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Results 451–500
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Trampled Under Foot: Earnings Estimates Crushed; But Not Stocks
by Liz Ann Sonders of Charles Schwab,
The pace of earnings estimate cuts by Wall Street analysts and companies has been well sharper than the norm, suggesting the bar has now been set so low as to make it easier to hurdle. That’s what investors can hope for heading into the next earnings season; but the risk around earnings and valuation is unquestionably higher than it’s been in some time.
Rhyming…but not Repeating.
Stocks have recovered their January losses and have continued to move higher. While economic growth remains solid and we remain secular bulls, investors should be prepared for increased volatility and the potential for a near-term correction. Also, European stocks may be due for at least a pause and we suggest looking to add exposure to emerging market positions if needed. Staying well diversified and keeping an eye on rebalancing is the recommended strategy.
Self-Sustaining US Economy…So What Now?
The US economy appears to be in a self-sustaining phase of the expansion, which could mean more volatility as the Fed embarks on a tightening cycle. We remain confident the secular bull market is intact, but volatility has risen and we suggest investors who are over-exposed to US equities consider global diversification, with a preference for emerging markets. Europe appears to be stealthily improving, but Greece remains a flash point and Eurozone equity markets may have gotten ahead of themselves a bit.
Should I Stay or Should I Go: Global Diversification Could be 2015’s Winner
by Liz Ann Sonders of Charles Schwab,
Last year ended on a weak note for US equities; and January continued the trend; Divergences will remain a theme and likely keep volatility elevated; US investors haven’t felt the need to diversify globally…they should
Diverging Policies…Converging Economies?
The US economy should continue to expand but faces headwinds with weak global growth and a strengthening dollar leading to diverging central bank policies. Volatility has risen and the potential for a correction in the near term appears more likely. Nonetheless, timing the market in the shorter-term is dangerous, while the longer-term picture still looks positive for US equities. Across the pond, we remain skeptical much can be accomplished with the ECB’s QE program and continue to favor emerging markets over developed internationally. We also believe global diversification is becomin
Levitate: More Market Mood Swings in 2015?
by Liz Ann Sonders of Charles Schwab,
Secular bull market is likely intact, but 2015 could bring more volatility associated with Fed policy and/or global events. Longer-term sentiment suggests the ?wall of worry? is intact; but shorter-term sentiment is more troubling. Falling oil and rising dollar have generated loads of questions from clients ? history tells a generally positive story.
Your Time is Gonna Come: From Considerable Time to Patient
by Liz Ann Sonders of Charles Schwab,
Regardless of the obsession around the specific words used, the statement is somewhat par-for-the-course; and supports our consistent view that rates should begin rising at some point in mid-year 2015, that the US dollar will remain strong, and that the yield curve should continue to flatten (as a result of benign inflation keeping longer-term rates fairly low). Although our view is that the stock market will be at the mercy of more frequent mood swings, the secular bull market we believe began nearly six years ago should persist in 2015.
Glancing Back but Focusing Forward
The US stock market appears set for further gains into at least the first half of next year, although risks are elevated with valuations no longer discounted and looming rate hikes. There is hope that ongoing easy monetary policy by global central banks can help to bolster economic activity is areas such as the Eurozone, China, and Japan. But we are somewhat skeptical about stock market performance in developed international countries and favor emerging markets to start out the New Year.
Dont You Worry bout a Thing: Tell That to Individual Investors!
by Liz Ann Sonders of Charles Schwab,
Some attitudinal measures of investor sentiment show troublingly high levels of optimism. Longer-term sentiment surveys that separate individuals from institutions show something much, much different. These longer-term surveys suggest theres little risk that the wall of worry the market likes to climb is crumbling.
Rolling AlongFor Now
We remain optimistic that US stocks will likely continue to move higher, but warn against getting overly complacent as a pullback is always a possibility. The US economy is improving, the Fed is erring on the side of dovishness, and both corporate and consumer confidence are growing. The fall in oil should be a net positive for the US and global economy, and we are in a traditionally seasonally positive time of the year for equities. Global economies remain weak, but we are seeing a glimmer of hope from stepped up responses from foreign central banks.
Ben Bernanke: Too Big to Fail
by Liz Ann Sonders of Charles Schwab,
I shared the stage at Schwabs IMPACT conference recently with former Fed Chair Ben Bernanke (a goose-bumpy experience). He was remarkably funny; but also firm in his views about the merits of the Feds extraordinary efforts to stem the tide of the financial crisis. Notably, he strongly pushed back on the notion that QE is an inflation accident waiting to happen.
And the Winner isInvestors?
The pullback seen in October is now just a memory and stock indexes are again pushing into record territory. Seasonality and the election cycle are lining up with still solid earnings growth and an expanding economy to help support further gains. Complacency is a risk but we continue to believe the trend in US stocks is higher.
Black Dog: Are Plunging Oil Prices a Positive or a Negative?
by Liz Ann Sonders of Charles Schwab,
The bear market in oil prices is largely a positive for the consumption-oriented US economy, but there are caveats. Oil's plunge is more a function of increased supply and the stronger US dollar than it is of weaker global demand. Oddly, many investors are worried about the stock market because of oil's plunge; but history suggests otherwise.
Plot Twistor a Different Book?
Volatility could continue but equity investors should keep the longer-term picture in mind, which we believe is positive. The U.S. economy is improving and monetary policy remains quite loose. The international picture is more concerning but diversification is important across asset classes. We currently favor emerging markets within a diversified international portfolio.
Global Fears
Volatility could continue but equity investors should keep the longer-term picture in mind, which we believe is positive. The U.S. economy is improving and monetary policy remains quite loose. The international picture is more concerning but diversification is important across asset classes. We currently favor emerging markets within a diversified international portfolio.
One Thing Leads to Another: From Dividends/Buybacks to Capex
by Liz Ann Sonders of Charles Schwab,
The final revision to second quarter real GDP showed a healthy contribution by capex. Tide may be turning away from returning cash to shareholders toward capex; pushed by activist investors.Capex's leading indicators point to further improvement.
Clear Sailingor Choppy Seas?
We are at a tenuous point in the market seasonally speaking and a pullback is quite possible. We dont recommend trying to time a potential correction, however, as that is virtually impossible and exposes investors to missed upside opportunities waiting on the sidelines. Elsewhere, the international picture looks a little shaky, but diversification is important and we do favor emerging markets within an international portfolio.
Fed Keeps Considerable Time But Ups Rate Expectations Through 2017
by Liz Ann Sonders of Charles Schwab,
The Fed kept its statement largely intact relative to Julys; opting to retain the much-ballyhooed considerable time phrase. It was confirmed that QEs tapering would be concluded by the end of October; while the Feds rate expectations were increased. Yellen took great pains to explain that considerable time should not be considered calendar-based guidance.
Schwab Market Perspective: Diverging Paths…Growing Risks?
by Liz Ann Sonders of Charles Schwab,
The U.S. stock market continues to reach new highs but sentiment is extended and we are entering a period that has historically seen weakness. We believe the ultimate trend is higher, but bumps could get more pronounced in the near future. The U.S. economy is improving, with data suggesting self-supporting expansion is taking hold. Whether this means accelerated Fed interest rate hikes is being closely watched, while midterm elections often inject some more uncertainty into the market. The European Central Bank (ECB) finally acted, but structural issues and lack of demand remain problems.
Back in the Saddle Again: Time to Pull in the Reins?
by Liz Ann Sonders of Charles Schwab,
Interest rates and seasonal tendencies are taking some attention away from the stronger economy and pose short-term risks for the stock market. Another pullback would be welcome from a sentiment perspective and would not dent our longer-term optimism that we are in a secular bull market that still has room to run. But just as fear has been the strongest emotion keeping many investors out of this bull market, greed is an emotion to rein in as well.
Sound Familiar?
Stocks seem likely to continue their upward momentum although volatility could increase with Federal Reserve interest rate uncertainty combined with midterm elections and geopolitics. An improving economy, decent valuations and a still-accommodative Fed leave us confident that dips should be viewed as buying opportunities. Conversely, Europe is looking worse and we would be cautious in adding new cash at this time, concentrating additional international exposure instead on China and to a lesser degree Japan, always with a diversified portfolio in mind.
Skittishness
Stocks suffered some of their bigger daily and weekly declines of the year recently with geopolitical and Fed concerns the likely culprits. We dont believe this was the start of a sustainable downtrend, although there could be further selling to come in the near-term. The U.S. economy appears to be strengthening, leaving us optimistic on the longer-term outlook for stocks. Likewise, worries over the Fed and the timing of the first rate hike have increased, but the initial stages of a tightening cycle tend to be positive for equities.
Summer Void
Although Wall Street and other corners of the business and political world may empty over the next few weeks, risks of a pullback in U.S. equities have gone up. Although we believe it would represent a buying opportunity and are optimistic longer term due to improving economic growth, nervous investors may want to consider a hedging strategy. China's stock market performance has improved and we remain positive, while European economic data has been more concerning, although the stocks still look attractively valued in our view.
Getting Closer: Fed Continues its Tapering & Moving Toward Rate Hikes
by Liz Ann Sonders of Charles Schwab,
The Fed continues its taper; moving closer to rate hikes. Strong GDP report elevating chatter about possible earlier-than-expected rate hikes. Although volatility/pullbacks are possible, history shows initial rate hikes are NOT negative for stocks.
Bull Stumbles
Any near-term correction would be healthy in the context of an ongoing secular bull market. Trying to time the market is always difficult, even though the market is in a potentially weak phase, both in terms of the annual and election cycles. And while sentiment is elevated in the United States, both Europe and China provide opportunities to invest where the mood is decidedly less enthusiastic.
One Step Closer: Public Sector Taking Deleveraging Baton from Private Sector
by Liz Ann Sonders of Charles Schwab,
The budget deficit has plunged; but government debt remains extraordinarily high. Private sector deleveraging began alongside the financial crisis; and may be largely in its finale. Objective measures of household/consumer stress have come down markedly.
Stealthy, Silent…Sustainable?
US stocks should continue to move generally higher although activity may remain sluggish through the summer and the possibility of a correction is elevated as per both seasonal/election cycle tendencies and elevated optimistic sentiment. The U.S. economy should help support the market as signs are increasing that we may be entering the long-waited for self-sustaining expansion. The ECB's actions weren't game changing but are helpful and European equities look attractive, while we believe the worries over a Chinese slowdown are overblown.
Slow Ride: Housing’s Recovery Taking a Breather
by Liz Ann Sonders of Charles Schwab,
Key Points
Housing's recovery has stalled courtesy of several headwinds.
But it's less a driver of economic growth; and some trends could begin reversing.
Long-term bears may be ignoring the (eventual) force of demographics.
Mounting Momentum?
Although the stock market remains sluggish, with the potential for a correction elevated, the U.S. economy appears to be improving. There is probably no great rush to get into the stock market at this point, but maintaining a steady investing discipline in the face of what we think is a continuing secular bull market is key. Investors frustrated with the low yield environment should be careful about adding too much risk to a portfolio in search of higher yields.
Proper Perspective
Getting caught up in the weeds is easy in this 24-hour news cycle where everyone is looking to make a splash, but successful investing requires staying above the fray. The U.S. economy is growing and equities appear fairly valued, Europe has issues to deal with but has come a long way from the depths, Japan may be working against itself but improvement has been seen, and the threat of a Chinese debacle at this point seems minimal.
A New Machine: Is a Capital Spending Cycle Imminent?
by Liz Ann Sonders of Charles Schwab,
Activist investors have helped highlight companies bias toward stock buybacks/dividends vs. longer-term capital investments. Preconditions for a pickup in capital spending appear to be lining up. The technology and industrial sectors are likely the biggest beneficiaries.
Heating Up and Thawing Out
Concerns over growth and geopolitical issues have largely been set aside by investors in the United States, but complacency can be dangerous and another pullback in the near term could unfold if history holds. Investors should keep longer term goals in mind and remember that trying to time the market is an extremely difficult task. The weather is turning and economic data will be watched to see if recent softness was temporary or something more serious. We lean toward the former, but a retrenchment in bond yields would cause some concern about the potential for something more than weather.
Inflation Blues: Is it Time to Start Worrying?
by Liz Ann Sonders of Charles Schwab,
Inflation was revised higher in the latest GDP revision; while an increase in the minimum wage could push it higher still. But we remain sanguine about inflation risk as long as velocity and wage growth remain low. The key to watch near-term is bank lending, which is starting to accelerate sharply; signaling the possible return of "animal spirits."
Bounce Back
US stocks have bounced and the markets still attractive and in the midst of a secular bull market. But there are likely to be bumps along the way; notably given that this is a midterm election year; which are known for first-half pullbacks. A diversified portfolio is important and both European and Chinese stocks appear to have upside, while Japan continues to frustrate with a two-steps forward, two-steps back sort of approach. And a final reminder not to replace fixed income assets with equities in search of higher income without recognizing the risk profile of a portfolio has changed.
Weather Related?
The recent slowdown in economic data appears to be largely weather related and we believe decent growth will reassert itself. Stocks have bounced after a weak start to the year, but the threat of a further pullback remains, although our longer-term optimism has not been dented. Likewise, we believe Europe offers some attractive investment opportunities but were in a wait-and-see mode with Japan. Finally, we dont see EM turmoil becoming overly contagious, but we are watching that situation closely.
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 worlds 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.
The New Watchword-Deflation?
Equity markets have been shaky to start the year but we dont believe its 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 dont believe the recent problems will morph into a widespread crisis at this point.
Dialing Down the Drama
We remain optimistic on stocks for 2014, but there will likely be bumps in the road. Investor sentiment is elevated, complacency seems to be building, and the valuation story is less compelling. But waiting for a correction can be quite detrimental to portfolio performance, evidenced by last year. QE tapering will likely continue at a very modest pace and U.S. interest rates will likely drift higher throughout the year. We remain positive on Europe and our outlook toward China is improving, while we are in at wait-and-see sort of mode with Japan.
Start Me Up: Fed Announces a Much-Anticipated Taper
by Liz Ann Sonders of Charles Schwab,
The Fed decided to begin tapering its QE-related bond purchases with a reduction of $10 billion; split evenly between Treasuries and mortgage-backed securities. In a sign that tapering was already priced in, the stock market surged on the announcement; while bond yields remained quite tame. The Fed announced slightly sunnier economic forecasts, suggesting quantitative easing could wind down within a year.
Gimme Three Steps...on the Path of Deleveraging
by Liz Ann Sonders of Charles Schwab,
Debt (and Fed policy) continue to be my biggest longer-term concerns; even with the progress made over the past few years by the household sector. The budget deficit is plunging; and thats great news, but more is needed to bring overall debt growth down to more reasonable levels. The solutions stool is three-legged: spending, revenues...and growth!
Gliding to Year End?
Although we remain optimistic, the path to year-end may have some potholes. US stocks are among the more attractive investment options available, but there is the risk of a pullback in the near term should sentiment conditions continue to be elevated. There is also a risk of a melt-up in stocks given recent momentum. Europe is dealing with falling inflation and weak growth, although expectations are low, leaving investment opportunities somewhat attractive. Both Japan and China appear to be at a crossroads and we are watching political and monetary developments carefully.
Why Worry About a Melt-Up?
by Liz Ann Sonders of Charles Schwab,
The risk of a melt-up in stocks is garnering more attention; and is something weve been discussing recently, too. Sentiment does appear stretched in the near-term and warns of a possible pullback. But there are few, if any, bubble-like conditions present and fundamentals ex-sentiment appear healthy.
Glory Days: Could They Come Back for US Equities?
by Liz Ann Sonders of Charles Schwab,
A "great rotation" may not be underway by individual investors; even amid record-breaking outflows from bond funds this summer. But fund flow data do show some shift in preferences and highlight the sensitivity of investors to any rise in longer-term interest rates. A more interesting place to look is at the fiduciary community; that has decidedly shifted its attention away from traditional equities (and fixed income) over the past decade.
Results 451–500
of 660 found.
