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6 Reasons Why a Soft Landing in China Matters
by Russ Koesterich of iShares Blog,
World markets and financial media seem to react to every new data point about Chinas economy, whether its manufacturing reports or gross domestic product numbers. This market sensitivity isnt very surprising given how important China has become for the global economy. But it also means that it will be hard for the global recovery to continue without a soft landing in China.
The Income Hunt: Opportunities Abroad
by Russ Koesterich of iShares Blog,
When it comes to fixed income portfolios, investors are often too reliant on domestic debt issues. However, as Russ explains, today there are a number of reasons why US investors should consider looking outside their own country particularly toward emerging markets for their fixed income needs.
A Risky Business
by Russ Koesterich of iShares Blog,
In todays low yield environment, fixed income investors face a stark choice: accept lower income or take on additional risk to generate incremental yield. In assessing these two options, investors must start with their own tolerance for risk and investment objectives. For those willing to take on additional risk, I continue to advocate reducing duration risk, for which investors are not being adequately compensated, and modestly increasing exposure to spread products. I currently see opportunities in Investment Grade US Corporate Debt and Emerging Market Bonds.
Fewer Workers: A Drag on US Growth
by Russ Koesterich of iShares Blog,
The March non-farm payroll report left investors disappointed by the low level of job creation. Yet the number in the report that may prove the most relevant over the long term was largely ignored the proportion of the US population currently in the labor force, a number now at 63.8% and close to a thirty-year low. Over the long term, a countrys economic growth is determined by the rate of increase in the labor force and productivity growth. If fewer people are working growth slows. This is exactly what has happened over the past dozen or so years in the United States.
Q2 Markets: Dont Expect Smooth Sailing
by Russ Koesterich of iShares Blog,
While valuations still appear reasonable, inflationary pressures remain well contained and the economy is stabilizing, Russ explains why he expects more market volatility in the second quarter and details how investors may want to position their portfolios as a result.
Investor Question: Gold or Gold Miners?
by Russ Koesterich of iShares Blog,
The Fed may be the best friend gold investors ever had. The most important factor for gold is actually not inflation or the dollar, but rather the level of real interest rates. In fact, the relationship between gold and real rates is so critical that since 1990, the level of real rates explains roughly 60% of the annual performance of gold. Gold generally does best in an environment in which real rates are low to negative as this means no opportunity cost to holding gold. Since 2003 when gold began its long-term outperformance we have been in just such an environment.
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.
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.
Time to Exit Emerging Markets?
by Russ Koesterich of iShares Blog,
Is it time to sell emerging market equities? Thats what many investors are wondering given that emerging market stocks are up significantly since fall lows and have modestly outperformed developed markets year to date. Despite emerging markets strong recent performance, I believe there are two major reasons why investors should still consider overweighting select countries relative to their weight in the MSCI ACWI benchmark. Cheap Valuations and Falling Inflation.
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.
Shifting Focus: Behind Country Valuations Today
by Russ Koesterich of iShares Blog,
As the European financial crisis raged last fall, investors were closely monitoring metrics like credit default swaps and yields on Italian bonds to determine where to place their country bets.
But 2012 has brought some stability to the eurozone and with it weve noticed a shift in the types of indicators that investors should be tracking when it comes to determining country valuations metrics that show economic growth.
Proceed with Caution in the Hunt for High Yield
by Russ Koesterich of iShares Blog,
Given high yield credits recent rally and surge of inflows, Im now getting a lot of questions about whether or not the asset class still looks appealing. While high yield provides an attractive pickup in yield and Im maintaining my neutral view of the sector, I believe the easy money has probably already been made and the asset class no longer looks cheap. As such, over high yield, I prefer investment grade credit and municipals.
Stocks: Still a Bargain
by Russ Koesterich of iShares Blog,
With global stocks up approximately 25% from their fall low and many market watchers endorsing equities in recent weeks, its hardly surprising that investors are wondering if stocks are still a good bargain. While some measures of sentiment notably abnormally low volatility levels could be interpreted as flashing yellow caution signs, valuations and fundamentals still favor global stocks over the long term. Currently, equities look reasonably priced. Developed market equities are trading at around 14.5x trailing earnings, while large emerging markets are trading at roughly 12x earnings.
How to Access the EM Consumer? Think Small
by Russ Koesterich of iShares Blog,
Investors who are looking to gain exposure to emerging market domestic consumption may want to consider the small cap segment of emerging markets. I expect emerging markets to outperform based on low relative valuations, falling inflation and stronger growth. Longer term, emerging market stocks are likely to benefit from falling volatility and rising developed market volatility. However, if youre specifically trying to capture, and profit from, the secular rise of emerging market middle class consumers, its worth considering that small cap stocks provide a more targeted exposure.
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.
The Case for Chinese Stocks
by Russ Koesterich of iShares Blog,
Chinas recent lowering of its growth target made some investors nervous that the country may be in for a period of sluggish growth. Russ, however, believes that a hard landing can be avoided, and he continues to advocate overweighting Chinese equities for three reasons.
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.
Where to Look for Dividends? Try Outside the US
by Russ Koesterich of iShares Blog,
With the dividend corner of the US equity market now crowded and expensive, Russ gives three reasons why investors might want to consider looking abroad for dividend income. More Reasonable Valuations: Outside of the US, dividend paying stocks still appear cheap and are trading at a significant discount to the broader equity market. More Attractive Yields: Non-US dividend companies are offering more enticing yields. Outperformance in a Slow Growth Environment: high dividend paying stocks tend to outperform during periods of slow growth like the one were experiencing this year.
Another Country in Europe to Avoid
by Russ Koesterich of iShares Blog,
Russ recently advocated that investors avoid Spain and Italy, markets that are cheap for a reason. Now, hes adding the United Kingdom to the list of European markets to consider underweighting -- a country that has its own issues separate from those of the euro zone.
The Current State of Munis
by Russ Koesterich of iShares,
With the much anticipated 'muni meltdown' never coming to pass in 2011, investors are wondering what to think about municipal bonds going into the new year. Russ Koesterich explains the recent selloff and provides some new context for this important asset class.
Why Warren Buffett is Wrong About Gold
by Russ Koesterich of iShares Blog,
One of the more vocal and visible proponents of the anti-gold view is Warren Buffett, who recently reiterated his long held view that gold does not belong in an investment portfolio as it produces no income and has no intrinsic value. With all due respect to Mr. Buffett, this argument ignores two crucial facts: gold helps to diversify a portfolio and, if only by an historical fluke, it is a recognized store of value.
Inflation Inferno? Maybe in 2013 and Beyond
by Russ Koesterich of iShares Blog,
In a controversial new paper, a staff economist at the Federal Reserve Bank of St. Louis warns that conditions are ripe for a spike in inflation. While Russ shares many of the economists concerns, he explains why its too soon to make significant changes to a portfolio based on inflation fears.
Q&A with Russ Koesterich: What Obamas Budget Proposal Means for Dividend Investing
by Russ Koesterich of iShares Blog,
President Obamas 2013 budget proposal includes a significant hike in the dividend tax rate. Russ explains how likely this proposal is to pass and what it would mean for the dividend paying stocks investors who have embraced in their quest for yield.
A Tailwind for Gold? Low Rates
by Russ Koesterich of iShares Blog,
In recent months, the Fed and the ECB have been lowering-or maintaining low-interest rates in an effort to support growth. One unintended beneficiary of the aggressive easing by the developed worlds central banks: Gold. Historically, the most important driver of gold returns has not been inflation or the dollar, but rather the level of real interest rates. In the past, environments with interest rates at or below the level of inflation have been very supportive of commodities, and particularly gold. Todays rate environment fits this bill and so should that of the near future.
The Outlook for Oil
by Russ Koesterich of iShares Blog,
Are we headed for another oil shock, and, if so, what are the investment implications? Russ tackles these questions, explaining what could cause an oil spike, why he believes crude prices are likely to stay elevated in the near term and what this means for his view of global energy companies.
The Outlook for the Overvalued Euro
by Russ Koesterich of iShares Blog,
Now that a second Greek bailout deal has been reached, investors are asking whether Greece will remain in the euro bloc and how the euro will likely perform going forward. Russ answers these questions, explaining why the euro currently appears overvalued and how a weaker currency could be good for Germany.
Buyer Beware When it Comes to US Retailers
by Russ Koesterich of iShares Blog,
While the US labor market has improved recently, it has yet to lead to any real acceleration in US consumption. In fact, last week, US retail sales came in below expectations for a second month in a row, and US consumption growth has held relatively steady at a 2% annualized rate for the past 10 quarters. There are four reasons why consumption is still so far below trend despite the improving labor market. 1. Keeping the improvement in context: The job market is actually improving from a very low base. 2. A Smaller Work Force. 3. Decelerating Wages and 4. Household Debt.
Mega Caps: Where the Profits Are
by Russ Koesterich of iShares Blog,
Despite mega caps recent outperformance, the stocks remain cheap on both a relative and absolute basis. Heres more evidence to add to the case for mega caps. The current discount on mega-cap stocks is particularly hard to justify given that these large companies continue to be extremely profitable despite todays tepid economic environment. In fact, the return on equity (ROE) for the S&P 100 index is slightly below 29%, the highest level since 2000 and well above the long-term average of 23%.
3 Reasons to Underweight South Africa
by Russ Koesterich of iShares Blog,
In my opinion, investors should consider minimizing their exposure to emerging markets in Europe, the Middle East and Africa, otherwise known as EMEA. The big reason: emerging markets in EMEA generally have close economic ties to the euro zone, which as we all know is going through a rough spot and is likely to experience at least a mild recession this year. Drilling down to the stocks of specific emerging market countries within EMEA, Im particularly focused on South Africa as its the largest country in the MSCI Emerging Markets EMEA index.
Current Market Volatility? Too Quiet
by Russ Koesterich of iShares Blog,
In horror movies, the time to worry is when things become eerily quiet. Last Friday, the Chicago Board Options Exchange Volatility Index (VIX), hit its lowest level since last July. This is the financial equivalent of eerily quiet. Assuming that volatility is set to rise, how should investors adjust their portfolios? First, remember that its the change in volatility that tends to impact asset prices. Investors would want to modestly lower their weight to market segments that are very sensitive to changes in volatility and raise their weight to less sensitive or lower beta instruments.
Where to Find Value in Emerging Asia
by Russ Koesterich of iShares Blog,
Im updating my views on some of the emerging market countries in Asia. While Im upgrading Chinese equities from neutral to overweight, Im downgrading South Korean and Indian stocks from neutral to underweight. Starting with China and South Korea the two countries are both highly exposed to global growth, but China currently appears to be the better positioned and is likely to hold up much better. To be sure, South Korean equities are also cheap compared to other emerging markets. Im downgrading India in response to the countrys recent surge in valuations and persistently high inflation.
The Case Against Long-Term Treasuries
by Russ Koesterich of iShares Blog,
Just last week, the yield on 10-year Treasury notes slid in response to the Federal Reserves announcement that interest rates would remain low through 2014, and yields dropped further early this week on concerns about Europe. With the yield on 10-year notes now hovering around 2% and core inflation at its highest level in over three years, the spread between the 10-year Treasury yield and core inflation is currently at its most negative since 1980.
Election Watch: What Romney Means for the Economy
by Russ Koesterich of iShares Blog,
In the near term, Romneys strong showing in Florida isnt likely to have much of an impact on the US economy. Looking forward to this fall, however, Russ explains how a Romney win could have a significant impact on the US economic outlook.
Back To The Gold Standard -- and the Great Depression
by Russ Koesterich of iShares,
One of the central tenants of Ron Paul's presidential campaign is a return to the gold standard. In this video, Russ Koesterich, iShares Global Chief Investment Strategist, explains what it would mean for the US and global economies if Ron Paul's wish was granted and the US dollar was once again tied to gold.
Dissecting Todays Bull Market
by Russ Koesterich of iShares Blog,
So whats a tactical investing idea for the current cyclical bull market? Well, lets look at the investment implications of the Feds announcement this week. First, it suggests that nominal rates and real rates will stay low for a long time. This further buttresses the case for gold. Second, if US interest rates are going to be anchored at zero for an extended period, people are going to need to take some risk in one form or another to generate a decent return.
Big State Doesnt Mean Bad Muni
by Russ Koesterich of iShares Blog,
With their budget woes frequently dominating headlines, California and New York are regularly cited as poster children for bad state finances, and investors often avoid these states municipal bonds as a result. But these two states may not be in as bad shape as many people believe. My team recently performed a basic examination of the financial health of the 50 states. We looked at three metrics for each state: Revenue-to-interest payments, state debt levels to state revenue and the funding of pension costs.
The Price of a Good Nights Sleep
by Russ Koesterich of iShares Blog,
Even with the recent market rally, investors are still placing a significant premium on those assets perceived as safe. Case in point: the US Treasury market. By one measure-real yields measured against core inflation long-dated Treasuries are offering the worst returns in over 30 years. The flip side of this trade is a persistent aversion to assets perceived to be the most risky, particularly Europe. Even in the more stable, northern parts many markets are trading at 8 times earnings, with dividend yields at 4% to 5%. In a low yield world, this strikes us as a long-term opportunity.
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.
The Continuing Case for Mega Caps
by Russ Koesterich of iShares Blog,
Last year, mega-cap companies were cheaper and more profitable than their smaller counterparts. Thats why I continuously advocated for mega-cap, quality stocks as a defensive play amid last years market volatility, economic shocks and political paralysis. Ultimately, investing in mega caps in 2011 was a good call. Now, after last years flight to safety, many investors are asking if mega-cap stocks are still a bargain. The answer is a resounding yes. Despite outperforming in 2011, mega caps are still trading at a historically high discount to other segments of the market.
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.
Video: A Portfolio (or Two) for a Binary World
Will the global economy continue to muddle along, stuck in this slow growth environment? Or is it headed for a crisis? How is it possible to position an investment portfolio for either scenario? Russ Koesterich, iShares Global Chief Investment Strategist, explains in this video why in these binary times, it might make sense for investors to consider having two portfolios.
The Other Presidential Election to Watch
by Russ Koesterich of iShares Blog,
The US presidential election isnt the only race for top office this year worth closely watching. Right now, my attention is focused on an upcoming presidential election on the other side of the globe. On January 14, Taiwanese voters will vote for their countrys next president. This election is particularly important for investors. Though many factors drive stock prices, a win for incumbent President Ma Ying-jeou would be supportive of Taiwanese equities. A loss, on the other hand, could be a tailwind for the market.
A Portfolio (or Two) for a Binary World
by Russ Koesterich of iShares,
Will the global economy continue to muddle along, stuck in this slow growth environment? Or is it headed for a crisis? How is it possible to position an investment portfolio for either scenario? Russ Koesterich, iShares Global Chief Investment Strategist, explains in this video why in these binary times, it might make sense for investors to consider having two portfolios.
3 Economic Scenarios for 2012
by Russ Koesterich of iShares Blog,
Russ believes that one of three economic scenarios will likely play out next year: the Great Idle will continue, the global economy will slip into a recession or global growth will accelerate. The most likely scenario is that The Great Idle continues. A severe global recession in 2012 is a second possible scenario. In fact, Im placing higher odds on another global recession than I did last year. Theres a tiny chance of a third scenario. In this scenario, emerging markets would resume stellar growth and the developed world would revert back its long-term average growth.
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.
A Look Back at 2011s Calls
by Russ Koesterich of iShares Blog,
Last December, Russ shared his economic forecast for 2011, along with a series of investment calls. Nearly every Monday since then, he has highlighted certain asset classes and market sectors in his weekly call posts. So, how did his calls perform? Read more to find out.
Results 601–650
of 720 found.
