences will lead to an immense slowdown in world economic activity, and thus thus are selling stocks, buying bonds and short-selling commodities. Others think government action to forestall the deflation will end up creating inflation, and are buying commodities, buying stocks and avoiding bonds As the two sides pull markets back and forth, volatility will continue. To deal with the volatility, Guild is holding a large percentage of client assets in cash and gold, which can rise in either an inflationary or a deflationary situation.

2010-06-02 Be Water, My Friend! by Jeffrey Saut of Raymond James Equity Research

As the old sailor's axiom states, you can't change the direction of the wind, but you can adjust the sails. Clearly, the stock market's 'winds' have been in a downdraft. Last month was the worst May for the S&P 500 since 1962. Granted, the May Melt could have been worse if the SPX had stayed at last Tuesday's low of 1040.78, but most oversold indicators are about as compressed as they ever get. This week markets will have to deal with yet another disappointment after BP's failed top-kill operation in the Gulf. The best strategy now is thus defense, until the 'sell signal' reverses.

2010-06-01 Europe: Value or Value Trap? by Dan Trosch, CFA (Article)

European equities seem much cheaper than in the US, says Dan Trosch of Fortigent in this guest contribution. Europe trades at a 26% Price to Book discount and a 20% Price to Cash Earnings discount to the US. Some European industries and stocks are deservedly cheap and value traps; other industries and stocks are attractive and will benefit from global growth in exports and other macro trends.

2010-06-01 Oil and Red Ink by John P. Hussman of Hussman Funds

It's no longer reasonable to apply previous risk estimates even after we've observed a major disaster. Before the housing crisis, it might have been tempting to shrug off mortgage defaults as relatively isolated events, since the price of housing had generally experienced a long upward trend over time. Indeed, historically, sustained declines in home prices could be shown to be very low probability events. But as the bubble continued, investors made little attempt to assess the probability of a debt crisis.

2010-06-01 Global Equity Markets Slip on Greek Debt Crunch by Team of American Century Investments

Fears of a Greek default have heightened concerns about the financial stability of several other peripheral European countries. Spain, Ireland, Italy and Portugal, however, are not in the same situation as Greece. Italy in particular is in a separate, stronger category than the others. It is less reliant on foreign financing, with Italians owning a high percentage of their own sovereign debt. Italy also lagged in the economic boom prior to the global recession, a blessing in disguise because its banking sector is now not as over-leveraged to the housing market as banks in other countries.

2010-06-01 The New Economic Reality by Monty Guild and Tony Danaher of Guild Investment Management

There is too much debt throughout the developed countries, and not enough growth to service that debt. The first phase of the current deleveraging cycle began about 20 years ago, when Japan's giant real estate and stock market bubble began to deflate. The second began in 2007, when the U.S. real estate lending bubble burst. The third began this year, with the European sovereign debt crisis. U.S. investors should buy only on dips, be selective, and look for good income, strong balance sheets, and strong earnings growth generated from internal cash flow.

2010-05-28 The Real Deal by Michael Nairne of Tacita Capital

Investors will face turbulent markets over the next several years as the world's credit implosion, now mutated into a sovereign debt crisis, plays out. Broad global asset class diversification is essential to riding out this storm. However, in the long run, it is the real economy that matters to equity returns. In today's climate of uncertainty, long-term investors should take heart that the drivers of world GDP growth - labor force growth and productivity increases - remain intact.

2010-05-28 May Volatility, Downward GDP Revision and Sputtering Labor Markets by David A. Rosenberg of Gluskin Sheff

We are still in the midst of a credit collapse. There is simply too much debt and debt service globally relative to worldwide income. The fact that we had a year-long respite does not alter this view, because that respite was induced by an unsustainable pace of bailout and fiscal stimulus in practically every country on the planet, not just in the United States. Governments bailed out the banks and stimulated the economy. But because the revenue cupboard was bare, public sector debt loads exploded at all levels of government, and to varying degrees, in every jurisdiction.

2010-05-28 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Move over Greece…here comes Spain. While one tiny euro country dominated the press for months, another looks to be taking over the headlines. This week, Spain announced significant budget cuts, and then its debt was downgraded by Fitch right before the weekend began (and after many traders had departed). China offered a “vote of confidence” for the euro-zone (at least, before the Fitch move). At home, the numbers continue to impress and say “recovery,” though investors can’t help but keep an eye (or two) on Europe as equities suffered their worst month since February 2009.

2010-05-27 Greece, Portugal and Spain Are the Least of Our Economic/Financial Challenges by Paul Kasriel and Asha Bangalore of Northern Trust

The debt problems that Greece, Portugal and Spain are currently facing have undoubtedly had a negative effect on global financial markets, and will probably have some negative effect on global economic activity. Problems with these countries, however, will not derail the global economic recovery that is currently underway. The biggest threat to the continuation of the global economic recovery would be some policy mistake by the Chinese economic policymakers resulting in a rapid deflation of the Chinese real estate bubble, which, in turn, would reduce Chinese real GDP growth.

2010-05-26 Two Will Get You Three (or) Three Will Get You Two by Bill Gross of PIMCO

Fiscal tightening and budget conservatism may have come too late for Greece and its global lookalikes. Continued deficit spending may be an exorbitant privilege extended to only a few. Caught in the middle are many developed countries that will likely face muted growth rates and a continued bumpy journey toward their destinations. Investors must respect this rather tortuous journey in the months and years ahead for what it is: a deleveraging process based upon too much debt and too little growth to service it.

2010-05-26 Emerging Market Vs. G7 Debt Levels by Team of Bespoke Investment Group

Bespoke provides tables comparing debt levels in G7 and emerging market countries. The average level of public debt to GDP among G7 countries is 94 percent. Two countries, Japan and Italy, have levels of debt that are in excess of 100 percent of GDP. Compared to the other six countries on the list, the U.S. debt level of 52.9 percent seems downright thrifty. Meanwhile, the average level of debt in emerging market countries is just 37.4 percent. If concerns over debt are the major issue behind the correction, emerging market countries should thus rebound the strongest in any recovery.

2010-05-25 Seth Klarman is More Worried than at Any Time in his Career by Robert Huebscher (Article)

The concern that the dollars he earns for his clients will lose their purchasing power is always on hedge fund manager Seth Klarman's mind. The possibility that the government will continue to print money to solve our economic problems has left him more worried than at any time in his career. We report on Klarman's remarks at last week's CFA conference.

2010-05-25 Ken Rogoff Expects Slow Growth and Sovereign Defaults by Robert Huebscher (Article)

Among the crush of analysis devoted to the financial crisis, perhaps none has been as influential as that of Kenneth Rogoff and Carmen Reinhart, co-authors of the book This Time is Different. Looking back at 800 years of data on emerging and developed economies, they showed that financial crises - and the recoveries from those crises - follow a highly predictable pattern, and the title of their book was a jab at those who suggest otherwise. Rogoff also spoke at the CFA conference.

2010-05-24 European Discord? by Komal Sri-Kumar of TCW Asset Management

German taxpayers have started to view the European Union merely as a 'transfer union,' where they incur tax hikes and spending cuts in order to make transfers that enable their southern neighbors to maintain social welfare provisions. Sooner or later, the political willingness to continue this pattern merely in order to sustain a common currency will cease. At that time, the choice will be to reconstitute the euro area, or agree that weaker nations with debt problems need to reduce and restructure their debts rather than pile on more.

2010-05-24 Correction Should Be Nearing Completion by Bob Doll of BlackRock

The worst of the downturn should be behind us, but it will likely take some additional time before markets can repair themselves. Looking ahead, one positive factor is that market valuations have become more attractive in recent weeks, as prices have dropped while earnings have increased. Over time, additional clarity around the situation in Europe and financial market reform in the US should provide a measure of stability; and a sense that the economic recovery remains on track should help spark a turnaround in the recent aversion to higher-risk assets.

2010-05-21 Take Your Pick - A Tale of Two Investment Trends by Monty Guild and Tony Danaher of Guild Investment Management

The developed world is deleveraging and Europe is moving toward deflation and depression. Meanwhile, the Chinese, Southeast Asian, and Indian-led developing world is growing and experiencing inflation. Guild’s portfolios are largely in cash and, and they will spend it as bargains appear. Investors should consider buying gold and begin looking at China’s market, which is becoming attractively priced. In the case of oil, Brazil, India, Korea, and Singapore Guild plans to wait until the fear subsides and use the correction as an opportunity to buy into these markets.

2010-05-20 An Emerging Conundrum by John West of Research Affiliates

Emerging economies have nearly doubled relative to the developed world since the mid-1990s. Despite this growth, however, emerging financial markets have performed relatively poorly over the long term as measured by the traditional indices. This gap between emerging market economic and stock market performance is a direct result of the return drag from capitalization weighting. Often, one, two, or at most a handful of stocks dominate local emerging markets. Not once have these large capitalization stocks collectively outperformed the rest of the market over a five-year period.

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

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

2010-05-18 Jeremy Grantham Guarantees Gold will Crash by Robert Huebscher (Article)

Jeremy Grantham, the investor celebrated for his ability to spot and exploit bubbles in asset classes, guaranteed yesterday that the current bull market in gold will end. His proof? He bought some - for his own account - at the end of last week. That comment was tongue-in-cheek, but he went on to identify two asset classes likely to go into bubble territory.

2010-05-18 Anthony Boeckh on the Great Reflation by Robert Huebscher (Article)

Tony Boeckh has been the guiding force behind Bank Credit Analyst, and in this interview he discusses his new book, The Great Reflation. Boeckh stakes out a deflationary forecast, and explains how the flow of liquidity in the financial system will determine asset class performance.

2010-05-18 Sovereign Debt Crisis Drives Volatility Higher by Bob Doll of BlackRock

Investors have grown increasingly concerned about the potential for contagion from Europe, fearing credit issues could affect other markets. While European Union rescue plans do not address the underlying fundamental issues facing Greece and other countries, however, immediate liquidity risks should be contained in the short term. On a relative basis, U.S. markets have benefited from the uncertainty, as investors have continued to view the United States as a higher-quality haven for their assets. This makes U.S. stocks more attractive than those of other developed markets.

2010-05-18 Understanding Recent Negative International Bond Returns by Team of American Century Investments

This year so far has been a challenge for U.S. investors in high-quality, unhedged international bonds, continuing a downtrend for this sector that began in December of last year. Fortunately, the long-term strategic reasons for holding international bonds remain intact, including inflation protection from a potentially weaker dollar as the U.S. budget deficit grows, and diversification benefits versus traditional domestic fixed income.

2010-05-17 Gold, Oil and the European Economic Crisis by Monty Guild and Tony Danaher of Guild Investment Management

Why is oil falling while gold is rising during the European sovereign debt crisis? Gold is rising because quantitative easing in Europe will be highly inflationary in the long term and destructive to the standard of living of every citizen of the developed world, especially in Europe. Oil is falling as investors fear the austerity measures that are required in Europe will shrink economic demand. The other parts of Europe and the U.S. will all have their 'Greece Moment' in the coming months and years. When that happens, investors will be grateful for their gold holdings.

2010-05-14 Lessons from Argentina on the Outcomes of a Possible Greek Default by Richard Thies of Northern Trust

As a member of a currency union, Greece cannot pair a restructuring with a large currency devaluation, two things that have usually gone hand in hand. That alone is enough to conclude that a Greek default would be hugely different from anything we've witnessed. As Argentina's default demonstrated, as much as it may look like the International Monetary Fund or other countries such as Germany are pulling all the strings, the decision at the end of the day is in the hands of the country's government.

2010-05-12 Has the EMU Skirted Disaster? by Nouriel Roubini of RGE Monitor

Although many operational questions remain unanswered, the €750 billion headline number for this week's euro area stabilization mechanism - in addition to the European Central Bank liquidity facilities and quantitative easing - should help fight contagion. It is now up to euro area periphery countries to fulfill the fiscal consolidation requirements. In addition, the relatively high interest rates on joint loans should serve as an incentive for euro area members to put their fiscal houses in order without recurring to the facility.

2010-05-12 Eight Hundred Years of Financial Folly by Carmen M. Reinhart of VoxEU

This column, first posted on April 19, 2008, argues that sovereign debt crises have historically followed financial crises. Although data covering only the last thirty years might have given few hints about Greece's current problems, the Reinhart-Rogoff database spanning eight centuries reveals that today's event are very much in line with historical experience.

2010-05-12 A Typical European Response To An Atypical European Problem by Victoria Marklew of Northern Trust

Markets heaved a sigh of relief this week after European Union officials announced their $1 trillion rescue plan to save the euro. European states, however, will still have to face medium-term problems concerning fiscal deficits and economic restructuring. Demands that Spain make a renewed commitment to fiscal austerity suggest a new level of cross-country intervention. And the big issue has been swept under the carpet: how to ensure prudent fiscal policy-making across the 16 members of a monetary alliance with strong national identities and prickly memories of past hostilities.

2010-05-11 Positives Should Outweigh Negatives by Bob Doll of BlackRock

Given the sharpness of recent trading swings, many investors will continue to approach the markets with caution. Markets remain under pressure as a result of the sovereign debt issues in Europe, policy tightening in China and elsewhere, and uncertainty surrounding pending regulations for the financial services sector. The positive forces of improving economic growth, however, including an absence of inflation, low interest rates and stronger corporate earnings, should continue to move markets higher.

2010-05-11 Spring Quarterly Commentary by Alan T. Beimfohr and John G. Prichard of Knightsbridge Asset Management

The stock and bond markets are currently consumed with evaluating the risks from the crisis in Greece...and at Goldman Sachs. Each crisis could cause losses for investors. The simple fact, however, is that by the time most armchair investors have been alerted to impending tragedies, the tragedies have largely already occurred. That is why being reactive is seldom a prescription for loss avoidance, and why such crises are seldom viewed by investors as opportunities for gains.

2010-05-11 ECB Sterilization -Trichet's Maginot Line? by Paul Kasriel of Northern Trust

European Central Bank president Jean-Claude Trichet has stated that the ECB will drain by other means the amount of base money it creates through sovereign debt purchases. If Milton Friedman was correct that inflation is everywhere and always a monetary phenomenon, however, then Trichet need not worry about a sustained acceleration in euro area inflation given recent declines in euro area money and credit aggregates. Northern Trust also comments on the Federal Reserve's swap lines with other central banks, and a recent small business survey.

2010-05-10 Brushwood is to Forest Fires as Leverage is to Financial Crises by David Edwards of Heron Financial Group

Leverage ratios are way down since the financial crisis. The issuance of leveraged securities such as collateralized debt obligations, collateralized loan obligations and commercial mortgage-backed securities is nearly completely halted, and so the 'brushwood' necessary to stoke the next financial crisis is almost entirely absent. Heron also comments on the significance of Greece, Thursday's 'flash-crash,' the weakness of financial regulation, technicals vs. fundamentals, and investment strategy.

2010-05-10 Euro-Sclerosis No Longer and Last Week's Market by David A. Rosenberg of Gluskin Sheff

In what can only be described as a spectacular showing of solidarity, European Union finance ministers managed to cobble together a 750 billion euro stabilization program. This is over and above the 110 billion euro Greek bailout package announced last week and is widely seen as a very powerful countermove against the 'wolf pack' that had been attacking the peripheral euro area financial markets over the past few weeks. Equities, commodities , credit and lower-tiered sovereign bonds should all improve markedly. Gluskin also comments on last week's uncertainty in capital markets.

2010-05-10 Greek Debt and Backward Induction by John P. Hussman of Hussman Funds

Despite the potential for a short burst of relief, the broader concern about deficits in the euro area make it unlikely that global investors will be appeased by a large bailout of Greece, or will go forward on the assumption that all is back to normal once that happens. Looking at the current state of the world economy, the underlying reality remains little changed: There is more debt outstanding than is capable of being properly serviced. Hussman also comments on overbought equity markets, and the current market climate.

2010-05-08 The Center Cannot Hold by John Mauldin of Millennium Wave Advisors

Citing a paper from the Bank for International Settlements, Mauldin says increasing sovereign debt has two consequences - higher interest rates for that debt and lower growth rates for the underlying economies. Growth in sovereign debt at its current rate is unsustainable and poses systemic risks for the global economy. Fiscal austerity is the only solution, and that seems unlikely, particularly in the case of Greece.

2010-05-07 The Right Page of the Right Book by Team of Beacon Pointe

The beginning of 2010 saw a continuation of the 2009 rally. Most stock exchanges around the world, with the notable exception of China, posted positive returns for the quarter and added to their gains off the March 9, 2009 trough. The major indices, however, remain well below their previous highs. The post-bear rally has been fast and furious and at this time, a pause seems justified. The exact timing and nature of this pause, however, are highly uncertain.

2010-05-07 Wild Ride by Mark Oelschlager of Oak Associates

The market went on a wild ride Thursday. The fundamental explanation for the selloff and the correction that began in April is the sovereign debt problem in Europe. At times like this, it is important to remember that stock prices represent the discounted value of a firm's future cash flows. Earnings season is winding down, and first quarter profits have been very strong, even though revenues are just starting to recover to previous levels. Despite the myriad of worrisome big-picture issues, corporate America is healthy and companies are trading at reasonable valuations.

2010-05-07 Understanding the Greek Aftershocks by Mohamed A. El-Erian of PIMCO

The Greek crisis has already morphed into a regional shock. It now stands on the verge of morphing into a more global phenomenon. Some countries will benefit, mainly on account of capital flows coming out of the euro area. The majority will not. And even those that do benefit should remain vigilant and responsive. Like most other countries in the world, they will also end up suffering from the consequences of lower international demand and renewed disruptions to the global banking system.

2010-05-07 Greece and Possible Contagion by Charles Lieberman (Article)

The equity market melted down yesterday, partly due to a trading error, but also out of fear of contagion from Greece to Spain and Portugal. Europeans will need to draw a line in the sand to prevent the possibility of contagion, or risk a broad loss of liquidity across Europe. A strong policy response, possibly including a European Union guarantee on the sovereign debt of all its members, as well as support for the European credit markets from the European Central Bank, should calm the markets. Markets will remain quite volatile until these key players take strong policy action.

2010-05-07 Is Sovereign Debt Crisis Contained to Subprime? by Peter Schiff of Euro Pacific Capital

When mortgage-backed securities started to go bad, it wasn't as if the problems emanated in subprime and subsequently 'contaminated' the rest of the market. All borrowers were infected with the same disease, but the symptoms merely expressed themselves sooner in subprime. The same is true on a national level, whereby Greece plays the part of the subprime borrower. Even though the U.S. is considered to be the highest order of 'prime' borrower, our debt-to-GDP levels are at crisis levels compared to historic precedents, and are not that much lower than those of Portugal or Spain.

2010-05-07 And That\'s the Week That Was... by Ron Brounes of Brounes & Associates

So when is a 350 point down day considered a good thing? Perhaps, after it recovered from an earlier decline of almost 1,000 points? For a week at least, bullish investors went into hibernation and the bears reappeared, warning everyone about Greece, Goldman, Congress, deficits, the Fed, earnings, inflation, and everything else that could negatively impact the markets. Add a few potential technical computer glitches and maybe a heavy trading finger or two and you have one of the worst weeks among equities ever (memories of 2008).

2010-05-06 Global Market Correction Has Begun! by Komal Sri-Kumar of TCW Asset Management

The upward march of global equity markets in recent months is unsustainable. While U.S. corporate earnings have recorded healthy increases in recent quarters and, thereby, have been supportive of equity prices, the worldwide macroeconomic backdrop has continues to cause concern. The risks include, but are not limited to, a surge in the level of sovereign debt, a plunging dollar as foreign holders decide to cut their exposures in U.S. Treasury obligations, and a surge in U.S. Treasury bond yields.

2010-05-06 First Quarter 2010 Market Review and Outlook by Ronald W. Roge of R.W. Roge

Recent signs of economic strength are encouraging, but mostly stem from temporary factors like stimulus spending and inventory rebuilding. Based on current valuations, it is likely that stock returns will trend below average in the next five years. Even under more optimistic scenarios, annualized equity returns barely reach double digits. This goes for stocks of both domestic and foreign developed markets. Roge's investment view therefore remains cautious, balanced and flexible.

2010-05-05 Gold Prices – Just the Facts (and other notes) by Asha Bangalore of Northern Trust

The gold bug is alive and kicking. The current gold price of $1169.50 is more than three times the long-term average of $320.10. Uncertain economic conditions and sovereign debt issues have modified the place of gold in portfolios. Self-sustaining economic growth in one or more of the G-7 nations is necessary to reverse the course of gold because the low interest rate environment yields poor returns on interest-bearing assets. Northern Trust also comments on gains in the housing market due to the impending expiration of the homebuyer tax credit.

2010-05-04 Lacy Hunt: Keynes was Wrong (and Ricardo was Right) by Robert Huebscher (Article)

Underpinning the Obama administration's economic policies is the work of John Maynard Keynes, the legendary British economist who called for large fiscal and monetary interventions to counter the Great Depression. On this critical issue, Keynes was wrong, says Lacy Hunt, the internationally renowned economist with Texas-based Hoisington Investment.

2010-05-03 Stocks Sink on Fear of Credit Contagion by Bob Doll of BlackRock

Before last week, the rapid ascent in equity prices had been a cause for concern, and as last week's downturn shows, markets remain vulnerable to corrective forces. To date, the problems of the sovereign debt crisis, global policy tightening and regulatory restrictions have been outweighed by the broader improvements in the global economy and rising corporate profits. Given the low returns offered by cash and the still-reasonable valuations for stocks, this trend should continue.

2010-04-30 Europe's Troubles by Robert J. Horrocks of Matthews Asia

In the context of Europe's sovereign debt problems, we do not expect Asia to become a safe haven for investors in the near term. As solvent as China’s sovereign debt position is, questions still remain over the borrowing by local government investment vehicles during the recent stimulus plan and property boom. This is not a benign environment for Asia’s equity markets. But we do take solace in the long term, because these events once again show the relative health of Asia’s economies.

2010-04-29 Greek Crisis Endangers Private Sector by Mohamed A. El-Erian of PIMCO

The Greek debt crisis has morphed into something that is potentially more sinister for Europe and the global economy. What started out as a public finance issue is quickly turning into a banking problem too; and what started out as a Greek issue has become a full-blown crisis for Europe. Absent some remarkable change in the next few days, things will get even more complex for the public sector. It may have no choice but to combine its own exceptional financing efforts with talks on a controversial approach that will be familiar to emerging market observers - private sector involvement.

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

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

2010-04-26 Quarterly Letter by Jeffrey Erber and Eric Brugel of Grey Owl Capital Management

While the stock market paused briefly to catch its breath in January, risk taking was broadly rewarded beginning in mid-February. As we entered March and passed the one-year anniversary of the 2009 market lows, the market took off again. As if it was scripted, the most highly indebted and economically sensitive companies have performed the best during this rally. Financials, in particular banks, have roared. The market has been fueled by consistent marginal improvements in the economy, which have led to expectations of much bigger improvements in coming quarters.

2010-04-26 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The stock market continues to move higher even as investor and consumer sentiment remain depressed. So many investors have missed this rally that they are afraid and/or mad at themselves. At the same time the message coming from Washington and around the world is one of continued focus on increasing the role of the central government to solve all of our financial ills. Congress will hold hearings this week in an attempt to blame Wall Street for everything that has ever gone wrong, but this sad act will solve few problems.

2010-04-19 Complex Structural Changes in China and the Global Economy by Michael Spence of PIMCO

China has come to a point where its size and global impact are large. Policy in China will have to be set within a delicate balancing act between domestic growth and development and distributional challenges on one hand, and recognition of global impacts on the other. The large developing countries need to understand better than they currently do that their growing size and presence in trade in goods and services is forcing uncomfortable structural change in the advanced countries as well.

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

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

2010-04-13 Another Month, Another Huge Deficit by Team of Bespoke Investment Group

With total revenues of $153 billion and spending of nearly $219 billion, the federal government spent 43 percent more than it took in this month for its record 18th straight monthly deficit. Believe it or not, this month's $65 billion shortfall was the fourth-lowest over the last 12 months. When all is said and done, the total cost of the Troubled Asset Relief Program bailout is likely to reach $89 billion. When the federal government runs $65 billion in the red during its normal course of business, $89 billion to avert the collapse of the entire financial system doesn't seem so bad.

2010-04-08 Why the Greek Rescue Isn't Going According to Plan by Mohamed A. El-Erian of PIMCO

The triumphant announcement from Greece, the European Union and the International Monetary Fund a couple of weeks ago has not calmed markets, nor has it lowered Greek borrowing costs. Buoyed by a cyclical recovery, markets around the world have yet to recognize the complexity of this situation. When they do, it will also become apparent that Greece is part of a wider, and historically unfamiliar phenomenon – that of a simultaneous and large disruption to the balance sheets of many industrial countries.

2010-04-07 When the Facts Change by Niels C. Jensen of Absolute Return Partners

An echo bubble is upon us. Echo bubbles are the children of primary asset bubbles, and emerge when monetary authorities respond to the bursting of a primary asset bubble by slashing policy rates. Extraordinarily low interest rates are currently encouraging another bout of excessive risk taking. If policymakers raised rates now, however, they would almost certainly kill the fledgling recovery. The pressure is therefore on monetary authorities to keep rates low and feed the new bubble. Investors should steer toward assets that benefit from high volatility.

2010-04-01 Market Insight by Duncan W. Richardson of Eaton Vance Investment Managers

A year ago today, changes in the financial markets were nearly overwhelming for investors. At the close of last year's first quarter even the most sanguine of observers couldn't help but worry that the worst might not be over yet. Investor fear was reflected in the March 2009 asset allocation survey by the American Association of Individual Investors showing record low 41 percent allocations to equities and record high 45 percent allocations to cash.

2010-04-01 Market Insight by Payson S. Swaffield of Eaton Vance Investment Managers

Evidence mounts that the U.S. economy is moving away from the depths of the Great Recession. The U.S. economy expanded at a 5.6 percent annual rate in the fourth quarter of 2009, and corporate profits surged. While unemployment stands at 9.7 percent, there are indications that the jobs picture may be improving, and inflation has remained in check. The U.S. stock market has responded favorably to the current environment, with the Standard & Poor’s 500 Index climbing more than 5 percent since calendar year-end.

2010-03-29 Central Banks in 2010 - The Cacophonous Sound of Exit Music by Asha Bangalore of Northern Trust

Recent developments suggest that the uncertainty of the past three years has left central banks skittish. Otherwise strong economies have been slow to normalize rates and central banks that are following inflation targets have been more willing to risk breaches than growth. The remainder of the year will be characterized by differing exit strategies and their intended and unintended consequences. As central banks around the world begin tightening before the Fed and the ECB, there will be further implications for global capital flows and exchange rates.

2010-03-23 Barron's' Pension Warning Doesn't Change Our Pension Outlook by Team of American Century Investments

A recent Barron's magazine piece about unfunded public pension liabilities painted an otherwise solid bond sector with a broad negative brush. While pension liabilities are a serious problem for state and local governments, they are neither a new problem nor an immediate problem, and they are not the most pressing issue that municipalities face in the post-recession environment, according to American Century Investments credit research director David Moore. Despite unfunded pension liabilities, no state runs a serious risk of default on its general debt obligation.

2010-03-18 Dollar: Beleaguered No More? by Komal Sri-Kumar of TCW Asset Management

After weakening for most of the past decade, the dollar has appreciated significantly against the euro and the pound sterling, the two major European currencies, over the past three months. This is due more to the weakness of European currencies than to the strength of the dollar. Fears of stagnation in Europe, uncertainties over upcoming U.K. elections, and concerns that Portuguese and Spanish debt sovereign may come under attack by hedge funds have all dragged on European currencies. Compared to this turbulence, the U.S. economy seems like a safe haven.

2010-03-16 Implications of the Current Shiller P/E Ratio by Keith C. Goddard, CFA and Channing S. Smith, CFA (Article)

In this guest contribution, Keith Goddard and Channing Smith expand on ideas presented in a previous article, Return Distributions and the Shiller P/E Ratio. They study the historical behavior of U.S. stocks during three-year holding periods that began at with valuations comparable to recent market conditions, as measured by the Shiller P/E ratio.

2010-03-16 Greeks Bearing Gifts by Michael Lewitt (Article)

We are again privileged to publish the most recent edition of Michael Lewitt's HCM Market Letter, Greeks Bearing Gifts. Lewitt comments on Goldman Sachs' derivative transactions that helped Greece hide its debt and its larger implications for the financial system, for the European periphery and for Spain in particular. Lewitt also addresses the state of decline of the US economy and other topics.

2010-03-15 Weekly Commentary and Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The conventional wisdom seems to be that the worst is over and a slow but self-sustaining recovery is taking place. A very quiet and slow week of trading produced yet another advance in the stock market. Concerns over Greece and other sovereign debt issues receded, while evidence on the global economy was mixed. The Dow Jones Industrial Average gained 1.5 percent while the NASDAQ gained 1.8 percent over excitement generated by the new product line by Apple.

2010-03-13 Postcard from Southeast Asia by Sharat Shroff of Matthews Asia

Asian entrepreneurs are confident about their long-term prospects. Despite this confidence, however, some countries still need to develop stronger institutional frameworks. Billions of dollars worth of new projects for an industrial zone in the Gulf of Thailand have been halted since an environmental lawsuit was filed two years ago. And failings associated with the 2008 government bailout of Indonesia's PT Bank Century point to institutional weaknesses in that country. Failure to address these institutional issues could cost Asian economies crucial capital from foreign investors.

2010-03-05 Economic Update by Justin S. Anderson of Cambridge Advisors

In the coming months it will be important to track the changing dynamics in both the domestic labor market and international sovereign debt markets as these represent, quite possibly, the two most significant headwinds to growth in the US economy and stock markets in general.

2010-03-01 Don't Care by Bill Gross of PIMCO

A lack of global aggregate demand, brought by twenty years of accelerated globalization, is the fundamental economic problem of our age. Many states have used government debt to make up for shortfalls in aggregate demand. But as the crises in Dubai, Iceland, Ireland and Greece show, not every state is able to pay off its new debt load. Investors should therefore concentrate on states that have lower credit or inflationary risk, such as Germany and Canada, and avoid higher-risk states such as Greece and the U.K.

2010-02-26 The Global Banking Crisis Continues... by Monty Guild and Tony Danaher of Guild Investment Management

The Icelandic and Greek financial crises can be seen as the second stage of the larger global banking crisis. This second stage, which centers on European sovereign debt, was caused by years of over-borrowing and now deleveraging. Many countries will print money to help ease the crisis, and this will keep developed economies and their currencies under pressure for years. Guild and Danaher also comment on rising demand for oil and gold, the U.S. stock market rally, rising interest rates and the continued rise of China and India.

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

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

2010-02-22 A Speeding Ticket by Team of Beacon Pointe

Most indices are down from their January highs. But this pull-back is more of a speeding ticket than a suspended license, and markets will soon be able to travel cautiously toward their destinations. This environment will favor investors with a focus on security selection, a strong research effort and unwavering valuation discipline.

2010-02-17 Greece is Not Lehman Brothers by Brian S. Wesbury and Robert Stein of First Trust Advisors

Sovereign debt defaults are the most recent fears plaguing investors. If governments refuse to cut spending and markets refuse to finance excess outlays, debt defaults could spread worldwide one-by-one. The current sovereign debt crisis in Greece is more likely to lead policymakers to reduce spending to reasonable levels, however, than to kick off a new financial panic.

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

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

2010-02-13 Between Dire and Disastrous by John Mauldin of Millennium Wave Advisors

Mauldin discusses the Greek debt crisis and the options for resolving it. A Greek default "would bankrupt the bulk of the European banking system," but that is unlikely, he says. He cites Niall Ferguson's recent article in the FT and argues that the Greek crisis is a precursor to other countries facing similar sovereign debt problems.

2010-02-06 Greece, Spain, and the Euro Trojan Horse by Michael J. Schussele of Michael J. Schussele, CPA

Schussele provides an in-depth look at the divergent fiscal problems facing Spain and Greece. "The possibility of default is speculative hoopla and deficit hawk destructiveness. While deficits need to be controlled, targeted public spending grows an economy and the withdrawal of public spending constricts an economy. At the present time, Greece and Spain need targeted spending and financial regulatory reform. Default is not a plausible option given the domino effect."

2010-02-05 Sovereign Debt Default Risk by Team of Bespoke Investment Group

Since the beginning of the year, sovereign default risk (measured by credit default swap prices) has risen for Portugal, France, Iceland, German and Australia. It's even risen for the US - by a greater percentage than for either Dubai or Greece.

2010-02-05 US Sovereign Debt CDS Spikes by Team of Bespoke Investment Group

Default risk has spiked for US sovereign debt and is now significantly above its June 2009 high - but well below highs earlier in the financial crisis.

2010-02-04 Country Stock Market Performance by Team of Bespoke Investment Group

Worries about a few EU countries and the Euro currency have rattled global equity markets. Sovereign debt credit default swaps have been rising sharply for countries such as Greece and Portugal in recent days. Equity markets in Spain, Portugal, and Hungary are down more than 5% today alone. They highlight the year to date performance and performance since the 1/19 peak for the major equity markets of 81 countries around the world.

2010-02-02 Letter to the Editor by Various (Article)

In a letter to the Editor, a reader responds to a commentary recently posted on our site.

2010-01-30 Watch Out for Spam! by Bill Mitchell of Billy Blog

Bill Mitchell is an Australia-based economist. This commentary is a direct rebuttal to many of John Mauldin's arguments, particularly regarding the message of Reinhart and Rogoff's book, This Time is Different.

2010-01-27 The Greece Dilemma: Sovereign Debts Imperiling the Euro and Challenging EU Ties by Christopher Whalen of RGE Monitor

Roubini discusses Greece’s sovereign debt issues, noting that Greece faces two choices: either adopt fiscal tightening (budget cuts) or increased instability due to potential insolvency. Either way,

2010-01-26 The Ring of Fire by Bill Gross of PIMCO

Bill Gross reviews two recent analyses (the Reinhart/Rogoff book and the McKinsey study) of the plight of economies faced with large fiscal deficits. He says that these support PIMCO’s view of the Ne

2010-01-26 2010 Outlook / Macro Overview by James F. Keegan of Ridgeworth

“In summary, global asset markets have transitioned from fear at the beginning of 2009 to an environment where government support and intervention have led to complacency and greed. While these powerf

2010-01-20 Political Potholes for Europe's IMF Borrowers by Nouriel Roubini of RGE Monitor

Amid the global financial crisis, several European countries faced serious economic distress and turned to external creditors, including the EU and IMF, for emergency financing. This multilateral supp

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

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

2010-01-13 Payrolls, Policies, Politics by Art Patten of Symmetry Capital Management

2010-01-06 Let's Get Physical by Bill Gross of PIMCO


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