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

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2014-04-16 A Classic Barometer by Richard Bernstein of Richard Bernstein Advisors

Investors seem a bit too eager to tout emerging market equities. Much as they did with technology stocks during the early-2000s, investors today are looking for the best re-entry point. Data clearly do not support anymore the notion that emerging markets are a superior growth story, yet investors seem to be ignoring the classic warnings signs for fear of missing out. One such classic warning sign is the slope of the yield curve. Historically, steeper yield curves have been reliable forecasters of stronger overall nominal economic growth and stronger profits growth.

2014-04-15 5 Things You Need to Know About the Selloff by Kristina Hooper of Allianz Global Investors

Kristina Hooper puts the sharp pullback in the stock market in perspective for investors who may be wondering about a correction.

2014-04-10 Why the U.S. Should Export Crude Oil by Tim Guinness, Will Riley, Jonathan Waghorn of Guinness Atkinson Asset Management

The Ukraine-Russia crisis, as well as Russia’s position as a major energy provider, has renewed the discussion on whether the US should export crude oil. A forty year old decree bans U.S. producers from exporting crude oil, and it needs to be repealed. It represents misguided protectionism and is a hangover from the days before the US embraced free trade. We think that exporting crude oil would be an economic benefit to the US, as it incentivises the full development of the US shale resource.

2014-04-08 Overcoming Fear and Loathing in Lost Wages by Kristina Hooper of Allianz Global Investors

Personal income, not job growth, may have drawn the ire of investors as stocks sold off on Friday. But look for the market to rebound on continued economic progress and soothing remarks from the Fed, writes Kristina Hooper.

2014-04-08 Labor Markets Looking for a Spring Blossom by Chris Maxey, Ryan Davis of Fortigent

With an unusually harsh winter finally ending, economists were excited to see if labor markets would rebound in March. By many accounts, they were left wanting for more, but the underlying theme in the March report was consistent, steady job growth.

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.

2014-03-31 Labor Market Clues for Bond Investors by Christopher Molumphy of Franklin Templeton

When the US Federal Reserve (Fed) began tapering early this year, the general assumption was that investors would flee en masse from fixed income investments. Certainly, there has been some volatility in Treasury yields, most recently after Fed Chair Janet Yellen suggested interest rates could start to rise around six months after tapering ends – which would be somewhat sooner than many were expecting.

2014-03-29 When Inequality Isn\'t by John Mauldin of Millennium Wave Advisors

We’ve discovered so far that income inequality is a fact; however, income mobility has remained roughly the same over the last 40 years. That is, a person’s chances of rising from a lower stratum of wealth distribution to a higher stratum is approximately the same as it was in 1975.

2014-03-26 Durable Goods Orders: The Disconnect Continues by Team of GaveKal Capital

This morning durable goods orders were released, and while the headline index exhibited a good bounce from January, the rest of the report was more mixed.

2014-03-25 A Slip and Fall? by Jerry Wagner of Flexible Plan Investments

Despite last week’s vernal equinox, signaling the first day of spring on Thursday, another arctic blast is hitting the Midwest yet again this week, and cabin fever has become an epidemic. So many of my friends and family are singing the same refrain; “When will this winter be over?”

2014-03-18 Can the Fed Fend Off the Ides of March? by Kristina Hooper of Allianz Global Investors

Mid-March hasn’t been associated with much good luck in Europe historically. And with Ukraine mired in conflict, this year’s no different. But investors should resist the urge to react to geopolitical uncertainty and expect steady guidance from the Fed.

2014-03-12 The Importance of Beta Management by Richard Bernstein of Richard Bernstein Advisors

Morningstar recently released “Mind the Gap-2014” which demonstrated that investors are generally very poor beta managers. The Morningstar data showed that investors’ performance lagged that of their funds by about 250 basis points per year for the past ten years because of poor beta management, i.e., investors tend to be very poor allocators of capital.

2014-03-12 U.S. Household Net Worth Hits New Record High by Gary Halbert of Halbert Wealth Management

The Federal Reserve announced last Thursday that US household net worth reached a new record high by the end of last year – at $80.7 trillion. The Fed said the new record was made possible largely due to vaulting stock prices, increased home values and Americans paying off more of their debts.

2014-03-06 Gold Scams Revisited by Peter Schiff of Euro Pacific Precious Metals

Before Bear Stearns and Lehman collapsed, the market for physical gold was limited to a relatively small group of investors who understood the havoc inflation was wreaking on our savings and the US markets. As the financial crisis took hold, a flood of new and inexperienced buyers entered the market, creating an opportunity for unscrupulous metals dealers to swindle their way to massive profits. This is what drove me to launch my very own gold dealer, Euro Pacific Precious Metals, to provide a safe alternative for those who were taking my advice to diversify into sound money.

2014-03-05 The US Economy - Back To The Slow Lane Again by Gary Halbert of Halbert Wealth Management

Late last year, President Obama predicted that 2014 would see “breakout growth” in the US economy. His optimism was not completely unwarranted since the economy grew by a healthy 4.1% (annual rate) in the 3Q of last year, driven largely by an unexpected surge in inventory rebuilding. Then in late January, the Commerce Department reported that the economy grew by a better than expected 3.2% in the 4Q.

2014-03-04 Our Thoughts on Warren Buffett's Thoughts by William Smead of Smead Capital Management

The Berkshire Hathaway 2013 Annual Shareholder Letter came out on Saturday the 1st of March, 2014. Mr. Buffett was in rare form and we'd like to share some of his key thoughts which speak directly to what we do at Smead Capital Management.

2014-03-03 Casting a Wide Asset Net in a Volatile Sea by Ed Perks of Franklin Templeton

It’s fair to say that investors will likely never be fully comfortable with market volatility. But actively managing the inevitable bumps that accompany equity investments, even in bull markets, can help make the ride a little less harrowing, according to Ed Perks, executive vice president and director of Portfolio Management, Franklin Equity Group®. He explains how understanding the fundamental dynamics behind market selloffs is key to uncovering potential opportunities in the face of a rough market ride.

2014-02-27 Corporate Credit Charting its Own Course by Eric Takaha of Franklin Templeton

At the start of the year, equity investors were fretting about possible emerging-market contagion, while bond investors were fretting about fallout from US Federal Reserve tapering. Meanwhile, the corporate credit market seemed to be charting its own course. Eric Takaha, director of the Corporate & High Yield Group and senior vice president, Franklin Templeton Fixed Income Group®, takes a look at the corporate credit/high-yield market and explains why he currently sees supportive fundamentals.

2014-02-26 Market Perspective by CCR Wealth Management Investment Committee of CCR Wealth Management

It cost $0.32 to mail a letter, unemployment was 4.9%, O.J. Simpson was found liable in a civil suit, Hong Kong was returned to Chinese rule, Timothy McVeigh was sentenced to Death, Green Bay defeated the Patriots in the Super Bowl, Titanic came crashing into movie theatres, and Dolly, the first genetically engineered lamb was unveiled to the public; the year was 1997.

2014-02-24 Corporate Credit Charting its Own Course by Eric Takaha of Franklin Templeton

At the start of the year, equity investors were fretting about possible emerging-market contagion, while bond investors were fretting about fallout from US Federal Reserve tapering. Meanwhile, the corporate credit market seemed to be charting its own course. Eric Takaha, director of the Corporate & High Yield Group and senior vice president, Franklin Templeton Fixed Income Group®, takes a look at the corporate credit/high-yield market and explains why he currently sees supportive fundamentals.

2014-02-21 The Big Four Economic Indicators: Real Retail Sales by Doug Short of Advisor Perspectives (

With yesterday's release of the January Consumer Price Index, we can now calculate Real Retail Sales for the underlying sales data released on February 13th. Nominal Retail Sales had fallen 0.4% month-over-month, the second month of contraction, and are up only 0.3% year-over-year. When we adjust for inflation, January sales were down 0.6% MoM. The YoY change was a fractional 0.1% growth. Real sales are down 0.9% from their all-time high in November.

2014-02-20 Meeting an Economic Need by William Smead of Smead Capital Management

At heart, Smead Capital Management is a stock picking organization. On top of our bottoms-up stock picking discipline, we are driven by our belief and respect for the laws of economics. One example of this is the subject of demographics. As long-duration investors, we want to understand where the aging process is taking demand in major product categories and how it will shape spending and production in the US. In other words, what economic needs will grow at the margin and who out there among companies that fit our other seven criteria can meet that marginal demand.

2014-02-20 American Industrial Renaissance Revisited by Richard Bernstein of Richard Bernstein Advisors

We first wrote about The "American Industrial Renaissance" in 2012, and it remains one of our favorite investment themes. We continue to implement this theme through small US-centric industrial companies and small financial institutions that lend to public and private industrial firms. It remains unlikely that the United States will be the manufacturing powerhouse that it was during the 1950s and 1960s, but many factors are suggesting that the US industrial sector will continue to gain market share.

2014-02-19 US Savings Rate Falling Again - Here Comes \"MyRA\" by Gary Halbert of Halbert Wealth Management

Today we weave together several different topics that are all connected in one way or another. We begin with the US savings rate which is trending lower once again. From 1975 to 2007, the savings rate fell to an all-time low of 2.4%. While it jumped up briefly after the 2008 financial crisis, it is now moving lower yet again.

2014-02-14 Does a Down January Dog the Rest of the Year? Probably by Peter Nielsen of Saturna Capital

The bottom line for investors is that a negative January tends to herald lower (though not necessarily negative) returns for the subsequent 11 months.

2014-02-12 Was the labor report positive, or negative, anyone? by Chris Maxey and Ryan Davis  of Fortigent

Stocks were modestly positive last week following three straight weeks of negative performance. Markets crawled back following an ugly Monday in which the S&P 500 suffered its worst loss in more than seven months. For the week, the S&P rose 0.9% while the Dow Jones Industrial Average added 0.7%.

2014-02-12 Why Quantitative Easing Didn’t Work by Gary D. Halbert of Halbert Wealth Management

IN THIS ISSUE: 1. Why Fed’s Quantitative Easing (QE) Didn’t Work 2. Velocity of Money Plunged During Financial Crisis 3. Should Bernanke & Company Have Done More? 4. QE Was a Huge, Dangerous Experiment That Failed 5. Fed Begins to “Taper” QE Purchases in January 6. Conclusions – What Happens Next?

2014-02-07 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Fears over emerging markets, a tightening Federal Reserve Board and a loss in momentum in the economy have combined to create a sloppy market for stocks, while the bond market continues to confound the pundits and enjoy a solid start to the New Year.

2014-02-06 So Cruel: Pullback Could Become Correction by Liz Ann Sonders of Charles Schwab

For now, the EM tail is wagging the dog, but the US remains the world’s big dog and should ultimately get through the latest turmoil. "January Barometer" has sent mixed signals for the remainder of the year historically. More technical and sentiment recovery is likely needed before a market recovery is likely.

2014-02-06 Stagnation by Design by Joseph Stiglitz of Project Syndicate

The difficulties that many rich countries now face are not the result of the inexorable laws of economics, to which people simply must adjust, as they would to a natural disaster. On the contrary, the decline in most households’ income over the past three decades, particularly in the US, is the result of flawed policies.

2014-02-03 10 Steps Forward, 1 Step Back! Comments on January Stock Market by David Edwards of Heron Financial Group

US stocks as measured by the S&P 500 delivered a phenomenal 32.4% return in 2013. That was the 6th best year for US stocks since 1940. In January, US stocks fell 3.5%. We don’t watch business news anymore, but judging from an increased volume of phone calls from clients, we presume that CNBC, Fox Business, CNN and MSNBC have categorized this modest decline as "an apocalypse." Our "dashboard" shows return numbers for US and International stock markets, commodities, currencies and bond yields. A lot of red YTD 2014, but all green at the end of 2013.

2014-02-03 A Secular Bull Market? by Juliet Ellis of Invesco Blog

Five years from now, I believe we will look back and see that 2014 was part of the early stages of a multi-year secular bull market for US equities, characterized by rising stock prices with only short, intervening market corrections.

2014-01-31 The Big Four Economic Indicators: Real Personal Income Less Transfer Payments by Doug Short of Advisor Perspectives (

The December month-over-month Real Personal Income less Transfer Payments came in at a disappointing -0.21% (-0.2% rounded to one decimal). The year-over-year change is -2.47% (rounded to -2.5%). However, the YoY metric is radically skewed by the December 2012 end-of-year tax-planning strategy whereby income was captured in 2012 to avoided expected tax increases.

2014-01-31 The New Watchword-Deflation? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Equity markets have been shaky to start the year but we don’t believe it’s time to abandon ship. The fundamentals in the United States continue to look appealing and the recent pullback has helped to correct some sentiment and valuation concerns. We are watching the fight against deflation carefully in Europe and Japan, and believe both countries may need to do more via monetary policy stimulus. Meanwhile, some emerging economies are dealing with inflation, but we don’t believe the recent problems will morph into a widespread crisis at this point.

2014-01-27 Hasenstab: Standing One\'s Ground by Michael Hasenstab of Franklin Templeton

When the masses are against you, it’s hard to stand your ground. Going against the crowd is familiar turf for Michael Hasenstab, who manages Templeton Global Bond Fund and co-manages Templeton Global Balanced Fund, and certainly knows the virtue of patience. He has staunchly defended his investment theses over the years, tuning out the naysayers and market noise time and again.

2014-01-22 What to Expect in 2014 (And Beyond) by Jack Rivkin of Altegris

Each year, I take Alfred Lord Tennyson’s advice and "ring out the old, ring in the new" by creating a list of expectations about the markets. My list involves events that the average investor thinks have only a one-in-three-chance of happening, but which I believe have more than a 50% chance of occurring. If this approach sounds familiar, it should. It’s modeled after Byron Wien’s annual list of "surprises." Like his, my expectations are designed to provoke thought and discussion.

2014-01-21 Digging for Natural Resource Opportunities in 2014 by Frederick Fromm, Stephen Land, Matthew Adams of Franklin Templeton

The natural resources sector has been through a period of transition in the past year, one which has pushed many companies toward cost reduction and greater capital discipline amid an environment of rather sluggish global economic growth. Franklin Equity Group Analysts Fred Fromm, Stephen Land and Matthew Adams think an improving economic outlook could set the stage for potentially stronger commodity demand going forward, and see healthy potential demand growth for energy in particular. They share their outlook for the natural resources sector in 2014, and where they are finding opportunities.

2014-01-17 The Big Four Economic Indicators: Real Retail Sales and Industrial Production by Doug Short of Advisor Perspectives (

With yesterday’s release of December’s CPI, we can now calculate Real Retail Sales for December. Month-over-month real sales came in at -0.07% (-0.1% rounded to one decimal). This indicator is now fractionally off its all-time high set the previous month. Although real December sales were a bit disappointing, this indicator rose 3.57% year-over-year, and it was positive for nine of the 12 months.

2014-01-17 Digging for Natural Resource Opportunities in 2014 by Frederick Fromm, Stephen Land, Matthew Adams of Franklin Templeton

The natural resources sector has been through a period of transition in the past year, one which has pushed many companies toward cost reduction and greater capital discipline amid an environment of rather sluggish global economic growth. Franklin Equity Group Analysts Fred Fromm, Stephen Land and Matthew Adams think an improving economic outlook could set the stage for potentially stronger commodity demand going forward, and see healthy potential demand growth for energy in particular. They share their outlook for the natural resources sector in 2014, and where they are finding opportunities.

2014-01-16 2014: Once more for \'84 by Team of Smead Capital Management

Since our thinking is always dominated by owning businesses which meet our eight investment criteria in a long-duration time frame, we continue to remain vigilant of the circumstances around us. To that end, we thought it would be helpful to review a similar historical situation and glean a feel for what was wise behavior back then and what might be wise behavior as we look forward to the year 2014.

2014-01-16 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Last year ended very well for us! The New Year has started slowly both because of the weather and because of the middle of the week timing of the holidays. Last Friday’s employment report for December was the 1st real piece of economic data which the financial markets could sink their teeth into, and the results have most people (not us) confused.

2014-01-14 The Diversification Obituary by Chris Maxey, Ryan Davis of Fortigent

According to some major media outlets, 2013 was the year diversification died. With the S&P 500 racing to a more than 30% gain (the largest since the late ’90s), it seemed as though no other asset class truly mattered last year. While it is true domestic equities had a banner year, one-asset class portfolios will never be robust, and there is reason to believe 2013 is a prime example of why diversification is incredibly important.

2014-01-13 Equity Bubble? No. by Richard Bernstein of Richard Bernstein Advisors

The US stock market performed very well during 2013. The S&P 500’s total return of nearly 33% far outpaced the returns of most asset classes. A growing contingent of market observers is fearful that the US equity market is in some sort of a bubble. We disagree completely with this notion. A strong market rally that many investors have missed is hardly sufficient grounds for a financial bubble.

2014-01-13 3 Reasons the Dollar Should Strengthen This Year by Russ Koesterich of iShares Blog

Russ explains why the U.S. dollar is likely to strengthen in 2014, and what this means for various asset classes.

2014-01-10 5 Investor Tips for 2014 by Kristina Hooper of Allianz Global Investors

While the winding down of QE signals better times ahead, investors need to be selective and focused in taking smart risks, says US Investment Strategist Kristina Hooper.

2014-01-10 The Big Four Economic Indicators: Today\'s Strange Nonfarm Payrolls in Context by Doug Short of Advisor Perspectives (

The January Employment Report gives us a look at the December Nonfarm Employment along with extensive revisions back to January 2009. The big stunner today was the meager 74K new jobs in December against expectations of around 196K. This sucker punch from the Establishment Data was accompanied by the equally stunning news that the unemployment rate declined from 7.0-6.7%. The two numbers, of course, are from two completely different surveys - the jobs number from the Establishment Survey of business and government and the unemployment rate from the Household Survey of the general population.

2013-12-26 Does the CAPE Still Work? by William Hester of Hussman Funds

We feel no particular obligation defend the CAPE ratio. It has a strong long-term relationship to subsequent 10-year market returns. And it’s only one of numerous valuation indicators that we use in our work - many which are considerably more reliable.

2013-12-26 Economy Surprises On The Upside, But Is It Real? by Gary Halbert of Halbert Wealth Management

In today’s abbreviated holiday E-Letter, we’ll look at last Friday’s surprising report on 3Q GDP. In its third estimate of 3Q GDP, the Commerce Department reported that the economy surged by more than anyone expected. Given the surprisingly strong numbers, more than a few are questioning the report’s accuracy and wondering if it will be revised lower in January.

2013-12-24 A Spoonful of Sugar by Peter Schiff of Euro Pacific Capital

The press has framed Ben Bernanke’s valedictory press conference last week in heroic terms. It’s as if a veteran quarterback engineered a stunning come-from-behind drive in his final game, and graciously bowed out of the game with the ball sitting on the opponent’s one-yard line. In reality, Bernanke has merely completed a five-yard pass from his own end zone, and has left Janet Yellen to come off the bench down by three touchdowns, with no credible deep threats, and very little time left on the clock.

2013-12-24 Fed Taper Brings Us Back to the Future by Kristina Hooper of Allianz Global Investors

A return to normal economic conditions is now more palpable following the Fed’s decision to start unwinding QE and early signs of a revival in consumer spending, growth and jobs, writes Kristina Hooper.

2013-12-23 Risk Assets Take Fed Taper Announcement in Stride by Roger Bayston of Franklin Templeton

The US Federal Reserve (Fed) delivered an early holiday surprise to some market participants, announcing at its December 18 policy meeting it would start slowing its asset purchase program known as quantitative easing in January. For some thoughts on what this may mean for the markets in the new year, we turned just after the announcement to Roger Bayston. He believes the markets should be able to take the Fed’s tapering in 2014 in stride, although investors should prepare for the proposition of higher Treasury yields.

2013-12-23 Welcome, Taper by Dianne Lob of AllianceBernstein

The Federal Open Market Committee’s statement that it will begin to taper its bond purchases in January is a good sign that the US economy continues to heal, in our view.

2013-12-21 What Has QE Wrought? by John Mauldin of Millennium Wave Advisors

Now that we have begun tapering, we will soon see lots of analysis about whether QE has been effective. What will the stock market do? The US economy seems to be moving in the right direction, but the Fed has forecast Nirvana (seriously) - do we dare hope they can finally get a forecast right? Or have they jinxed us?

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 Will 2014 Bring an End to Central Bank Intervention? by Chris Maxey, Ryan Davis of Fortigent

Nearing the final two weeks of the year, it is customary to look forward to the trends and events that will shape the coming year. A theme that may come to the fore in 2014 revolves around central bankers, specifically the diverging fates in various economies of the world.

2013-12-13 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The past two weeks were pretty quiet as the Thanksgiving holiday combined with conflicting economic data produced a stalemate on Wall Street.

2013-12-11 Q3:2013 Flow-of-Funds Report - \'Tis the Season to Be Jolly by Paul Kasriel of Econtrarian, LLC

I know that being a Debbie Downer gets more face time on cable news, but after looking at the Fed’s latest Financial Accounts of the U.S. report, formerly known as the Flow-of-Funds report, I cannot contain my optimism about the economy’s prospects in the New Year.

2013-12-10 Macro Factors Distract Wealth Creation by Bill Smead of Smead Capital Management

What do Obamacare, Federal Government debt/budget deals, Quantitative Easing and jobs data have in common? To us they are all types of macroeconomic factors on which most investors focus. We believe the reason most investors focus on these types of news stories is because they can influence the US stock market over the next six to twelve months instead of the next 10 to 20 years. In this missive, we would like to challenge everyone’s thinking about their ultimate goal for investing in the stock market and the behaviors which lead to wealth creation.

2013-12-09 America\'s Partisan Peril by Mohamed El-Erian of Project Syndicate

Many Americans started 2013 with high hopes that congressional leaders would overcome, even if only partly, the polarization and political dysfunction that had slowed recovery. But optimism foundered over the course of 2013, while frustration soared.

2013-12-09 Gauging Tapering Post November Jobs Report by Chris Maxey, Ryan Davis of Fortigent

With another month down in 2013, last week came time to dissect the latest report on employment. If the market reaction was indicative, the highly anticipated November labor report did not disappoint, sending stocks up more than 1% on Friday.

2013-12-06 Like a Shakespearean Script by Richard Bernstein of Richard Bernstein Advisors

Shakespearean plays follow a pattern. The underlying plots and storylines change from play to play, but the five-act construction is a common overlap. Market cycles tend to follow a similar pattern cycle after cycle. Like the different plots in various Shakespearean plays, the catalysts that begin and end each cycle, and the events during the cycle are always different. However, market cycles seem to follow a script and, so far, this cycle seems to be following the script almost perfectly.

2013-12-04 What\'s the Problem With Advanced Economies? by Kenneth Rogoff of Project Syndicate

Is today’s slow growth in advanced economies a continuation of long-term secular decline, or does it reflect the normal aftermath of a deep systemic financial crisis? Fortunately, we do not need to answer that question definitively in order to boost the pace of economic recovery.

2013-12-04 Gold, What Is It Good for? by Miguel Perez-Santalla of BullionVault

Absolutely nothing! Well, except 5,000 years of value exchange, non-correlation, and preserving wealth...The current market environment has led many in the press to question gold’s value as an investment or an asset class, writes Miguel Perez-Santalla at BullionVault.

2013-11-22 The Big Four Economic Indicators: Real Retail Sales by Doug Short of Advisor Perspectives (

The underlying sales data were stronger than expected, and the disinflationary October headline CPI boosted the number higher. in light of the general pessimism over the government shutdown and congressional face-off on debt ceiling, the October numbers are indeed surprising.

2013-11-21 US Stocks for a Baby Boom by Bill Smead of Smead Capital Management

As contrarians, we at Smead Capital Management frequently get questions about stocks like Gannett (GCI), Bank of America (BAC) and eBay (EBAY). To understand how excited we are to own these common stocks you need to understand how a long-duration common stock portfolio would benefit from the coming baby boom in the developed world. Thanks to wonderful research from The Bank Credit Analyst (BCA), we can understand the demographics of developed nations like the US. BCA concluded that a "baby boom" is coming in the US and in other developed nations.

2013-11-15 The Big Four Economic Indicators: Industrial Production by Doug Short of Advisor Perspectives (

Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

2013-11-13 Markets On Cruise Control And Why There Will Be No Dectaper by John Rothe of Riverbend Investment Management

We are now post shutdown, post debt ceiling and post election, and equity markets are now on cruise control.

2013-11-12 Dream to Outperform the Market by Bill Smead of Smead Capital Management

If you dream about investment market outcomes which are already popular in the marketplace, your dreams can turn into nightmares. The Everly Brothers 1958 hit song, “All I have to do is Dream” tells us a great deal about the long-term posture of investors in late 2013 and how dreams can turn to nightmares. On the other hand, if you dream about an outcome which most experts aren’t expecting, the rewards can be explosive.

2013-11-12 Will 39% Hike in Minimum Wage Tank The Economy? by Gary Halbert of Halbert Wealth Management

President Obama called for a whopping 39% increase in the minimum wage from $7.25 to $10.10 per hour last Thursday. There is already a bill working its way through in the Senate to do the same thing. If this legislation passes, the minimum wage will be increased 95 cents each year for the next three years starting this year, to bring it to $10.10 by 2015.

2013-11-07 Gold: Hold It or Fold It? by Peter Schiff of Euro Pacific Precious Metals

It’s starting to feel like we are part of a giant poker game against the US government, whose hand is the true condition of the American economy. The government has become so good at bluffing that most people feel compelled to watch how the biggest players in the game react to determine their own investment strategy.

2013-11-07 EM: The Growth Story That Isn't by Richard Bernstein of Richard Bernstein Advisors

We remain very concerned about emerging market stocks and bonds. The recent outperformance of EM stocks is again luring investors to once again touch the hot stove. Emerging markets seem to have some significant structural and cyclical issues about which investors seem unaware or seem to be ignoring.

2013-11-05 Even Economists Get Stuck Looking in the Rearview Mirror by Bill Smead of Smead Capital Management

Will the US economy grow in an above-average way in the next ten to twenty years or do we need to resign ourselves to an era of anemic economic growth? Two pieces of information came out this week, adding to existing information on the subject and speak to this core debate in the US stock market. The first piece was called “Slowing to a Crawl” by Jonathan Laing from Barron’s.

2013-11-04 More #PlowHorse in Q3 by Brian Wesbury, Bob Stein of First Trust Advisors

Despite the shutdown, the sequester, talk of tapering, and meteors in the night sky, the US economy just keeps plowing along. Reported later this week, we expect Q3 real GDP grew right on trend at a 1.9% rate another, #PlowHorse report.

2013-11-01 ECRI Recession Watch: Weekly Update by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 131.5, up from last week’s 131.1. The WLI annualized growth indicator (WLIg) to one decimal place, dropped to 1.7, down from 2.0 last week.

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.

2013-10-30 The Thermometer of the Stock Market by Bill Smead of Smead Capital Management

As long-duration owners of common stock, we believe it is the wealth created by the businesses which causes the owners to prosper. We have also been participants in the US stock market since 1980 and are very aware of big swings in enthusiasm for owning common stocks. So we thought it would be helpful to share our opinion on the current temperature of the market. To take the temperature of the market we need to examine the thermometer readings.

2013-10-30 US Economy Mired in a Sea of Contradictions by Gary Halbert of Halbert Wealth Management

Consumer confidence has plunged over the last month, due in large part to the government shutdown and fear that the US might default on its debt because of the ineptitude of our leaders in Washington. Normally, when consumer confidence plunges, we would expect a significant slowdown in consumer spending, which accounts for 70% of GDP.

2013-10-28 How Real Estate Impacts the US Economy by Russ Koesterich of iShares Blog

Despite appreciating more than 10% over the past year, home prices still look reasonable and housing affordable. However, while there is little risk of another housing bubble, a significant pickup in interest rates could dampen housing activity and by extension, the recovery.

2013-10-28 Crawling, Economic Impact of Stubbing Your Toe and Employment by Gregg Bienstock of Lumesis

I have to admit, I had a lot of trouble figuring out where to start this week -- unemployment from last week, post-shutdown observations, exports or sobering observations around expected growth of the US economy and expected implications. It was a Barron’s article, “Slowing to a Crawl” that pushed me to address the latter first. Why? Much of what the article focuses on hit very close to home the impact of demographics and economic data on our economies.

2013-10-28 Fear of Debt Spiral Misplaced by Brian Wesbury, Bob Stein of First Trust Advisors

Now that things have settled down in Washington DC, politicians are focusing on a “grand compromise” to fix the budget. Without reform, growth in entitlements will eventually push federal spending back to levels last seen in World War II.

2013-10-25 ECRI Recession Watch: Weekly Update by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 131.1, up from last week’s 130.3 (revised from 130.4). The WLI annualized growth indicator (WLIg) to one decimal place, dropped to 2.0, down from 2.7 (a downward revision from 2.8).

2013-10-18 ECRI Recession Watch: Weekly Update by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 130.4, down from last week’s 130.3 (revised from 130.4). The WLI annualized growth indicator (WLIg) to one decimal place, dropped to 2.8, down from 3.6 (a downward revision from 3.9).

2013-10-17 Politics Secondary to US Equity Fundamentals by Grant Bowers of Franklin Templeton

It’s easy to get caught up in the tense drama surrounding the government shutdown and the debt ceiling squabble between Congressional Republicans and Democrats, but Grant Bowers, portfolio manager of Franklin Growth Opportunities Fund, maintains that looking beyond the political posturing and focusing instead on US corporate fundamentals is his preferred approach. Read on for more from Bowers on how he views the issues at hand, and why, even in the face of another political showdown in the Capitol, he thinks the US still presents a strong investment case.

2013-10-15 A Degree in Debt: Student Loans and the Economy by Team of Manning & Napier

Recent times have drawn concerns about student loan debt and rising delinquencies. Anecdotes of unfortunate individuals struggling financially to cope with massive student loans raise fears of broader risks to the US economy and financial markets.

2013-10-14 House Republicans Determined to Burn Country to the Ground (In Order to Save It!) by David Edwards of Heron Financial Group

Whenever our financial markets commentary strays into the realm of politics, we’re guaranteed to offend at least half of our clients and readers. So let us state up front that our job is NOT to choose sides but to evaluate how politics will affect the US economy and by extension corporate earnings, which are the bedrock of stock market performance. By that measure, the current tactics of House Republicans to shutdown the “non-essential” parts of the federal government and block raising the debt ceiling is an unmitigated disaster. Businesses crave predictability and reliabi

2013-10-12 A Special Note on Potential Government Debt Default by Richard Bernstein of Richard Bernstein Advisors

We find it incredible that the government is, once again, on the verge of a default on US debt. Although we doubt that the US will actually default, it is unfathomable that elected officials would even consider such an event. Worse yet, some officials apparently believe that a default might benefit the US.

2013-10-11 The Fed's Surprise and Yellen's Challenge by Mohamed A. El-Erian of Project Syndicate

To ask what Janet L. Yellen, the nominee to succeed Ben Bernanke as Chair of the Federal Reserve, has in store for US monetary policy is to pose the wrong question. The real issue is the decline of the Fed’s policy effectiveness.

2013-10-07 Ted Williams, Ford F-150\'s, and Market Valuations by Robert Mark of Castle Investment Management

In late 2008 Lehman Brothers had just collapsed, AIG needed help from the US government and markets around the world were in a tailspin. Today, five short years later, we find it strange how the strength of the stock market defies a climate of declining earnings. With another quarter of corporate results behind us, equities continue to rally despite corporate earnings offering no material support, with many companies actually talking down their future growth prospects.

2013-10-04 Is the Pump Primed for Emerging Markets Investors? by Mark Mobius of Franklin Templeton

The vulnerabilitiesor rather, perceived vulnerabilitiesof emerging markets have been the focus of heightened discussions over the past few months. Concerns about the health of emerging markets came on the heels of political upheavals in Egypt, economic deceleration in China and protest demonstrations in Brazil and Turkey this summer.

2013-10-04 ECRI Recession Watch: Weekly Update by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 132.1, down from last week’s 132.9. The WLI annualized growth indicator (WLIg) to one decimal place, remains unchanged at 4.8% (with last week’s number revised downward from 4.9).

2013-10-03 Active ETF Market Share Update & Weekly Market Review by AdvisorShares Research of AdvisorShares

Last week, total AUM in all active ETFs fell by almost $40.9 million. Assets in the two largest categories “Short Term Bond” and “Global Bond” fell by $7.74 million and $10.156 respectively. In addition, the “Foreign Bond” category decreased by $36.33 million, while AUM in “Currency” active ETFs fell by almost $5.2 million.

2013-10-02 The Death Knell of Global Synchronized Trade by Bill Smead of Smead Capital Management

At Smead Capital Management, we believe the interest on September 18th in emerging markets, oil and gold are the last gasps of a dying trend. Our discipline demands that you must avoid popular investments and completely avoid investments attached to a perceived “new era.” We argue that the international investment markets reaction to Bernanke’s reprieve on September 18th is proof of a vision we have of the future.

2013-09-30 The Global Sea Change Continues by Richard Bernstein of Richard Bernstein Advisors

Most investors will readily admit the global credit bubble is deflating, yet continue to favor credit-based asset classes within their portfolios. Whereas many investors still believe that the emerging markets are a growth story, the data tell us that U.S. investors can find growth in their own backyard.

2013-09-27 You Never Know by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Surprises come at any moment in the investing world, reinforcing the need to have both a long-term view and a balanced/diversified portfolio. We believe signs are pointing to better US and European growth, a near-term rebound in China, and some possible positive momentum building in Japan. But near-term fiscal policy risks abound. Investors that need to add to equity positions should use pullbacks to do so.

2013-09-25 Bernanke's Temporary Reprieve by Bill Smead of Smead Capital Management

There is no nice way to state this opinion: the end of Quantitative Easing and the ultimate allowance of the open market to set interest rates will create a grueling multi-decade bear market in US bond investments. Higher rates mean the re-pricing of existing bond instruments to lower prices and the principle risk of longer-dated maturities getting exposed. In 1983, I remember people losing approximately 15% of their market value in one year as Treasury interest rates rose from 11% to 14%, temporarily crushing owners of 25-year tax-free unit trusts.

2013-09-25 Occupy QE by Stephen Roach of Project Syndicate

The Occupy Wall Street movement began two years ago this month, galvanizing attention to income and wealth inequality in the US and around the world. But, if anything, economic inequality has deepened since then and, lost in the angst over inequality, is the critical role that central banks have played in exacerbating the problem.

2013-09-23 Post Fed, Expect More Surprises by Kristina Hooper of Allianz Global Investors

Kristina Hooper says investors should brace for more big market swingsand some fiscal curveballsin the wake of the FOMC’s decision not to taper in September. But the economy is throwing some good surprises our way too.

2013-09-20 5 Years Later: The Crisis We Haven't Tackled Yet by Russ Koesterich of iShares Blog

Five years after the Lehman bankruptcy, the proximate causes of the 2008 crash are no longer threats. But while the risk of another imminent financial system crisis has abated, there are two major issues that foretell a coming retirement funding crisis.

2013-09-17 Doesn\'t Government Lie? by Brian Wesbury, Bob Stein of First Trust Advisors

Like a Plow Horse, the US economy keeps plodding along GDP and payrolls keep growing. This confounds many pessimistic, debt-focused, perma-bear investors, who fall back on the belief that anything good must simply be a lie.

2013-09-16 Opportunities in Uncertainty by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

Uncertainty and volatility are elevated, which we believe provides opportunities for investors.

2013-09-10 Investor Anxiety + Uncertainty = More Volatility Ahead by Russ Koesterich of iShares Blog

As Russ expected, both equity and bond market volatility have risen in recent weeks. Russ explains why this rocky road is likely to continue, and he provides two ideas for potentially insulating portfolios amid volatility.

2013-09-10 Some Scary Bumps in the Road Just Ahead by Gary Halbert of Halbert Wealth Management

The major stock indexes moved lower after setting new record highs in early August, although prices have recovered somewhat in the last few days. So was the weakness in August just an overdue correction before moving even higher? Maybe, but there are a number of things coming up in the next month or so that could rattle the markets even more, including whether or not we go to war with Syria. We’ll talk about those today.

2013-09-10 Taper Vs. No Taper - Let\'s Meet Somewhere In The Middle by John Rothe of Riverbend Investment Management

Volatility in the US equity and bond markets has risen since Ben Bernanke and the rest of the Federal Reserve Board mentioned the possibility of tapering its bond purchase program - in other words, a potential end to the "free ride" the Fed has been giving investors. However, economic data is still weak and a reduction in economic stimulus by the Fed may harm the US economy.

2013-09-09 Get Ready for “Taper Lite”: 3 Signs the Labor Market Isn't Picking Up by Russ Koesterich of iShares Blog

While the overall US economy is healing, the labor market’s recovery continues to be frustratingly slow. Friday’s payroll report suggests investors should prepare for a less aggressive Fed, a more muted backup in interest rates and a bond market that can go up as well as down.

2013-09-09 Moving On - Five Years After Lehman by John Petrides (Article)

This month marks the fifth anniversary of the Lehman Brothers failure and the start of worst financial crisis in American history since the Great Depression, and yet to some investors, it seems like only yesterday. Investors still hold onto that period of volatility as if it will happen again tomorrow, paralyzing and confusing their investment decisions. Consequently, many investors have watched from the sidelines as the stock market has recovered solidly year after year.

2013-09-06 The Big Four Economic Indicators: Nonfarm Employment by Doug Short of Advisor Perspectives (

I’ve now updated this commentary to include today’s release of the August Nonfarm Employment data. As the adjacent thumbnail illustrates, the trend in this indicator has been ever upward, but at a frustratingly slow pace. Today’s announcement of only 169K new jobs was below forecasts. Moreover, the nonfarm jobs number for July was revised downward from 188K to 172K and the June number was revised downward from 162K to 104K for a combined decline of 74K from last month’s report.

2013-09-05 Exponential Business Success by Bill Smead of Smead Capital Management

At a major conference in November of 2012, the futurist, Peter Diamandis, shared the concept behind his book, Abundance: The Future Is Better Than You Think. Diamandis, a graduate of MIT and Harvard Medical School, has been a thought leader in everything from space travel (International Space University and X Prize Foundation) to the Internet. His concept is simple. He believes that participants in the US economy and US stock market are drastically underestimating the exponential success which comes from the unlimited impact of the Internet and technology.

2013-09-04 Fixed Income - Where to Now? by Chris Maxey, Ryan Davis of Fortigent

Since the end of the Global Financial Crisis (GFC), investors moved aggressively into fixed income asset classes. They were quickly rewarded in the years following the crisis with a combination of falling interest rates and tighter credit spreads, which led to positive absolute returns. The easy money in fixed income is gone, however, and now is the time for careful asset class selection.

2013-08-29 Have Emerging Markets Gotten Oversold? by Mark Mobius of Franklin Templeton Investments

At Templeton, we’ve repeatedly championed our value-driven philosophy by frequently buying at times others are most pessimistic. This is not easy to do, even for seasoned market veterans. During the past few months, emerging markets have been subject to such pessimism. These periods of short-term volatility are certainly not new to us, and don’t change our long-term conviction of the potential emerging markets hold.

2013-08-29 Middle East Tensions, Oil Prices and the US Economy by Russ Koesterich of iShares Blog

A further escalation of violence in the Middle East will not only have a terrible human toll, it could also lead to rising oil prices, which in turn could hurt consumers and the global recovery. Russ explains the situation and shares how investors can prepare.

2013-08-28 Forrest Gump Stock Market by Bill Smead of Smead Capital Management

After watching "Forrest Gump" for about the thirtieth time recently, I realized that the US economy and US stock market share a great deal in common with Forrest. In this missive, we will be reminded of the journey of a true American folk hero and of the journey back from the abyss the US economy and stock market have made since early in 2009.

2013-08-28 America is Turning Into a \"Part-Time Nation\" by Gary Halbert of Halbert Wealth Management

Part-time work accounted for a whopping 77% of the jobs the US economy created from January through July, according to household survey data from the Bureau of Labor Statistics. Last year during the same time period, part-time jobs were only 53% of the total versus 47% full-time jobs. This trend toward part-time, low paying jobs is accelerating rapidly.

2013-08-27 Will Rate Rise Derail Housing Recovery? by Chris Maxey, Ryan Davis of Fortigent

As the Federal Reserve grapples with when and how to unwind quantitative easing, interest rates climbed more than a point since the end of 2012. This caused mortgage rates to increase to their highest levels in two years last week, with the average conforming 30-year loan jumping to 4.58% from 4.40% the week prior. Rising financing costs is presenting a headwind for one of the biggest bright spots in the US economy over the past 12 months.

2013-08-21 Trickle-Up Economics by Bill Smead of Smead Capital Management

Major magazines have a history of putting a topic on their cover at the end of a long-term trend. For example, “The Death of Equities” was a Business Week cover in late 1979, near the end of a miserable stretch in the US stock market. Time’s recent cover story, “The Childfree Life”, got us wondering about the economics of childbearing in the US? Does Time’s cover mark the end of a trend? Can the US economy succeed without homegrown population increases? Will economic success driven by the current demographics in the US trickle down to unemployed blue collar

2013-08-20 Change is Coming by Chris Maxey, Ryan Davis of Fortigent

The summer months brought a period of calm to global markets and economies. Nearing the move to autumn, it is time to look ahead and see what resides on the horizon. Investors could be due for a renewed bout of volatility based on any number of events set to happen before year-end.

2013-08-14 Focused Only on the US? Here's What You're Missing by Russ Koesterich of iShares Blog

Many investors remain fixated on what’s happening in the United States -- and particularly on what the Federal Reserve will do -- but Russ explains why they shouldn’t lose sight of what’s happening abroad.

2013-08-13 China Struggles to Fight the Trend by Chris Maxey, Ryan Davis of Fortigent

Prior to the global financial crisis, decoupling’ was the word du jour. In the years since the crisis began, however, decoupling has vanished from the everyday lexicon. In recent weeks, the financial media noticed a new form of decoupling, one that shows improving growth prospects in the developed world but slower growth in developing economies. Rightly or otherwise, much of that slowdown is pinned on China and recent data continues to suggest a slower pace of growth than investors became accustomed to in prior decades.

2013-08-13 China's Government Can't Stop the Bust by Bill Smead of Smead Capital Management

On a recent trip to Europe we participated in a forum in Milan of five stock picking organizations. Two were from Brazil, one was from Malaysia and one was picking stocks inside China via the Shanghai Stock Exchange. We believe what they said was an enticement to investors for the purpose of getting them excited about stocks in their country. To us, this reveals a great deal about where prices in emerging stock markets and commodities are headed over the next five to seven years.

2013-08-09 Charts for the Beach by Richards Bernstein of Richards Bernstein Advisors

Our basic positions are now famous (or infamous). We continue to favor US assets and to shield our portfolios from the on-going and broad problems in the emerging markets. In the spirit of August, we forego significant text this month to present a series of charts that outline a few of the opportunities and risks we see in the global markets.

2013-08-08 Coming Soon: September Volatility by Russ Koesterich of iShares Blog

Since spiking earlier this summer, market volatility is now back to spring lows. Investors, however, shouldn’t expect this calm to continue come September. Russ has four reasons why.

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.

2013-08-06 Low Quality Jobs Recovery Continues in July by Chris Maxey, Ryan Davis of Fortigent

In a busy week of economic data, investors ended the week on a mixed note.The government jobs report revealed a labor market experiencing steady if not unspectacular growth, as nonfarm payrolls came in below consensus estimates while the unemployment rate surprised to the upside.

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 New GDP Revisions to Boost US Economy by 3% by Gary Halbert of Halbert Wealth Management

At the end of April, I pointed out that the Commerce Department’s Bureau of Economic Analysis (BEA) announced it would be making some significant revisions to the way it calculates Gross Domestic Product on July 31. It will revise economic growth for all years going back to 1929. This change is somewhat controversial in that it is expected to add up to 3% to total GDP in one fell swoop tomorrow morning. That’s about $1,500 worth of extra goods and services for every person in the US!

2013-07-30 FPA Crescent: Steve Romick\'s Quarterly Commentary by Steven Romick of FPA Funds

FPA Crescent Fund has released its quarterly commentary examining the state of the fund and its investments as well as an outlook on the greater economy. Portfolio manager Steve Romick feels that the economic “recovery has been disappointing and largely engineered by central bank policy” and worries “that low interest rates and novel and theoretical Fed policy could lead to unintended consequences.”

2013-07-29 Driftingbut for How Long? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

Equities have drifted higher during a decent earnings season with few surprises, while yields have calmed and volatility has plunged. Typical lackluster summer action may prevail for the next month, but action is likely to heat up as the weather begins to cool.

2013-07-27 A Lost Generation by John Mauldin of Millennium Wave Advisors

This week we will briefly look at why weak consumer spending is going to become an even greater problem in the coming years, and we will continue to look at some disturbing trends in employment.

2013-07-24 Average Gas Price Could Hit $4 by Labor Day... Or Not by Gary Halbert of Halbert Wealth Management

With the recent jump in gasoline prices, several energy analysts are forecasting that prices at the pump will top $4 a gallon (national average) later this summer. On the other hand, some analysts feel that gas prices will only go up another 5-10 cents a gallon just ahead, and then move lower in the fall. Of course, no one knows for sure. Today, we’ll take a look at what’s driving gas prices higher.

2013-07-24 Bursting of the Bond Bubble by Clyde Kendzierski of Financial Solutions Group

Our April newsletter focused on the extreme overvaluation in the bond market. I argued that money market funds (or cash) were likely to outperform bonds and bond funds over the next decade. In May I applied the same logic to US stock prices and the inherent fallacy in the prevailing TINA (“there is no alternative” to stocks) hypothesis. Although stocks are likely to outperform bonds over the next decade, both asset classes remain seriously overvalued. In a world of overvalued assets, zero return looks much better than large potential losses even when that means foregoing transitory

2013-07-23 Emerging Markets: Undervalued or Value Trap? by Chris Maxey, Ryan Davis of Fortigent

In the first quarter, we explored the divergence of emerging market equities from the US. We noted that a combination of factors likely drove the 12% performance differential, including investor risk appetites, inflationary pressures in developing markets, and reduced commodity price expectations.

2013-07-23 Dear Bernanke - You Can\'t Have Your Cake And Eat It Too by John Rothe of Riverbend Investment Management

The U.S. stock market continues its euphoric rise into record territory despite continuing weakness in economic data. Recent comments from Federal Reserve Board Chair, Ben Bernanke, indicating that the Fed does not have a predetermined plan to stop its stimulus plan has investors increasing their allocations to equities.

2013-07-18 The Death of Disasterism by Steven Vincent of BullBear Trading

From late 2012 I have been gradually layering and developing the thesis that a secular bull market started in November of 2012 (with a possible revised start date of June 2012), ending the sideways secular bear market that started in 2000. Here are the basic components of that thesis through the last report.

2013-07-17 The Bernanke Guessing Game by David Wismer of Flexible Plan Investments

There can be little doubt that US equity markets have become more dependent than ever, at least in the short-term, on the every utterance of Fed Chairman Ben Bernanke and his fellow FOMC members.

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 Hedge Funds Can Advertise...But Should They? by Chris Maxey, Ryan Davis of Fortigent

In April 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law. The legislation eased a number of regulatory burdens on small businesses and private industry in a bid to boost job growth. The bill made additional headlines for lifting an 80-year ban on solicitation for private placements, the restriction that prevented hedge funds from advertising their wares to the general public.

2013-07-16 Investment Bulletin: Global Equity Strategy July by Team of Bedlam Asset Management

For the first half of the year, the 17.7% gain by the portfolio was 390 basis points better than the index; during June, market panic over potential changes in Fed policy resulted in a 3.0% fall in the index, with the portfolio down by a similar amount. US bond funds suffered a record $58 billion outflow during the month, 2%of their assets.

2013-07-10 3 Risks that Could Derail the Market Rally by Russ Koesterich of iShares Blog

Stocks can withstand moderate rate increases, as we saw last Friday when they rallied despite a sell-off in bonds. But Russ K warns that they may not withstand these three other scenarios.

2013-07-09 High Yield Munis: Risky Business by Ryan Davis, Jingwei Lei of Fortigent

We shine a spotlight on the obscure market of high yield municipals this week. In the current fixed income selloff, the market has been among the worst performing with a drawdown of 6.1%. Investors could not get enough of the sector in 2012 as they chased yield; the Barclays high yield muni index returned over 18%. Investor sentiment has turned sharply, however, on this asset class. Funds experienced significant outflows over the last couple of months, which is especially troubling for a small and retail dominated market. Why did this onetime darling asset turn into a pariah so abruptly?

2013-07-02 Investors Gear Up for Earnings Post-Taper by Chris Maxey, Ryan Davis of Fortigent

Following a few weeks of FOMC-induced turmoil, investors are looking forward to getting back to the fundamentals.Second quarter earnings season are set to kick off July 8 with Alcoa, in what will mark an important reporting period for financial markets.Given the now much telegraphed intentions of the Fed, investors are scrutinizing whether the US economy and corporate sector is ready to stand on its own feet.

2013-07-02 Preparing for the Second Half of 2013 by Russ Koesterich of iShares Blog

It’s halftime halfway through the year. That means Russ is looking back at what he got right and wrong in the first half of the year, and updating his expectations for the remainder of 2013.

2013-06-28 The New, Old Normal by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

We believe the recent volatility will be relatively short lived and provides an opportunity for investors who need to adjust their portfolios to do sowith long-term goals in mind. The risks associated with fixed income have been illustrated over the past couple of weeks and rising yields have caused equity volatility and a pullback. But we remain optimistic about US equities as well as developed international markets; particularly relative to emerging markets.

2013-06-26 Win Ben's Money by Bill Smead of Smead Capital Management

From 1997 to 2003 a show called,” Win Ben Stein’s Money” ran on the Comedy Central Network. The last five years, investors in the US have been playing a very similar game we are calling, “Win Ben’s Money”. The new game stars Federal Reserve Board Chairman, Ben Bernanke. The object is to win the money the Fed creates via Quantitative Easing (QE) through macroeconomic analysis. In this missive, we will look at how these investors chased Ben’s Money and consider what to do going forward.

2013-06-25 Back to Normal by Brian Wesbury, Bob Stein of First Trust Advisors

Market behavior especially since Fed Chair Ben Bernanke mentioned QE tapering has been relatively dramatic. Not unprecedented, but dramatic. By contrast, the reaction of the punditry has been way over the top.

2013-06-25 Is Fixed Income the New Equity? by Chris Maxey, Ryan Davis of Fortigent

After several decades of positive returns, fixed income investors are being treated to a rude awakening in the last six weeks. Recent comments from Federal Reserve officials suggest a sooner than anticipated exit from quantitative easing, raising the prospect of higher interest rates. Throughout the universe of fixed income assets, investors are questioning the future return potential, leading many to wonder, what now?

2013-06-25 Despite More Downside Risk, Stick with Stocks by Russ Koesterich of iShares Blog

Despite stocks’ recent declines and the rocky road ahead, Russ explains why he still prefers equities over bonds.

2013-06-21 Asia Brief: China's Energy Demand by Edmund Harriss, James Weir of Guinness Atkinson Asset Management

China has the world’s largest unconventional gas reserves, but these so far remain untapped despite its growing demand for energy. China is now trying to follow the example of the US, and the government has set aggressive targets for unconventional gas production. As the demand for transportation fuels grow over the next decade, this gas could be a major contributor to meeting that need.

2013-06-21 The Fear Factor in US Equities by Grant Bowers of Franklin Templeton Investments

Fear is a powerful motivator. Whether it’s a saber-toothed tiger or investment risks, it’s hard to stay calm when confronted with a perceived threat. Fear of a 2008 2009 downturn repeat, even in spite of strong performance in the US equity market in the first half of the year, has kept many investors sidelined. Grant Bowers believes fear itself could be the biggest issue holding back many investors right now, noting that in his view, short-term volatility aside, the recent US market rally is based on supportive fundamentals which he thinks should have staying power.

2013-06-15 Economists Are (Still) Clueless by John Mauldin of Millennium Wave Advisors

The economic forecasts of mainstream economists are quite positive, if not enirely optimistic, reflecting the current data. Should we not take heart from that? Alas, no. This week we look at some of our recent musings on that topic, triggered by a letter from a very serious economist who took umbrage when I wrote disparagingly about economists and forecasting a couple months ago.

2013-06-12 Who Is Your Daddy and What Does He Do? by Cole Smead of Smead Capital Management

In the 1990 movie Kindergarten Cop, Arnold Schwarzenegger portrayed a police officer who goes undercover as John Kimble, a kindergarten teacher in Astoria, OR. Early in the movie, Mr. Kimble tells his class they are going to play a game called “Who is your daddy and what does he do?” After a myriad of answers, one of the children asks him if his ensuing headache is a tumor. Kimble replies “It’s not a tumor.” We at Smead Capital Management believe this was not only one of the more comical moments of Kindergarten Cop, but also a great question to ponder in today&rs

2013-06-11 Risk Parity - New Thinking or New Packaging? by Chris Maxey, Ryan Davis of Fortigent

Ever since Harry Markowitz brought forth the notion of mean-variance optimization in 1952, academics and practitioners alike have sought ways to build more robust asset allocation methodologies. Recently, the most talked about approach in the institutional world is risk parity, which seeks to focus on risk as its primary input. Risk parity is intuitively appealing, but suffers many pitfalls that investors need to consider.

2013-06-06 The REAL Great Rotation by Richard Bernstein of Richard Bernstein Advisors

The phrase "Great Rotation" has come to mean a sizeable shift in asset allocation from bonds to stocks. We, too, believe that stocks are likely to secularly outperform bonds, but we don’t think that is the "great rotation" about which investors should be concerned.

2013-06-05 Fed Advisory Council Drops A Bombshell by Gary Halbert of Halbert Wealth Management

Last Friday afternoon, the Fed released the minutes from a May 17 meeting of the Federal Advisory Council (FAC). The Council is a group of 12 influential bankers from across the country who meet periodically and give the Fed Board of Governors input regarding the economy, moneyary policy, etc. The minutes from the latest FAC meeting clearly indicate that the bankers are becoming increasingly uncomfortable with the Fed’s unprecedented “quantitative easing” policy. To my knowledge, no one in the mainstream media has reported on what you will read here today.

2013-06-05 26 Years of Wealth Effect: Equity Valuation in the Greenspan/Bernanke Era by Mark Ungewitter of Charter Trust Company

I recently observed that P/E multiples are becoming stretched versus historic experience. Historically rich valuations, however, should be viewed in context of today’s highly supportive monetary environment.

2013-06-04 The Gold Bull vs The Paper Tiger by Peter Schiff of Euro Pacific Precious Metals

That’s all, folks. One look at the headlines will tell you the gold bull market is officially over: the stock market is booming, a modest recovery of the US economy is underway, and the dollar is dominating the forex. Time to sell your bullion and get back into US stocks!

2013-06-03 US Balance Sheet Repair: More Difficult This Time by John Greenwood of Invesco

In most developed economies, the post-war years since 1945 saw sustained business cycle expansions alternating with shorter recessions. At the end of each expansion, authorities dealt with inflation by raising interest rates and slowing credit growth. When inflation subsided, interest rates were lowered again.

2013-06-03 Does Sector Shift Spell A Continued Rally? by Chris Maxey, Ryan Davis of Fortigent

Unlike most robust equity rallies, however, 2013 performance was initially led by traditionally defensive sectors, such as health care, utilities, and consumer staples. Through the first quarter, those three sectors posted an average return of 14.5%, while traditional cyclicals averaged just 9%. While some speculated this trend was due to investors’ reach for yield amid a frothy fixed income environment, the magnitude of this sector leadership (in an up move) was certainly unusual.

2013-05-31 Taking a Bite of Values by Peter Langerman of Franklin Templeton Investments

In the midst of a spring stock market surge sweeping some spots on the global mapnotably the USsome investors have been left scratching their heads, wondering just what it is that the equity market is celebrating. True, the US economy has been improving in some areas, but is it enough to justify the hooplaand keep the market from back-sliding at the first hint of trouble? And, are there any values to be had in this environment? Peter Langerman believes much of today’s US market euphoria is actually rational because it’s based on improving fundamentals, and yes, there are values to

2013-05-31 The American Consumer is Not Okay by Stephen Roach of Project Syndicate

The spin-doctors are hard at work arguing that falling unemployment, rising home values, and record stock prices mean that the American consumer the major drag on the economy in the post-crisis period is finally back. The facts say otherwise.

2013-05-31 The Most Important (and Widely Ignored) Economic Number by Russ Koesterich of iShares Blog

While economic numbers like GDP or the monthly non-farm payroll report typically garner the headlines, Russ explains why investors should pay more attention to and may want to alter their assumptions based on -- the Chicago Fed National Activity Index (CFNAI).

2013-05-30 Cyclical Securities: Too Early? by Bill Smead of Smead Capital Management

We have been making a number of arguments about various asset classes over the last three years and we would like to keep our readers very aware of the progress being made in these markets. We have argued that a secular bear market is in place for commodities and US company shares which are attached to the commodity cycle. Additionally, we maintain that there is a secular bear market operating under the surface in emerging equity markets. We believe that July of 2011 was the beginning of the secular bear market involving a number of asset classes beyond just commodities and emerging markets.

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.

2013-05-24 4 Ideas for Today's Low Inflation Environment by Russ Koesterich of iShares Blog

There’s certainly no shortage of things to worry about right now related to the US economy. But one thing we’re not too worried about right now: Inflation. Not only is inflation low, but the latest numbers show it’s actually falling. And as I write in my commentary this week, inflation is unlikely to become a problem in the United States for at least another 12 to 18 months. Why? There are a number of headwinds keeping US prices low in the near term.

2013-05-24 4 Market Risks Worth Worrying About by Russ Koesterich of iShares Blog

The risk of a US slowdown Not discounted in US valuations. While US valuations currently look reasonable, they’re predicated on a US economy growing at around 2% to 2.5%. The risk of slower growth is not priced into the market. If US economic data continues to disappoint, and we get a growth hiccup in the second or third quarter, then we’re likely to see some US market weakness.

2013-05-24 Remarkable Resilience by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

We saw how the prospect of a sooner pullback in purchases in bonds by the Fed rattled the market both in the US and globally, but the picture, to us, has not changed to any great degree. A very gradual pullback, not even going to zero, in quantitative easing due to an improved economic situation doesn’t spell disaster to us. We continue to urge investors to pay attention to both sides of the risk equation when making decisions and to keep the longer-term perspective in mind. Short-term swings are inevitable, but should not be the basis for sound decision making.

2013-05-22 Is There Value in Today's Stock Market by Bill Smead of Smead Capital Management

Due to the recent strength in the US stock market, we thought it would be helpful to followers of Smead Capital Management to understand the history of our core investment beliefs and where our portfolio is in relation to those core beliefs. A review of the ongoing tension between valuation mattering dearly and the enormous benefits of long-term business ownership is especially interesting after a significant upward move in the stock market. How do you keep turnover and trading expense low, while maintaining a meaningful margin of safety?

2013-05-22 Cyprus and the Eurozone...Still Stuck in the Middle by Gregory Hahn of Winthrop Capital Management

The debt crisis in the Eurozone turned another chapter as Cyprus finally reached the point of requiring a bailout from the European Union. The wisdom of Gerry Rafferty’s hit song “Stuck in the Middle with You” which was written in 1973, rings true today as we watch the EU and the European Central Bank navigate the mess in Europe. With each attempt at containment, there appears some plot twist, the proposed Cyprus bank bailout is no exception. While the bailout of Cyprus and its banks is not large in size, only 10 billion, relative to the Cyprus economy, it is significant.

2013-05-22 Where is inflation headed? What will it mean for investors? by Russ Koesterich of BlackRock Investment Management

Slow economic growth and long-term headwinds should keep inflation contained. Low inflation should help support equity markets and high yield bonds, but may be a negative for gold prices. The inflation environment should also help prevent interest rates from rising too fast.

2013-05-22 The Benefits of Diversifying the Funding of a Gold Position by Team of AdvisorShares

The recent sell off in gold has sharpened the focus of even the most committed gold bugs, and has highlighted one of the key risks that many investors face when they access the gold market. Do you purchase Gold in dollar terms or something else? How do you look at Gold, as a currency or something else? For the purposes of this analysis, Treesdale Partners took a look at a gold transaction in foreign exchange terms.

2013-05-21 Why the Lack of Inflation Is a Problem by Chris Maxey, Ryan Davis of Fortigent

Given the outsized role central banks are playing in today’s financial markets, inflation watching has taken on increased significance.It is widely assumed that continued easy money policies are only possible as long as price increases remain under control.At the same time, for a global economy trying to escape an extended period of weak growth and burdensome debt loads, low inflation is a double-edged sword.

2013-05-21 Are Equity Investors Pushing the Gas Pedal Too Hard? by Norman Boersma of Franklin Templeton Investments

Whatever previous reticence investors may have had about equities last year seems to have evaporated and, with remarkable speed, turned into fear over having missed the equity rally. Some major market averages have accelerated at a pace some say is reckless, so as we head toward the mid-point of the year, Norm Boersma, CFA, chief investment officer of Templeton Global Equity Group, takes a look at reasons investors might continue to push the gas pedalor tap the brakes.

2013-05-17 4 Reasons to Still Hold High Yield by Russ Koesterich of iShares Blog

With high yield spreads historically tight and prices at all-time highs, some market watchers are wondering whether it’s time to jump off the high-yield bandwagon. Russ weighs in and explains why this asset class is still worth holding.

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

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

2013-05-15 Speaking of a Great Week... by Blaine Rollins of 361 Capital

I left the office each day thinking that I just saw another walk off game winning home run by the S&P500. The bears were given their chance in April with the weak economic data and slightly less than exciting earnings, but they just couldn’t break it. In return, the employment data was a bit better, the global central banks came out swinging (ECB, Australia, and South Korea), then the markets broke the Yen, Bonds, and Gold, and the Bulls absolutely skinned the Bears.

2013-05-13 Tenuous Times? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

US stocks continue to make new highs, yet commodities have struggled and Treasury yields remain low, albeit up from recent near-record lows. Although not the standard playbook, we remain optimistic but acknowledge an equity pullback can occur at any time. Manufacturing data has been soft, the employment picture is mixed, and housing continues to improve. The European Central Bank (ECB) has joined the easing arty, illustrating the continued disappointments coming out of the eurozone.

2013-05-10 2013 US Financial Markets: Part 2 - The TINA Hypothesis by Clyde Kendzierski of Financial Solutions Group

Contrary to the “Bernanke Illusion” (money market funds are a zero return investment), history indicates that money market funds are likely to provide investors with returns approximating inflation over the next decade. As I pointed out in our last letter, the markets are pricing in inflation levels significantly higher than the prospective total returns of 10 year TBonds. The small additional return achieved by corporate bonds or US stocks (at current prices) is unlikely to compensate a buy and hold investor with sufficient gains to justify the interim risks.

2013-05-09 Why Reinhart & Rogoff Still Matter by Russ Koesterich of iShares Blog

Despite Reinhart and Rogoff’s methodology mistakes, their widely cited paper’s basic conclusion still holds. Russ K warns that both policy makers and investors ignore it at their own peril.

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

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

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

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

2013-05-07 Navigating Opportunities in Senior Loan and High Yield Corporate Bond ETFs by Ryan Issakainen of First Trust Advisors

In this newsletter, we will consider how senior loan and high yield corporate bond ETFs may be utilized by investors to pursue a higher level of income while seeking to mitigate the impact of rising interest rates. We’ll discuss why we believe benchmark indices are flawed investment strategies for gaining exposure to these asset classes, and we’ll highlight how First Trust utilizes active management to seek better risk-adjusted returns than passive senior loan and high yield corporate bond index ETFs.

2013-05-07 Quarterly Letter by Team of Grey Owl Capital Management

In his April 2013 commentary, PIMCO’s Bill Gross wrote, “PIMCO’s epoch1, Berkshire Hathaway’s epoch, Peter Lynch’s epoch, all occurred or have occurred within an epoch of credit expansion What if an epoch changes? What if perpetual credit expansion and its fertilization of asset prices and returns are substantially altered? What if a future epoch favors lower than index carry or continual bouts of 2008 Lehmanesque volatility ?”

2013-05-01 US Economy to Get a Hollywood Makeover by Gary Halbert of Halbert Wealth Management

You may have heard that the government is going to make some major changes in how our Gross Domestic Product is calculated later this year. Your first thought might be that this is no big deal. However, I will argue today that it is a very big deal, the biggest in a decade, and you need to know why. So I hope you read what follows with more than a passing interest.

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

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

2013-04-26 Like Baseball in the Snow by Doug MacKay, Bill Hoover, Mike Czekaj of Broadleaf Partners

As has occurred in each of the last three years, the economy should continue to plug along, not as we might like it to be, but as we can reasonably expect. Growth scare or not, we suspect that the end of 2013 will show that continued progress lies ahead, but perhaps not exactly in the same pattern as it has thus far.

2013-04-19 Recession Watch: ECRI\'s Weekly Leading Indicator Rises by Doug Short of Advisor Perspectives (

Essentially ECRI is sticking to its call that a recession began in mid-2012, although the company now calls it a "mild" recession, which is quite a shift from their original stance 18 months ago: "...if you think this is a bad economy, you haven’t seen anything yet."

2013-04-18 Reversing Quantitative Easing by Richard Bernstein of Richard Bernstein Advisors

The Fed is likely to lag the markets, as they do in most cycles. The markets will probably anticipate the Fed reversing QE. The Fed will surprise few investors. The Fed should reverse QE in a yield curve-neutral way, in our view. Steepening the curve risks perversely stimulating the economy by making carry trades and loan spreads more profitable. This cycle will probably end as do most cycles. The Fed will be behind the curve, play catch-up, tighten too much, invert the curve, and cause a recession. That end result, however, is probably quite far in the future.

2013-04-16 Five Warning Signs of a Coming Market Correction by Dawn Bennett of Bennett Funds

There are no positive fundamentals driving the U.S. stock market. No one has ever gotten rich by chasing markets by buying at the top, which is how this market feels.but it seems everybody feels they can’t afford to miss being in the U.S. equity markets. People should instead be focused on the true facts of the U.S. economy and corporations and tune out the hype and happy talk from the media and Fed heads. Instead investors should focus on the real data.

2013-04-16 2013 US Financial Markets by Clyde Kendzierski of Financial Solutions Group

In the fall of 2012 the S&P 500 came close to our forecast high (S&P- 1500) Last year we suggested that not only was the S&P likely to reach 1500, but also speculated that renewed bullish sentiment could take us back to the old highs of 1565. When the S&P touched 1563 a couple weeks ago, I started getting client calls complimenting my prescient forecast.

2013-04-12 ECRI\'s Weekly Leading Indicator Shows a Small Improvement by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is now at 130.1, up from 129.1 last week (revised from 129.2). The WLI annualized growth indicator (WLIg) remains unchanged at 6.2%.

2013-04-12 Housing Bubble II? by Russ Koesterich of iShares Blog

It might seem like the housing bubble just burst, but as the housing market stages a comeback, investors are asking if we’re already facing another bubble. Russ explains why home prices aren’t in a bubble but home builder stock valuations may be.

2013-04-10 Time to Flee Equities for Bonds...and Japan? by John Rothe of Riverbend Investment Management

Last week’s string of bad economic data may finally be the tipping point we have been waiting for. For the past few weeks, I have become more and more bearish on the US economy and stock market. Payroll tax hikes, sequestration, and slowing global growth mixed with a euphoria for a rising stock market have pushed the markets into a high risk environment.

2013-04-09 Morning in Japan by Christian Thwaites of Sentinel Investments

There were two very important central bank meetings last week, one from the Bank of Japan the other the ECB. Bank of Japan press conferences have been soporific affairs for years with a few QE programs not leading to much and no changes to inflation targets. Deflation, a declining workforce and falling aggregate demand have been pretty much the unbroken story for the best part of two decades.

2013-04-05 ECRI\'s Recession Indicators Decline from the Previous Week by Doug Short of Advisor Perspectives (

Today ECRI has added a new headline on the website, Employment Growth Hits New Low, based on data from today’s jobs report. Essentially ECRI is sticking to its call that a recession began in mid-2012, although the company now calls it a "mild" recession, which is quite a shift from their original stance 18 months ago: "...if you think this is a bad economy, you haven’t seen anything yet."

2013-04-02 Is the Vix Still an Adequate Measure of Risk? by Chris Maxey, Ryan Davis of Fortigent

The 30-day implied volatility index for the S&P 500 calculated by the Chicago Board of Options Exchange (CBOE), known as VIX, has long been used as an indicator of market sentiment. Commonly referred to as the “fear index,” the VIX often portends periods of stress in equity markets, as options traders price in higher volatility in the future. The shape of the VIX futures curve, in particular, has historically been used as an indicator of future volatility levels.

2013-04-02 The Crisis in Cyprus by Bill O'Grady of Confluence Investment Management

Over the weekend of March 16, Cyprus announced it was taxing deposits in order to recapitalize its banking system. The proposal, which levied a tax of 9.9% for deposits under 100k and 12.5% for amounts over that level, caused a severe political backlash. The Cypriot legislature would not approve the measure. In the days following, a banking holiday was put in place to prevent banking runs. The Troika (the EU, the IMF and ECB), who approve bailouts for the Eurozone, negotiated into late Sunday, March 24, before reaching a deal.

2013-03-29 ECRI Recession Indicator: Unchanged from Last Week by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) to one decimal place is unchanged from last week. It is now at 129.7, the same as last week’s downward revision from 129.8. The WLI annualized growth indicator (WLIg) has risen fractionally to 6.6%, up from last week’s 6.3%. Those of us who regularly follow ECRI’s publicly available data and commentaries understand that there is no logical connection between ECRI’s proprietary indicators and their "pronounced, pervasive and persistent" recession call of September 2011.

2013-03-28 On the Fed, the Keystone Pipeline & the War On Jobs by Gary Halbert of Halbert Wealth Management

The Fed Open Market Committee (FOMC) met as scheduled last Tuesday and Wednesday to review monetary policy and its massive “quantitative easing” effort. The official policy statement released at the end of the meeting on Wednesday was little changed from those in previous months.

2013-03-28 Today's Good News Isn't Bad for US Stocks by Daniel Loewy of AllianceBernstein

Believe it or not, recent US housing market gains, the slight reduction in jobless rates and other signs of a revival in US economic growth are making some investors bearish about US stocks. We think their fears are misplaced.

2013-03-26 Currencies in a Race to Debase by Chris Maxey, Ryan Davis of Fortigent

Since the start of the year, investors have seen rapid shifts of sentiment in currency markets. The debasement that for so long was assumed to be a purely Western phenomenon is beginning to impact countries globally, driving changes in expected returns and growth prospects.

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 ECRI’s "Recession" Indicators: Unchanged from Last Week by Doug Short of Advisor Perspectives (

The only new ECRI-related news since last Friday’s update is a CBS Moneywatch commentary, Can the stock market rise while the economy stalls? ECRI liked the commentary well enough to reprint it on the company’s website. It basically reiterates Achuthan’s point in the "Yo-Yo Years" essay that it’s possible for the market to rise during a recession, citing three such instances (of the 15 recessions) since the Roaring Twenties.

2013-03-21 The Constancy of Dividends by Bill Smead of Smead Capital Management

The payout ratio on the S&P 500 Index currently hovers around 30% of the after-tax profits of companies in the indexat the low end of the last 100 years. In comparison, the capital appreciation portfolio here at Smead Capital Management has a payout ratio of 27%. This is important because most studies show that over 40% of the returns provided by common stocks come from dividends over long stretches of time. With those figures in mind, we reasoned that this is a good juncture to remind everyone about our vision of the next ten years as it pertains to dividends.

2013-03-20 Spending Patterns Paint Half Truth by John Browne of Euro Pacific Capital

On March 13th, the Commerce Department announced a 1.1 percent increase in food and services retail sales, doubling a prior Dow Jones survey of economists that forecast an increase of just 0.6 percent. This new data has led to a fresh wave of enthusiastic commentaries that the US economy is set for a strong recovery. Less examined were the underlying factors that supported the increase.

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

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

2013-03-19 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.

2013-03-19 Mila Kunis, Euphoria, and the Stock Market by John Rothe of Riverbend Investment Management

Are we in the “euphoria” stage of the market right now? This past week, as the S&P 500 nears a record level, financial news pundits were fascinated with the following headlines.

2013-03-15 ECRI’s Recession Call: Proprietary Indicators Still Not Cooperating by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) rose in today’s update. It is now at 129.9 versus the previous week’s 129.5 (revised upward from 129.3). The WLI annualized growth indicator (WLIg) has eased, now at 6.3, down from last week’s 6.4 (an upward revision from 6.2).

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

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

2013-03-11 And That's the Week That Was by Ron Brounes of Brounes & Associates

Stocks moved to record highs (Dow Jones) early in the week and never looked back. Some favorable economic data, particularly from labor, renewed investors' confidence and others jumped on as the week progressed to participate in the friendly trend. Even with the spending cuts from sequester threatening to weaken the economy, investors focused more on the present than the future. Though naysayers scoff at the recent moves and claim the economic strength is at least partially artificially Fed induced, their voices have been silenced for now.

2013-03-08 ECRI "Recession" Update: Lakshman Achuthan Stands his Ground by Doug Short of Advisor Perspectives (

The big news this week is the ECRI's Chief Operating Officer and spokesman, Lakshman Achuthan, returned to the media circuit with interviews yesterday on Bloomberg, CNBC and Yahoo's Daily Ticker. In addition, ECRI has published a new commentary available to the general public.

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

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

2013-03-07 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 What Economists can Learn from Downton Abbey by Robert Huebscher (Article)

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

2013-03-05 The Sequester: A Second Quarter Worry by Russ Koesterich of iShares Blog

Now that March 1 has come and gone, what will the sequester mean for the US economy and markets? Maybe not much in the near term, but Russ explains why the second quarter will be a different story.

2013-03-04 Is Congress About to Cause a Major Economic Slowdown? by John Rothe of Riverbend Investment Management

The fiscal cliff, sequestration, higher taxes, and a pending budget debate may be too much for overly optimistic investors to handle. Volatility has started to rise and the market is looking weaker:

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 ECRI "Recession" Update: Proprietary Indicators Slip Again by Doug Short of Advisor Perspectives (

ECRI adamantly denied that the sharp decline of their indicators in 2010 marked the beginning of a recession. But in 2011, when their proprietary indicators were at levels higher than 2010, they made their recession call with stunning confidence bordering on arrogance.

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 ECRI "Recession" Update: Proprietary Indicators Slip Again by Doug Short of Advisor Perspectives (

ECRI adamantly denied that the sharp decline of their indicators in 2010 marked the beginning of a recession. But in 2011, when their proprietary indicators were at levels higher than 2010, they made their recession call with stunning confidence bordering on arrogance...

2013-02-22 January 2013 Market Commentary by Andrew Clinton of Clinton Investment Management

The municipal bond market continues to perform well in the face of significant political, financial and economic uncertainty, once again, demonstrating the importance of consistent, competitive tax-free cash flow. Municipal bonds proved to be one of the best performing asset classes during 2012.

2013-02-21 Fed Must Tune in to Changing US Economy by Joseph Carson of AllianceBernstein

With each passing month, more questions are being asked about the sluggish US economic recovery. Why has growth been subdued since the recession ended in mid-2009? What's changed in the economy? How long can loose monetary policies persist before promoting more inflation or creating a new bubble?

2013-02-19 Letter to the Editor by Various (Article)

A reader responds to Gary Halbert's commentary, The Economy: Worst Five Years Since the Depression, which appeared on February 13.

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

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

2013-02-15 Latest OECD Data Shows Global Economy in State of Flux by Steve Rumsey of Optimus Advisory Group

According to the OECD ("Organisation for Economic Co-operation and Development"), the US economy managed to stage a leading indicator "rally" into the most favorable northeast quadrant. The red six month lagging tail on the graph clearly shows the economic leading indicators moving from expansion to slowdown, only to move back to the expansion quadrant in late 2012.

2013-02-15 ECRI "Recession" Update: Propietary Indicators Take a Pause by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) slipped fractionally in today's update. It is now at 129.6 versus the previous week's 130.2.The WLI annualized growth indicator (WLIg) also eased, now at 8.3, down from last week's 8.9. WLIg has been in expansion territory since August 10th of last year, but is is fractionally off its interim high set last week.

2013-02-14 Is Inflation Around the Next Corner? Then What? by Pete Sorrentino of Huntington Funds

As the Federal Reserve Board reiterates its intention to keep interest rates near zero into 2015, it appears that the markets and many investors are growing complacent about inflation. Ever since the Financial Crisis of 2007-08, "headline inflation," as measured by the Consumer Price Index (CPI), has stayed low so far. Although it has threatened to break out at times, economic weakness has restrained the price growth that underlies inflation.

2013-02-13 Our Job: Whether; Market's Job: When by Bill Smead of Smead Capital Management

Warren Buffett describes the stock market's purpose as being "a wonderfully efficient mechanism for transferring wealth from the impatient to the patient". We are reminded of this by a series of news reports and commentaries on subjects greatly influenced by basic economics. In today's missive, we consider what the law of supply and demand says about China, oil, and housing in the USA.

2013-02-13 The Economy: Worst Five Years Since the Depression by Gary Halbert of Halbert Wealth Management

While the many facts and figures below are disappointing, even depressing, Americans need to know the truth about the real state of our economy and our union. Consider what follows as a rebuttal to President Obama's speech tonight. Feel free to forward this to as many people as you wish.

2013-02-12 Consumers Less Enthused to Bail Out the Economy by Chris Maxey, Ryan Davis of Fortigent

Following recent recessions, it was commonplace to rely on American consumers to bail out the economy. The reliance on the American consumer was widely understood as the best remedy for an ailing economy. We are not as fortunate this time around and our dependence on consumers is one reason for the sluggish rate of recovery since 2008.

2013-02-12 Currency Wars? What Currency Wars? by Christian Thwaites of Sentinel Investments

There's much talk of currency wars right now. We think they're way overblown. The source of the problem lies with Japan, which has made explicit a strategy to lower the yen, increase domestic demand and increase inflation. It needs to do all three. The twenty year old balance sheet recession and deflation in Japan has been a costly error in targeting inflation and not much else.

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 ECRI "Recession" Update: Leading Index Growth Sets Another Interim High by Doug Short of Advisor Perspectives (

First a flashback for those of us who have followed ECRI's media appearances: we know that the company adamantly denied that the sharp decline of their indicators in 2010 marked the beginning of a recession. But in 2011, when their proprietary indicators were at levels higher than 2010, they made their recession call with stunning confidence bordering on arrogance...

2013-02-08 Weekly Economic Commentary by Team of Northern Trust

Immigration reform would help the US economy at many levels. There is much going on with the US labor force participation rate. Will leadership change usher in a new era at the Bank of Japan?

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

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

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

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

2013-02-04 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.

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

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

2013-02-01 ECRI "Recession" Update: Leading Index Growth Hits Another Interim High by Doug Short of Advisor Perspectives (

ECRI posts its proprietary indicators on one-week delayed basis to the general public, but ECRI's Lakshman Achuthan has switched focus to his company's version of the Big Four Economic Indicators I've been tracking for the past several months. See, for example, this November 29thBloomberg video that ECRI continues to feature on their website. Achuthan pinpoints July as the business cycle peak, thus putting us in at the beginning of the eighth month of a recession.

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

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

2013-01-31 Q4 2012 Letter by Team of Grey Owl Capital Management

During the second half of 2012, central banks turned their massive and coordinated monetary intervention "up to eleven." This is the overwhelmingly dominant economic and market force today. Despite the long-term consequences (which are very real), we believe the central bankers commitment is steadfast. It has and will likely continue to mute both real economic and financial market volatility (at the expense of long-term growth). A deeper analysis of what has changed, our assessment of the impact, and our portfolio response follows.

2013-01-30 U.S. Debt Crisis End-Game Looms in 3-5 Years by Gary Halbert of Halbert Wealth Management

Last week, one of the most respected research groups in the world predicted that the US likely has only 3-5 years before the wheels fall off and the world is thrust into a major financial crisis, possibly even a depression. We'll talk about all of these things as we go along today. But before we go there, let's take a brief look at the economy before tomorrow's advance (first) estimate of 4Q GDP.

2013-01-29 What Budget Problems? by Christian Thwaites of Sentinel Investments

"Vickers falls on fear of peace." There's an apocryphal story of how on the day after D-Day, the stock of Vickers, a large defense contractor, abruptly fell. I can't find the source but it was a good story going around the City some, ahem, 30 years ago. Last week there was not a lot of price action in bonds until Friday when economic upticks replaced budgets as the main driver. We saw a one point correction in treasuries. The market is right to push budget concerns into the background for now.

2013-01-25 Housing Is Off the Floor, But Faces Ceilings. by Team of Northern Trust

Housing is off the floor, but faces ceilings. The cost of housing could be a source of increased inflation. January's FOMC meeting should not break any new ground.

2013-01-23 Avoid Disappointment, Aim Low by Christian Thwaites of Sentinel Investments

No, it's not a life aspiration. But it can work when it comes to investing. We had a rush of gains coming into the end of the year with the S&P up 22% over the year. But it's also one of the more relaxed markets and start we've had in years. The political agenda is still front and clear and we're in a lull until the debt ceiling arguments gain steam. The markets know this but seem comfortably complacent. They're probably right to be.

2013-01-22 2013 Investment Outlook by Jeremy Boynton of Laureate Wealth Management

I would like to focus this commentary on three trends which I believe will have a larger positive impact on the US economy going forward than the broader investment community expects.

2013-01-22 Equities Set to Break Out of the Bear Trap by Catherine Wood of AllianceBernstein

In the face of significant uncertainties, US and global equities rallied in 2012 and at the start of the New Year. We think there might be more to come as stocks break out of the bear trap.

2013-01-16 3 Reasons the Stock Market Rally Could Falter by Russ Koesterich of iShares Blog

Enjoy the US stock market rally while it lasts. Russ Koesterich has three reasons why investors should remain cautious in the near term.

2013-01-15 Gundlach’s Predictions for 2013 by Robert Huebscher (Article)

Don't expect the low volatility that characterized the capital markets in 2012 to continue. Global economic uncertainty remains, and markets are poised like a 'coiled snake' to reward or penalize investors in certain asset classes, according to Jeffrey Gundlach.

2013-01-15 Template for a Year-End Client Letter 2012 in Review: Learning from the Past, Looking to the Future by Dan Richards (Article)

Client concerns about whether you're on top of things can be reduced by sending regular overviews of what's happened in the immediate past and the outlook for the period ahead. That's why each year since 2008, I have posted templates to serve as a starting point for advisors looking to send clients an overview of the year that just ended and the outlook for the period ahead.

2013-01-15 Forecast 2013: Unsustainability and Transition by John Mauldin of Millennium Wave Advisors

As we begin a new year, we again indulge ourselves in the annual rite of forecasting the year ahead. This year I want to look out a little further than just one year in order to think about the changes that are soon going to be forced on the developed world. We are all going to have to make a very agile adaptation to a new economic environment (and it is one that I will welcome). The transition will offer both crisis and loss for those mired in the current system, which must evolve or perish, and opportunity for those who can see the necessity for change and take advantage of the evolution.

2013-01-15 It's Not What Happens That Matters by Bill Smead of Smead Capital Management

Late in 2008 and in early 2009, a group of what we like to call "brilliant pessimists" hit the airwaves with their economic theories. The prognosticators' vision of the future was and is predicated on the history of similar situations and the mathematical realities of the huge debt overhang from the prior ten years of profligate economic behavior. They put very effective names on their visions like "new normal" and "seven lean years". They marketed their visions incredibly well to the point of shaming anyone who might disagree with their theories.

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...

2013-01-10 Things Can Only Get Better by Bill Smead of Smead Capital Management

As long-duration common stock owners, we at Smead Capital Management don't put much emphasis on predicting the year-to-year movements in the stock market. We expect at least a 10 percent or greater decline during each year and a greater than 20 percent decline at least once every five years. With that caveat in place, we will throw our two cents into the debate about what the US stock market will do in 2013.

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

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

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

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

2013-01-07 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The stock market has started the New Year in fine shape, relieved that President Obama's threat to raise taxes to the moon on capital gains and dividends were thwarted with the deal agreed to on New Year's Day.

2013-01-03 Beyond the Fiscal Cliff by Richard Bernstein of Richard Bernstein Advisors

Politicians love the spotlight, but it is very unfortunate that investors watch the show. The drama of the so-called "fiscal cliff" has scared investors, and led them to miss a very good year in the equity market (the S&P 500's total return was 16.0% during 2012 versus the long-term annual average of 11.8%). It appears as though Washington wants to continue to dominate the headlines, which means that it may be more important than ever for investors to downplay Washington's theatrics.

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.

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

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

2013-01-03 Taking Care of Business, DC-Style, to Avert the Fiscal Cliff by Liz Ann Sonders of Charles Schwab

No "grand bargain," but Congress got a deal done at the 13th hour to avert the fiscal cliff. The next two months will bring more DC wrangling and likely market angst, but we believe the outlook has brightened for the economy and market in 2013. The "wall of worry" is alive and well.

2013-01-02 Somewhere Over the Rainbow by John Mauldin of Millennium Wave Advisors

We are 13 years into a secular bear market in the United States. The Nasdaq is still down 40% from its high, and the Dow and S&P 500 are essentially flat. European and Japanese equities have generally fared worse. The average secular bear market in the US has been about 11 years, with the shortest to date being four years and the longest 20. Are we at the beginning of a new bull market or another seven years of famine? What sorts of returns should we expect over the coming years from US equities?

2012-12-26 Gundlach's High-Conviction Investment Idea by Robert Huebscher (Article)

Count Jeffrey Gundlach among those who expect Japan's currency to collapse because it can't service its debt. Japan's challenges may parallel those that the US faces, and Gundlach feels strongly that they have created a compelling investment opportunity.

2012-12-21 ECRI Update: The Recession Call Is Further Undermined by Doug Short of Advisor Perspectives (

TheWeekly Leading Index(WLI) of the Economic Cycle Research Institute (ECRI) slipped fractionally in the latest public data. It is now at 127.2 versus the previous week's 127.4. However, the WLI annualized growth indicator (WLIg) rose, now at 4.6, up from last week's 3.9. WLIg has been in expansion territory since August 24th, although it is off its high at 6.0 on October 12th.

2012-12-17 Fed Talks Louder, To Little Avail by Brian Wesbury, Bob Stein of First Trust Advisors

When someone doesn't speak your language, yet you must communicate, funny things can happen. At first, most just talk normally, hoping the message somehow gets through with a hand gesture or two. If that doesn't work, some people start talking really slowly. And if all else fails, how about saying it REALLY LOUDLY, and emphatically, to finally get our point across. That's where the Federal Reserve is today. In its own collective mind, it has a very important message to convey: that monetary policy is going to be as expansionary as necessary to get this economic recovery off the ground.

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

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

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

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

2012-12-14 ECRI Weekly Update: Walking the Recession Plank by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) rose in the latest public data to its highest level since early August of 2011. It is now at 127.7, up from a downwardly revised 126.7 in the previous week. See the WLI chart. The WLI annualized growth indicator (WLIg) also rose, now at 4.4 from last week's 3.5. WLIg has been in expansion territory since August 24th, although it is off its high at 6.0 on October 12th.

2012-12-12 Does China Pass the Smell Test? by Bill Smead of Smead Capital Management

We at Smead Capital Management believe that prolonged faith in China's economy and the belief that emerging market growth will be an elixir for developed market multi-national companies is the erroneous gift that just keeps giving. If China's economy has been successfully soft landed from its boom, why is the internal Shanghai Composite index making new lows as recently as last week (November 29th, 2012)?

2012-12-11 Tax Reform: A First Step by Clyde Kendzierski of Financial Solutions Group

I rarely use this space to rant about political issues, but the recent election made it obvious just how dysfunctional the American political process has become. The ongoing financial crisis in the US will never get fixed as long as both political parties remain focused on solutions that make the problem worse. The Democrats want to give people more money to spend, claiming this will grow the economy. The Republicans want to cut taxes, so that people have more to spend, claiming that will grow the economy

2012-12-10 13 for '13 by Richard Bernstein of Richard Bernstein Advisors

Each December we publish a list of investment themes that we feel are critical to the coming year. We continue to believe that US equities are in the midst of a major bull market that could ultimately rival 1982's bull market. It is hard to be bearish when one considers the following.

2012-12-07 ECRI Weekly Update: More Recession Flag Waving by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) rose slightly in the latest public data. It is now at 126.8, up from an upwardly revised 126.2 in the previous week. See the WLI chart in the Appendix below. The WLI annualized growth indicator (WLIg) also rose, now at 3.5 from last week's 3.4. WLIg has been in expansion territory since August 24th, althout it is off its high at 6.0 on October 12th.

2012-12-06 Questions and Answers Surrounding the Fiscal Cliff by Team of Northern Trust

There is no resolution yet to the US fiscal cliff. It is probably unfair to have expected one by now; the clock is too far from midnight. But as the negotiations continue, several questions have been raised that deserve some reflection. 1. The two sides seem to be making statements that reflect stark disagreement. Are talks failing? 2. Is our fiscal path a cliff, or a slope? 3. There is a proposal to limit the deductions claimed by high income taxpayers. How would these work, and what are the consequences? 4. The cliff has been in the news for a long time. Why isnt everyone prepared for it?

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

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

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

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

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

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

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

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

2012-11-27 A Critique of Grantham and Gordon: The Prospects for Long-term Growth by Laurence B. Siegel (Article)

The vigorous global economic growth of the last two centuries is over, according to Jeremy Grantham and Robert Gordon. That prediction, if correct, has profound and worrisome implications for investors. And the short-term trend is indeed disquieting: Growth has been close to zero over the last decade in advanced countries. But the most likely outcome is that per capita GDP growth going forward will approximate its U.S. historical average of 1.8%, and it will grow faster in developing markets.

2012-11-23 ECRI Weekly Leading Index: Index Rises, Growth Diminishes by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) rose slightly in the latest public data (released Wednesday in advance of the Thanksgiving holiday). It is now at 125.7, up from 125.4 in the previous week. See the WLI chart in the Appendix below. The WLI annualized growth indicator (WLIg) declined to 3.8, down from last week's 4.3. WLIg has been in expansion territory for thirteen weeks, although it is now at a seven-week low, with the high at 6.0 on October 12th.

2012-11-19 America's Fiscal Cliff Dwellers by Simon Johnson of Project Syndicate

America's looming "fiscal cliff" is actually more of a "slope," with the full effect of the tax increases and spending cuts felt only gradually. But the choice of words matters, given the hysteria that has been whipped up in recent months, primarily by people who want to decimate America's social-insurance programs.

2012-11-16 Obstacles to a Lasting Recovery: The Liquidity, Hesitancy & Solvency Traps by Thomas Fahey of Loomis Sayles

Those familiar symptoms are back again to start the summer: risk aversion; falling equity prices; rising volatility; record-low German and US government bond yields; wider credit spreads; a European country getting picked on; and a stronger US dollar. We have seen this bad movie twice before, during the summers of 2010 and 2011.

2012-11-16 ECRI Weekly Leading Index: The Slippage Continues by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) declined again in the numbers released today. It is now at 125.4, down from its interim high of 127.6 set five weeks earlier. The WLI annualized growth indicator (WLIg) also declined, now at 4.4, down from last week's downard revision to 5.0. WLIg has been in expansion territory for twelve weeks, although it is now at a five-week low, with the revised high at 6.0 on October 12th.

2012-11-15 Weekly Commentary & Outlook by Gary Halbert of Halbert Wealth Management

Obviously, I am very discouraged with the outcome of the election. The main mistake Spencer and I made (and others including Gallup, Rasmussen, Pew, Rove, Morris, etc., etc.) in our pre-election analysis was to significantly underestimate the turnout rates among Democrats. The widely-held view that Democrats were unenthused and wouldn't turn out to vote, as suggested by numerous pollsters, was simply wrong. Obama won both the popular vote and the Electoral College comfortably.

2012-11-14 U.S. Economic and Interest Rate Outlook - November 2012 by Carl Tannenbaum, Asha Bangalore of Northern Trust

Our updated forecast anticipates some movement on the "fiscal cliff."

2012-11-13 The Election by Jeffrey Saut of Raymond James

As most of you know I was in Glasgow, Edinburgh, London, Zurich, and Geneva during election week seeing institutional accounts and speaking at conferences. Of course the question on all the portfolio managers' (PMs) minds was about the election, the subsequent effect on the economy and the various markets, currencies, and the Fiscal Cliff.

2012-11-13 Four More Years... by Kate Schapiro of Sentinel Investments

Americans went to the polls this past Tuesday and re-elected President Obama to four more years in office. In addition, the partisan breakdown of Congress stayed roughly the same in both the House of Representatives (Republican majority) and Senate (Democratic majority). So after nearly two years and billions of dollars spent on campaigning, debating, polling, grand-standing and mudslinging, the leadership is unchanged. A good argument for campaign finance reform if ever there was one.

2012-11-12 Fiscal Cliff, US Economy and Election Results - What Happens Next? by Liz Ann Sonders of Charles Schwab

Housing, manufacturing, and post-Sandy rebuilding could help offset the drag from the fast-approaching "fiscal cliff," but for now, uncertainty is front and center.

2012-11-09 Fiscal Cliff, US Economy and Election ResultsWhat Happens Next? by Liz Ann Sonders of Charles Schwab

Even if the United States falls off the "fiscal cliff," the hit to the economy will probably be gradual. And while the fiscal cliff probably figured into the recent market pullback, it's not the only contributor. Resolution to this issue, the continuation of positive trends in housing and manufacturing, and fundamental tax reform could help give the economy a boost.

2012-11-09 ECRI Weekly Leading Index: Off Its Interim High by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) declined in the numbers released today. It is now at 126.2, down from its interim high of 127.6 set four weeks earlier. The WLI annualized growth indicator (WLIg) also declined, now at 5.1, down from last week's 5.9. WLIg has now spent eleven consecutive weeks in expansion territory, although it is now at a five-week low.

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 Weekly Economic Commentary by Carl Tannenbaum, Asha Bangalore, Victoria Marklew of Northern Trust

Hurricane Sandy will impact the pattern of upcoming data, but is not likely to have a lasting economic impact. Our updated forecast anticipates some movement on the "fiscal cliff." France may be part of Europe's problem, not a source of Europe's solutions.

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.

2012-11-07 US Olympic Swim Team and Warren Buffett: Buy and Hold by Bill Smead of Smead Capital Management

The US swim team has their own criteria for developing young athletes. We assume in every ten-year stretch that they support the swimming efforts of 25 to 30 young athletes in hopes of finding an occasional Mark Spitz or Michael Phelps. Most of them share the characteristics we described about Michael Phelps. The US Olympic team is the most successful swim team portfolio manager in the world. What can we learn from them as portfolio managers?

2012-11-02 ECRI Weekly Leading Index: Still Jogging in Place by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) slipped fractionally in the numbers released today. It is now at 126.6, down from last week's 126.7 (revised from 126.8). Likewise, the WLI growth indicator (WLIg) slipped slightly, now at 5.9, down from last week's 6.0. WLIg has now spent ten consecutive weeks in expansion territory, although it is off its interim high of 6.1. But for the past six weeks the WLI has been jogging in place in a narrow range (126.2 to 126.7).

2012-10-29 The Quest for Certainty by John Mauldin of Millennium Wave Advisors

The last two weeks we have been looking at the problems with models. First we touched on what I called the Economic Singularity. In physics a singularity is where the mathematical models no longer work. For example, models based on the physics of relativity no longer work if one gets too close to a black hole. If we think of too much debt as a black hole of sorts, we may understand why economic models no longer work. Last week, in "The Perils of Fiscal Cliff," we looked at the use of fiscal multipliers by economists in order to argue for or against governmental economic policies.

2012-10-29 Waiting for Treasuries to Reverse Course by Chris Maxey, Ryan Davis of Fortigent

In the years since the global financial crisis, investors have funneled money into fixed income securities. This year alone, more than $260 billion found its way into fixed income mutual funds. In an environment desperate for yield-oriented solutions, such demand is not surprising. What might be considered surprising, however, is investors' willingness to embrace such yield with extraordinary risk attached.

2012-10-26 ECRI Weekly Leading Index: Running in Place by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) rose fractionally in the numbers released today. It is now at 126.8, up from last week's 126.6 (revised from 126.7). However, the WLI growth indicator (WLIg) slipped slightly in expansion territory, not at 6.0, down from last week's 6.1. WLIg has now spent nine consecutive weeks of in expansion territory. But essentially the WLI has been running in place for the past five weeks.

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

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

2012-10-25 Do the US Elections Matter for Investors? by Frank Caruso, Robert Brown of AllianceBernstein

Frank Caruso and Robert Brown Pundits across the political spectrum say the health of the US economy and stock market hangs in the balance of this year's presidential election. We found that when it comes to driving the stock market, politics actually takes a back seat.

2012-10-23 There's New Hope for US Recovery as Early Cyclical Sectors Rebound by Joseph Carson of AllianceBernstein

Something is changing in the US economic recovery. Housing and autos are finally starting to wake up from a recession-induced slumber, and the timing couldn't be better.

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

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

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

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

2012-10-19 ECRI Weekly Leading Index: Index Slips, But Growth Rises by Doug Short of Advisor Perspectives (

The Weekly Leading Index of the Economic Cycle Research Institute declined in the numbers released today. It is now at 126.7, down from last week's 127.6 (revised from 127.7). However, the WLI growth indicator rose further in expansion territory to 6.1, up from last week's 5.7. WLIg has now posted sixteen consecutive weeks of improvement and is at its highest level since May 20, 2011. The divergence between the WLI and its growth derivative is probably attributable to apparent anomaly in the BLS's weekly unemployment data over the past two weeks.

2012-10-16 The New World of Credit by Michael Lewitt, Editor, The Credit Strategist (Article)

In an era in which economies are driven by the creation of fiat money by central banks, and where the base of hard money is dwarfed by the volume of outstanding debt, every form of capital is tied to credit. In 1919, William Butler Yeats famously wrote that 'the center cannot hold.' A century later, there is no center.

2012-10-15 Economic Singularity by John Mauldin of Millennium Wave Advisors

There is considerable disagreement throughout the world on what policies to pursue in the face of rising deficits and economies that are barely growing or at stall speed. Both sides look at the same set of realities and yet draw drastically different conclusions. Both sides marshal arguments based on rigorous mathematical models "proving" the correctness of their favorite solution, and both sides can point to counterfactuals that show the other side to be insincere or just plain wrong.

2012-10-15 The New Investment World is Not Near, It's Here by Russ Koesterich of iShares Blog

The recent pace and magnitude of economic change has left many investors disoriented, to say the least. Russ K explains why this new environment is unlikely to change any time soon, which may have implications for investors' current and long-term strategies.

2012-10-12 ECRI Weekly Leading Indicators: Time to Recant the Recession Call? by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) made a strong advance in the numbers released today. It is now at 127.7, up from last week's 126.2 (revised from 126.3). See the WLI chart below. The WLI growth indicator (WLIg) now marks its eighth week in expansion territory at 5.7, up from last week's 4.6. WLIg has now posted fifteenth consecutive weeks of improvement and is at its highest level since May 27, 2011.

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.

2012-10-09 A Small Business Complex by Chris Maxey, Ryan Davis of Fortigent

Despite the release of the September labor report on Friday, small business owners seemed to take the biggest proportion of the spotlight last week. According to the Huffington Post, Romney and Obama mentioned the phrase "small business" a total of 29 times throughout the Presidential debate. The issues and importance placed on small business are unlikely to be as cut and dry as both candidates made them seem.

2012-10-08 The Unemployment Surprise by John Mauldin of Millennium Wave Advisors

The unemployment number surprisingly dropped to 7.8% last Friday, and the shoot-from-the-hip crowd came out in force. To say that the jobs report was met with skepticism would be a serious understatement. The response that got the most immediate airplay was ex-GE CEO Jack Welch (who knows a few things about making a number say what you want it to say) tweeting, "Unbelievable job numbers ... these Chicago guys will do anything ... can't debate so change numbers."

2012-10-05 ECRI Weekly Leading Indicators: Mixed Signals in Latest Data by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) slipped fractionally after eight consecutive weeks of growth. It is now at 126.3, down from last week's 126.6 (revised from 126.7). See the WLI chart below. However, the WLI growth indicator (WLIg) now marks its seventh week in expansion territory at 4.7, up from last week's 3.8. WLIg has now posted fourteen consecutive weeks of improvement and is at its highest level since June 3, 2011.

2012-10-03 Understanding How "Debt Deleveraging" Works by Gary Halbert of Halbert Wealth Management

For many years, I have warned that our massive explosion in federal debt (up 50% just since Obama took office) would one day stifle economic growth. Obviously economic growth is currently stifled, what with the weakest post-recession recovery in decades. But the question remains as to whether our massive national debt and trillion-dollar budget deficits are the main reason for the disappointing recovery.

2012-10-03 Stocks Are Taking a Breather from the Rally by Bob Doll of BlackRock Investment Management

To at least some extent, the pause in the rally we have seen over the past couple of weeks can be attributed to some profit-taking on the heels of a significant multi-month uptrend (US stocks rose close to 6% in the third quarter). It is also likely, however, that investors are coming to grips with the fact that the world continues to face some serious risks and are recognizing that not all of the world's problems can be solved by central bank action.

2012-10-03 Don't Bring Me Down: Not Swayed by Pessimism at BCA Conference by Liz Ann Sonders of Charles Schwab

We present highlights, key takeaways and perspective on the recent BCA Research Investment Conference. The eurozone crisis and China's slowdown remain risks, but are somewhat offset by optimism about US markets. Politics will remain a force underpinning uncertainty and volatility.

2012-10-02 Confronting the Unemployment Crisis by Robert Huebscher (Article)

Policymakers seeking a path to economic recovery must first answer one crucial question: Is our persistently high unemployment structural or cyclical? If it's cyclical, then monetary and fiscal measures designed to boost consumer spending will restore the US to full employment in due course. But if we face a structural problem, then quick fixes won't work until we correct deeper imbalances that have left 12.5 million Americans without jobs.

2012-10-02 Are Markets Ready for a Correction? by Chris Maxey, Ryan Davis of Fortigent

Entering the final quarter of 2012, many investors may find themselves apprehensive about the outlook for markets and the broader economy. While the pace of economic disappointment appears to have slowed down and actually reversed according to the Citigroup Economic Surprise Index actual data levels continue to suggest an anemic economic state.

2012-09-28 ECRI Weekly Leading Index Growth at Highest Level Since June 2011 by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) rose for the eighth consecutive week, now at 126.7, up from last week's 125.3 (revised from 124.7). See the WLI chart below. The WLI growth indicator (WLIg) now marks its sixth week in expansion territory at 3.8 (up from last week's 2.7). It has now posted thirteen consecutive weeks of improvement and is at its highest level since June 10, 2011.

2012-09-28 Schwab Market Perspective: Disrespected RallyCan It Continue? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

US equities are trading near five-year highs but numerous measures show investors remain skeptical. The enthusiasm following the Fed's announcement of more quantitative easing was short-lived, although the summer rally in stocks could be at least partially attributed to anticipation of more stimulus. The enthusiasm following the Fed's announcement of more quantitative easing was short-lived, although the summer rally in stocks could be at least partially attributed to anticipation of more stimulus.

2012-09-26 The Predictive Power of Dividends by Bill Smead of Smead Capital Management

In an article published by on September 21, 2012, Mark Hulbert asks the question, "Where do you think the stock market will be ten years from now?" It was as a lead into the results of a predictive model from Rob Arnott, founder of Research Affiliates. His model argues that current dividend yields go a long way to predicting ten-year forward returns. Other than a big glitch in the 1990's, it appears to have some value.

2012-09-25 Jim Bianco – Markets Will Benefit From Disastrous Fed Policy by Robert Huebscher (Article)

The Fed's quantitative easing policy will be 'disastrous,' according to Jim Bianco, but prices for riskier assets will rise over the near term as a result. In remarks last week, Bianco, the head of the Chicago-based economic research firm that bears his name, also gave the US economy a near-failing grade of C-, and warned that inflation will be 'problematic.'

2012-09-25 Stocks Should Overcome Hurdles to Continue the Bull Market by Bob Doll of BlackRock Investment Management

Although global economic data has been relatively weak in recent years, risk asset prices have nonetheless advanced. We would attribute this trend to the fact that weak economic growth does not, by itself, limit the potential for risk assets. In our view, the liquidity-driven reflationary policies of the world's central banks have been a more important factor for asset prices than economic growth levels have been.

2012-09-21 ECRI Weekly Leading Index Growth at Highest Level Since July 2011 by Doug Short of Advisor Perspectives (

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) rose for the seventh consecutive week, now at 125.4, up from last week's 124.7 (revised from 124.9). See the WLI chart below. The WLI growth indicator (WLIg) now marks its fifth week in expansion territory at 2.7 (up from last week's 1.9). It has now posted twelve consecutive weeks of improvement and is at its highest level since July 29, 2011.

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.

2012-09-17 And That's the Week That Was by Ron Brounes of Brounes & Associates

Dr. B. has spoken and investor are happy (though some Republican investors probably have mixed feelings). Though not all economists were on board with QE3, the policymakers looked at the labor market and took action. With promises of more bond-buying and low fund rates into 2015, investors went on a risk asset buying spree and stocks shot up to multi-year highs. So let the over-analysis (and political bickering) begin.

2012-09-14 Afraid of QE3? Buy Real Assets by Seth J. Masters of AllianceBernstein

We expect to see continued asset-buying announcements from central banks around the world: the ECB last month, the Fed today, the Bank of Japan imminently. The impact of these announcements, and ensuing implementations on the real economy, are likely to be ambiguous at best. However, our research suggests that real assets such as real estate and commodities will profit from asset purchases in the near term and protect from related inflationary risks in the medium term.

2012-09-14 Open-Ended Easing by Carl Tannenbaum and Asha Bangalore of Northern Trust

The Federal Open Market Committee (FOMC) took a very forceful set of steps this week, designed to stimulate what officials have called a "frustrating" job market. Our updated forecast suggests that the growth trajectory of the US economy is positive but sufficiently sub-par for the Fed to have initiated additional monetary policy support. There are increasing signs that China's economy is slowing more than the official readings would suggest.

2012-09-14 QE3: Ineffective Parachute for Fiscal Cliff by Russ Koesterich of iShares Blog

While the most likely scenario is that Washington reaches a compromise at the last minute, until then the uncertainty will keep the markets volatile and potentially drag down fourth quarter growth. Given recent comments out of Congress, there is also a non-trivial chance that we will, at least temporarily, go over the cliff. If that happens, QE3 will not be a particularly effective parachute.

2012-09-12 Will America Be Greece in Four Years? by Gary Halbert of Halbert Wealth Management

The US national debt topped $16 trillion last week, and it was almost as if no one paid attention. At the rate we are going, the national debt will top $20 trillion just four years from now in 2016. In my August 21 E-Letter, I pointed out just how mind-boggling a trillion dollars is. Lets revisit that analogy of a trillion in terms of time.

2012-09-11 Ready, Set, Fed! Weak Jobs Report Raises QE3 Odds by Russ Koesterich of iShares Blog

Russ says the US Federal Reserve Open Market Committee has more reason to consider quantitative easing at this week's meeting, after the latest payroll report suggests the US economic recovery is likely to remain weak into the end of the year.

2012-09-11 Rally Should Continue, but Look for More Volatility by Bob Doll of BlackRock Investment Management

Despite a relatively disappointing jobs market report for August, stocks rose last week as investors focused on the European Central Banks (ECB) announcement of its longawaited plan to buy bonds in the secondary market. The ECB program represents an important step in terms of lowering volatility and providing a cushion for Europes debttroubled countries to make some longer-term improvements in their fundamentals.

2012-09-11 US Stock Market Sentiment in a World of Wide Asset Allocation by Bill Smead of Smead Capital Management

Our long-time readers are aware that we are stingy when it comes to trading and big believers of keeping trading costs low at Smead Capital Management. Despite these natural inclinations, we do try to keep the pulse of sentiment in the US stock market.

2012-09-07 The Fed's Campaign by Peter Schiff of Euro Pacific Precious Metals

This past Friday, as Fed Chairman Ben Bernanke delivered his annual address from Jackson Hole - the State of the Dollar, if you will - I couldn't help but hear it as an incumbent's campaign speech. While Wall Street was hoping for some concrete announcement, what we got was a mushy appraisal of the Fed's handling of the financial crisis so far and a suggestion that more 'help' is on the way.

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 Profit Motive: If Earnings/Margins Are Peaking, What About Stocks? by Liz Ann Sonders of Charles Schwab

Earnings growth has peaked, but don't necessarily assume the same about margins. Present pace of earnings growth has historically been accompanied by decent market performance. Margins are increasingly driven by domestic and foreign earnings, but peaking margins have historically been accompanied by strong market performance.

2012-09-04 Civility by Jeffrey Saut of Raymond James

Webster's defines "civility" as: civilized conduct; especially: courtesy, politeness. But, there was no civility last Friday afternoon. The place, CNBC; the time 3:05 p.m.; the anchors Michelle Caruso-Cabrera and Bill Griffith; the show "Closing Bell"; the guests were myself, Bill Spiropoulos, Lee Munson, and Matt McCormick. The interview started off well enough with each interviewee responding to the anchors' questions.

2012-09-04 Still No Recession in Sight by Brian Wesbury, Bob Stein of First Trust Advisors

Real GDP in the US has grown 2.3% in the past year, a mediocre rate of growth, little different than its 2.2% average since mid-2009, when the recovery officially began. It's what we call the Plow Horse economy and we expect it to continue plodding along, at least through this fall.

2012-08-27 Still No QE3 by Brian Wesbury, Bob Stein of First Trust Advisors

The Federal Reserve is clearly ready to do something. In recently released minutes from the 7/31-8/1 meeting and a letter from Chairman Bernanke to Congressman Darrell Issa (R-CA), the Fed argued that its actions had helped the economy already and that the Fed was ready to do more.

2012-08-27 And That's the Week That Was by Ron Brounes of Brounes & Associates

When Ben Bernanke talks...investors listen, Republican moans, Romney belittles, and markets react. For now, the jury is still out about any upcoming stimulus move as the policymakers appear far from consensus. Housing continued its rebounding ways, though manufacturing again raised concerns. Europe still appears to be in disarray as Greece takes direction (and a scolding) from its stronger brethren. Stocks ended their nice winning streak, though closed the week on a high note.

2012-08-24 Is a Japan-Style "Lost Decade" Ahead for the US? by Sharon Fay of AllianceBernstein

The laborious pace of the US recovery has inevitably fostered comparisons with Japan. But we find several reasons why a protracted slump like Japan's is unlikely, as my colleague Gerry Paul argues. After five years of tepid growth, investors can be forgiven for wondering if the US is headed for a decades-long slump like Japan's.

2012-08-22 What Will it Take for the Rally to Continue? by Bob Doll of BlackRock Investment Management

One of the factors underlying the upturn in stock prices over the past couple of months has been a modestly improving trend in US economic data. Last week, retail sales advanced 0.8%, well ahead of expectations. This was the first increase in four months, which suggests that while households remain generally cautious, spending levels are beginning to tick higher.

2012-08-17 Fiscal Cliffhanger by Brian Horrigan of Loomis Sayles

In the famous 1955 movie Rebel Without a Cause, troubled high school student Jim Stark (played by James Dean) winds up playing a game of chicken with his classmates. The US economy is at risk of driving, so to speak, over a "fiscal cliff" starting January 1, 2013, an event that threatens to wreck the economy. There are fewer than five months to avoid going over this cliff.

2012-08-13 Stocks Look Poised for Continued Gains by Bob Doll of BlackRock Investment Management

Although investor attention seems focused on a number of well-known downside risks (including the European debt crisis, hesitant US economic growth and the pending US fiscal cliff), stocks have continued to climb higher and last week notched their fifth consecutive week of gains.

2012-08-10 Schwab Sector Views: Cautiously Cautious by Brad Sorensen of Charles Schwab

We remain slightly defensive with our sector recommendations but admit that we're a bit concerned over doing so. While we certainly believe this is the appropriate positioning given the continued elevated uncertainty in the market, combined with sluggish economic data, we also acknowledge that some defensive areas appear extended and the possibility of a near-term cyclically-based rally exists.

2012-08-08 Stock Pickers: "Somebody I Used to Know" by Bill Smead of Smead Capital Management

Art has a tendency to express culture. One of today's catchiest songs does a great job of explaining the relationship between institutional/individual investors and US common stock picking. The song captures what has happened since the summer of 1999, when Warren Buffett warned investors about forward stock market returns because of a love affair that institutional and individual investors were having with US large cap stocks.

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 GDP Report: "Good News" - You've Got to be Kidding! by Gary Halbert of Halbert Wealth Management

We dissect last Fridays controversial 2Q GDP report, which most found disappointing but some in the mainstream media found encouraging (ie at least were not in a recession). From there, well discuss the Feds latest monetary policy meeting that ends tomorrow. The stock markets rallied strongly last week, partly on perceived good news from Europe, and partly because of renewed expectations that the GDP report would be weak enough to move the Fed to enact QE3.

2012-07-31 Uncertainty Reigns Supreme by Chris Maxey, Ryan Davis of Fortigent

With the first half of the year in the rearview mirror, investors might be lulled into thinking the most active period of the year is also in the rearview. Fast forward to year-end, though, and investors may beg for a return to the sanguine days of early 2012. A range of events in the coming months will likely dictate market optimism for 2012, 2013 and possibly beyond.

2012-07-30 Looking Past Weak Data; Awaiting Policy Responses by Bob Doll of BlackRock Investment Management

Although last week featured some lackluster economic and earnings news, investors continued to focus their attention on the growing possibility of additional monetary policy action, particularly from Europe. For the week, the Dow Jones Industrial Average climbed 2.0% to 13,075, the S&P 500 Index advanced 1.7% to 1,385 and the Nasdaq Composite rose 1.1% to 2,958.

2012-07-27 Treading Water by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Stocks seem to be biding time until the action heats back up as summer winds down, but market-moving events can happen at any time. The US economy continues to slow and Bernanke had a relatively dour outlook before Congress. But it appears things would have to get worse before another round of easing is initiated; the effectiveness of which we continue to question. Yields in Spain and Italy indicate action may be needed sooner rather than later, but we did get positive remarks by the ECB, which led to market rallies and a big drop in yields, providing a measure of hope.

2012-07-24 Markets Likely to Continue Moving Unevenly by Bob Doll of BlackRock Investment Management

Notwithstanding a pullback on Friday, stocks managed to post gains last week despite a generally negative tone to the economic data. In some ways, the recent trend of relatively weak data has actually been beneficial for stocks in that it has been boosting hopes for additional policy stimulus around the world. For the week, the Dow Jones Industrial Average climbed 0.4% to 12,822, the S&P 500 Index advanced 0.4% to 1,362 and the Nasdaq Composite climbed 0.6% to 2,925.

2012-07-23 Slow in Q2, But No Recession by Brian Wesbury, Bob Stein of First Trust Advisors

We estimate real GDP grew at only a 0.9% annual rate in Q2. The Plow Horse Economy hit a tough spot, but it hasn't hit the wall. In Q1-2011, real GDP grew at just 0.4% at an annual rate, but then accelerated again. In other words, this is not the end of the world. It's not a recession.

2012-07-20 American Pie in the Sky by Nouriel Roubini of Project Syndicate

For the last three years, the consensus has been that the US economy was on the verge of a robust and self-sustaining recovery that would restore above-potential growth. That turned out to be wrong, as a painful process of balance-sheet deleveraging implies that the recovery will remain, at best, below-trend for many years to come.

2012-07-20 What's Behind the Risk-On/Risk-Off US Economy? by Joseph Carson of Alliance Bernstein

The US economic recovery is progressing in fits and starts. Short-lived risk-on periods, when companies and consumers invest more, seem to constantly give way to risk-off periods, with anxiety and fear restraining economic activity. I think the choppy growth trends may have been triggered by a big change to business behavior since the financial crisis of 2008.

2012-07-17 Obstacles to a Lasting Recovery: The Liquidity, Hesitancy & Solvency Traps by Thomas Fahey of Loomis Sayles

Those familiar symptoms are back again to start the summer: risk aversion; falling equity prices; rising volatility; record-low German and US government bond yields; wider credit spreads; a European country getting picked on; and a stronger US dollar. We have seen this bad movie twice before. If this is indeed another rerun, we should expect central bank and other policy responses to help limit the fallout. As we see it, hesitancy and solvency traps are the main obstacles to recovery.

2012-07-17 Bull Market Has Been Buffeted, but Remains Intact by Bob Doll of BlackRock Investment Management

During a relatively modest week in terms of trading activity, stocks managed to stage a rally on Friday that helped erase the declines of the previous four days. The stock market gains over the past month can be largely attributed to the perception that policymakers in Europe have been making some progress combatting the ongoing debt crisis. There is a sense of uncertainty over the state of the US economy, and that uncertainty is making investors, companies and consumers wary about the future.

2012-07-13 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 Equity Market Review & Outlook by Richard Skaggs of Loomis Sayles

Following back-to-back double-digit quarterly gains, US stocks took a breather in the second quarter, with the S&P 500 Index declining 2.8%. It could have been worse. At the quarters low point in early June, the Index had declined 10.0% from the first-quarter close. June was a strong month for stock performance, leading to a welcome recovery from the early quarter decline. However, positive returns from the first quarter prevented the Index from becoming negative on a year-to-date basis.

2012-07-10 Recession is Not Imminent by Dwaine van Vuuren (Article)

Perma-bears are bombarding us with alarm bells, sounding the doom of the US economy. We find ourselves in yet another 'summer slowdown scare,' for the third year running. In 2010 and 2011, the purported slowdowns turned out to be soft landings. Investors who ran to the sidelines stared in disbelief as the stock market roared ahead, leaving them behind. We are likely in the same position now.

2012-07-10 Investors fret about Europe, but US stocks up 8.6% on the year by David Edwards of Heron Financial Group

Investors have flooded back to European and US stocks on the surprise announcement that a single Eurozone wide agency, somewhat akin to the Federal Deposit Insurance Corporation (FDIC), will be established to backstop European banks directly, rather than lending through the respective governments of troubled banks.

2012-07-05 Math, History and Psychology - Part 2 by Bill Smead of Smead Capital Management

Last week we wrote about the math of common stock investing and the effectiveness of mathematical discipline to portfolio management. This week we will focus on history and the importance of that academic discipline to us as common stock portfolio managers here at Smead Capital Management (SCM).

2012-07-03 10 Predictions for 2012: Mid-Year Update by Bob Doll of BlackRock Investment Management

At the midway point of 2012, it seems an opportune time to review the predictions we made at the beginning of the year. Although much could change, at this point it appears that the majority of our predictions are on track.

2012-07-03 Jump: Market Rallies Sharply on EU Summit News by Liz Ann Sonders of Charles Schwab

Friday's sharp rally on better European news is followed by weaker economic news this week, keeping debate alive about what the market's priced in. When markets expect nothing and get something it can be a recipe for a rally. Investors of every ilk have de-risked, unleashing a scramble last Friday. The US economy is at stall speed, but still looks better than much of the world.

2012-06-29 Step Two - Going Backward - Election More Important Than Ever by Brian S. Wesbury and Robert Stein of First Trust Advisors

In one of the least likely outcomes in Supreme Court history, Chief Justice Roberts, who was widely considered a conservative voice on the Court, proved to be the swing vote in one of the largest expansions of US government involvement in the economy ever.

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 The Great American Mirage by Stephen Roach of Project Syndicate

In September 1998, during the depths of the Asian financial crisis, the US Federal Reserves then-chairman, Alan Greenspan, had a simple message: the US is not an oasis of prosperity in an otherwise struggling world. Greenspans point is even closer to the mark today than it was back then.

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 Math, History and Psychology by Bill Smead of Smead Capital Management

In my 32 years in the investment business, success in common stock investing seems to come down to math, history and psychology. At Smead Capital Management (SCM), we have built our investment discipline and our eight proprietary criteria around these academic subjects. With the stock markets gyrating wildly the last few weeks, we thought it would be helpful to see where we are today in each of these disciplines. We will start this week with our view on the math section.

2012-06-25 Volcker Does Not Rule by Jeffrey Bronchick of Cove Street Capital

There are many reasons an interested observer can conjure as to why the US economy remains in a petulant quagmire, and some of them are actually not political in nature. Our mini-treatise today is on our particular favorite: the inanity of financial services regulation and the whipping boy of the month, Jamie Dimon of JP Morgan.

2012-06-25 The Second Step: Supreme Court by Brian S. Wesbury and Robert Stein of First Trust Advisors

Step Two of our Four Steps to Recovery will happen sometime this week. The wait for the Supreme Court to issue its decision on whether President Obamas health care reform law is constitutional is almost over.

2012-06-25 Markets Vacillate Between Weaker Data and Hopes for Policy by Bob Doll of BlackRock Investment Management

Last week was a modestly negative one for stocks as investors continued to focus on a trend of weakening economic data. Additionally, many were disappointed by what was perceived to be a less-than-robust response from the Federal Reserve following its policy meeting last week.

2012-06-22 Dont Expect A Double Dip This Year by Russ Koesterich of iShares Blog

Renewed fears of a US double dip are making the rounds. While Russ gives four reasons why the United States is not likely to tip back into recession this year, he has a word of caution about a risk looming over 2013.

2012-06-19 Will Policy Response Follow Policy Rumor? by Bob Doll of BlackRock Investment Management

The past two weeks have been better for stocks, with the major indices up in consecutive weeks for the first time in more than a month. Europe remains stuck in a cruel cycle of recession, a banking system in need of life support, frozen policymakers, too much debt and a downward confidence spiral. In the United States, economic growth slowed this spring (likely due to poor weather and the earlier spike in gasoline prices), but remains intact.

2012-06-19 Shocking Fed Survey on Consumer Finances by Gary D. Halbert of Halbert Wealth Management

Today we focus on a new Fed study which found that Americans net worth plunged almost 39% in the period from 2007 to 2010. That period included the so-called Great Recession, a financial crisis and a severe bear market in stocks. There are lots of interesting statistics to look at in this new Fed study.

2012-06-15 Schwab Market Perspective: Time for Action by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

With escalated uncertainty, sitting back can be an easy choice, but we believe investors and policymakers alike need to take action. Equities bounced off of what appeared to be oversold conditions but although the US economy appears to be holding its own, a renewed sustainable uptrend may be hard to come by until some substantive policy actions are taken around the globe. The time for decisive action in the eurozone appears to be quickly approaching as short-term solutions are no longer satiating the market.

2012-06-15 Obstacles to a Lasting Recovery: The Liquidity, Hesitancy & Solvency Traps by Thomas Fahey of Loomis Sayles

Those familiar symptoms are back again to start the summer: risk aversion; falling equity prices; rising volatility; record-low German and US government bond yields; wider credit spreads; a European country getting picked on; and a stronger US dollar. We have seen this bad movie twice before, during the summers of 2010 and 2011. If this is indeed another rerun, we should expect central bank and other official policy responses to help limit the fallout. As we see it, hesitancy and solvency trapsnot a liquidity trapare the main obstacles to a lasting economic recovery.

2012-06-14 The US Economy Sitting on the Threshold of a New Golden Age: Part Two by Chuck Carnevale of F.A.S.T. Graphs

In part one of this multipart series on the US economy I offered the following basic opinion: The majority of the positive aspects underpinning the US economy are being mostly ignored by mainstream media in favor of the smaller, but more titillating, negative aspects. Consequently, I believe that many Americans, and since this is an investing blog, many investors, are holding a much more negative view of the strength of the American economy than is warranted. I offer massive outflows from equity funds into Treasury bonds as evidence supporting my thesis.

2012-06-13 The by Gary D. Halbert of Halbert Wealth Management

Today we revisit the subject of the so-called fiscal cliff that our country faces at the end of this year if a Lame Duck Congress fails to pass a number of new laws by December 31. (I last wrote about this subject on March 27.) Some analysts are arguing that nothing really bad will happen if the Lame Duck Congress fails to get the job done. I disagree and I will tell you why below.

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.

2012-06-11 Investors Look Forward to More Policy Help by Bob Doll of BlackRock Investment Management

Following a significant slide the week before, stocks bounced back last week, primarily due to a growing sense that policymakers in Europe and the United States may be ready to engage in further easing measures. The increasing stress in Europe has put additional pressure on the European Central Bank (ECB) and on other policymakers to take stronger action, and, indeed, over the weekend European finance ministers announced a new plan to recapitalize the Spanish banking sector.

2012-06-08 The US Economy Sitting On The Threshold Of A New Golden Age: Part One by Chuck Carnevale of F.A.S.T. Graphs

In the past, Ive written numerous articles positing a long-term optimistic outlook for both our economy and the attractive future growth prospects of our great American businesses. Even though I hate to forecast the market in general, I have even presented evidence indicating that the general market as represented by the S&P 500 is currently reasonably priced and even slightly undervalued. My most recent contribution can be found here.

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 May Rout Leads to June Rally by David Edwards of Heron Financial Group

We got three exogenous events in May: Greek credit crisis resumed, with Greece likely to exit the Eurozone this summer. JP Morgan Chase lost $3 billion on Credit Default Swap trading. The FaceBook FacePlant. And on June 1st, the Labor department reported a minimal gain in jobs, which has economists worried anew about the United States returning to recession.

2012-06-06 Our House: Is the United States the Best House in a Bad Neighborhood? by Liz Ann Sonders of Charles Schwab

I won't try to put lipstick on the pig that was last Friday's May jobs report, but I will try a little lip gloss. Somewhat lost in the mire of the dire reaction to the report were several other more-positive readings on the economy. That's testament to the likelihood that there are many more drivers to today's malaise than just jobs growth, or lack thereof. It seems clear we're in the midst of the third consecutive mid-year economic slowdown, driven by similar forces, most dominantly the eurozone debt crisis.

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.

2012-06-05 Rational Despair and Analogous Situations by Bill Smead of Smead Capital Management

Randall Forsyth of Barrons wrote a piece on May 31st, 2012 called, Irrational Exuberances Flip Side Seen in Low Bond Yields. It reminded me of the following and wise joke. A younger person asks an older person, How do you succeed in business? The older person says, Good Decisions. The younger person says, How do you make good decisions? The older person answers, Through experience. The younger person asks, How do you get experience? The older person answers, Bad decisions.

2012-06-04 After Disappointing Jobs Data, Now What? by Russ Koesterich of iShares Blog

Stocks tumbled Friday after particularly disappointing May jobs data. Russ provides his take on what the report means for the US economy and stocks going forward. First, the implications for the economy: As jobs numbers tend to lag broader economic activity, the report doesnt in itself suggest that the United States is slipping back into recession. In addition, its worth calling out that according to the new data, the United States created only 69,000 net new jobs in May, less than half of what economists were expecting and the slowest rate of net new job creation in a year.

2012-06-04 4 Reasons Europe is a Major Risk for US Stocks by Russ Koesterich of iShares Blog

Some investors have argued that events in Europe are having a disproportionate impact on US stocks. Their logic: the US is in the midst of a recovery, albeit a fairly anemic one, that is unlikely to be derailed by Europes travails. Its true that the US economy is doing much better than Europes, and especially southern Europes. But from my perspective, the trajectory of the US economy and the US stock market are very much tied to eurozone events. Here are four reasons why US investors should not underestimate the potential impact of events in Europe.

2012-06-04 Negatives Intensify, but Panic Isn't Warranted by Bob Doll of BlackRock Investment Management

For some time, we have been suggesting that the US economy had been holding up relatively well compared to the rest of the world. While we are not changing that view, last weeks data (particularly Mays employment report) provided a negative jolt and pushed stock prices down sharply. Our summary view of the US economy is that while the United States appears to have entered another slowdown phase with the data growing more disappointing in recent weeks, the case for a renewed recession still looks flimsy.

2012-06-02 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.

2012-05-30 CBO Warns of Recession in 2013 by Gary D. Halbert of Halbert Wealth Management

The non-partisan Congressional Budget Office (CBO) has calculated the expected negative effects on the US economy if the Bush tax cuts expire at the end of this year. Their numbers just released last week are eye-opening! To give us some perspective, US Gross Domestic Product rose by 2.2% (annual rate) in the 1Q of this year.

2012-05-30 Beyond Short-Term Risks, Stocks Are Growing More Attractive by Bob Doll of BlackRock Investment Management

Given our view that the European debt crisis should remain reasonably well contained and our belief that the US recovery remains on track, our outlook for risk assets continues to be a positive one. The combination of the rising equity risk premium, falling stock prices, improving corporate arnings and lower Treasury yields means that stocks have become quite cheap relative to bonds. Assuming that the world is not headed for a renewed deflationary spiral, there is little doubt in our view that stocks are poised to provide superior long-term returns over bonds given their current levels.

2012-05-26 Meanwhile, Back at the Ranch by John Mauldin of Millennium Wave Advisors

We need to tear our gaze away from Europe and look around at what is happening in the rest of the world. There is about to be an eerily near-simultaneous ending to the quantitative easing by the four major central banks while global growth is slowing down. And so, while the future of Europe is up for grabs, the true danger to global markets and growth may be elsewhere.

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

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

2012-05-22 New Lows and a Dud IPO by Christian Thwaites of Sentinel Investments

We're testing all sorts of lows: 1) record low for GT10 auction last week 2) GT30 yield, same level as Dec 2008 3) European banks are at same price level as 25 years of gains wiped out 4) euro stocks same level as March 2009, so all the gains gone 5) US safest and best place to be 6) China stocks at same level as 2006, since then the Chinese economy has doubled and 7) to cap it all we had an IPO that should never have happened. We're back in risk territory and markets don't want to extend or commit.

2012-05-22 The Achilles Heel of the US Economy by Russ Koesterich of iShares Blog

The Achilles Heel of the US economy may just be that entitlement programs havent kept pace with US demographics, a fact that has long-term implications for investors. According to a recent annual government report on entitlement programs, the Social Security trust fund is likely to run out of money in 2033, three years earlier than previously projected. Meanwhile, both Social Security and Medicare arent sustainable in the long term without structural changes.

2012-05-22 Return to Normalcy: The False Argument of "Austerity" vs. Growth by Team of Institutional Risk Analyst

To rescue Europe, to reinvigorate the United States, and to set the global economy on a sustainable path toward expansion, the current debate offers a so-called "choice": either slash government spending or spend your way to growth. In Europe, German Chancellor Angela Merkel is one of the most prominent proponents of fiscal restraint -- in part because Germany is picking up the tab for the continent's debt crisis. And in the United States, economist and New York Times columnist Paul Krugman is the fullest-throated supporter of more government spending.

2012-05-22 Were Off to See the Wizard by Bill Smead of Smead Capital Management

In October of 2010 we explained in a missive called The Wizard of Oz that investors had put too much confidence in the ability of a group of Chinese National, US-educated economists to manage the China economy. Thanks to the writing of Ambrose Evans-Pritchard in The Telegraph on May 13th of 2012, we can see just how successful the Wizard has been in perpetuating the myth that China can be the first major world economy to defy business cycles.

2012-05-16 The Bigger Picture on US Jobs by Joseph G. Carson of AllianceBernstein

Job growth slowed in March and April from a robust pace early in the year. People also appear to be leaving the labor force. Both trends suggest that the US economy may be losing momentum. However, I think preliminary employment figures dont tell the whole story and that you really need to wait for revisions to get a more accurate picture of underlying trends. In April, payroll employment rose by 115,000. That fell short of the consensus estimate of 150,000 and was the smallest jobs gain since August 2011. But initial payroll estimates are based on only a sample of business establishments.

2012-05-15 Month of May: Sell and Go Away, or Hang in There? by Liz Ann Sonders of Charles Schwab

We believe the stock market's correction is likely to be less severe this year relative to 2010 or 2011. Be aware of the possible perils of following a "sell in May" trading strategy. For now, macro concernsincluding Europe and the looming "fiscal cliff"are trumping better micro news.

2012-05-14 The Bull Market Has Not Yet Reached Its Highs by Bob Doll of BlackRock Investment Management

It has been the case for some time, but recent events serve as a reminder that the primary risk to the global economy and markets is the ongoing debt crisis in Europe. Confidence over policymakers' ability to deal with the crisis took a hit recently given that the election results in Greece and France signal a shift away from governments' willingness to move forward with unpopular austerity measures. The resulting political uncertainty and investor confusion has put downward pressure on stocks and other risk assets. Unfortunately, the reality is there is no quick fix for Europe's problems.

2012-05-11 The US: Stuck in the Slow Lane How Long? by Russ Koesterich of iShares Blog

A slow growth world does not necessarily mean the death of equities or the absence of opportunities. It does, however, suggest that investors need to have realistic expectations for the US economy, and for most of the developed world. Slower growth, lower interest rates and lower multiples are arguably consequences of higher public debt. And this may be an issue were still contending with in two decades time.

2012-05-09 It's All About the Fraud: Madoff, MF Global & Antonin Scalia by Team of Institutional Risk Analyst

In this issue, we return to the Lehman Brothers, Madoff and MF Global bankruptcies to talk about how the largest banks have wired US bankruptcy laws to their own advantage. Specifically, the 2005 changes to the bankruptcy code, combined with the traditional American caution regarding pre-judgement restraint on the parties surrounding a bankruptcy, has provided American banks with a free pass to facilitate fraud with no accountability. But first, Ally Financial has received the blessing of the US Treasury to file a bankruptcy for the ResCap real estate unit. This is a profoundly bad idea.

2012-05-08 Richard Bernstein: US Assets will Outperform over the Next Decade by Robert Huebscher (Article)

Prior to founding the firm that now bears his name, Richard Bernstein was the chief investment strategist at Merrill Lynch & Co. In this interview, he discusses why he expects US assets - both equities and fixed income - to be the outperformers among global markets over the next decade.

2012-05-08 Sentiment Readies for a Tumultuous Fall by Chris Maxey and Ryan Davis of Fortigent

Market sentiment has oscillated quite rapidly in recent months on the heels of dramatic market intervention by the ECB and shifting views of global economic stability. Sentiment is likely to remain unstable in the months ahead as investors grapple with any number of events, from elections in Europe and the US to the end of recent monetary easing efforts domestically. While markets have rallied substantially over the past six months, retail investors are maintaining a somewhat neutral view on their allocations.

2012-05-07 Q1 2012 Letter by Team of Grey Owl Capital Management

The overall equity markets strong first quarter rally was narrowly focused and, from our perspective, fragile. Cutting to the chase, we think both stocks and bonds are expensive. During the quarter, we used opportunities presented by Mr. Market to trim some of our lower quality positions and to add starter positions in a few high quality businesses. We also added to our short-term, high-yield fixed income holdings, sources of return that we expect to show less volatility but results equal to or better than the broad equity market indices.

2012-05-02 Digbys Umbrella and a Dinner to Remember by Christian Thwaites of Sentinel Investments

The US economy is on a painfully slow road. It is recovering. Jobs numbers are better, even though some hiring in the first quarter may have been brought forward by mild weather. Production, manufacturing and exports, all signs of regained competitiveness in the US, are showing steady improvements. And the government sector is contracting. Not on purpose mind you, but jumping off a cliff and letting inertia do the work result in the same end. Above all of this, we have a Fed using every monetary policy at their disposal to try and promote growth and employment.

2012-04-30 Dissecting the US Q1 GDP by Monty Agarwal of MA Capital Management

4 years after facing a massive recession, the unemployment rate is still stuck above 8% and the economic growth is starting to slow. Many of my colleagues in the hedge fund circles are calling for a return to negative growth or recession in the US by the end of 2012. This does not bode well for the retail investor, who after missing the Q1 rally has decided to jump back into the markets only to see the rally dissipate.

2012-04-30 Euro Risks Continue but Support for Risk Assets Is by Bob Doll of BlackRock Investment Management

At this point last year, two of the major downside risks were the possibility of the European debt crisis spiraling out of control and the inability of the United States to get its fiscal house in order. Today, while these remain two factors that have investors concerned and while there are some similarities between the situations one year ago and today, there are also some important differences. The US fiscal policy is murky. The tax and fiscal policies that are set to expire at the end of 2012 are clouded in uncertainty and it is impossible to view them outside the 2012 elections.

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 Is The Economic Recovery Stalling? by Gary D. Halbert of Halbert Wealth Management

The US economic recovery is facing some stiff headwinds. Those include high gasoline prices, the recession and higher interest rates in Europe and the recent disappointing unemployment numbers in the US, just to name a few. The apparent slowdown in the recovery recently is in part due to the unusually warm winter, which served to pull economic activity forward in January and February, thus making March and April so far look softer. Some in the mainstream media concluded that we dont have a problem with the economy. Maybe so, but the recovery has had an uneasy feeling about it recently.

2012-04-24 Bruce Greenwald on Structural Imbalances in the Economy by Eric Uhlfelder (Article)

Bruce Greenwald likes to say that he is constituted to disagree with everybody about everything, and he was true to his word at the recent Hyman P. Minksy Conference in New York. Taking immediate exception with the virtually unanimous characterization of the economic crisis as a balance-sheet recession, Greenwald, a professor of finance at Columbia University, argued that, far from being unusual, balance-sheet recessions can in fact be found at the heart of almost all business cycles.

2012-04-23 Global Policy Remains a Critical Catalyst by Bob Doll of BlackRock Investment Management

The economic backdrop continues to be mixed, but the overall trend continues to be one in which the US economy appears to be growing slowly. One interesting pattern that has emerged is that the US household sector has been picking up at the same time that the industrial side has been weakening. While an improving household sector is critical to ensuring long-term growth, there are some caveats to this trend. First, households have been dipping into their savings to boost spending, which is clearly not sustainable. Additionally, some of the growth may have been "borrowed" from summer quarter.

2012-04-23 The Plow Horse Economy by Brian S. Wesbury and Robert Stein of First Trust Advisors

Like a plow horse, the US economy just puts one hoof after the other. It aint gonna win any races, but it aint gonna keel over and die either. After slogging through the mud last year, and slowing down to just 1.2% annualized growth in the first three quarters of 2011, things have improved. In the fourth quarter last year, real GDP grew a solid, work-horse-like, 3%. We expect that continued in the first quarter of 2012. If anything, other indicators suggest real GDP growth might be even stronger. Nonfarm payrolls rose 635,000 in Q1, the largest gain since 2006.

2012-04-18 Stock Picking in a World of Profit Margin Mean Reversion by Bill Smead of Smead Capital Management

We feel investors should avoid capital intensive companies which are tied to commodities or emerging markets. As interest rates rise and capital becomes dear, those who eat capital lose and those with strong balance sheets and who generate high and consistent free cash flow, should win. As Buffet, Grantham, Hutchinson and Stein pointed out, someone loses in the reversion to the mean of profit margins when compared to GDP. Lastly, dont be fooled by those who are bearish on the stock market because of their belief in profit margin reversion.

2012-04-16 Market Drawdown Presents Buying Opportunities by Bob Doll of BlackRock Investment Management

Given the relative differences between the economy in 2011 and what it looks like today, we believe the US economy will be more resilient than it was last year. We would also look to corporate earnings as a source of strength. Although we are forecasting that the pace of earnings growth will be slower this year than it has been in the recent past, so far the data has shown that corporate earnings have been doing just fine. Expectations for the first quarter have been set relatively low, but so far over 80% of the companies that have reported have surpassed expectations, which is a good sign.

2012-04-13 How Rising Rates Will Affect Stocks by Russ Koesterich of iShares Blog

While recent market weakness, and the accompanying bond market rally, has tempered fears of an imminent bond market meltdown, many equity investors are still concerned about the potential impact of rising rates on US and global stocks. This year, I expect long-term rates to rise modestly as they appear too low. Assuming the US economy continues to stabilize over the course of the year, the yield on the 10-year Treasury will likely rise to around the 3% level, . However, this probable grind higher is not a major threat to US and global stocks this year for two reasons.

2012-04-12 Jobs Data a Reminder of the Slow, Fitful US Recovery by Russ Koesterich of iShares Blog

While last Fridays disappointing monthly jobs report doesnt herald the end of the US recovery, its a reminder of the recoverys fragility and that improvement in the US economy will most likely continue to be slow and characterized by fits and starts. When you view the jobs data in a context of longer than one month, there is evidence that the US labor market has improved since last year. However, its improving from a very low base at an agonizingly slow pace. There is also some evidence that the labor market has structural problems that may prove to be a drag on growth for some time.

2012-04-10 Paul Kasriel's Parting Thoughts on the Economy by Robert Huebscher (Article)

Paul Kasriel, the chief economist at Northern Trust, will retire at the end of this month. In this interview, he explains why he is optimistic about the prospects for the US economy and why supposed headwinds - from the price of oil to the housing market - pose much less of a threat than most people believe.

2012-04-10 Which Stocks Win on Main Streets Comeback? by Bill Smead of Smead Capital Management

We are very excited about the next three to five years because we believe it is likely that Main Street will start to compete with Wall Street for capital and economic growth will accelerate. Unemployment rates would fall in that scenario and pent-up demand for goods and services could come out of the woodwork among average American households. What we mean by saying this is that capital will begin being demanded for business activities. As capital gets demanded for business activities ranging from housing to business expansion, the cost of capital will rise and bond prices would fall.

2012-04-06 A Headwind for the US Economy: Tax Uncertainty by Russ Koesterich of iShares Blog

If 2013 tax hikes seem set to hit on schedule, I would be more bearish on the US economy and US equities. In such a scenario, the US economy would likely face $500 billion to $600 billion in fiscal drag a significant damper on economic growth and consumption from higher taxes. And lingering uncertainty over taxes into 2013 would also be a negative for the US economy because of the potential harm it could cause to US confidence and business spending.

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 Have We Reached the End of the Rally? by Bob Doll of BlackRock Investment Management

Our overall view about the markets is that improvements in the global economic outlook, continued easy financial conditions and slowly improving investor risk appetites are all reasons that stock prices should continue to crawl higher. Markets have, however, paused somewhat in their rally over the last several weeks. This can be attributed to the fact that prices had risen so far so quickly and that markets were overdue for a period of consolidation or correction, but it is also important to emphasize that we will need to see further evidence of economic improvement for gains to continue.

2012-03-30 Kasriels Parting Thoughts Mary Matlins Economics by Paul Kasriel of Northern Trust

There is a controversy about whether one should use real GDP or real GDI to evaluate the performance of the U.S. economy. Real GDP is obtained by adding up spending across the economy and real GDI is computed by adding up income earned. Conceptually, GDP and GDI are identical but the source data for each is different and they yield different numbers. The GDI measure is gaining attention; Jeremy Nalewaik of the Fed has pointed out the National Bureau of Economic Research uses monthly indicators, GDI and GDP to determine official dates of business cycle peaks and troughs.

2012-03-27 Buy Commodities, Sell Brands by Bill Smead of Smead Capital Management

Warren Buffett was quoted the other day saying, We like companies which buy a commodity and sell a brand. We thought it would be very helpful to unpack his thought and put it into the context of today. We believe these current circumstances are framed by the historical over-pricing of commodities, the coming economic contraction of China, the successful cleansing of the income statements of US households and the inevitable rebound in housing in the US. We will look at the makeup of our portfolio companies which buy a commodity and sell a brand to consider their upside in this environment.

2012-03-23 The Republican Budget Proposal: Reading the Tea Leaves by Russ Koesterich of iShares Blog

While budget plans from Republicans and Democrats are generally at odds, the differences between the parties current proposals are particularly stark and provide evidence for Russ forecast for the global market this year: Two quarters of sun, followed by a chance of severe thunderstorms in the fourth quarter.

2012-03-22 The American Recovery by Mohamed A. El-Erian of Project Syndicate

The US has gone through an arduous period of intervention and rehabilitation since the global financial crisis in 2008 sent it to the economic equivalent of the emergency room. The question now is whether the US economy is ready not just to walk, but also to run and sprint.

2012-03-21 US Treasuries: This is the End? by Russ Koesterich of iShares Blog

Last week, the US Treasury market suffered its worst losing streak since 2006. This rapid rise in yields has prompted investors to wonder whether the 30 year rally in bonds is finally coming to an end, and if so how high will rates rise? The answer may surprise you.

2012-03-20 Bob Rodriguez on the Dangers in Today's Markets by Robert Huebscher (Article)

Bob Rodriguez is the managing partner and chief executive officer of Los Angeles-based First Pacific Advisors. In this interview, he discusses how the challenges faced by the US economy will impact the capital markets.

2012-03-20 An Actively Passive Debate by Chris Maxey of Fortigent

The debate surrounding active versus passive investment management continues to attract a growing share of investor interest. After several years of underperformance, active managers are finally outperforming their benchmarks YTD, but it may be too late. Investors, frustrated with the underperformance and higher fees, are piling en masse into exchange-traded funds (ETFs) and other low cost solutions. The time for an all-passive solution may not be right now, but active managers are undoubtedly concerned about what the future may hold.

2012-03-19 Stocks: More Room to Run by Bob Doll of BlackRock Investment Management

While it is important to remain cognizant of the risks facing the markets, our overall view toward stocks remains constructive. Since the current rally began last autumn, we have seen some market pullbacks, but they have been brief and shallow, likely because many investors remain underweight equities and have been using pullbacks to buy on price dips. Now that bond prices are falling, we believe investors as a whole will finally begin to move out of Treasuries and into stocks. As such, as long as the macro fundamentals remain reasonably good, we believe equities should grind higher from here.

2012-03-13 Will he? Won't he? by Christian Thwaites of Sentinel Investments

Will oil prices hurt the economy? No Recent good news on the economy has come with warnings of possible demand destruction from higher oil. First, lets stress that QE does not cause higher oil prices. There are too many iterations between increasing bank reserves and the trading firepower needed to drive spot oil prices sharply higher. And while we have seen an increase since September, we're no higher than a year ago. During that time economic prospects dimmed then brightened MENA troubles flared, receded and then grew, and Asian demand steadily rose. But there are reasons to be sanguine.

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.

2012-03-08 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.

2012-03-06 The Recovery of the US Economy Continues by John Buckingham of AFAM

The Dow Jones Industrial Average closed above 13,000 on Tuesday for the first time since May 2008. While there is no significance to the number from where we sit, The LA Times devoted front-page real estate in Wednesdays paper to the accomplishment and The WSJ ran a story titled, Dow, on A Tear, Leaps to 13000. One might think that the media coverage would perhaps provide a little prodding to get back into the market for those sitting on the sidelines, but the 3% pullback on the week in the Russell 2000 small-cap stock index suggests instead that many saw it as a reason to reduce risk.

2012-03-06 Continued Struggle Between Borrowing and Lending by Chris Maxey of Fortigent

Nonfarm payrolls and the unemployment rate headline the weeks economic data. Consensus expects another 200K+ gain in payrolls and no change in the unemployment rate. Other major economic data of note includes the ISM Non-Manufacturing index and the US trade balance. Abroad, there are important releases on tap including Q4 EU GDP and EU retail sales. Both the ECB and Bank of England meet this week, but neither is expected to adjust their key interest rates. Other central banks meeting include Russia, Australia, Brazil, Poland, New Zealand, Indonesia, South Korea, Canada, Peru, and Malaysia.

2012-03-05 The Disingenuous ECRI Recession Call by Mike "Mish" Shedlock of Sitka Pacific Capital Management

Late last month in "ECRI Sticks with Recession Call on CNBC; More than a Bit of an Exaggeration by Achuthan to Make His Call?" I questioned the ECRI's use of coincident indicators to make a claim regarding recession.... In spite of all the above, I happen to like the ECRI recession call. Yes, I am biased, but it is hard to find anyone who is not.... To go out on a limb, I think GDP in 2012 is going to hugely surprise on the downside, and 1st Quarter GDP may be as low as zero to .5%. A negative number (or more likely a revised negative number) would not shock me in the least.

2012-03-02 Will the Bond Bubble Burst This Year? by Gary D. Halbert of Halbert Wealth Management

I dont know who first uttered this classic line The trend is your friend (until its not) but it is timeless. It seems especially appropriate today in light of the massive shift weve seen from stocks to bonds since the financial crisis and bear market of 2008-early 2009. Millions of investors have moved from stocks to bonds and consider themselves safe. Today, there are more people invested in US bonds (of all types) than ever before.

2012-03-02 Fed Done: So Is Gold by Brian S. Wesbury of First Trust Advisors

The bottom line is that even though Bernanke wants to make the case for QE3, he cant.In fact, better news on the economy has cut the Fed off from doing more massive easing projects.In the end, we believe the Fed has finally run out of justification for its excessively easy monetary policy.As the quarters ahead unfold, the prospects of more ease will continue to wane.This is good news for stocks which do not do well with accelerating inflation but, it is bad news for gold.Gold is done.and so is the Fed.

2012-03-02 The Protein Bomb by Niels C. Jensen of Absolute Return Partners

Population will grow from 7-8.3 billion people over the next decade. Meanwhile, arable land across the world will shrink and living standards will continue to rise, with the OECD projecting 3 billion new middle class consumers over the next 20 years. Many of these people will change their diets in favor of more animal protein. Livestock is quite inefficient in terms of converting grain to energy, so the pressure on farmers to deliver more will be immense. We conclude that agriculture should be represented in every long-term portfolio, but farm land has already risen a lot in value.

2012-02-29 Life During War Time by Rick Lear of Sloan Wealth Management

This week, with European financial crisis almost in our rear view mirror, it is the price of oil that is leading the economic worry race. This worry race has seen more lead changes than the Republican Primary. Worrying about the economy is our new Cold War. We believe, that like the Cold War, this too shall pass.

2012-02-29 2012: A Year in the Global Economy by Azad Zangana and Keith Wade of Schroder Investment Management

Global growth is set to slow further in 2012 largely as a result of the euro crisis. On the positive side, two factors should support activity in 2012. The first is a fall in inflation, which will support household real incomes leading to stronger consumer spending. The second is the strength of the corporate sector; companies have stockpiled cash and built up profits. However, Europe is entering a serious recession and will weigh on growth elsewhere. Euro policymakers should redouble their efforts to find a solution to the eurozone crisis.

2012-02-21 David Rosenberg: "Searching for Certainty in a Sea of Uncertainty" by Katie Southwick (Article)

David Rosenberg is known for his bearish outlook, and he has not yet seen anything in recent economic news that persuades him to change his tune. Contrary to prevailing "bullish complacency" and the widespread belief that central banking systems "have the answers to the ongoing global debt deleveraging cycle," in the United States Rosenberg sees monumental deficits, flat growth, an underlying trend of deflation, and current fiscal policies that will limit future flexibility. In other words, trouble remains on the horizon.

2012-02-21 Gundlach: The Two Questions that Matter Most by Robert Huebscher (Article)

Two questions stand out amid the complexity of the current economic and market environment, according to Jeffrey Gundlach, both of which relate to critical elements of fiscal and monetary policy and should guide portfolio construction for investors.

2012-02-21 Stocks Rising, But Still Cheap by Brian S. Wesbury and Robert Stein of First Trust Advisors

The rise in equities so far this year is not just a sugar high. The Fed has done nothing new, while Keynesian pump-priming is on the wane. Federal spending peaked at 25.3% of GDP back in 2009. Its still way too high, but has fallen to 23.7%. Meanwhile, despite shenanigans like the temporary payroll tax cut, federal revenue has risen from 15.1% of GDP to 15.4% in the past year. Spending is down and taxes are up. Fiscal policy is contractionary. Yes, the Fed is loose and is holding interest rates down. But even if we assume normal interest rates and stable profits , stocks are very cheap.

2012-02-15 Stay Frosty by Liam Molloy and Bethany Carlson of Galway Investment Strategy

The Roubiniesque blues felt globally due to a lack of confidence is not isolated to just the marginally attached and does have merit. As the economy restructured manufacturing workers in the 1980s only had a 65% reemployment rate. We feel the past few years have marked another restructuring in US the economy. Again it will likely mean unemployment will remain high as many workers may not make the transition. This time around the reemployment rate for housing related jobs and financial services will likely remain very subdued.

2012-02-13 The 'Risk On' Trade Remains the Right Call by Bob Doll of Blackrock Investment Management

The risk on trade is the right one in the long term given that the worlds major economies are healing and that debt problems are slowly improving. These processes will not occur in a straight line and we will see setbacks along the way. The rise in risk asset prices, however, has been in a more-or-less straight line, with US stocks rising close to 25% over the past four months. As a result, at some point we will almost certainly see at least a pause in the upward move as markets experience some sort of consolidation or corrective action.

2012-02-09 Syria, Assad and the Arab Spring by Doug Short of Advisor Perspectives (

Last October I posted a commentary, Libya, Ghaddafi and the Arab Spring, shortly after Ghaddafi's death at the hands of the Libyan National Liberation Army. It was the third major Arab regime to be overthrown in 2011. Since that time Ali Abdullah Saleh has resigned the presidency of Yemen, which remains in a state of turmoil. And the media spotlight is currently on the escalating conflict in Syria.

2012-02-07 Despite Naysayers, The Recovery Is Real by Brian S. Wesbury and Robert Stein of Euro Pacific Capital

The US economy is far from perfect. Economic growth has been positive, but mediocre over the past year and a half. The unemployment rate, at 8.3%, is still elevated, higher than it ever was from 1984 through 2008. When it comes to bashing government policies, from either party, we do not take a back seat to anyone. What we cant do, because it makes no sense, is allow our dislike of current government policy to influence our view of the actual economic data. There really is a recovery underway. If it quacks like a duckit must be a duck.

2012-02-07 Corporate Earnings Hit a Rough Patch by Chris Maxey of Fortigent

The week started slow, however, with a mixed personal income and outlays report from the Bureau of Economic Analysis. While consumer spending was flat in December, incomes grew 0.5% above expectations and the biggest gain since March. The lack of spending growth is concerning, but somewhat expected given stagnating wage growth. Spending to this point has largely been financed through savings, making Decembers income boost a much welcome improvement for consumers.

2012-02-04 Who Took My Easy Button? by John Mauldin of Millennium Wave Advisors

There is no way enough money can be found to fund our entitlement programs, given the current system, even under the best of assumptions. Things must change. Either we will make the difficult choices or those changes will be forced by the market. The longer we put off the difficult choices, the more painful the consequences. This week we begin a series on the choices facing the US. We need to understand the consequences of the choices we make. Cut spending, say some. Tax the rich, say others. Cut out waste and corruption is always a popular choice. Do all of the above, intone others.

2012-02-03 The Unlikely Bull Market by Niels C. Jensen of Absolute Return Partners

Europe is going from crisis to crisis at the same time as stock markets climb higher. Meanwhile, investors are left confused. The key to understanding the apparent disconnect between stock market behavior and economic fundamentals is the aggressive policy being pursued by the ECB which has eased credit conditions in the crisis-stricken European banking industry. With more QE from the ECB in the pipeline, we expect equity prices to benefit.

2012-02-03 Drudge, Tyler Durden and Economic Ignorance by Brian S. Wesbury of First Trust Advisors

There is a group of influential people (meaning that they get lots of hits on their blogs or websites) who may be articulate and have an ax to grind, but at the same time know little about economics, mathematics and data. A classic example is the Drudge Report link today to a headline and blog post by Tyler Durden that says, Record, 1.2 million people fall out of labor force in one month

2012-02-02 Knowledge is the Antidote to Fear by Team of Sloan Wealth Management

We feel investors should focus on the high probability that this could be a rewarding decade. The volatility of the market can often mask the improving fundamentals. Now two years into the decade, we are pleased that the SWM Moderate Risk Composite is up 14%. This election year will create endless entertainment, needed discussion on the future of our great nation and finally clarity for corporations and individuals. This clarity should allow corporations to loosen their purse strings and continue to fuel growth.

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.

2012-01-28 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.

2012-01-24 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.

2012-01-23 Animate and Repress by Christian W. Thwaites of Sentinel Investments

Europe is in a state of suspended animation, neither moving nor acting on policy. After weeks of spurious deadlines, the markets settled into quiet acceptance that Greece is a hopeless case but that, for now, imminent collapse is not in the cards. Some of the best performing bond markets this week have been the worst of the worst...Ireland, Italy and Greece long bonds are up over 5%. It's not all good. Greek CDS have virtually ceased to exist and notional amounts on the peripherals have shrunk. No one wants to stand behind a restructuring, posing as PSI haircut, masquerading as default.

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 The Deleveraging Myth Part 2: Behind Consumer Deleveraging by Russ Koesterich of iShares Blog

The rise in transfer payments can, and probably should, continue in the near term as wage growth is still anemic. However, if previous credit bubbles are any guide, it will take a long time for the labor market to rebound, meaning the consumer is likely to remain dependent on help from the government in the long term. While this will allow consumer deleveraging to continue, it comes at the expense of more government debt and a net effect of more US non-financial debt.

2012-01-18 The Bigger the Base, the Higher the Space by Pamela Rosenau of Hightower Advisors

Overall, people around the globe are underinvested or invested in the wrong asset classes. As data point continue to strengthen, coupled with the fact that income (and sustainability of income) are becoming a scarce commodity, a significant rally in the equity markets could ensue. As some technical analysts may suggest, the bigger the base, the higher the space. As U.S. blue chip stocks have lagged for more than ten years, they have built a base that has prepared these stocks for liftoff.

2012-01-17 Martin Wolf on the Eurozone and Beyond by Robert Huebscher (Article)

Martin Wolf is widely considered to be one of the world's most influential writers on economics. Since joining the Financial Times in 1987, where he is chief economics commentator, he has received numerous awards for excellence in financial journalism. In this interview, he discusses the Eurozone crisis and prospects for global economic growth.

2012-01-17 A Nobel Laureate’s View on the US A Debt Problem, but an Unemployment Crisis by Dan Richards (Article)

Peter Diamond is a professor emeritus at MIT and the winner of the 2010 Nobel Prize in Economics for his work on unemployment and labor market policy. In this interview, he discusses the degree to which US unemployment is a structural problem and whether it can be reduced through fiscal stimulus. This is the transcript of the interview.

2012-01-17 The Great Deleveraging Myth by Russ Koesterich of iShares Blog

Theres been talk in the blogosphere lately aboutwhether or not developed economies are deleveraging, i.e. winding down their debt. Some recent posts, under headlines such as The Age Of Consumer Deleveraging Is Over and Deleveraging is So 2011, have argued that at least in the United States, consumer deleveraging appears to be a thing of the past. My take, however, is that in many sectors of the US economy, deleveraging hasnt happened at all. In fact, the notion that the United States is deleveraging is mostly a myth.

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 Gundlach on the Key Risk for Bond Investors by Robert Huebscher (Article)

Watch out if you own a bond fund that underperformed its benchmark by 2% or more last year, as most did. Rather than put their careers at risk by suffering a second year of poor performance, those fund managers will turn to indexation, according to DoubleLine’s Jeffrey Gundlach. And since the Barclay’s Aggregate Index holds nearly 35% of its assets in Treasury bonds with near-zero yields, its investors will endure poor returns.

2012-01-10 Intrade Recession Odds Plummet by Team of Bespoke Investment Group

The stock market has stabilized over the past few weeks here in the US. This has coincided with a belief that things might not be as bad as expected here in the US on the economic front. One way to highlight sentiment towards the US economy is through Intrade's contract for whether or not the US will go into a recession in 2012. As shown below, the odds have plummeted recently down to just 25.1%, which is the lowest level seen since mid-2011 before Europe really went haywire.

2012-01-09 Muddling Through in 2012 by Bob Doll of BlackRock Investment Management

The world continues to operate in a post-creditbust environment in which significant amounts of deleveraging still need to occur. The momentum in the United States is pointing in the right direction, but we do expect to see ongoing back-and-forth in the tone of economic data. Conditions will not continue to improve at the same pace we have seen over the last couple of months, nor will they deteriorate to the point that a double-dip recession becomes likely. Instead, we expect the economy to chart a middle course and grow somewhere between 2% and 2.5% for the year.

2012-01-09 Corporate Profits Hit a Wall, But Stocks a Buy? by Chris Maxey of Fortigent

Equity markets finished their first week of the New Year with positive gains, with the S&P 500 and Dow Jones Industrial Average rising 1.6% and 1.2%, respectively. Those gains, and more, occurred in the first 30 minutes of trading on Tuesday, the first trading day of 2012. From there, markets traded choppily through the remainder of the week, as lingering problems in Europe dampened risk appetites. Investors returning from holiday break received more positive news regarding the US economy, particularly within manufacturing and employment.

2012-01-05 True Reflections on 2011 and 2012 by Liz Ann Sonders of Charles Schwab

The Dow Jones Industrial Average (DJIA) managed a gain for the year in 2011, but very few investors were cheering. With inflation settling down, the upward boost to real gross domestic product (GDP) is likely being underestimated. Although the eurozone crisis may keep volatility elevated short-term, 2012 is looking like a better year.

2012-01-04 What to Watch for in Early 2012 by Russ Koesterich of iShares Blog

As 2012 gets underway, investors should pay close attention to two particular unresolved economic issues: High Italian bond yields and the ongoing drama of the payroll tax holiday. These two pieces of unfinished business are likely to dominate headlines and influence markets during the first few months of this year. They both also could send the global economy back into a recession if theyre not solved adequately. What needs to happen for these issues to be resolved? Heres a quick look at some signs investors should watch for.

2012-01-03 US Recession - An Opposing View by Dwaine van Vuuren (Article)

A large number of reputable analysts and companies are forecasting a new U.S recession on the immediate horizon. Attracting the most attention is ECRI, which made a public recession call on September 30th and several television reaffirmations since. But an examination of a broader range of other composite economic indicators shows that sole reliance on ECRI's forecast would be misplaced.

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.

2011-12-30 2012: A Look Ahead by Bob Doll of BlackRock Investment Management

2012 is likely to feature a slow-growth world that includes a recession in Europe. The US faces headwinds, but manages to achieve growth of between 2% and 2.5%. China and India slow somewhat, but, along with the US, make up two-thirds of global GDP growth. The big risk remains that of a financial breakdown in Europe, which would tip the developed world into recession. Inflation should also continue to move lower. Should the muddle-through environment come to pass, we believe earnings and some improvement in confidence would allow equity markets to move higher, with US stocks leading the way.

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 A Look Back at 2011 by Bob Doll of BlackRock Investment Management

Although 2011 started off on a relatively strong note for the global economy and markets, the past year was dominated by fears that contagion from the European debt crisis would derail the recovery. Overall global economic growth struggled as most areas of the world experienced growth slowdowns (the notable exception being the U.S.) Emerging markets were also faced with some mounting inflation pressures, which presented a challenge for policymakers. Although there have been some signs of progress regarding the debt crisis, uncertainty levels remain high going into 2012.

2011-12-17 The Center Cannot Hold by John Mauldin of Millennium Wave Advisors

We'll leave aside the politics of the payroll tax extension and look at the economic implications, and then go on to examine the deficit in the US. That will give rise to some thoughts about Europe and what would have to happen for a country to leave the euro. We'll finally close with some thoughts and graphs about the more controversial part of the tax cut extension, the Keystone XL Pipeline. Just how radical is it to build such a pipeline in the US? And what are the implications for the deficit?

2011-12-16 Early Santa Arrival? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Stocks have continued their seesaw pattern around developments in the European debt crisis. The major indices remain in the wide range we've been in for the last two years. Factors are setting up for a potential break above that range in the coming year. Expectations about progress in Washington are extremely low and near-term the biggest issues are the proposed extensions of the payroll tax cut and unemployment insurance. The increasing populist rhetoric is not helpful and any chance of major debt-reducing legislation occurring before the 2012 election seems remote.

2011-12-14 Fed Ends 2011 with a Whimper by Liz Ann Sonders of Charles Schwab

There were no surprises out of the Fed meeting today, with short-term interest rates remaining pegged at zero. There was one dissenting FOMC member who wished for additional policy accommodation. Much of the Fed's near-term focus remains on the eurozone debt crisis.

2011-12-14 Clinton Investment Management 3Q2011 Market Commentary by Andrew Clinton of Clinton Investment Management

As we look toward year-end, we endeavor to seek out the best means for adding meaningful value to our client portfolios. We expect municipal bond new issue supply to dissipate as we approach the New Year. As it does, we expect technical conditions to improve materially. We also believe that the roughly $20 billion in anticipated January reinvestment will pull demand for municipal bonds forward into December. We have extended our client durations modestly in an effort to capitalize on what we believe could be a period of solid outperformance for the municipal bond market.

2011-12-13 What Happens If A Rising Tide Sinks Some Ships? by Chris Maxey of Fortigent

A multi-day summit in Brussels by European policymakers yielded an expected fiscal union between euro member countries. However, a key refusal by Britain undermined the credibility of the pact. Without unanimous agreement, the original European Union treaty cannot be altered, so a new intergovernmental agreement was created. Some question whether such an arrangement has the teeth to enforce budgetary discipline.

2011-12-12 Teutoburg Forest Remembered by Christian Thwaites of Sentinel Investments

The European Council agreed to some startling actions to stem the crisis: 1) all fiscal deficits not to exceed 0.5% of GDP 2) excessive deficit rules to come into effect when they breach 3% of GDP 3) the Commission to sign off on national budgets and 4) enforce sanctions if debt exceeds 60% of GDP with 5) fiscal integration to follow and 6) EFSF and ESM capital to remain at around 500bn with another 200bn committed to the IMF. The markets' reactions were generally favorable but I doubt any of this will hold.

2011-12-12 Progress in Europe Lifts Sentiment by Bob Doll of BlackRock Investment Management

Market action last week centered on the European summit that took place on Thursday and Friday. While no one is suggesting that the debt crisis will go away any time soon, the framework agreement that was reached has at least reduced some of the anxiety and appears to have eased the gridlock in European financial markets. While these moves will do little to ease the near-term debt issues affecting many European countries, they are important. In our view, last week's summit may well represent the first tangible positive developments since the crisis began.

2011-12-12 Obama's 8%: Sounds Right by Brian S. Wesbury and Robert Stein of First Trust Advisors

Given his advisers track record, you would think President Obama would be very cautious when making predictions about the unemployment rate. As we all now know, even though the stimulus bill was fully implemented, the jobless rate kept heading north, peaking at 10.1% in October 2009 and never once falling even remotely close to 8%. Nevertheless, President Obama is doing it again and predicting unemployment will be 8% around Election Day. This time, we think hes right.

2011-12-07 The Fed: Is QE3 Coming in January? by Gary D. Halbert of Halbert Wealth Management

For most of this year, rumors have continually swirled that the Fed was about to embark on yet a third round of Quantitative Easing. The rumors suggested, that the Fed would announce another $600 billion in asset purchases, primarily of long-dated Treasury bonds. While many of us argue that the first two rounds of QE have had little positive effect, the Obama administration and many others are urging the Fed to do more. The argument is that Europe is heading into a recession, and this cant help but weaken the US economy just ahead.

2011-12-06 What Are Investors Up To? by Chris Maxey of Fortigent

With markets ebbing and flowing and making it virtually impossible to differentiate up from down, it has become all the more difficult to determine what qualifies as an attractive investment. While equity markets rallied into the end of November, volatility remains well above its long-term average, causing most investors to question their equity allocations. It should come as no surprise, then, that individual investors are anything but confident in the latest rally. Macroeconomic headlines and excessive volatility are dampening even the most hardened investors faith in financial markets.

2011-12-05 Engines of Doctrine by Christian Thwaites of Sentinel Investments

European leaders have a tough time stringing together a coherent sentence but the words go roughly like this: 1) drive down deficits 2) pummel inflation 3) encourage companies to invest more and 4) households to spend more and, thus, fingers crossed, 5) create employment. The problem with this is that output gaps drive down aggregate demand and prices. And no business executive will invest while demand is leaking. And so will not increase employment. This standard trap is exacerbated when there is no central bank that can do what central banks do.

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.

2011-12-03 Time to Bring Out the Howitzers by John Mauldin of Millennium Wave Advisors

It is now common to use the term bazooka when referring the actions of governments and central banks as they try to avert a credit crisis. And this week we saw a coordinated effort by central banks to use their bazookas to head off another 2008-style credit disaster. The market reacted as if the crisis is now over and we can get on to the next bull run. Yet, we will see that it wasn't enough. Something more along the lines of a howitzer is needed (keeping with our WW2-era military arsenal theme). And of course I need to briefly comment on today's employment numbers.

2011-12-02 The Cost of (Super Committee) Failure by Russ Koesterich of iShares Blog

With the failure of the Congressional super committee, the US economy is now poised to experience a significant slowdown in 2013. Russ explains that given that in 2013 the US economy will very likely still be struggling with the impact of consumer deleveraging and a moribund labor market, the resultant fiscal drag would increase the probability that the United States could tip back into a recession.

2011-11-29 Jeremy Siegel on Why Stocks are 'Extremely Attractive' by Robert Huebscher (Article)

Jeremy Siegel is the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania. His book, Stocks for the Long Run, now in its fourth edition, is widely recognized as one of the best books on investing. We spoke to him last week about equity valuations and the prospects for the economy.

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 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.

2011-11-28 Another Asian Wake-Up Call by Stephen S. Roach of Project Syndicate

For the second time in three years, global economic recovery is at risk, with the crisis in 2008, triggered by subprime crisis made in America, now followed by Europe's sovereign-debt crisis. The alarm bells should be ringing loud and clear across Asia an export-led region that cannot afford to ignore repeated shocks to its two largest sources of external demand.

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.

2011-11-22 Krugman versus Summers – Will the US mirror Japan? by Robert Huebscher (Article)

Larry Summers and Paul Krugman may share ideological leanings, but they disagree sharply about our economic prospects. Both agree that political gridlock is responsible for the failure to grow our economy, but is that impasse is so severe that the US is destined to endure the slow growth, high unemployment and deflation that has plagued Japan for the last two decades? It depends who you ask.

2011-11-22 The Domestic Economy Keeps Fighting for Growth by Chris Maxey of Fortigent

It is a shortened week due to the Thanksgiving holiday in the US, but that does not mean investors should tune out. The market will turn its sights on the governments super committee, which is looking less than super. The committee looks like it will not meet its target deadline of November 23, which will likely have negative implications for financial markets. The committee was supposed to find spending cuts that would reduce the deficit by $1.2 trillion over the next decade.

2011-11-22 A Failure to Act by Russ Koesterich of iShares Blog

The bipartisan Congressional super committee announced on Monday that it would not be able toreach a deficit-reduction dealin time for its deadline this week. The committees failure will not unleash a near-term economic catastrophe, but it does have four important implications for the US economy: 1. Lower Investor Confidence 2. A Stalled Economy in 2012 3. Fiscal Drag in 2013 and 4. Another Potential Downgrade.

2011-11-22 Common Sense is Uncommon: Our Hidden Economic Resilience by Pamela Rosenau of Hightower Advisors

If one thing has become clear these days, macro factors increasingly determine the valuations at the micro level. Although the valuation of individual stocks used to determine the value of the market as a whole, stock selection is now subordinate to asset allocation. Even Bill Miller, the ultimate bottom-up investor, is going to lose his job after thirty years at the helm of Legg Mason Value Trust. Investors need to begin to focus on the positive signals that the market is sending us - better economic data will be a boon for the U.S. stock market.

2011-11-21 No Direction Home by Christian Thwaites of Sentinel Investments

The conceit of Ancient Rome: In Imperial Rome, roads out of the city marked only the distance from the city, not to anywhere. All that counted was how far or near you were from it. The ECB adopts a similar centricity: all that matters is to keep prices stable. Nothing else. Which is why euro bonds continue to retreat with Italy and Spain hitting the 7% club for their 10-year paper. Unemployment can remain at 10% for three years. Growth can slow to 0.2%. But while inflation stays above the 2% target, all bets are off to ease the pain.

2011-11-21 No Direction Home by Christian Thwaites of Sentinel Investments

The conceit of Ancient Rome: In Imperial Rome, roads out of the city marked only the distance from the city, not to anywhere. All that counted was how far or near you were from it. The ECB adopts a similar centricity: all that matters is to keep prices stable. Nothing else. Which is why euro bonds continue to retreat with Italy and Spain hitting the 7% club for their 10-year paper. Unemployment can remain at 10% for three years. Growth can slow to 0.2%. But while inflation stays above the 2% target, all bets are off to ease the pain.

2011-11-18 Behavioral Finance (Why Watching CNBC Wont Make You Rich) by David Edwards of Heron Financial Group

The current confluence of strong and rising earnings, low stock price valuations and exceptionally low interest rates presents one of the best stock buying opportunities in 50 years. Most Americans will not take advantage of that opportunity because most invest with their hearts, not with their heads, and right now their hearts are filled with fear! To help our clients invest with their heads, we present this commentary on behavioral finance.

2011-11-17 A Risk Lurking in Octobers Retail Sales by Russ Koesterich of iShares Blog

October retail sales are the latest sign that the US economy is likely to avoid another recession and is experiencing what Im calling The Great Idle. But a look behind the retail numbers also reveals a major risk facing the US economy. With unemployment still high and wages growing so slowly that hourly workers are losing purchasing power at the fastest rate in 20 years, you may be wondering where consumers are getting the money to buy new cars or the latest iPhone. It turns out that surprisingly brisk retail spending is being supported by lower savings and by help from the government.

2011-11-15 Every Picture Tells a Story: Market Charts Looking Good by Liz Ann Sonders of Charles Schwab

With so much focus on the macro, I thought an update on the micro would be welcome. Several measures of sentiment, valuation and technical conditions show the market to be in pretty good shape. Macro headwinds persist, but the expectations bar has arguably been set low enough to be easily hurdled.

2011-11-14 Don't Fret the Foreign Stuff by Brian S. Wesbury and Robert Stein of First Trust Advisors

Guess what? Japans real GDP grew at a 6% annual rate in the third quarter, a sharp snapback from the downturn following that awful earthquake and tsunami. Much of the rebound was auto-related, as manufacturers overcame problems with electricity and the supply-chain. While the swings in Japan are more dramatic, US economic data shows the same pattern. Real GDP accelerated in the US to a 2.5% annual growth rate in Q3. If we exclude the large drag from an inventory slowdown, real final sales grew 3.6%.

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.

2011-11-08 Checking the Boxes by Research Team of GaveKal

We have argued recently that the current rally is largely dependent on US economic performance, since Europe's crisis is not going to be solved anytime soon. On that basis, Friday's reports of mixed and lacklustre data for US employment may not seem overly confidence-boosting. The household survey showed the unemployment rate unexpectedly ticked down from 9.1% to a six-month low of 9.0% in October; but the establishment survey disappointed, showing total nonfarm payrolls grew +80K last month Beyond these headline figures, however, we found the report supportive of our major current themes.

2011-11-08 Perfect Storm: Eight Reasons to be Bullish on the US Dollar by Mike "Mish" Shedlock of Sitka Pacific Capital Management

One of my much appreciated contacts is Steen Jakobsen, chief economist for Saxo Bank in Copenhagen, Denmark. Today he passed on an "internal note" that he gave permission to share. Steen Writes..."One of my main themes over the last quarter has been a "relative outperformance" of the US economy relative to consensus. This has materialized and our call was almost entirely driven by Consumer Metric data which over the last three years has outperformed any other relevant predictor. This is now slowing down slightly, but still elevated..."

2011-11-07 Risks Remain High, But May Be Receding by Bob Doll of BlackRock Investment Management

We do not think the Fed is quite ready yet to enact QE3, but should we see some sort of combination of further chaos in Europe, inflation levels receding further and economic growth deteriorating, the likelihood would grow. On the economic front, last week saw the release of the October payrolls report. Gains were slightly weaker than expected (up 80,000), but the data also showed that gains in August and September were revised up sharply and that unemployment fell very slightly, from 9.1% to 9.0%.

2011-11-05 Welcome to the Great Idle by Russ Koesterich of iShares Blog

First, there was the Great Depression. Then, there was the Great Recession. Now, the US economy is stuck idling along in neutral, temporarily unable to move beyond sluggish growth, high unemployment and a general lack of confidence.

2011-11-03 Dressing Up a Default for Halloween by Team of BondWave Advisors

Politicians in Europe spent October trying to juggle three balls: 1) avoiding an unavoidable Greek default, 2) keeping a Greek default from cascading into Italy and Spain, and 3) shoring up the European banks before a Greek default. BondWave Advisors discuss the details of the Greek situation in our November Fixed Income Report and provide additional insight into the US Treasury, Corporate and Municipal Bond Markets.

2011-11-02 Born in the USA: A Look at What Could Go Right by Liz Ann Sonders of Charles Schwab

The expectations bar has probably been set low enough to be easily hurdled as the big market rally may be indicating. Not only is recession risk fading in the near term, a very positive longer-term story is emerging, even though very few are in tune (yet). Investors have gotten used to digesting worst-case scenarios maybe it's time to ask what could go right.

2011-11-02 Debarred from Certainty by Christian Thwaites of Sentinel Investments

The innocent pre-2008 are days gone. Expect volatility. Markets distrust most of the news and theres little conviction in any one direction. Vanilla investors are on the sidelines. Day to day trading is mostly position covering and range bound investing. Thats fine with us. The more algos and high frequency trading noise, the easier to spot fundamental anomalies. The challenge is to keep fluid between seemingly different but highly correlated markets.

2011-11-01 Separate Tables by Christian Thwaites of Sentinel Investments

About two thirds of companies have beaten expectations and growth is around 16%. If the market holds at 1280 pixel-time level, we will have seen a 17% retracement of the 22% summer correction. Equities look well supported but NFLX, AMZN and GMCR [1] show how fragile is confidence. The ever-reliable Fed surveys from Richmond, Chicago and Kansas all showed improvements with very little sign of price increases. Bottom Line: Some worry that the sell off in bonds may be too rapid but we're comfortable with domestic stocks and, increasingly, international.

2011-10-31 What's Going Right? by Brian S. Wesbury and Robert Stein of First Trust Advisors

Everyone knows housing is still weak. And, everyone knows jobs are growing, but not fast enough to seriously lower the unemployment rate (9.1%). Everyone also knows real GDP has expanded for nine consecutive quarters, at an average annual rate of 2.5%. No one is satisfied with this; but it is a recovery, not a recession. So, how can real GDP grow when housing and employment are so weak? Well, it turns out that the strongest part of the economy has been business investment. Equipment and software investment has grown five times faster than GDP-12.9% over the past nine quarters.

2011-10-31 Rally Continues on Positive News from Europe by Bob Doll of BlackRock Investment Management

Investor sentiment has certainly improved over the past several weeks, and while it is much too early to declare victory over the European debt crisis, last weeks deal is certainly a positive step. The easing of the risks associated with Europes issues, along with a brighter outlook for the US economy than was the case a couple of months ago does create a more solid footing for risk assets. Given the sharp advance markets have seen over the past month, we may be in for a period in which markets need to "digest" these gains, but the longer-term outlook for stocks does appear to be improving.

2011-10-26 72% Say US Headed in the Wrong Direction by Gary D. Halbert of Halbert Wealth Management

We begin with some new Associated Press polls released. Lead among them is the poll which found that 72% of Americans now believe that the US is headed in the wrong direction. Then summarize the latest economic reports, most disappointing, but there were a few bright spots. Finally, I will address a political issue that is just beginning to make the rounds in the media. That the Republican presidential hopefuls are gravitating to a flat tax and jobs growth agenda that could stand up very well against President Obamas tax-and-spend, punish- success policies in the 2012 election.

2011-10-19 America at Stall Speed? by Mohamed A. El-Erian of Project Syndicate

Judging from the skittishness of both markets and consensus expectations, the United States economic prospects are confusing. One day, the country is on the brink of a double-dip recession; the next, it is on the verge of a turbo-charged recovery, powered by resilient consumers and US multinationals starting to deploy, at long last, their massive cash reserves. In the process, markets take investors on a wild rollercoaster ride, with the European crisis (riddled with even more confusion and volatility) serving to aggravate their queasiness.

2011-10-18 Bob Doll: Why the US is Positioned Strongly by BlackRock (Article)

Investor unease has risen dramatically over the past quarter in the face of growing concerns about the world's economic and financial health. The focal point has been the intensifying debt crisis in Europe. The issues facing Europe are highly complex, but essentially are underscored by a single question: Is Europe facing a solvency crisis or a liquidity crisis?

2011-10-15 Can 'It' Happen Here? by John Mauldin of Millennium Wave Advisors

The beginning of the end of the Weimar Republic was some 89 years ago this week. There is a stream of opinion that the US is headed for the same type of end. How else can it be, given that we owe some $75-80 trillion dollars in the coming years, over 5 times current GDP and growing every year? Remember the good old days of about 5-6 years ago (if memory serves me correctly) when it was only $50 trillion? With a nod to Bernankes helicopter speech, where he detailed how the Fed could prevent deflation, I ask the opposite question, Can it (hyperinflation) really happen here?

2011-10-14 Will the Micro Matter? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Q3 earnings season is in full swing and it will be modestly positive after numerous reductions of expectations due largely to economic concerns. The US will avoid a dip into recession and, for now, the data seems to support that view. The yield curve has flattened since the announcement of Operation Twist but mortgage applications have yet to jump and companies continue to cite concern over governmental policies for their continued caution. The EU debt crisis has had some positive movement, providing some hope to the market, but concern is growing over the state of the Chinese economy.

2011-10-11 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.

2011-10-10 Positive Signs Exist, but Europe and Policy Are Unclear by Bob Doll of BlackRock Investment Management

It is difficult to assess value in the current environment. If the European debt crisis were to suddenly disappear, stocks would appear very cheap, but of course the uncertainty over the debt crisis remains the critical wildcard. From a technical perspective, over the past couple of weeks the S&P 500 tested the 1,100 low it reached in August and while that level was briefly pierced from a price perspective, stocks rebounded quickly which perhaps makes the 1,100 level a stronger floor. This is not to say that that level will not be tested again, but we do believe it is a good sign.

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 Point of Maximum Pessimism? by Niels C. Jensen of Absolute Return Partners

The current level of pessimism is quite overwhelming, in particular in Europe where the eurozone crisis has taken its toll on investor confidence. This has led to valuation levels we haven't seen since the dark days of 1981-82, just before we embarked on the 1982-2000 bull market - the biggest of all time. It is our view that investors will be amply rewarded if they begin to buy European equities at current levels, although it is a strategy that shall require both a solid stomach and some patience.

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.

2011-10-05 Million Dollar Question: Dollar and Recession Risk Up Together by Liz Ann Sonders of Charles Schwab

Recession fears have mounted, but the picture is still mixed and it's not yet conclusive. The US dollar is winning the "least ugly" currency contest, but isn't helping stocks or commodities. Short-term, a stronger dollar is a negative for riskier assets but not necessarily longer-term, if history's a guide.

2011-10-04 Markets Warned of Impending Recession by Chris Maxey of Fortigent

In the latest week, economic data was mixed, but news on consumer income and spending raised concerns over the health of the all-important consumer sector. Even worse, a growing number of economists are highlighting the possibility of recession. One organization, the ECRI, went as far as declaring that recession was unavoidable and warned, theres nothing policy makers can do to head it off. Such dire forecasts do nothing to bolster economic or market confidence. The ECRI has accurately predicted prior recessions, including the most recent one in 2008.

2011-10-03 Markets Continue to Look for Clarity by Bob Doll of BlackRock Investment Management

The global financial stresses that have been contributing to market volatility have shown no signs of easing. Financial markets have been signaling that economic growth levels are too weak to support the current financial structure. Corporate bond spreads in most markets have been widening and euro-area bank bond spreads are close to their 2008 crisis levels. These signals suggest that economic growth needs to improve sharply (which is not likely to happen any time soon) or that further policy action is needed to ease the strain.

2011-09-30 Are You Properly Positioned for the Return of the Economic Vitality of America by Chuck Carnevale of F.A.S.T. Graphs

It has been my observation over my last four decades of studying the stock market that investors have a penchant for projecting into the future what is currently happening. In other words, when the market is behaving badly, they tend to believe it is going to continue to behave badly far into the future. And as I reflect on this, it occurs to me that every bull market has ended with a bear market, and conversely, every bear market has ended with a bull market. The most important attribute to remember about free-markets is that they self adjust. Most know this as the law of supply and demand.

2011-09-29 Grease (Greece) is the Word by Bill Smead of Smead Capital Management

You might think that the countries in Europe like Portugal, Ireland, Greece and Spain are the source of the current consternation in the US stock market. We believe that Europe is peripheral to the core issue. American investors have spent the last ten years falling in love with the BRIC trade and feeding an infatuation with the global synchronized economy and the emerging consensus surrounding global stocks/bonds. In our opinion, it is time to go back to conventionality and leave the BRIC trade before its time is gone and investors put their capital back in motion.

2011-09-27 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 Economic Recovery Starts with Bank of America by Team of Institutional Risk Analyst

In this issue we provide a "how to" roadmap for the restructuring of Bank of America (BAC), this in response to a number of yowls of protest, spurts of indignation and outright do-not-knows. For those who've not done so, please read "A not so fictional FSOC memo for Bank of America" where we introduced the home audience to the concept of a parent-only view of BAC and other bank holding companies ("BHCs"). The restructuring of BAC creates a huge positive for credit creation in the US housing sector, the necessary condition for an economic recovery.

2011-09-26 Market Outlook Hinges on Europe by Bob Doll of BlackRock Investment Management

We expect the economy will muddle through in the coming year and we would place decent odds that economic growth will improve from the 1% level it experienced in the first half of 2011. This view is predicated on the assumptionand it is a big onethat there is no major additional fallout from the European debt crisis.

2011-09-22 Jobless Claims, Leading Indicators Could Show US Economy is Not Contracting by Russ Koesterich of iShares Blog

Of all the economic reports coming out this week, Im most closely watching for the latest US weekly jobless claim numbers and the new leading indicators data, due out Thursday. Both will give further confirmation on the near-term state of the economy. As Ive mentioned before, I expect that the US economy is most likely going to experience an anemic expansion, rather than another recession. Recent economic reports have so far confirmed my view. I believe the new data this week will similarly show that the while the US economic recovery has stalled, the economy is not contracting.

2011-09-21 Pondering 2H 2011 Bank Earnings by Team of Institutional Risk Analyst

This week, we do a short rant on the 2H 2011 outlook for financials and ask whether further deflation does not mean a mixed road ahead for some banks. To review, let's look at the Bank Stress Index for the past several years in the box below. You can look up the rating for your bank on our retail web site, The major factors affecting bank performance are largely economic as always, but the market value of the liquid, large-cap financials will be buffeted by the macro see-saw between the US and EU. We just hope that our BSI is not rising again by the close of 2011.

2011-09-19 The H1:2011 Economy may have been Stronger than we Thought by Brian Horrigan of Loomis Sayles

A key sector is the nonfinancial corporate sector. It excludes government, noncorporate small businesses, farmers, nonprofits, owner-occupied housing, and banks and insurance companies. Real output in the nonfinancial corporate sector surged a hot 4.5% in Q1 and a red-hot 7.5% in Q2. The weakness in the economy is predominantly in housing, banks, government, and small business. Overall, nonfinancial corporations have been doing well. Output in that sector has matched the prior peak of Q4:2007. Hows the economy doing? It depends on whom you ask. Dont count it as a lost cause just yet.

2011-09-19 No Recession, No Panic by Brian S. Wesbury and Robert Stein of First Trust Advisors

Online markets (at Intrade) put the odds of a recession in the next year at 40%. The consensus of economists (in a Wall Street Journal poll) has the odds of recession at one in three. These elevated fears are hitting consumer confidence, creating political pressures and causing volatility in financial markets. We think the actual odds of a recession are much lower than the consensus thinks. We place them at 20%, barely above the 15% that history tells us exists in any year.

2011-09-14 Obamas Jobs Speech, The Economy & The Fed by Gary D. Halbert of Halbert Wealth Management

Once again this week, there is a lot of news to cover. We begin with my thoughts on President Obamas latest jobs speech in which he asked for yet another almost $450 billion in stimulus which he said is paid for. That all depends on Congress passing a litany of new tax increases that Obama announced yesterday. Following that discussion, we will look at the latest economic reports, including the dreadful August unemployment report. Next, we will move on to the latest news from the Fed and what the FOMC may be up to at its upcoming monetary policy meeting on September 20-21.

2011-09-12 Whats Missing From Obamas Plan by Russ Koesterich of iShares Blog

In a speech last Thursday evening, President Obama outlined his American Jobs Act, a $447 billion package of tax cuts and government spending he hopes will help stimulate the slowing economy. It calls for reduced payroll taxes, extended unemployment benefits and increased spending on infrastructure to help put people back to work. Without passage, I believe the US will suffer significant fiscal drag in 2012 and the economy will face more headwinds. However, while the proposal could spur some growth, it does nothing to fix the longer-term fiscal problems facing the country.

2011-09-08 The Transfer Payment Paradox by Russ Koesterich of iShares Blog

You dont have to be a fan of profligate government spending to recognize the enormous paradox the United States faces in getting its economic and fiscal houses in order. The US economy is driven largely by consumptionroughly 70% of GDP comes from personal consumption. A large and growing percentage of that consumption is dependent on federal transfer paymentsdirect government payments to individuals. Yet as the US tries to get its deficit under control, these payments could be cut. That in turn could have a significant impact on disposable income and economic growth.

2011-09-06 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.

2011-09-06 Want Jobs? Have Faith by Brian S. Wesbury and Robert Stein of First Trust Advisors

The private sector created 17,000 new payroll jobs in August and the government lost 17,000. The net was zero. Nadazipzilchnothing. Some would say that this is a perfect metaphor for the economya big fat zero. The stock market is getting drilled, politicians are frothing at the mouth, the Fed is having longer meetings, and investors are scared. So, whats going on? First, let us say that we have been overly optimistic. We expected better growth in jobs and the economy. We have been wrong, but we still dont expect another recession.

2011-09-04 Its All About the Jobs and Gold by John Mauldin of Millennium Wave Advisors

If somehow a Republican appeared in the White House tomorrow, there is no magic he (or she!) could bring with him/her to fix the unemployment problem. There are just some things the private sector will have to do for itself, and the sooner the government stops getting in the way, the sooner will get things fixed. But it will take a long time, no mater what. For the record, I think you should own about 5% of your net worth in gold, as insurance, not as an investment.

2011-09-01 The Blessing of Hitting the Skids First by Bill Smead of Smead Capital Management

We believe that the first country to hit bottom, the first to confess its mistakes the way Frank Blake and Howard Schultz did for their companies, and the first to cleanse the banks, corporations and households will lead to lasting prosperity long before any other country in the world does. We also believe that the investment rewards of US non-cyclical large cap common stock investing has rarely looked more attractive because of the willingness of investors to underestimate the benefit of hitting the skids before everyone else does.

2011-08-31 Be-Ratings Wars. by Jonathan Leidy of Portico Wealth Advisors

S&Ps US downgrade was an unmistakable watershed event, causing everyone from the President to the proletariat to take a long, hard look at the lackluster numbers that have typified the US economy for months. Perhaps equally noteworthy during the tumult, however, was the sheer quantity of contradictions, ironies, and paradoxes that arose throughout the downgrade process. They sprung from all sides, ranging from the subtle to the downright staggering, and yielded a portrait of a country desperate for direction. What follows is a chronicle of these incongruities.

2011-08-29 Markets Recover Some Ground As Uncertainty Remains High by Bob Doll of BlackRock Investment Management

In some ways, whether or not the economy does sink into recession is a technical point. If we do see a double-dip recession, any such contraction should be mild. If the economy avoids a recession, growth will still be weak. From an earnings perspective, any decline that comes about in earnings growth due to economic weakness should also be smaller than the average contraction that occurs during a typical recession. Looking ahead, our forecast is that earnings growth flattens out while GDP remains very low.

2011-08-25 One Number Says it All by Stephen S. Roach of Project Syndicate

The average annualized growth of US consumer spending over the past 14 quarters-calculated in inflation-adjusted terms from the first quarter of 2008 to the second quarter of 2011 is 0.2%. Never before in the post-WWII era have American consumers been so weak for so long. This one number encapsulates much of what is wrong today in the US-and in the global economy. The US economy-as well as the global economy-cannot get back on its feet without the American consumer. Its time to look beyond ideology-on the left and right-and frame the policy debate with that consideration in mind.

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.

2011-08-22 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.

2011-08-18 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.

2011-08-16 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 Money Manager Pride Goeth Before Destruction by Bill Smead of Smead Capital Management

All great money managers reach a point in their career where adulation and self confidence detracts from their better judgment. This interruption in judgment usually coincides with the discipline in use becoming the most popular discipline in the marketplace or the investing style being overdue for a three to five-year correction. Studies of the equity managers with the best long term records show that the best underperform the S&P 500 Index 35% of the time. The pride associated with multi-decade success and an army of folks enjoying your work is probably the most dangerous thing.

2011-08-12 Warren Buffett Said Ignore Political and Economic Forecasts by Julie Carnevale of F.A.S.T. Graphs

This article is about casting a light of reason on the longer-term perspective, in contrast to what is typically an emotionally charged attitude about short-term volatility. It is human nature to judge the performance of our portfolios based on their closing stock price for any given day, week, month, or even quarter. The point we're trying to make here is that it is not the most important factor, unless you were actually planning to sell on the day you measure it. Otherwise, the intrinsic value derived from the operating results that you generate is more important than price volatility.

2011-08-12 Robert Rubin, Bank America and the fate of the dollar by Team of Institutional Risk Analyst

This week in The Institutional Risk Analyst, we take a look at the latest week of inaction and indecision on the part of the leaders of the G-20 nations. Never has doing absolutely nothing taken so much time and garnered so much market and media attention. If the nothing doing dance by Barack Obama, Nicholas Sarkozy and Angela Merkel reaches a much higher frequency, life as we know if is definitely going to change big time. And that change may include altering the international role of the dollar, a change regarding which neither Congress nor the American people have been consulted.

2011-08-12 The Fix is In by Peter Schiff of Euro Pacific Capital

Until interest rates are allowed to rise to appropriate levels, more resources will be misallocated, additional jobs will be lost, government spending and deficits will continue to grow, the dollar will keep falling, consumer prices will keep rising, and the government will keep blaming our problems on external factors beyond its control. As the old adage goes, 'insanity is doing the same thing over and over again and expecting different results.'

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.

2011-08-11 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.

2011-08-10 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 Unprecedented Fed to the Rescue by Mohamed A. El-Erian of PIMCO

After Mondays gut wrenching 635 point fall, the Dow Jones index surged an impressive 430 points on Tuesday. In the process, investors experienced a wild 640 point intra-day roller coaster! Gold prices set another record while Treasury yields fell sharply, with the 2-year closing at an eye popping 0.2% and the 5-year at an equally stunning 1.0 percent. Tuesdays combination of unusual, if not unprecedented, market moves had a lot to do with the Fed. Once again, the institution came to the rescue of an equity market under severe pressure, and did so in a bold manner.

2011-08-09 US Debt: Moody?s AAA / S&P AA+ by Brian S. Wesbury and Robert Stein of First Trust Advisors

If this move by S&P helps the US get more serious about cutting spending, then it will have been a very positive development. If it influences the political environment by pushing the US to a more conservative set of fiscal values it will be even more positive than that. There is a titanic battle of economic and political philosophy taking place in the US today. S&P wants to be a player in this battle, but in the end it will have a relatively minor role.

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?

2011-08-05 Portfolio Commentary Q211 by Jay Compson of Absolute Investment Advisors

The Fund's overall positioning and exposures have changed very little over the past few months as our managers continue to see almost all asset classes priced to deliver unsatisfactory long term returns. There is no real change in overall thoughts from our previous commentary except to add that many of the issues and risks we have discussed are starting to become more significant and weakening fundamentals are finally becoming more apparent to investors. Ironically, the things that have created short term rallies of late are largely noise and are less positive than they were 3-6 months ago.

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.

2011-08-04 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.

2011-08-03 Training Wreck Waiting to Happen by Bill Smead of Smead Capital Management

Someday soon, as the charade of uninterrupted GDP growth catches up with the Totalitarian Communist Government, we believe the entire Chinese banking system will have to be recapitalized to the tune of over $1.5 trillion. At that point, there wont be enough money to lend for new projects to even maintain existing GDP. In our opinion, there will be an economic contraction in China lasting three to four years. Whether China is to become a truly great economy will be determined by what they do in the aftermath of the coming economic train wreck.

2011-08-02 Is the US a "BBB" credit? David Woolley on the MERS land title chain fiasco by Team of Institutional Risk Analyst

In this issue of The Institutional Risk Analyst, we feature a summary of a paper by David E. Woolley, a California Licensed Land Surveyor and Certified Fraud Examiner, who is a principal of Harbinger Analytics Group in Tustin, CA. Thanks to David and Lisa Herzog, who edited the study and performed research, for summarizing the paper. But first a rant on the furious inaction of the past week.

2011-08-01 Markets Will Look Past Debt Issues, But Not Yet by Bob Doll of BlackRock Investment Management

Over the past several months, stocks have been in a fairly narrow trading range, with strong earnings pushing prices higher and macro risks and the growth slowdown acting as counterweights. Once the debt and deficit pictures become more clear and once investors are able to price in the effects of the final deals, markets may be able to again focus on fundamentals. From an economic perspective, the US economy remains vulnerable, which is not a comfortable backdrop for risk assets, but we continue to believe that the probability of recession remains low and that economic data should improve.

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.

2011-07-27 Are We Headed For A Second Recession? by Caroline Corbett & Lance Roberts of Streettalk Live of Advisor Perspectives (

Is a second recession in so short of a time in the offing? It certainly seems that way. The hope for a continued recovery has grown dim lately as many of the economic indexes are moving towards contractionary territory. In the words of David Rosenberg, chief economist at Gluskin Sheff, "one small shock" could send us into a second recession. With the recent release of the Chicago Fed National Activity Index, our proprietary economic index is just one small step away from crossing the 35 mark which has always been a pre-cursor to recession.

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

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

2011-07-21 Are the Housing GSEs and TBTF Banks Blocking the Economic Recovery? by Team of Institutional Risk Analyst

The housing GSEs and the largest banks are blocking the economic recovery by denying Americans from refinancing their home mortgages. If the Obama Administration wants to see the US economy recover, then we must start the real process of restructuring that Washington & Wall Street have been avoiding since 2007. Obama may not be able to turn things around before the 2012 election, but he will be remembered more kindly in the history books if he has the courage to do the right thing. As always, we are available to help in this process.

2011-07-20 On Your Mind: Debt Ceiling and the US Dollar by Team of Charles Schwab

The uncertainty surrounding the upcoming decision on the debt ceiling has been a negative factor for the dollar. A US default and/or a downgrade of the US credit rating would almost certainly be negative also. It could weaken confidence in the dollar and cause it to fall. However, there are many global factors driving demand, including support of Japan and China, which continue to be large holders of US Treasuries. It would not be in their interest to sell dollar-denominated assets, including Treasuries, if there was simply a rating change or short-term default.

2011-07-19 A Palinized Nation - No Direction, No Leadership, No Clue by Cliff W. Draughn of Excelsia Investment Advisors

America is being palinized by total lack of leadership and responsibility from both political parties on Capitol Hill. The discussion of whether the US should default on our government debt if Congress is unable to pass a budget compromise and raise the debt ceiling by August 2nd, 2011 is absurd. The result of the impasse is a gradual erosion of trust by individuals, corporations, and foreign debt holders. How did we arrive at this point of lunacy, where our leaders are actually talking about the USA defaulting on our debts? Luke 23:34: Father, forgive them for they know not what they do.

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.

2011-07-14 Ben Bernanke channels Genworth Financial; Chris Laursen on bank trading under the Volcker rule by Team of Institutional Risk Analyst

This week we republish an important article by Christopher Laursen, NERA Vice President, on bank trading under the Volcker rule. And we ask whether Fed Chairman Ben Bernanke knew he was saying about the conforming loan limit yesterday before the House Financial Services Committee.

2011-07-14 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.

2011-07-11 Jobs Versus Government by Brian S. Wesbury and Robert Stein of First Trust Advisors

After the very strong ADP employment report on Thursday, many economists marked-up their forecasts for Friday’s official payroll report. We moved ours up 5,000, and went into the report at 140,000 net new private sector jobs. Ouch…the official report showed just 57,000 new private sector jobs and equities immediately headed south. For bulls, this data was a huge disappointment. But employment is a lagging indicator. Other data have already been into, and out of, a “soft patch.” Moreover, as a forecasting tool, employment data has not always been perfect.

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%.

2011-07-05 Is Europe’s Debt Crisis a “Lehman Moment” for America? by Mohamed A. El-Erian of PIMCO

Europe’s debt problem is a headwind for what remains a disappointing U.S. economic recovery. There is now broad-based recognition of America’s persistent economic weakness. The Federal Reserve has been forced again to revise downwards its growth projections for both 2011 and 2012. In order to avoid a repeat of the total Lehman paralysis in the face of an external shock to the U.S. economy three conditions must be met: a banking system that remains robust, no disruptions to money market funds and limited blockage to the plumbing of the country’s payments and settlement system.

2011-07-01 Schwab Market Perspective: Dealing with Debt by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Global governments are dealing with rolling debt crises equaling shaky investor confidence. We are concerned that many of the solutions weigh on growth prospects, but are hopeful about short-term resolutions that restore business confidence and lead to more investment and hiring. The Fed continues to hold steady, keeping short rates near zero and likely reinvesting maturing Treasury securities after QE2 ends. Greece passed the austerity package required to get short-term funding but much more is needed. And while the focus has been on Europe, it may be time to focus on the Asian region.

2011-06-30 The Biggest Bear Market Rally of All? by Bill Smead of Smead Capital Management

Most stock market participants screamed “bear market rally” in the summer of 2009 as the US market exploded to the upside from the March 2009 low. They were referring to the phenomena whereby a major rally follows a bear market, retraces some of the prior decline and attempts to suck most investors back into the market. These “sucker” rallies are debilitating because they heap agony those who end up getting caught twice in the same secular decline. We believe the rally in oil to $115 is possibly the biggest “bear market” rally ever and we advise folks to protect their capital.

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.

2011-06-27 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.

2011-06-23 U.S. Monetary Policy: A Case of Self-Induced Paralysis? by Paul Kasriel of Northern Trust

Part of the decreased real GDP growth/increased unemployment rate central-tendency forecasts for June vs. April can be attributed to supply interruptions from Japan and higher energy prices. But given the FOMC's assumption that the supply interruptions are dissipating and that energy prices are declining, this explanation does not apply to the reduced real GDP growth and unemployment rate central-tendency forecasts for 2012. I think the central-tendency forecasts for real GDP growth and the unemployment rate are optimistic for 2011 and 2012 in the absence of continued quantitative easing.

2011-06-23 The Disconnect Continues by Richard Bernstein of Richard Bernstein Advisors

BRIC yield curves are on the brink of inversion, while the US has the steepest yield curve in the world. Such signals, while certainly not infallible, have historically been reliable predictors of future equity returns, but investors’ portfolios nonetheless remain generally overweight emerging markets and underweight the US. We see opportunity in this disconnect.

2011-06-20 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.

2011-06-20 Inflation Now and Later by Brian S. Wesbury and Robert Stein of First Trust Advisors

The Fed believes with all its heart that inflation only occurs in economies that are producing at or above their potential. As a result, with unemployment above “normal” and growth below “trend,” the Fed sees little threat of inflation. As far as the Fed is concerned, any increase in commodity prices is temporary and any increase in the consumer prices due to commodities (like energy) is transitory. We wish we could be as sanguine about inflation as the Fed, but we heard all the same arguments back in the 1970s. The Fed was wrong then, and we think it is making the same mistake(s) today.

2011-06-15 America’s Dangerous Debt Ceiling Debate by Mohamed A. El-Erian of PIMCO

​In today’s polarized environment in Washington, Republicans and Democrats are unwilling to compromise “too early.” Such political paralysis on key economic issues is increasingly unsettling for the U.S. private sector, and for other countries that rely on a strong U.S. at the core of the global economy.

2011-06-13 Soft Patch Already Fading by Brian S. Wesbury and Robert Stein of First Trust Advisors

The soft patch is nothing more than a temporary and superficial blow to the economy. If it was anything more than Japan’s disasters and the tornado season, the good numbers we’ve been seeing lately – on lending, tax revenue, trade, hours-worked, ex-auto sales, and commercial building – wouldn’t be happening.

2011-06-10 Pause or Panic? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic data has deteriorated to the point that talk of a double dip recession has returned. The risk of another recession is low as most indicators remain well in expansion territory. Several factors are contributing to a soft patch, but a rebound is likely in the latter part of 2011. Along with talk of recession risk, chatter about the need for QE3 by the Fed has increased. The bar is quite high for QE3, but it is very likely the Fed will not let its balance sheet shrink in the near-term. Global growth is decelerating as well, with China tightening and Japan dealing with reconstruction.

2011-06-09 Understanding Recent Market Movements by Mohamed A. El-Erian of PIMCO

Despite massive fiscal and monetary stimulus, the U.S. economy has frustratingly failed to gain proper traction. The U.S. economy faces structural impairments in housing, credit, public finances, and the functioning of the labor market. The situation in Europe is another factor undermining market sentiment. Structural problems require structural solutions that are adopted within a clearly communicated overall vision.

2011-06-09 The Next US Policy Shift by Team of GaveKal

We were once told by a client that “when the US government decides to sell, no price is cheap enough.” Our friend added: “This is how Onassis made his fortune; buying the surplus cargo boats the US Navy no longer needed following the end of WWII for cents on the dollar.” If this is true, then there must be fortunes to be made in US housing today, not only is housing trading at very attractive levels against incomes and ability to service a mortgage, but the US government, through its GSEs, is proving to be a very willing seller. In 1Q11 the GSEs sold 110,000 foreclosed homes, 10% of sales.

2011-06-07 The Tough Transition by Cole Smead of Smead Capital Management

Stock market participants seem to be having a great deal of difficulty handling temporary economic weakness. This weakness is highly likely to be a combination of higher gasoline prices and the disruptions that supply chains suffered at the hands of the Japanese Tsunami. We are not surprised by this temporary weakness and if it hadn’t been caused by this combination it would have come to pass anyway.

2011-06-06 Disappointing Data Should Be Temporary, But Ultimately All Depends On Jobs by Bob Doll of BlackRock Investment Management

A stream of increasingly disappointing economic data helped accelerate the multi-week correction in stocks. The most recent high-profile evidence pointing to a slowdown in growth came in Fridays jobs report for May. For the month, total nonfarm payrolls grew 54,000 (consensus expectations were for over 150,000). Additionally, the unemployment rate unexpectedly rose to 9.1%. There has clearly been a soft patch in economic performance this spring, and as such, the employment growth rate is slowing rather than accelerating. In addition the ISM Manufacturing Index for May dropped sharply.

2011-06-03 Economic Whiplash by John Mauldin of Millennium Wave Advisors

The political winds in Europe are shifting. The crowd that runs the various member countries today will not long survive the changes. There will be new politicians with different mandates as it becomes clear that the costs of the bailout are going to fall on the backs of the solvent countries and that austerity is going to mean hellishly bad deflation, high and rising employment, and depression in the indebted countries. And with the US economy slowing down, it might not take much to push us over the edge.

2011-06-02 Some Days (Months) Are Better Than Others by Liz Ann Sonders of Charles Schwab

May was a rough month for investors, though it ended on a sunnier note. A growth slowdown is evident, but the debate rages about whether its factors are temporary. We think May's risk-off mode is easing, but choppy action remains likely until longer-term worries subside. After an uphill ride in April, when the Dow was up 4%, May wasn't kind to investors, although the last two trading days brought some sunshine. It was the first time in nearly three years that the S&P 500® index had no up weeks in a month.

2011-06-01 Next Big Thing: "Rent to Own?" Recreating the Ear of the Markets by Team of Institutional Risk Analyst

We feature a comment by Damien IslamFrenoy and David Cox, of Microsoft Banking and Capital Markets, about the need to restore context to information to better identify and manage risk. But first we make a few observations about the trends in the political economy. The first quarter of 2011 is now the best quarter since 2007 but does this mean that the future is assured? With an ROA<1% and ROE measured in single digits, the results are less than stellar. But the retrenchment of Americans away from housing assets and toward cash savings raises questions about the future of the banking industry.

2011-05-31 The by Brian S. Wesbury and Robert Stein of First Trust Advisors

Not since the early 1980s has such widespread pessimism about the US economy been so prevalent. This pessimism – fueled by political demagoguery and an overbuilt short-selling industry – denies and ridicules any upward move in growth or stock prices. Basically, if something moves up, then the pessimists argue that it cannot possibly be “real.” Even smart analysts, like Robert Arnott, have fallen into the trap of looking at the world in a negative way. Mr. Arnott argues that much of our recent GDP growth is “unreal,” because it has been driven by government debt.

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.

2011-05-27 All That Glitters by Richard Bernstein of Richard Bernstein Advisors

It is hard to find anything in the current financial landscape that has caught investors’ attention as much as gold. We were proponents of gold at times over the past decade. However, the rationale for investing in gold has changed in the last three years. The story was once a fundamental one, but today’s general enthusiasm seems more emotionally-based. Gold prices might rise further, but we prefer to sit out the current rally in favor of more fundamentally-based investments that tend to perform well during periods of sizeable nominal growth.

2011-05-25 Bull Case Nobody Makes by Bill Smead of Smead Capital Management

We feel compelled to make a US stock market bullish case which feels as good to this writer as avoiding tech stocks did in late 1999. It is so lonely that it is divine. Andy Grove, former Intel CEO, college prof John Maynard Keynes said, “When everyone knows that something is so, it means that nobody knows nothin’.” We believe the majority has put their assets into investments that will provide defeat, insecurity and failure. Out of this comes a very optimistic bull case which is available to those who have courage to look foolish in the short run and avoid today’s popular asset allocation.

2011-05-17 Dylan Grice on Japan's Coming Hyperinflation by Robert Huebscher (Article)

The Japanese scenario haunts US policy makers, who recall that country's two-decade miasma of lethargic growth and escalating fiscal deficits with apprehension. What scares them most, perhaps, is the potential endgame Japan now faces: an insolvent government crippled by uncontrollable inflation. While Japan's current situation closely parallels the experience of other countries that went on to confront hyperinflation, according to Dylan Grice, we shouldn't expect a crisis in the near term.

2011-05-16 Public Policy Looking Better by Brian S. Wesbury and Robert Stein of First Trust Advisors

We think there are five (5) reasons to be bullish about the US economy. First, monetary policy is loose and likely to remain so. Second, the financial panic is over, thanks to the end of mark-to-market accounting rules. Third, technological advances continue to boost productivity growth. Fourth, our free market economy is incredibly resilient, more so than the pessimists believe. And fifth, the policy environment is improving. Despite what Bernanke might say (that quantitative easing lifted stock prices), we think the return in the S&P 500 has to do with a positive shift in government policy.

2011-05-10 The Financial Impact of an Aging Demographic by Chris Maxey of Fortigent

A volatile week of trading resulted in the S&P 500 Index losing 1.7% and the Dow Jones Industrial Average falling 1.3%. However, those losses were tame relative to the rout experienced in commodity markets. According to the Wall Street Journal, crude oil dropped 14.7% last week, while the Dow Jones-UBS Commodity Index lost 9.1%. There was no single cause for the sudden risk aversion, but it appears that recognition of a slowing US economy, along with tighter monetary policy in developing economies, contributed to the renewed caution.

2011-05-05 Entropy and the Mechanics of Reflation by Team of Institutional Risk Analyst

All we can say with some degree of certainty is that the real economy seems to be slowing rapidly from our perspective. The problem is not so much a dearth of credit as a lack of demand for credit and goods of all descriptions. Have you noticed your retailers and service providers trying harder recently? Even the major airlines are treating passengers with a degree of deference that is almost unnerving -- but the planes are mostly full.

2011-05-05 A Roadmap For The Coming Changes In Fed Policy by Will Denyer of GaveKal

Last week’s FOMC statement, and Bernanke’s first press conference, were predictably anticlimactic. But they did confirm what the FOMC plans to do this summer, and what they currently think should be the next steps thereafter. Based on this apparent plan, market participants would be right to assume that Fed policy will continue, well after QE2 ends in June, to weigh on the Dollar and support the already elevated Euro, commodity prices, commodity currencies, etc… In other words, the Fed’s telegraphed trajectory would continue to contribute to the world’s biggest macro risks today.

2011-05-04 More Than 14% of Americans on Food Stamps by Team of Bespoke Investment Group

As if we needed another reminder of the depressed level of the US economy, a recent WSJ article noted that one out of every seven Americans are on food stamps. Breaking out the numbers by state shows some wide divergences. Mississippi, has the highest percentage of its residents on food stamps at 20.6%. The only other state where one in five residents are on food stamps is Oregon. On the low end of the spectrum, Wyoming has the smallest proportion of its residents on food stamps, 6.6%, and believe it or not there are only seven other states where less than one in ten people are on food stamps.

2011-05-03 My Breakfast with Dave by Robert Huebscher (Article)

A month ago, one of the most closely followed market observers, Gluskin Sheff's David Rosenberg, moved his Breakfast with Dave commentaries behind a pay-wall, ending an era of free access to his insights. Last Friday, however, he presented his views publicly to an audience of 500 advisors and investors, your author included.

2011-05-03 Gary Shilling - Five Things that can Derail the Recovery by Robert Huebscher (Article)

Die-hard deflationists - those who foresee a continued bull market in bonds - are so few in number these days they could all share an elevator, according to Gary Shilling. One is Gluskin Sheff's David Rosenberg, whose views are considered elsewhere in this issue. But the loudest such voice belongs to Shilling himself, who has advocated for a long position in Treasury bonds continuously since 1980, a stance that has always proved prescient so far.

2011-05-03 Martin Barnes - How Safe is the Equity Market? by Robert Huebscher (Article)

When members of the Federal Reserve Board seek counsel on tough issues, one of the economists to whom they turn first is Martin Barnes. Speaking publicly last week, Barnes addressed two themes in the US economy and markets: the potential for a sustained bear market in equities and the likelihood of higher taxes. These two distinct questions are both critically important to investors.

2011-04-29 U.S. Economic Growth: GDP Minus the Federal Deficit by Randy Degner of Doug Short

A few days before today's publication of the Q1 2011 advance GDP estimate, I received an email that eloquently expresses a widely held view of Gross Domestic Product — namely that it is a gross exaggeration. It was accompanied by a pair of chart. One is straight from the St. Louis Federal Reserve database. The other is the creation of the author of the email.

2011-04-29 This Time Isn’t Different by Richard Bernstein of Richard Bernstein Advisors

Hearing the phrase “this time is different” is often a warning signal. History demonstrates that rationalizing an overvalued market by suggesting that the economy has structurally or that we’ve entered a “new paradigm”, is not generally a fruitful strategy. Whether bullish or bearish, we believe that macro cycles rarely diverge from historical patterns. Indeed, current global economic cycles appear to be following historical trends. However, there appears to be a significant disconnect between investor sentiment regarding risk and where problems are actually emerging within the global economy

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).

2011-04-26 Are You Watching Your Brokered Deposits? Bob Eisenbeis: What's a Central Bank to Do? by Team of Institutional Risk Analyst

In this issue of The Institutional Risk Analyst, we feature a comment from Bob Eisenbeis, Chief Monetary Economist of Cumberland Advisors. Bob clearly states the obvious in his excellent analysis of the choices facing the Federal Open Market Committee, namely that the Fed continues to steer monetary policy based upon largely domestic factors, this even as the global role of the dollar creates dangers for the US and other nations as they flee the perils of deflation.

2011-04-23 The 'Miracle' of Compound Inflation by John Mauldin of Millennium Wave Advisors

Investors will face the “zero bound” in interest rates for a while longer. They can sit on their cash and earn nothing. They can fret and wring their hands about a ramp-up in inflation, but the evidence so far does not support it. They can stay in the US dollar, in which case they can watch their dollars weaken relative to the rest of the world. Travelling in Sicily or Rome validates how strong the euro is relative to the dollar. All you have to do is buy a dinner or hotel room.

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.

2011-04-19 Gundlach: Treasuries will Rally When QE2 Ends by Robert Huebscher (Article)

The bonds that PIMCO's Bill Gross sold to take a 3% short position in the Treasury market may have found a buyer in Doubleline's Jeffrey Gundlach. In a conference call with investors last week, Gundlach said that Treasury prices would rise in the near term, once QE2 expires on June 30.

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%)

2011-04-15 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 Will Precious Metals Survive the Double Dip? by John Browne of Euro Pacific Capital

It is rare for precious metals to appreciate in parallel with the broader stock market. Yet, this has been the case in the two years since the stock market began coming back from the 2008 financial crisis. Although metals have outperformed US equities over that time frame, it is noteworthy that stocks have gone up at all. Since January 2, 2009, the S&P is up about 50%. While gold is up 68% and silver is up a staggering 267%. With rising interest rates, oil at over $100 a barrel, and the recovery running out of steam, many investors are wisely asking if the markets are set for a sharp pullback

2011-04-12 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.

2011-04-08 Important Recent Developments by Louis-Vincent Gave of GaveKal

It seems obvious to us that we are approaching a tipping point. The rise in commodity prices and risk assets does not seem to be compatible. Neither does the rise in commodity prices, equity prices, and inflation expectations and overly easy central banks. The recent surge in certain currencies to two standard deviations above their purchasing parities should also have economic consequences. So the situation does not seem stable from a bottom-up perspective. And from a top down perspective, it seems obvious that the recent period of exceptionally easy fiscal policies should come to an end.

2011-04-05 Employment Manufactures Another Month of Positive Growth by Chris Maxey of Fortigent

Equity markets surged into quarter end, with the S&P 500 index rising 1.4% and the Dow Jones increasing 1.3%. For the first time since Feb the S&P 500 increased in two weeks. After hitting a trough on Tuesday morning, several positive employment reports encouraged the equity markets to move higher. As expected, manufacturing activity had a deceleration, as the ISM Purchasing Managers Index fell from 61.4% in February to 61.2% in March. Readings above 50% are representative of expansion in the manufacturing sector. Although the index fell, it is still the third highest reading since 1990.

2011-04-04 The Revolving Door at the Fed of New York; Dick Alford on False Dichotomies in Monetary Policy by Team of Institutional Risk Analyst

This week in The Institutional Risk Analyst, we feature a comment by Richard Alford on the false dicotomy between discretionary and rules-based regimes when it comes to monetary policy. But first we want to do a little review of the latest disgorgement of documents by the Fed. Listening to the debate between the "borrow and spend" camp led by Paul Krugman et al and the cut the deficit camp led by the Tea Partiers in Congress and around the nation, we are reminded again of the film "The Matrix" and its predecessors.

2011-04-01 Housing Will Remain a Government Program by Neeraj Chaudhary of Euro Pacific Capital

Recently, the Obama Administration seemed to flash a rare sign of laissez-faire thinking when it issued a report calling for the “winding down” of Fannie Mae and Freddie Mac, the two taxpayer-guaranteed institutions now responsible for backing at least 90% of the US mortgage market. In its press release, the Administration acknowledged that the private sector should be the “primary source of mortgage credit," and that their goal is to “bring private capital back to the mortgage market."

2011-03-29 The Inflation Knuckleball by Michael Pento of Euro Pacific Capital

For the past 40 years or so, every country on the planet has relied on fiat money. To a very large extent, this means that the national economies are far more exposed to the whims of their central bankers than they have been in the past. So, if central bankers go off their meds, the danger to the currency becomes profound. Unfortunately, at America's Federal Reserve, it seems the inmates are now running the asylum.

2011-03-28 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Stocks rebounded strongly last week as the sell-off of the previous week provided investors with a good entry point. the Dow Jones Industrial Average gained 3% while the NASDAQ Composite jumped by 3.76%. The reason for this quite simply is strong corporate profits last year and the strong outlook for the same this year overtaking the many problems that dominate the news these days.

2011-03-25 Profit Margin Squeeze and Inflation Risk by Doug Short of Doug Short

A major risk factor for margin squeeze is the increase in commodity prices over the past several months. The latest turmoil in the North Africa and the Middle East has now put oil prices in the spotlight. At present, in light of the unemployment rate and the ongoing demographic shift, the rise in commodity prices probably poses more risk of margin squeeze than run-away inflation. Some degree of cost-push inflation may be a near-term risk, but the demand-pull inflation we saw in the 1970s is difficult to evision in the US economy of this decade.

2011-03-23 A Crime Called Private Mortgage Insurance; Alex Pollock on the Political Finance of Covered Bonds by Team of Institutional Risk Analyst

This week in The IRA Advisory Service, we review the Fed's latest stress test exercise and discuss what it means for the banking industry and the US economy. While the US central bank did not provide results for specific institutions, the assumptions in the Comprehensive Capital Analysis and Review (CCAR) are more instructive than the Big Media seems to notice. Indeed, a close reading of the CCAR document provides a compelling argument for why the Fed should not be supervising financial institutions.

2011-03-17 Focus on Japan Overshadows Fed Decision by Brad Sorensen of Charles Schwab

To no one's surprise, the Fed kept interest rates at near zero and maintained its scheduled purchases of Treasury securities (also known as quantitative easing, or QE2). We're growing more concerned that the Fed is keeping interest rates low for too long, leading to potential problems down the road. With the market currently reacting to the tragedy in Japan and the ensuing market volatility, it's important to avoid acting hastily.

2011-03-14 Weekly Investment Commentary by Bob Doll of BlackRock Investment Management

Risk assets experienced a setback last week in the face of rising tensions in Libya and the Middle East. Additionally, the massive earthquake that hit Japan on Friday resulted in a sharp downturn in Japanese equities on Monday and increased investor unease. For the week, the Dow Jones Industrial Average lost 1.0% to 12,044, the S&P 500 Index declined 1.3% to 1,304 and the Nasdaq Composite fell 2.5% to 2,716. The human costs of the earthquake in Japan are obviously foremost in everyone’s mind at this time, but the potential economic and market implications are also being weighed by investors.

2011-03-14 Achilles by Michael Dana of Dana Investment Advisors

Since the beginning of the Republic, the US has been invincible, overcoming many disasters. The US was first made aware of its Achilles heel during the 1970s oil embargo. Fortunately, the Middle East agreed to pump more oil, and the negative impact on the economy was short lived. The ensuing financial crisis pushed oil back to $32 per barrel in 2009. The global economic recovery has once again caused heavy demand and rising prices for the liquid gold. Now, however, we add tensions in the oil producing countries in the Middle East and we have a perfect storm brewing.

2011-03-07 Toryism, Socialism and Housing Reform: Real and Imagined by Christopher Whalen of Institutional Risk Analyst

This commentary is background for the presentation entitled "GSEs: The Future Role of Government Sponsored Enterprises in the US," at the Global Association of Risk Professionals event on Tuesday, March 8, 2011, in New York. The Obama Administration recently advanced some proposals to reform several government agencies that control the market for housing. Treasury/HUD plan is really a menu of possible options, eliminating what would not work and making it clear that change will happen slowly, if at all.

2011-03-07 Investment Commentary by Bob Doll of BlackRock Investment Management

A tug of war is taking place in the markets, with crosscurrents of good economic reports on the positive side and a continued rise in oil prices from the conflicts in the Middle East on the negative side. Last week, US equities were up modestly, with the Dow Jones Industrial Average rising 0.33% to 12,169, the Nasdaq Composite advancing 0.13% to 2,784 and the S&P 500 adding 0.10% to close at 1,321.

2011-03-01 Simon Johnson on the Unconscionable Risks We Face by Dan Richards (Article)

Simon Johnson is a professor of economics at MIT and was the chief economist for the International Monetary Fund. In this interview, he explains why the underlying factors which led to the financial crisis remain unresolved. This is the transcript; a video is also available.

2011-02-28 Moment of Surrender: Regimes Fall, Oil Prices Spike by Liz Ann Sonders of Charles Schwab

Geopolitical tensions swell along with oil prices, pushing the stock market lower. The absence of a longer-term oil- supply shock suggests the price spike could be short-lived. Consumers will take a hit, but the broader economy should avoid a double-dip recession.

2011-02-25 Worry ... Friend or Foe? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Interest rates have moved higher, inflation concerns are growing, debt issues remain and global tensions are heightened. All valid concerns, but in our opinion not enough to derail stocks—although they could potentially in the future. Violence in the Middle East and North Africa is creating tension in global markets, but there are other concerns for emerging markets as well. Europe is becoming a bifurcated situation, with investors distinguishing between those with debt issues and those without.

2011-02-22 Stop Wasting Time and Money on Client Communication by Dan Richards (Article)

The world has changed in all kinds of ways. What worked in terms of client communication as recently as five years ago doesn't work nearly as well today. As a result, you need to fundamentally change how you communicate with clients.

2011-02-22 Profit Margin Squeeze and Inflation Risk by Doug Short of Doug Short

At present, in light of the unemployment rate and the ongoing demographic shift, the surge in commodity prices probably poses more risk of margin squeeze than run-away inflation. Some degree of cost-push inflation may be a near-term risk, but the demand-pull inflation we saw in the 1970s is difficult to evision in the US economy of this decade.

2011-02-21 Inflation or Deflation? Or is it Global Weimar? by Christopher Whalen of Institutional Risk Analyst

As we've noted in recent missives for The IRA Advisory Service, the visible volume of business flowing through the bank consumer channel seems to be receding or maintaining low levels. The commercial channel at most banks we hear from is still running at 1/3 to 1/2 of pre-2008 levels in terms of new originations and demand for credit. This is why when clients ask us about whether we worry more about inflation or deflation, our answer is "both." The chief worry bead remains revenue flowing through banks, housing and the US economy.

2011-02-19 Viewing Chairman Bernanke’s Remarks Through the Lens of Emerging Economies by Mohamed A. El-Erian of PIMCO

Bernanke's comments will raise eyebrows among policymakers in emerging economies. His remarks highlight persistent differences in analysis that complicate policy discussions. International cooperation will not materialize unless advanced and emerging economies converge on a common analysis of the key issues. My hope is that the G-20 meeting will take an important step in this regard, and do so by recognizing that there is more than one perspective to today’s global challenges. I fear, however, that this may not materialize as yet.

2011-02-19 A Random Walk Around the Frontlines by John Mauldin of Millennium Wave Advisors

Today we do a Random Walk Around the Frontlines, surveying what’s going on in the world. The US economy continues to improve in fits and starts. Inflation for the last six months has risen rather smartly. And for the last three months inflation on an annualized basis is running over 3%. The recent drop in the unemployment rate was entirely due to rather dramatic drops in what is known as the participation rate - fewer people looking for jobs. The Fed needs to end its program of quantitative easing.

2011-02-15 Food Chain: Do Spiking Food Prices Warn of Generalized Inflation? by Liz Ann Sonders of Charles Schwab

Food inflation has heated up and has incited global unrest. But for now, it's unlikely to become a monetary phenomenon. Investors should expect geopolitical risk to stay elevated in 2011, with implications for emerging markets performance.

2011-02-10 Outlook 2011 by Bill Smead of Smead Capital Management

The year 2010 took us on quite a ride and ultimately delivered acceptable returns in both the US stock and bond markets. Our returns were commensurate with the index, but did so without exposing our clients to what we consider the primary long term risks that exist today. Those two primary risks we see in 2011 involve bonds and China.

2011-02-01 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 Investors, Zombie Banks and the Valuation Gap by Christopher Whalen of Institutional Risk Analyst

Until the US government summons the courage to impose the same discipline on Bank of America, JPM and the other zombie money center banks as was applied to Western United and First Community banks, there will be no recovery in the US economy or in the housing sector -- nor in the political currency of Washington politicians. Credibility is ultimately the biggest valuation gap of all. Barack Obama's shortfall when it comes to public policy regarding the economy and financial institutions is a mile wide.

2011-01-31 Investment Commentary by Bob Doll of BlackRock Investment Management

At present, most investors appear to have increased their expectations for global growth and for growth levels in the United States. The words “double dip” have virtually vanished from investors’ vocabularies and while we agree with the generally optimistic tenor of the conversation, we are also somewhat uneasy about the positive shift in sentiment and growing sense of complacency. As last week’s events remind us, there are a number of risks to be wary of, including one we have not yet mentioned — monetary tightening in emerging markets.

2011-01-28 The Fed Sticks to the Status Quo by Liz Ann Sonders of Charles Schwab

The Fed announced no changes to its interest rate and quantitative easing round two (QE2) policies. There were no dissenters, with two new voting members changing their tune about QE2. The risk is growing that the Fed will stay easy too long, which could have implications for bond yields (and bond investors).

2011-01-28 Growth Investing with a Distinct Perspective by Aziz Hamzaogullari of Loomis Sayles

In this paper we outline the distinct elements of our process and philosophy to show how our Large Cap Growth discipline takes the traditional definition of a growth strategy and seeks to infuse it with a quality and valuation focus. These preferences play out in our focus on finding companies with sustainable cash-flow growth and profitability as well as intrinsic value. We believe this helps us exploit opportunities offered by growth companies while tempering the return volatility often associated with growth investing. Our consistent long-term approach has generated a high-growth portfolio.

2011-01-26 Set the Bar High by Vitaliy Katsenelson of Investment Management Associates

The world today is riddled with unique economic, political, and demographic risks. Finding attractively priced assets that will perform well in spite of these challenges is excruciatingly difficult. For investors, though, one segment of the market – the highest-quality stocks – still offers attractive risk-adjusted returns.

2011-01-24 Currency Wars: View From Beijing by Douglas Clark Johnson of Codexa Capital

Any belief in Washington that the Chinese will allow the yuan to appreciate meaningfully beyond their pre-determined framework belies a certain naivete, in our view. First, of course, is the ancient Chinese stance that any such directives constitute meddling in internal affairs. We see two overriding themes that provide more contemporary context for Chinese economic decision-making: civil stability and social security.

2011-01-22 Together at Last! by Stephen J. Taddie of Stellar Capital Management

Many people get lost when economists start talking about monetary and fiscal policy. By definition, fiscal policy is the use of government expenditure and revenue collection to influence the economy through borrowing, spending and taxation. Monetary policy is the process by which the monetary authority of a country (the Federal Reserve, or “Fed”, in the U.S.) controls the money supply in that economy through targeting interest rates or buying and selling securities from its portfolio. In the end, the two policies are just two different tools used to manage an economy.

2011-01-22 The Unsustainable Meets the Irresistible by John Mauldin of Millennium Wave Advisors

States are the largest component of US GDP, and states' revenues have declined 10% from their peak. On top of that, federal stimulus support for states is running out. Congress should allow states to declare bankruptcy and force unions to come to the bargaining table. The US is on an unsustainable path. Absent very serious fiscal remedies, long before we get to 2019 the bond markets will have taken away our ability to finance our debt at low rates.

2011-01-18 Richard Bernstein: The Antidote to Pessimism by Robert Huebscher (Article)

For an antidote to the bearish sentiment coming from David Rosenberg, look at Richard Bernstein. In contrast to Rosenberg's vision of Japan's lost decade, Bernstein expects the S&P to outperform emerging markets, at least in the near term.

2011-01-18 Equity Investment Outlook by Team of Osterweis Capital Management

During the fourth quarter, the stock market staged a strong rally, reflecting both growing evidence of a sustained economic recovery and the reversal (thanks to the Republican victory in November) of the seriously anti-business tone in Washington. These two factors enabled investors to begin thinking not just of a recovery from the recent crisis and recession, but of a more sustainable and enduring expansion. As a result, they were able to bet on a longer stream of favorable corporate earnings.

2011-01-15 Further Fuel? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Stocks may be vulnerable to a near-term pullback thanks to elevated sentiment, and earnings season could provide an impetus for some profit taking. The economy appears to be strengthening and we remain optimistic. Despite signs of growth, the Fed seems insistent on letting QE2 play out, pointing to continued high unemployment and housing. The new congress also has to deal with these issues, while attempting to pare deficit spending. International exposure is important, but we recommend taking some profits and rebalancing if your emerging-market exposure gets above your target allocation.

2011-01-12 Tolerable Accuracy by Christian Thwaites of Sentinel Investments

It paid to be practical in 2010. We started the year with relief that we averted catastrophe but were dimly aware it would be tough. How could it not be? Financial markets were in disrepair and the economy looked like it had only just made it through a re-stocking cycle. All other parts of the economy looked down for the count. But in the end, despite euro sovereign emergencies, deflationary fears and a phony currency war, both the real economy and financial assets had a strong year.

2011-01-11 Tactical Asset Allocation and Market Timing: What's the Difference? by Nancy Opiela (Article)

Why is it that the industry dismisses significant changes to portfolio allocations as "market timing" transactions but embraces the subtler "tactical shifts" many advisors are making in the current, transitional market? As advisors debate the nuances of that question, the more relevant question may be: How would you respond if a client asked you to explain the difference between market timing and tactical asset allocation?

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.

2011-01-07 Will The Tea Party Congress Bring Recovery? by John Browne of Euro Pacific Capital

If the Republicans make good on their campaign promises, we will see cuts in government spending and an end to fiscal stimulus. Given that short-term stock market performance is very much dependent on such government assistance, the current rally is hard to fathom. Meanwhile, gold and silver have experienced a counterintuitive correction (although to be honest, pundits are making much more of this 4% pullback than the size of the move merits). Could it be that the markets now believe that fiscal restraint in Washington is the best pathway to growth?

2011-01-04 The Coming Decade of Sideways Markets by Robert Huebscher (Article)

'We are in the middle of a sideways market, and we still have another decade to go,' says Vitality Katsenelson. In this interview, Katsenelson shares his insights on the decade ahead and the many factors that may keep China from leading us out of the recession.

2010-12-31 What to Do with Pakistan? by Douglas Clark Johnson of Codexa Capital

Pakistan is not for the faint-hearted. But there are material opportunities in the oil and gas, natural resources, textile, and agricultural sectors, given the decline in asset prices seen over the past two years. Investors in Pakistani shares will likely see validation of their commitments if foreign direct inflows improve as we expect over the year ahead. Operating somewhat below the radar of Western economic analysts, both the Saudis and the Chinese are set to lead the charge in project commitments, especially if progress is made on addressing political extremism.

2010-12-31 2011: A Look Ahead by Bob Doll of BlackRock

As a way of discussing our economic and market views for the coming year, we present our 10 predictions for 2011: 1. US growth accelerates as US real GDP reaches a new all-time high. 2. The US economy creates two to three million jobs in 2011 as the unemployment rate falls to 9%. 3. US stocks experience a third year of double-digit percentage returns for the first time in more than a decade as earnings reach a new all-time high. 4. Stocks outperform bonds and cash. 5. The US stock market outperforms the MSCI World Index.

2010-12-31 Pessimism was not the Winning Bet in 2010 by David Edwards of Heron Financial Group

The easy money has been made, particularly in certain economically sensitive sectors. Returns in bonds could be flat or even negative over the next several years. We’ve substantially increased our exposure to boring old consumer staples, utilities, REITs and telecomm stocks, which offer dividend yields starting at 4% and ranging up to 12%. We expect US GDP growth to range between 2-3% over the next 4 quarters. In that environment, we would forecast gains in the S&P 500 of 8-10%, but now we wonder whether December’s 6.9% gain has already accounted for most of 2011’s stock market returns.

2010-12-23 No, Krugman, You're Eating America Alive by Neeraj Chaudhary of Euro Pacific Capital

Here we go again. This week, Paul Krugman, the 2008 Nobel Prize winner in economics and the go-to guy for progressives who need a morale boost, launched another misguided attack on Austrian School economists. From his New York Times soapbox, he referred to the free-market Austrian “hard money” philosophy as a “zombie idea” that is inexplicably eating the brains of the voting public.

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.

2010-12-14 US More Likely to Learn From (Than Repeat) Japan's Mistakes by Bob Doll (Article)

In this report, Bob Doll, BlackRock's Chief Equity Strategist for Fundamental Equities and head of the US Large Cap Series equity team, homes in on some of the most striking points of comparison between the two countries' situations and experiences to support the contention that the United States will avoid Japan's fate.

2010-12-08 Two Flawed Currencies by John Browne of Euro Pacific Capital

Despite America’s economic problems, the US dollar has maintained its respected status the world over – and has even managed to maintain value in comparison to other currencies. The dollar’s charmed life stands in strong contrast to the euro, which is currently suffering from its internal flaws and the Europeans' unfortunate recognition of reality.

2010-12-07 Weekly Investment Commentary by Bob Doll of BlackRock

We think it is important that the correlations among asset classes have continued to fall, an indicator that investors are beginning to seek value across different investment areas rather than all herding to the same investments and limiting profit potential. Even within equities, it seems that investors are demonstrating healthy behavior by becoming discriminating and breaking out of patterns. Investors seem to be moving away from responding to increased macro risks by selling and lessened risks by buying — this is a positive development.

2010-12-07 \'Cheer up. This is not goodbye. It\'s just that I won\'t ever see you again.\' by Liam Molloy and Bethany Carlson of Galway Investment Strategy

The Canadian Leslie Nielsen was a great example of the most American of qualities, the ability to re-invent and innovate. That same ability to re-invent and innovate will be critical to America’s economic future. We have headwinds working against innovation, from insufficient visas to attract the best global talent, to a backlogged patent office, and R&D tax credit structures that are now falling behind other countries’. This plays to our historic strengths if we can once again re-invent our economy, this time into a productivity exporter rather than just an importing consumer.

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.

2010-12-04 Reframing A Case For High Yield Bonds by Tom Fahey of Loomis Sayles

Our contention is that high yield bonds are likely to continue to be a respectable store of value. We base this on their valuation profile and fixed income characteristics, which tend to stand out in the midst of a protracted economic recovery and ongoing deleveraging process that could have significant implications for economic growth and yield potential.

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.

2010-12-02 Q3 2010 Bank Ratings: Little Banks Improve, TBTF Zombies Rot by Christopher Whalen of Institutional Risk Analyst

The key thing to take away from the Q3 2010 FDIC results is the continued volatility in bank financial statements as evidenced by the movement among the different ratings strata. This type of volatility in performance is normal among banks and non-banks alike, but the current period of credit and operational stress is making these distinctions even more pronounced. When you see this type of instability in bank financial disclosure, it suggests very strongly that these depositories are under severe operational stress.

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.

2010-11-12 Down the Home Stretch by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic data has shown signs of strengthening. We believe we could be emerging from the soft patch and that stronger-than-expected growth could be in the offing. The elections are done and the Federal Reserve made its move, but the question remains as to whether much-needed confidence returns to businesses. Additionally, housing remains a problem that may not be helped substantially by either event. Competitive currency devaluations are dominating the international conversation, while investors are flocking to emerging markets, making us a bit skittish in the near term.

2010-11-06 Equity Valuation, Earnings and Relative Yield: A Compelling Point in the Cycle? by Richard Skaggs of Loomis Sayles

Large-cap US stocks, as represented by the Dow Jones Average, quadrupled in the 1980s and again in the 1990s. Given this historical perspective, the market’s long pause since 2000, accented by calamitous financial events, particularly in 2008, has left investors impatient and fearful. That said, investors would be wise not to wallow in this sentiment and overlook the long history of stocks returning to good form following lengthy periods of underperformance. The S&P 500 Index could be on the cusp of a positive long-term cycle based on its valuation, earnings and relative yield.

2010-11-05 Beware the Fed Tide by John Browne of Euro Pacific Capital

This week desperation became palpable at the Fed. In both the formulaic statement that accompanied its Federal Open Marked Committee policy decision and Chairman Ben Bernanke's unusual (and clumsy) Washington Post op-ed follow up, the guardians of our currency expressed grave disappointment at the slow pace of U.S. economic recovery and emphasized the continued threat of deflation. The Fed is now pledging to defeat this recession using any monetary means necessary. Unfortunately, their embrace threatens to smother our economy.

2010-11-05 Thoughts on Liquidity Traps by John Mauldin of Millennium Wave Advisors

Lacy Hunt writes that the Oct employment situation was dramatically weaker than the headline 159k increase in employment measures. The most distressing aspect is the loss of another 124K full-time jobs, bringing the 5-month loss to 1.1 million. John Hussman discusses liquidity traps, where investors prefer cash to debt (because of low interest rates) and the central bank loses control. Fiscal policy, not monetary policy, impacts economic growth and inflation - and the proper fiscal measures, such as infrastructure spending, may be the best hope for growth.

2010-11-04 U.S. Challenges and Hope by Charles and Louis Vincent Gave, Anatole Kaletsky of GaveKal

Why, in spite of record profitability and very strong cash flows, are U.S. firms not hiring more? One very simple explanation is the dramatic drop in the value of the assets of U.S. corporations. The net worth of U.S. non-farm, non-financial corporations stood at $16 trillion in 2Q07. By the last quarter of 2009, this net worth had dropped to $12.3 trillion. Now that the net-worth of U.S. corporations is expanding again, however, U.S. unemployment could improve rapidly given supportive fiscal and regulatory policy.

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.

2010-10-30 Schwab Market Perspective: So Now What? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

The Federal Reserve and upcoming elections are in sharp focus and results and actions in these two areas could determine whether the momentum seen since September can continue. Earnings season was better than expected and the market reacted as such. But confidence remains a major issue, with brewing mortgage-related problems and continued uncertainty around tax policy causing consternation. Debt remains a major issue that's just now being addressed and protectionism still threatens economic expansion. China remains a bright spot for global growth.

2010-10-29 Henry Paulson: An Inside Look at the Financial Crisis by Robert Huebscher (Article)

Former Treasury Secretary Henry Paulson candidly spoke about the details of his efforts to rescue the economy during the financial crisis, and offered some optimistic thoughts about the potential for growth in the US economy in the face of new financial regulation.

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 The One-Sided Compromise by John Browne of Euro Pacific Capital

Last weekend at the meeting of G-20 finance ministers China agreed to 'look into' a revaluation of the yuan and the management of trade surpluses in return for accepting America's continued dollar debasement. They also agreed to an international self-policing regime to curb currency manipulation. Secretary Geithner’s 'victory' at the G-20, however, was a Pyrrhic one. China will now become the third-largest shareholder in the IMF, and developing economies will get a six percent larger voting share.

2010-10-29 Keep Your Head Above Dollar by Peter Schiff of Euro Pacific Capital

The intent of QE2 is to lower interest rates to promote job growth and avoid the growing threat of deflation. The very idea that the economy is weak because interest rates are too high, however, is laughable. Deflation is the market's cure for asset bubbles that have recently burst, and any attempt to avert it will only weaken the economy further. What we need now is to make hard choices, not engage in more easing - to deleverage, not borrow more.

2010-10-29 Be Careful What You Wish For by John Mauldin of Millennium Wave Advisors

Q3 GDP numbers were unimpressive, and it would not surprise Mauldin to see GDP growth be closer to 1% in the 4th quarter, unless we start to see evidence of more inventory building. That is not good for jobs, personal income, tax collections needed to cover deficits at all levels, or consumer confidence. A further threat is posed by large numbers of people whose 99 weeks of unemployment will soon expire. Republicans face big challenges once they gain power, and Mauldin says a VAT is the only way to reduce budget deficits.

2010-10-22 What Lack of Innovation? by Team of Bespoke Investment Group

In a recent address at the home of Google executive Marissa Meyer, President Obama implied that there has been a lack of innovation in the American economy in recent years. As Bespoke illustrates in a chart provided, however, the number of U.S. patent applications granted has increased steadily each year since 2000, with the exception of 2005. In fact, many have argued that it has never been cheaper for someone with an idea to spread and develop it.

2010-10-22 Don't Fear the Euro by Michael Pento of Euro Pacific Capital

When the euro hit a low of $1.1917 against the US dollar on June 7th, 2010, the airwaves crackled with assertions that the European common currency, beset by Greek debt problems and intra-union discord, was destined to trade at parity with the greenback. They were wrong. Since then, the euro has risen over 17% against the dollar, hitting $1.3961 today. The current upswing, delivered courtesy of the Fed, has at least temporarily silenced the euro’s critics.

2010-10-21 Decoupling: Alive and Well by Neeraj Chaudhary of Euro Pacific Capital

When the global economic crisis began in 2008, many forecasters doubted that the world economy could return to growth without the U.S. consumer. Whether you are looking at ASEAN, OPEC or the EU, however, it is clear that decoupling is the order of the day; the world economy is rebuilding itself with China as its engine and hub. In the old days, it was said that when the United States sneezed, the rest of the world caught a cold. This time, they might just excuse themselves and move to the next car.

2010-10-18 Is Inflation Gone Today and Here Tomorrow? by Chris Maxey of Fortigent

Inflation is arguably not an issue for the time being, but with the Fed prepared to unleash trillions in additional liquidity, the outlook for inflation is more uncertain than ever. While yields on government bonds with a maturity between 2- and 10-years are flattening, the long end of the yield curve is widening dramatically. Long-term bonds exhibit the most sensitivity to interest rates and inflation, so this may be the first indication that inflation will pose a serious threat down the road. Investors and consumers alike should tread very, very carefully.

2010-10-15 Q310 Portfolio Commentary by Jay Compson of Absolute Investment Advisors

Asset prices appear to be solely supported by the potential effects of QE2. Global credit markets, where liquidity could be highly strained given the large flows into bond funds and the hazardous reach for yield, are particularly disconcerting. While the Fed could successfully create asset inflation in the short term, the asymmetry of these policy efforts is to the downside, and patience should be better rewarded. Additionally, a dollar rally is quite possible given current sentiment, and could create much volatility in both global equity and credit markets.

2010-10-11 Quantitative Easing Prospects Lift Stocks by Bob Doll of BlackRock

Despite the fact that Treasury yields have moved lower in recent weeks, the Fed's actions will help reduce deflationary risks and will help global economic growth. Stock markets and commodity prices have been pricing in inflation; those markets have it right in that central banks will do what is necessary to fight deflationary forces. The intentions of central bankers are quite clear at present, and this appears to be a case where the old saying 'don't fight the Fed' seems prudent advice: From an investment perspective, risk assets should continue to grind higher.

2010-10-11 No More Steroids Needed by Brian S. Wesbury and Robert Stein of First Trust Advisors

Three things are lifting the U.S. economy: productivity, easy money and the natural economic healing process. Two things holding back the economy: massive increases in government spending and heavy-handed government interference in economic activity. The U.S. could grow faster if it stopped spending and interfering so much, but it is growing nonetheless.

2010-10-08 The Hail Mary by Peter Schiff of Euro Pacific Capital

The Fed must raise interest rates aggressively, shrink its bloated balance sheet, and allow the real recession to finally run its course. It will be much more painful now than it would have been in 2008, but at least this time the pain will end and real recovery will take hold. By forcing the federal and state governments to slash spending, sound monetary policy will allow market forces to rebuild a solid foundation upon which future prosperity may be built.

2010-10-07 Risk On, Risk Off by Cliff W. Draughn of Excelsia Investment Advisors

The huge drop in bond yields is the driving force in the equity markets and the decline of the dollar. The old adage 'don't fight the Fed' still applies, and Excelsia's allocations will be shifted more towards equities and alternatives as interest rates get driven lower and lower. Emerging market debt, commodity and natural resource companies, gold, and large-cap stocks all offer favorable prospects.

2010-10-05 Do Past 10-Year Returns Forecast Future 10-Year Returns? by Bill Hester of Hussman Funds

The argument that above-average long-term returns typically follow periods of poor past long-term returns is not wrong, it's just incomplete.

2010-09-30 Why David Tepper Is Only Half Right by Michael Pento of Euro Pacific Capital

Once domestic bond investors regain consciousness -and they will most likely do so in concert with foreign holders of U.S. debt and currency - a debt and dollar crisis will emerge. Then the only buyer of U.S. Treasury debt will be the Federal Reserve. An economy can't persist for very long by buying its own debt with printed money. The result will be a crumbling currency and soaring interest rates, especially on the long end of the yield curve. When rates rise despite the Fed's efforts to keep them down, that's game over for the 'recovery.'

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.

2010-09-27 Weekly Investment Commentary by Bob Doll of BlackRock

The macroeconomic backdrop seems improved compared to one month ago. Economic data has moved from 'bad' to 'less bad' (if not to 'good'), and the rhetoric from Washington, D.C. has recently focused on some pro-business and tax policies. Optimism is growing that with the upcoming midterm elections, investors may be seeing some more equity-friendly policies in the works. BlackRock remains optimistic that the economy will avoid a double-dip recession, and stocks should continue to grind higher.

2010-09-25 Pushing on a String by John Mauldin of Millennium Wave Advisors

The Fed will move forward with aggressive quantitative easing (QE), unless economic growth reaches 1.5 percent to 2.0 percent. The Fed's QE efforts thus far have been ineffective, because funds remain on banks' balance sheets. Future efforts would likely lower interest rates or possibly devalue the dollar, but it is unlikely it will stimulate growth.

2010-09-16 The Woody Hayes Economy by Team of Applied Finance Group

By preventing additional redistribution policies, the split government that will likely emerge from the November U.S. midterm elections will probably loosen some purse strings to invest, hire and grow. However, we probably will not see any policies that will meaningfully change the overall economic condition or the outlook for equities as an investment. The next two years will thus most likely bring a Woody Hayes economy - 'Three yards and cloud of dust'- meaning we will have some renewed economic activity, but not the sustained, robust growth to be expected coming out of such a long slump.

2010-09-14 Autumn Leaves... And Election Cycles by Liz Ann Sonders of Charles Schwab

The passion is palpable about the upcoming November 2 midterm elections, and more and more market watchers are starting to study the historical election cycle to see if it provides any clues as to how stocks are likely to behave in the near term. It's also September, historically the weakest month of the year for stocks, and this year it's following a bruising August. But here's a word of caution for those relying heavily on past performance trends: In five of the past six years, the market was actually up in September.

2010-09-13 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

Last week's trading was heavily influenced by the so-called better-than-expected employment report for the month of August. The market had really discounted a very bad outcome and so when that scenario failed to materialize, the stock market was prepared to rally. Thus, the month of September has already reversed much of the damage that was done during the month before. Should Congress vote to extend cuts for all taxpayers for the next two years, then the rally just might have the justification to continue.

2010-09-10 Municipal Bond Market August 2010 Q&A by Andrew Clinton of Clinton Investment Management

In their quarterly commentary, Clinton Investment Management answers questions regarding municipal bond market conditions. As the U.S. economy stabilizes, they argue, higher interest rates will likely follow. That is not to say, however, that investors should avoid fixed income, let alone municipal bonds. As an asset class, fixed income, and tax-exempt bonds in particular, have proven to be a stabilizing force in asset allocations during what has arguably been one of the most challenging three-year periods in financial market history.

2010-09-07 Mr. Market? by Jeffrey Saut of Raymond James Equity Research

There have been two 90 percent upside days in the past few weeks combined with new highs in Lowry's buying power index and new reaction lows in the selling pressure index. Since 1940 there has never been an instance when such a configuration existed five months into a bear trend; and note that we are now five months from the April highs. Additionally, over the last 16 midterm elections the stock market has never made a new reaction low post-election day. If stocks rally during the week after Labor Day, the odds that the rally will continue are high.

2010-09-02 Beggar Thy Neighbor by Niels C. Jensen, Nick Rees and Patricia Ward of Absolute Return Partners

Austerity hurts domestic economic growth, and all those countries facing harsh austerity programs over the next several years will thus realize that the only way out of the current predicament is through higher exports and/or lower imports. We cannot all export our way out of our problems, however. Somebody will have to do the imports. Lower economic activity will again lead to lower tax revenues for the public sector; it is a very unfortunate and rather vicious spiral which is also very deflationary.

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?

2010-08-23 Weekly Investment Commentary by Bob Doll of BlackRock

The sharp pullback in bond yields throughout the past couple of weeks suggests that fixed income markets are discounting a return to recession conditions. In contrast, the relative resilience of the stock market suggests that equities are discounting a milder slowdown in the pace of recovery. BlackRock believes that fixed income markets are overly pessimistic, but acknowledges that it will take some time to work all of this out, meaning that stocks are likely to remain in a trading range.

2010-08-23 We Knew Reagan... And He's No Reagan by Brian S. Wesbury and Robert Stein of First Trust Advisors

No matter how many of Obama's economists say that stimulus has a positive multiplier, it's simply not true. Stimulus spending does not stimulate, is de-stimulates, because it takes resources from growing sectors of the economy and pushes them to shrinking sectors of the economy. It taxes and borrows from good business models to support bad business models. It’s simple math. The larger the government's share of GDP, the higher the unemployment rate.

2010-08-23 Markets Are Pricing in the 'New Normal' by Charles Gave of GaveKal

Either the upcoming U.S. elections, in a repeat of 1994, will bring about a Congress able to reduce the pace of government spending, thus triggering a massive sell-off in government bonds and a significant rally in equity markets, or the expansion of the U.S. government will continue, in which case investors in U.S. government bond markets will likely thrive in a repeat of what happened in Japan over the past two decades. You can guess which outcome the biggest fixed income investment houses are rooting for.

2010-08-16 Politics and Pessimists by Brian S. Wesbury and Robert Stein of First Trust Advisors

The forces underlying economic growth have turned positive. At the same time, the Fed is accommodative and unlikely to change its stance. These two factors alone will prove the pessimists wrong. In addition, the political winds are howling toward a divided government. The odds of putting off a tax hike in 2011, and possibly reversing healthcare legislation, cannot be ruled out. Add this to the mix, and the future could bring a sharp boost to the upside that makes short-sellers very uncomfortable.

2010-08-13 No Exit - Stage Left or Right by Peter Schiff of Euro Pacific Capital

The coming doses of quantitative easing from the Federal Reserve will finally spark adverse reactions, first in the dollar and later in the bond market. When a falling dollar forces consumer prices and long-term interest rates to rise, the Fed's actions will be rendered impotent. The Open Markets Committee will have to make a horrific choice: fight inflation by tightening policy into a weakening economy, or fight recession by allowing inflation to burn out of control. It's obvious that they will choose inflation, all the while pretending that it doesn't exist.

2010-08-09 Please - No More Stimulus by Brian S. Wesbury and Robert Stein of First Trust Advisors

Canada has been cutting spending and tax rates for the past decade or so. If Keynesians are right, the U.S. economy should be outperforming the Canadian economy now and Canada should have done better back in the 1980s and 1990s, right? Wrong. It's the opposite. The unemployment rate in Canada is currently 8 percent and has been below the U.S. level since October 2008, when government spending started to go crazy. The lesson is clear: Less spending, less taxing and more freedom work. Let's not stimulate anymore. The U.S. economy just can't take it.

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.

2010-08-04 Back to Zero: Deflation Fears Emerge by Liz Ann Sonders of Charles Schwab

The current high correlation between stocks and bonds has only two historical precedents - periods when deflation was a reality, or when it was a fear. Low inflation is the reality today, but worries about deflation have still wreaked some havoc on markets. The latest rally may be based on a combination of waning deflation risk and the lessened likelihood of a double-dip recession.

2010-08-02 Weekly Investment Commentary by Bob Doll of BlackRock

Market volatility has remained elevated over the past several months as investors remain uncertain about the future direction of global and U.S. economic growth. There is a lack of conviction and confidence on the part of businesses, consumers and investors, but as long as the economy does not slide back into recession, corporations should be able to continue to grow their earnings. A combination of positive (if slow) economic growth, solid corporate earnings and attractive equity market valuations should be enough to restore some positive momentum in equity markets over time.

2010-07-26 Weekly Investment Commentary by Bob Doll of BlackRock

A sustained, albeit subpar, economic recovery is in the cards. Neither critical equity sectors nor credit spreads are signaling that the recovery has been derailed, which suggests that the cyclical recovery in corporate profits is not over. Still, the US economy continues to face significant headwinds, giving us reason to believe that the move higher in equity and other risk asset prices will likely be a long, hard grind characterized by continued volatility.

2010-07-19 'New Normal' Nowhere in Sight by Brian S. Wesbury and Robert Stein of First Trust Advisors

With GDP scheduled for release next week, Brian Wesbury and Robert Stein's estimate for annualized second quarter real GDP growth is 3.5 percent. While this is a significant reduction from their 5.5 percent forecast made in March, it is still higher than what the 'new normal' camp is predicting. Productivity growth is strong, monetary policy is (and will continue to be) easy, inventories are razor-thin, and corporate profits are growing rapidly. For the next four quarters, ending in mid-2011, Wesbury and Stein thus again anticipate growth at around a 4 percent rate.

2010-07-16 Government Policies Pushing Towards Depression by John Browne of Euro Pacific Capital

As leaders around the world look to tighten the reins on out of control spending, President Obama and his Democratic supporters in Congress believe that their stimulus actions have succeeded and should be redoubled. Armed with nothing more than faith in government and a belief that spending is both a means and an end, it appears that the U.S. stimulus policy will continue. The net result of these efforts will not be a more vibrant economy, but the perpetuation of fear and confusion in the business community and the continuing expansion of deficits that will lead inevitably to higher taxes.

2010-07-12 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The market looks likely to be in a trading range until the fall as the excellent earnings are offset by the political uncertainties and the threat of one last attempt to micro-manage our $14 trillion economy. For now, the bulls have the upper hand after a lousy May and June. As a result the earnings season, which really gets underway this week, could serve to catapult stock prices higher by Labor Day especially given the thin summer trading that we have observed.

2010-07-10 It's More Than Just Birth-Death by John Mauldin of Millennium Wave Advisors

Mauldin examines the methodology used by the BLS when it calculates unemployment. He reviews claims by Jeff Miller of New Arc (which we published on Thursday) that distortions caused by unreported data are greater than those of the birth/death model. Mauldin also discusses a conversation he had with Mohammed El-Erian, who said that unemployment may now be a leading (instead of lagging) indicator of economic growth.

2010-07-08 Update: 10 Predictions for 2010 by Bob Doll of BlackRock

Over the long term, policymakers still have a difficult job to do as they work to unwind the massive amount of stimulus that had been injected into the system without causing either inflation issues or renewed deflation threats. Over the short term, the broad macro environment will continue to be buffeted by financial and economic uncertainty that will keep volatility levels elevated. That said, the odds for a double-dip recession are low. As long as a renewed economic contraction is avoided, equity prices should grind higher over time.

2010-07-07 Get Real - This is Not 1932 by Brian S. Wesbury and Robert Stein of First Trust Advisors

Want to be invited to 'A' list parties? Want people to think you are smart? Then don't smile and don't say anything positive - especially about the economy. Pessimism has become so pervasive that people will believe just about anything, as long as it is negative. The truth is that the U.S. is creating jobs, even if the rate of growth is slower than in previous recoveries. Profits are still rising. In fact, analysts are still raising earnings estimates. The market has so much negativity priced in that it is cheap on just about any basis.

2010-06-28 Investment Commentary by Bob Doll of BlackRock

We entered 2010 expecting a modest cyclical recovery countered by the structural problems that faced most of the developed world. For the first part of the year, the cyclical recovery did dominate, but in recent months, structural problems (especially those in Europe) began to win out and risk assets have been struggling. Now at the mid-year point, we thought it would be a good opportunity to take a look back at the predictions we made at the beginning of the year to see where we stand.

2010-06-23 Deconstructing the Great Inflation Myth by Jason Doiron of Sentinel Investments

Inflation does not seem to be a serious risk, at least in the near term. Significant decreases in the velocity of money are offsetting the impact of any increase in the money supply as a result of fiscal and monetary stimulus. Capacity utilization remains at about 74 percent of potential output. And about 17 percent of workers are still either unemployed or underemployed.

2010-06-22 China Rising by Brian S. Wesbury and Robert Stein of First Trust Advisors

China just decided it will once again let its currency - the yuan - get stronger against the U.S. dollar. Yuan appreciation will do two things. First, it will lower Chinese inflation relative to U.S. inflation. Second, it will raise the living standards of Chinese citizens. Where previously the Chinese government might have wanted the peg in order to encourage export growth, now the political calculus is starting to favor expanding the purchasing power of its workers. This is a sign of maturity for both the economy and Chinese policymakers.

2010-06-18 Chinese Workers Force the Issue by Neeraj Chaudhary of Euro Pacific Capital

Chinese factory workers and other laborers across the country are going on strike, thus defying the orders of their government-run unions and risking dismissal by their employers. The Chinese government must find a way to nip their labor issues in the bud. The best policy approach would involve yuan revaluation. By reducing the rate of inflation of the Chinese yuan, the purchasing power of the yuan will increase, thereby allowing Chinese workers to better enjoy the fruits of their labor. As living standards rise, worker unrest will subside, and the impetus to strike will vanish.

2010-06-17 Consumer Metrics Institute's Growth Index by Doug Short of Doug Short

Doug Short provides charts comparing the Consumer Metrics Institute's growth index with gross domestic product and the S&P 500 since 2005. Thus far the growth index has been an effective leading indicator of GDP. As such, a double-dip recession appears to be a distinct possibility amidst the end of the various government stimulus efforts, the potential contagion of the financial stress in Europe, the ongoing environmental catastrophe in the Gulf of Mexico and another round of consumer belt-tightening.

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

Views on the S&P 500 sectors.

2010-06-11 The Frog in the Frying Pan by John Mauldin of Millennium Wave Advisors

Jonathan Tepper of Variant Perception, a research firm in London, writes this column as a guest contribution. He says that Mauldin's Muddle Through Economy is the product of several major structural breaks in the economy, which have important implications for growth, jobs, and the timing of a future recession: lower GDP growth will lead to more frequent recessions and higher economic volatility; high unemployment rates will be the norm, especially for less educated workers.

2010-06-07 Decoupling by John Petrides (Article)

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

2010-06-07 China's Housing Bubble, To Be or Not To Be? by Chris Maxey of Fortigent

Market forecasters are worried about the state of the Chinese real estate market, with one publication after another declaring that an asset bubble is only moments away from popping. Clearly the recovery in the Chinese real estate market is impressive, perhaps curiously so, but the dynamics of the Chinese market indicate that an asset bubble is nowhere to be found…for now. From an affordability standpoint, the price-to-income index is on the rise, but well below the levels seen in the U.S., the UK and even India.

2010-06-04 The Parable of the Lifeboat by David Edwards of Heron Financial Group

Many investors are hesitant to add to their stock allocations due to negative returns over the past decade. The problem is that alternative investments have performed just as badly, if not worse. Ten thousand appears to be a hard floor for the Dow, despite investors' fears. Markets are thinner and more easily manipulated during the summer time, but July earnings reports should paint a rosy picture. NASDAQ is implementing expanded 'circuit breakers' to sideline stocks with unusually large moves - anything to reduce volatility and get investors interested in stocks again.

2010-06-04 Key Indicators of a New Depression by Neeraj Chaudhary of Euro Pacific Capital

During the Great Depression, the U.S. was on the gold standard like everyone else, which forced the country to live within its means. Unfortunately, because of the responses of the Obama Administration and the Federal Reserve, this recession could develop into something far more devastating than its predecessor: a hyperinflationary depression. As bad as the current downturn has been, inflation would make it immeasurably worse. It would require an honest accounting of the problems we face today to avert the disaster we see coming tomorrow.

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 Comment: Clifford Rossi on the Need for the Office of Financial Research by Christopher Whalen of Institutional Risk Analyst

This commentary features a contribution by Clifford Rossi, managing director of the Center for Financial Policy at the Robert H. Smith School of Business, University of Maryland. Rossi writes in support of a proposal by Senator Chris Dodd to establish the Office of Financial Research, which would aggregate enterprise-wide views of risk at large financial firms. Critics say the OFR would represent an unwarranted breach of privacy. The new division was included in the Senate financial reform bill, but is in danger of being dropped during the final reconciliation process.

2010-05-17 Volatility on the Rise by Liz Ann Sonders of Charles Schwab

Volatility in stocks has increased during the past several weeks as investors have grappled with numerous global concerns. Is this the start of a longer-term problem or is it just a short-term phenomenon? Developments in the housing and job markets hold the key to further economic improvement. Meanwhile, the European debt crisis was addressed with a massive package, but long-term issues remain, and China's rapid growth rate could lead to overheating and inflation.

2010-05-10 The Technicals Were Ripe For a Correction... by Chris Maxey of Fortigent

Last week's sell-off clearly resulted from a buildup of tension in technical factors coupled with overriding concern about the unfolding debacle in Europe. Numerous signs were flashing the caution light prior to last week. On the other hand, even though the technical factors were ready for a breakdown, a majority of the economic releases from last week suggest the recovery is still in its infancy. Investors should brace for another volatile week following the announcement that Europe will ready nearly $1trillion to bolster its capital markets.

2010-05-10 Wall Street Dips, Main Street Turns the Corner by Brian S. Wesbury and Robert Stein of First Trust Advisors

We may never know exactly what caused last week's Wall Street drop, but the lack of an uptick rule didn't help. Nonetheless, at the bottom on Thursday, the market experienced its first true 10 percent correction in 14 months. Short-sellers were basically gleeful and many politically motivated pundits took the drop as a sign of economic trouble. This correction, however, came just when economic data took a very visible turn for the better. Friday's employment report provided a huge 'thumbs up' for the V-shaped recovery. The fundamentals of Main Street are improving.

2010-05-03 Do a Good Job: Interview With Senator Ernest Hollings by Christopher Whalen of Institutional Risk Analyst

This commentary features an interview with former senator Ernest Hollings, a Democrat from South Carolina. Hollings was elected to the Senate in 1966. He is a social liberal and a fiscal hawk who regularly puts his Senate colleagues to shame on issues such as Social Security and the budget, according to Institutional Risk Analyst. Hollings supports new limits on campaign donations in exchange for lower corporate taxes. He also supports a new Value Added Tax, as well as tariffs to protect domestic industries and prevent the offshore outsourcing of jobs.

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 Reconnecting Wall Street to Main Street by Hemant Kathuria of Euro Pacific Capital

What Wall Street calls 'liquidity,' Main Street calls 'inflation.' The only way to avoid the collapse of both Wall Street and Main Street is to 'reconnect' them through a new gold standard. Returning to the gold standard may involve a painful recession, as excesses are wrung out of the U.S. economy. It could be a long and difficult process. But only by restricting Wall Street's liquidity - Main Street's inflation - can we begin to restore the foundation that made the United States the greatest industrial power in the world.

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

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

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

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

2010-04-20 Letter to the Editor – The Interest Rate Debate by Various (Article)

As a Treasury bond bear of modest conviction, advisor Martin Weil read with interest Gluskin Sheff's David Rosenberg's piece in our April 12 issue. Though providing little data to support his thesis, Rosenberg makes a solid argument for why it is inflation, not supply and demand, that drives Treasury prices and yields. In taking this position, he pits himself against, among others, Jim Grant, with whom he has been carrying on a running debate.

2010-04-17 First, Let’s Kill the Angels by John Mauldin of Millennium Wave Advisors

Provisions in the Dodd financial reform bill will impede angel investing in new ventures. Those provisions are the 120-day waiting period following SEC filing and the increase in minimum wealth requirements for accredited investors. Separately, the problems that Goldman now faces are "the tip of the iceberg," and at least eight other banks will face similar problems.

2010-04-12 Is the Renmibi Merely A Distraction? by Chris Maxey of Fortigent

It may be convenient to assume that a revaluation of the Yuan would lead to a readjustment of the US trade balance, but it is more likely that production would merely shift to the country with the next lowest costs. Gains in Chinese imports in the early 90s came at the expense of imports from other countries. In addition, politicians fail to recognize that many manufacturers in the US import production inputs from China, and so a currency revaluation would directly affect their ability to remain competitive. Fortigent also comments on rising equity markets, and the week ahead.

2010-04-06 Liz Ann Sonders on the US Economic Recovery by Robert Huebscher (Article)

Liz Ann Sonders is Senior Vice President and Chief Investment Strategist at Charles Schwab & Co. In this interview, she discusses her positive outlook for the US economy, which she believes has been recovering since last summer.

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

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

2010-03-29 Weekly Commentary and Outlook by Tom McIntyre of McIntyre, Freedman & Flynn

The stock market shrugged off the passage of Obamacare and moved higher last week based on the resolution of the debt crises in Dubai and Greece, as well as definite signs that corporate profits remain strong. Both the Dow Jones Industrial Average and the NASDAQ Composite gained around 1 percent, even as Treasury yields started to move higher. This week's employment report should see gains of 200,000 jobs or more. While the impact will be overstated, job creation this large could change perceptions.

2010-03-22 Useful Frameworks For Investment Analysis by David Edwards of Heron Financial Group

The S&P 500 rallied in March to an 18 month high, but is still below pre-recession levels. The daily volatility of the stock market has declined to levels not seen since the summer of 2006. The overall stock market, however, is still slightly overvalued. Corporate earnings and Federal Reserve policy over the next year will determine whether current levels are sustainable, and whether the U.S. avoids another double-dip recession. Sound frameworks for investment analysis will be crucial.

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.

2010-03-04 The Retirement Lottery by Niels C. Jensen of Absolute Return Partners

Aggressive advertising feeds us the fallacy that as long as we invest for the long term, equities will always provide us with solid returns. This may be true if your investment horizon is 30 or 40 years, but most people do not start saving for retirement until they are in their 40s. Hundreds of millions of baby boomers are now chasing whatever returns they can to ensure that they can retire in relative comfort. Jensen also examines the relationship between net private savings, foreign capital inflows and government debt.

2010-02-19 Will Productivity Gains Sustain US Economic Recovery if Employment Remains Subdued? by Joseph G. Carson of Alliance Bernstein

Productivity gains have exceeded real GDP growth by 3 percentage points during the economic recovery as companies have slashed payrolls and other costs. These productivity gains are critical to overall economic performance, including profitability and standard of living improvements, and will offset any risk of weak employment.

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 Is the Fed's Zero Interest Rate Policy Driving Global Deflation? by Christopher Whalen of Institutional Risk Analyst

Christopher Whalen of Institutional Risk Analytics says the Federal Reserve's zero interest rate policy may be driving global deflation by holding down asset values. He says the central bank should allow interest rates to rise so banks and other investors may earn positive returns on assets.

2010-02-16 Robert Shiller on Trills, Housing and Market Valuations by Dan Richards (Article)

Robert Shiller, a professor of economics at Yale University and co-creator of the Case-Shiller Housing Index, discusses several topics in this interview with Dan Richards, including his plan for governments to finance their debts by issuing "trills," a security representing a fractional claim on the country's GDP.

2010-02-10 Economic Inequality During Recessions by Jonathan Heathcote, Fabrizio Perri and Gianluca Violante of VoxEU

The unemployment rate has dominated economic headlines, but recessions raise numerous problems. This column warns that recessions raise earnings inequality and income inequality, absent mitigating government programs. The current recession has indeed raised such inequality, but consumption inequality has surprisingly declined.

2010-02-09 Trust, Illusion, Values and the Death of 'Common Sense' by David Edwards of Heron Financial Group

Heron Financial Group president David Edwards says the 6.9 percent decline in the S&P 500 since January 19 was a normal market correction, and he expects positive returns in the S&P by the end of the year. He proposes several regulatory reforms to discourage "negative sum" products and restore investor trust.

2010-02-06 A Bubble in Search of a Pin by John Mauldin of Millennium Wave Advisors

Mauldin covers three topics. He digs into the employment numbers and concludes that it is a "mixed bag" - the numbers of unemployed rose but the unemployment rate declined. Looking at the Reinhart-Rogoff book, he argues that Fed policy makers were at fault for failing to recognize the housing bubble. Last, he discusses Greece's fiscal problems in a historical context.

2010-02-02 Who will Pay for the Burlington Acquisition? by Vitaliy Katsenelson (Article)

According to investment manager Vitaliy Katsenelson, Warren Buffett overpaid in Berkshire's acquisition of Burlington Northern. He states, "Though I agree with Buffett's assessment of the Kraft-Cadbury deal, I fear that investors and media are completely ignoring Berkshire's own, $30-billion-plus acquisition of a very cyclical, capital-intensive, not terrifically high-return-on-capital business - Burlington Northern."

2010-02-01 Well, Better Late than Never by John Petrides (Article)

The author supports the reconfirmation of Bernanke as Fed Chairman, but warns that investor unease about policy decisions is justified.

2010-01-27 Political Risk: The Bernanke Nomination and the Return of American Populism by Christopher Whalen of Institutional Risk Analyst

Whalen argues against the reappointment of Bernanke for a second term, citing his inability to fulfill either of the Fed’s mandates: price stability and full employment. Bernanke bears responsibility

2010-01-26 Stop the Presses! by Jeremy Grantham of GMO

Grantham’s commentary begins with his reflections on the proposed financial reform, the “Volcker Plan,” and the recent Supreme Court ruling on corporate campaign contributions. He continues with a fo

2010-01-19 Steve Leuthold: The Market will Rally This Year by Robert Huebscher (Article)

Steve Leuthold is chairman of the $4.5 billion Leuthold Group and one of the most widely-followed market analysts. In his keynote presentation at last week's Fortigent conference, he offered an upbeat forecast for the first half of 2010.

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

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

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

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

2010-01-15 The Most Profitable Letter in 2009 by Resendes of Applied Finance Group

…there was one letter that was very profitable to investors for most of 2009 – Beta. Lost in all the hand wringing over the economy, Beta was an investor’s best friend in 2009 – so much so that outpe

2010-01-09 Forecasts by Team of State Street Global Advisors

2009-12-29 The Top 10 Articles You Didn’t Read (But Should Have) by Robert Huebscher (Article)

We closely monitor which articles draw the most readership. This allows us to fine-tune our content to the preferences of our audience. Reflecting on those articles that were most popular over the last year, however, we believe other articles also deserved your attention. We provide the "Top 10" articles you didn't read - but should have.

2009-12-22 ECRI: Recovery and Jobs Growth are Underway by Robert Huebscher (Article)

Lakshman Achuthan, the managing director of the Economic Cycle Research Institute (ECRI), provides an upbeat forecast in our interview. He says the economic recovery has been underway since the summer and he expects to see jobs growth in the coming quarters. ECRI is a global research firm serving buy- and sell-side institutions and Fortune 500 companies.

2009-12-21 Predictions of 2010: The Best is Yet to Come by Christopher Whalen of Institutional Risk Analyst

2009-12-15 Investing in Range-bound Markets by Vitaliy Katsenelson (Article)

Vitaliy Katsenelson, a frequent contributor to these pages, reviews his thesis for secular market cycles, why the US markets remain locked in a range-bound state, and what it will take for them to exit from that state.

2009-12-01 Allen Sinai: Jobless Recovery and the Failure of Current Economic Policies by Robert Huebscher (Article)

As the Democratic leadership in Congress has looked for ways to simultaneously create jobs and reduce the deficit, a key person they have turned to and continue to rely on is Allen Sinai. Sinai now fears the US is in the "mother of all jobless recoveries" and that the economic policies of the Obama administration are not working.

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

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

2009-11-24 Interview: Brian McMahon of Thornburg Investments by Robert Huebscher (Article)

We speak with Brian McMahon, CEO and CIO of Thornburg Investment Management about the Thornburg Income Builder Fund (TIBAX) and the challenges of finding income-producing securities in today's markets.

2009-11-17 Our Steroidally Challenged Economy by Vitaliy Katsenelson (Article)

Vitaliy Katsenelson writes that the US economy is like a marathon runner who, after suffering an injury, takes steroids in order to return to racing. His performance is fine, but what don't see are the risks, just as our economy is now "steroidally challenged."

2009-11-10 Bruce Greenwald on Structural Problems in the Economy and Unemployment by Robert Huebscher (Article)

Bruce Greenwald is a professor of finance at Columbia University, the Director of Research at First Eagle Funds, and perhaps the foremost expert on value investing. In part one of our two-part interview, he discusses the structural problems facing the economy, the parallels to the Great Depression, and the implications for the unemployment rate.

2009-11-10 Letters to the Editor – The “V” Points Downward by Various (Article)

In a letter to the Editor, a reader responds to our article, The "V" Points Downward.

2009-10-27 The “V” Points Downward by Robert Huebscher (Article)

Long-term equity investors face a critical juncture. They can believe a V-shaped economic recovery is imminent, if not underway, and valuations for broad-based equity indexes properly reflect an end to the "decrepit decade" of return-less risk in US markets. Or they can believe true economic recovery - growth, not just stability - is still a long way off and US equity valuations are in bubble territory, not reflective of the rough terrain ahead. We provide our thoughts.

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

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

2009-08-04 Uncovering the Mayhem in 2008 in the TIPS Market by Robert Huebscher (Article)

In an interview two weeks ago, Yale Endowment manager David Swensen singled out TIPS as the best way to protect against inflationary and deflationary scenarios. We review a comprehensive study of the history of the inflation-indexed bond market, including an explanation for the extreme volatility in TIPS last year.

2009-07-07 Gary Shilling: Recovery is a Year Away by Robert Huebscher (Article)

Among economists, Gary Shilling owns one of the most prescient forecasting records, having accurately predicted the credit crisis and the performance of key asset classes over the last several years. Now, he says, the chances that the current wave of "green shoots" will be the finale to the recession are "pretty low."e

2009-06-23 The Road to Zimbabwe by Robert Huebscher (Article)

John Williams of Shadow Government Statistics is best known for exposing inaccuracies and biases in government reporting of data - most notably the understatement of the CPI index. Williams says the US economy is on the brink of hyperinflation which will render the dollar worthless, as happened recently to Zimbabwe's local currency.

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

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

2009-05-26 Dan Fuss and the Eisenhower Recession Redux by Robert Huebscher (Article)

Those of us old enough to remember Studebakers and the military-industrial complex will recall the Eisenhower Recession, which began in 1957, lasted eight months and was followed by the 10 month "Rolling Adjustment" recession beginning in 1961. The W-shaped path of the US economy during this period is the correct analogy to today's crisis, according to Loomis Sayles and Company's Dan Fuss.

0000-00-00 Woody Brock on Why to Own Stocks Now - Video 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 video; a transcript of this talk is also available.

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