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Results 201–250
of 359 found.
Brexit & Bonds
by Anthony Valeri of LPL Financial,
High-quality bond strength following the Brexit vote is likely to persist if history is any guide. Flight-to-safety buying, which is typical in response to market or geopolitical shocks, propelled Treasuries to strong gains in response to voters in the United Kingdom (U.K.) deciding to leave the European Union (EU).
Brexit Reflections
by Burt White of LPL Financial,
The United Kingdom’s (U.K.) unexpected decision to leave the European Union (EU) sent markets reeling on Friday (June 24, 2016). The S&P suffered a 3.6% decline, its worst day of 2016. But that loss was muted in comparison to the 8.6% drop in Europe’s EURO STOXX 50 Index—its biggest one-day loss in 30 years—or the nearly 9% drop in the British pound versus the U.S. dollar to a 31-year low.
Brexit Breakdown
by John Canally of LPL Financial,
Financial markets reacted swiftly and sharply on Friday, June 24, 2016, to the unexpected decision by the United Kingdom (U.K.) to leave the European Union (EU) in a nationwide referendum held on June 23, 2016. Ahead of the vote, most financial market participants and political observers thought that the U.K. would vote to remain in the EU, and markets spent most of the day Friday adjusting to the reality that the U.K. will likely leave, sending equity prices lower, and bond and gold prices higher. The uncertainty in the markets, tightening financial conditions, and other potential impacts to the U.S. economy may influence the Federal Reserve’s (Fed) path of future rate hikes.
Municipals Buck the Seasonal Trend
by Anthony Valeri of LPL Financial,
Municipal bonds have thus far bucked the trend of typical headwinds in June. The Barclays Municipal Bond Index has returned 1.1% month to date through June 17, 2016, a stark contrast to the -0.55% total return the Barclays Municipal Bond Index has averaged in June over the past 10 years. The index has posted positive returns only three times over that time span—a remarkably poor batting average for any interest bearing sector—illustrating the consistency of June challenges until this year.
Overcoming A Wall Of Worries
by Burt White of LPL Financial,
With weaker than expected jobs growth in May, the Federal Reserve’s (Fed) recent disappointing economic forecast, negative interest rates around the globe, and the Brexit, the list of worries for investors continues to pile up. The U.S. economic recovery will turn seven at the end of this month, but very few realize that or feel like it has helped them. In the face of all the bad news, the S&P 500 is still only 2.8% away from a new all-time high. So maybe things aren’t so bad?
Trading Places: The Brexit, the U.K., and the EU
by Matthew Peterson of LPL Financial,
This week’s vote in the United Kingdom (U.K.) on remaining in the European Union (EU) could have significant implications for both parties. Polling data suggest that the vote will be very close, though historically, in similar situations people vote retain the status quo in greater proportions than the polling suggests.
Brexit: Should They Stay or Should They Go?
by Burt White of LPL Financial,
June 23, the day the United Kingdom votes on whether to remain in the European Union, is circled on every calendar on every trading desk globally. The vote will likely be very close, and while the most recent opinion polls show the likelihood of a “leave” vote increasing, though with a margin of error and a sizable undecided vote, the outcome is still unknown.
ECB Corporate Purchase Program
by Anthony Valeri of LPL Financial,
The European Central Bank's (ECB) Corporate Securities Purchase Program (CSPP) is set to begin on June 8. This program was initially announced in March, and brings corporate bonds into the European quantitative easing (QE) program, in an attempt to lower debt costs broadly. Though the first purchases are yet to be made, European corporate yields have fallen significantly, showing that the market has priced in its impact, making further broad gains less likely. Still, the low-yield environment is likely to push foreign cash toward the relatively higher yields in U.S. markets, potentially keeping a lid on U.S. Treasury and corporate yields as well.
High-Yield Bonds Still Dependent on Oil
by Anthony Valeri of LPL Financial,
High-yield has continued its run of strong performance that started in mid-February 2016, but continues to remain highly dependent on the path of oil prices. Second quarter 2016 economic growth prospects have also helped, but have taken a backseat to the impact of oil. Fair valuations, rising defaults, and continued dependency on oil suggest caution after an impressive rebound since mid-February 2016.
GDP Gap
by John Canally of LPL Financial,
How fast the economy is growing at any given point in time is important to know. Citizens, policymakers, investors, central banks, and, in election years, politicians, all want to know how we’re doing. These days, they want to know instantly. The problem is, getting a good read on how fast an economy is growing, in real time, is difficult at best. Trying to ascertain how the sectors of an economy (manufacturing, consumer, business spending, construction, etc.) are performing is even more difficult. Yet, despite all the issues, every day, week, month, or quarter, we obsess over the economic data and the pace and composition of growth in the U.S. (and global) economy.
Jam-Packed June
by Burt White of LPL Financial,
June is filled with major market events that may go a long way toward determining the near term direction of the equity markets. They include an OPEC meeting, central bank meetings for the Fed, ECB and Bank of Japan, and the "Brexit" vote, a referendum on whether the U.K. will remain in the European Union.
The Great Bond Sell-Off of 2015: Repeating in 2016?
by Anthony Valeri of LPL Financial,
Although not perfect, the path of yields so far in 2016 bears similarities to 2015. Both 2015 and 2016 witnessed sharp declines in yield to start the year before yields moved higher during the second quarter. However, there are key differences this time around that may work in the bond market's favor.
Spinning Our Wheels
by Burt White of LPL Financial,
The one-year anniversary of the S&P 500’s all-time high took place on May 21, 2016. Stocks have largely been spinning their wheels for the past year. The S&P 500 has failed to return to its May 21, 2015, record high for 12 months. Stocks have actually been spinning their wheels for even longer, considering the S&P 500 is at the same level as it was on November 18, 2014—an 18-month stretch.
Gender Equality: Good for Business
by Team of LPL Financial,
Many of us were excited to learn that civil rights activist Harriet Tubman will soon be featured on the $20 bill. Unfortunately, for women who work jobs where men earn $20 per hour, they will only be receiving one Hamilton, one Lincoln, and one Washington for their hours of work.
Time to Buy Mortgages?
by Anthony Valeri of LPL Financial,
Mortgage-backed securities (MBS) may provide opportunity in a challenging bond market environment. High-quality bond prices remain near 2016 highs, and yields on Treasuries, investment-grade corporate bonds, and municipal bonds remain near the low end of recent ranges. MBS are in a similar situation but offer attributes that may present incremental value.
Building Blocks
by John Canally of LPL Financial,
Job growth may be slowing, but when put in a broader context, it may also be at the height of its new potential. In last week’s Weekly Economic Commentary, “Yet Another Disconnect,” we wrote that according to several Federal Reserve (Fed) officials, monthly job gains as low as 125,000 per month in the U.S. would be enough to tighten the labor market, take up slack in the economy, and push up wages and ultimately inflation.
What Might Trump the Election Year Pattern?
by Burt White of LPL Financial,
This week we look at what the upcoming presidential election may mean for markets in 2016. Following last week’s somewhat surprising news that both Ted Cruz and John Kasich had withdrawn from the race, Donald Trump will be the Republican presidential nominee. Given that Trump has no formal policy record or political experience of any kind, this election cycle is, needless to say, unusual. Markets do not like uncertainty, and Trump undoubtedly brings that to the table.
Consumer Check-In
by John Canally of LPL Financial,
The 75% run-up in oil prices from the multiyear lows hit in mid-February 2016 has raised concerns that the U.S consumer may run for the hills. However, a look at what consumers actually did over the past two years as oil prices fell more than 70% (from nearly $110 per barrel in mid-2014 to just above $25 in early 2016) can help us better understand what consumers may do now that energy prices could be on the way back up.
Is Sell in May Just a Cliche?
by Burt White of LPL Financial,
“Sell in May and go away” is probably the most widely cited cliché in stock market history. May is upon us, which every year sparks a barrage of Wall Street commentaries, media stories, and investor questions about the popular stock market adage. This week we tackle this widely cited seasonal pattern, but with a couple of twists thrown in to add some new perspective.
Value Comeback?
by Burt White of LPL Financial,
Value stocks have staged a comeback versus growth after a long losing streak. Based on the Russell 1000 style indexes, growth has outpaced value for the better part of the last decade. Other than the period between April 2012 and July 2013, it’s been all growth all the time since 2006.
Mixed Messages From Municipals
by Anthony Valeri of LPL Financial,
Low yields coupled with fair valuations send a mixed message from the municipal bond market. The shift from a challenging seasonal period to a more favorable one provides another. The passage of April 15, or April 18 as is the case this year, marks not only the tax deadline but also the end of a challenging seasonal period for municipal bonds. Tax-related selling can often pressure municipal prices as soon as the start of March, but lackluster performance in both stock and bond markets in 2015 limited capital gains that might result in municipal bond sales.
Following the Money in EM Currency Markets
by John Canally of LPL Financial,
Emerging markets (EM) tantalize investors with the prospects of higher returns; yet the key to these returns may be the value of the U.S. dollar. Currency movements impact all aspects of international investing, starting with the basic impact of adjusting gains for the change in currency value when determining total returns. However, changes in currency also impact areas like corporate earnings, the ability to repay debts, and the overall economic health of the country. These impacts are greater for EM investments, where currencies are more volatile and countries are more economically dependent on trade.
Taking Stock After the Rally
by Burt White of LPL Financial,
Stocks have had quite a nice run. Since the February 11, 2016 lows the S&P 500 has gained 14%. The rally has been driven by many factors?—?chief among them, better U.S. economic data, higher oil prices, the Federal Reserve’s (Fed) slower rate hike timetable, increased confidence in China, and more stimulus from overseas central banks. These factors have enabled stocks to trade more on fundamentals than fear, and have pushed the S&P 500 to just 2.4% below its all-time high. Here we assess the likelihood that the rally continues from this point forward, and, if so, how much further it might have to go.
State of the States
by Anthony Valeri of LPL Financial,
With the deadline approaching, taxes are front and center in the minds of investors. No one likes paying taxes, but they are of utmost importance to the financial well-being of state and local governments. Higher tax revenue has been a key driver of improving (in most cases) state and local government credit quality metrics by firming the financial standing of municipal government debt issuers. However, growth in state and local government tax revenue may be poised to slow, lessening the positive impact behind municipal credit quality.
Gauging Global Growth
by John Canally of LPL Financial,
As U.S. corporations begin to report their results for the recently completed first quarter of 2016, global growth will likely take center stage among investors. While comments from corporate managements on business conditions in Europe, Japan, China, and other emerging markets will be closely watched, those comments may be overshadowed. This week, the International Monetary Fund (IMF) will publish the spring edition of its World Economic Outlook publication.
Emerging Market Earnings: Is the Tide Turning?
by Burt White of LPL Financial,
After disappointing investors last year, emerging market earnings forecasts may finally be consistent with what can be delivered. Emerging markets (EM) have underperformed U.S. markets since the summer of 2011. The reasons are numerous, including concerns about the Chinese economy (the largest and most important among EM), the strength of the U.S. dollar, and the decline in commodity prices, just to name a few.
A Tale of Two Halves
by Anthony Valeri of LPL Financial,
The first quarter of 2016 is in the record books and for most, including bond investors, it was a tale of two halves. During the first six weeks of the year, domestic economic concerns, worries over the state of China’s economy, and a near 30% decline in the price of oil sparked a strong Treasury rally that drove high-quality bond yields lower—not just in the U.S., but globally as well. Then the last six weeks of the quarter saw a shift for lower-rated bonds, thanks to improving economic data and market-friendly central bank actions. Through all the ups and downs, it was a strong quarter for bond performance; however, we don’t expect this strength to repeat over the remainder of the year.
Q1 2016 Earnings Preview: No More Excuses
by Burt White of LPL Financial,
First quarter earnings results will not be very exciting, but the earnings trajectory may be at a trough. We would love to say that this earnings season, which begins on April 11, 2016 (unofficially), will bring better results than recent quarters, but that appears very unlikely.
Market's March Madness
by Burt White of LPL Financial,
The NCAA Men’s College Basketball Final Four is set. North Carolina, Oklahoma, Syracuse, and Villanova are headed to Houston, TX to determine this year’s hoops national champion. In that spirit, we share our own Final Four for the stock market this year: China, earnings, the Federal Reserve (Fed), and oil. Stock market investors may not storm the court at the end of this year, but we do continue to expect mid-single-digit total returns for the S&P 500 in 2016 based on our assessment of our “Final Four.”
The Fed's Spring Surprise
by John Canally of LPL Financial,
As 2016 began and 2015 ended, global financial markets faced plenty of uncertainty in the wake of the first rate hike by the Federal Reserve (Fed) in nearly nine years. Although the rate hike was well anticipated and priced in by many market participants, the Fed’s move forced markets to focus on imbalances in the global economy and financial markets that had been simmering for years. The fears about how (and when, if ever) those imbalances would be resolved led to an extreme bout of financial market volatility over the first few months of 2016.
Europe - Not Enough Growth
by Burt White of LPL Financial,
Forecasts for European corporate earnings have become increasingly pessimistic. Analysts have reduced calendar year 2016 expectations to just under 3% earnings per share (EPS) growth, currently from nearly 20% as of the end of September 2015. Even though European stock prices have declined, the collapse in growth expectations suggests that these markets are still fairly valued; few, if any, bargains have been created. Recent aggressive monetary policy by the European Central Bank (ECB) may have boosted stock prices, but the implications for corporate earnings are much less certain.
FOMC FAQS: All About the Dots
by John Canally of LPL Financial,
The Fed holds its second of eight FOMC meetings of 2016 this Tuesday and Wednesday, March 15–16, 2016.
The FOMC’s “dot plots” are likely to be at the center of attention.
Fed Chair Yellen’s first post-FOMC meeting press conference of 2016 provides an opportunity for the Fed to add color to its view of the economy, inflation, and financial market volatility.
Will Eight be Great for the Bull?
by Burt White of LPL Financial,
The bull market turns seven. Last Wednesday, on March 9, 2016, the bull market officially celebrated its seventh birthday. During that seven-year period, the S&P 500 nearly tripled, gaining 194% in price and producing a total return of 241%. Although our expectations for the stock market in 2016 are for only modest S&P 500 gains, we do not see the warning signs that have signaled the end of past bull markets and would not be surprised at all if the current bull market celebrates its eighth birthday one year from now.
Beige Book: Window on Main Street
by John Canally of LPL Financial,
The latest Beige Book suggests that the U.S. economy is still growing near its long-term trend, but that the drag from a stronger dollar and weaker energy prices, along with the slowdown in emerging market (EM) economies—most notably China,?are still having a major impact on the manufacturing sector. In addition, our analysis of the Beige Book confirms that there has been some spillover of weakness from the energy and manufacturing sectors to other parts of the economy in recent months.
An International Perspective
by Anthony Valeri of LPL Financial,
International factors can help explain the relative resilience of longer-term bonds from mid-February to the start of March. Since Treasury yields bottomed on February 11, 2016, the 2-year Treasury yield has increased by 0.15% compared with a more muted 0.09% rise in the 10-year Treasury yield. The relative resilience of longer-term .
Too Soon for March Madness?
by John Canally of LPL Financial,
As we enter March, market participants are already looking ahead to the Federal Reserve’s (Fed) next Federal Open Market Committee (FOMC) meeting. While the meeting isn’t until March 15–16, 2016, markets are already trying to decipher how the widening disconnect between what the Fed plans to do with the fed funds rate and what the market thinks the Fed will do will be resolved.
From Headwind to Tailwind?
by John Canally of LPL Financial,
Since the middle of 2014—as markets prepared for the start of Federal Reserve (Fed) interest rate hikes and more easing from the European Central Bank (ECB) and the Bank of Japan (BOJ)—the U.S. dollar has been on a near historic run higher versus the currencies of major U.S. trading partners. I
How Extreme It Is
by Anthony Valeri of LPL Financial,
The 10-year Treasury yield has fallen by 0.6% over the past six weeks, a very rare occurrence. Going back 20 years, such a noteworthy yield decline over such a short period of time has occurred only 2% of the time since February 1996. Figure 1 illustrates not only the rarity of such large yield declines, but also the significant events that pushed high-quality bond prices higher and yields lower. Recessions or global crises are the most frequent catalyst, although the current episode has no single driver. China growth fears, oil prices, sluggish U.S. economic growth, and most recently, bank cr
Data-Driven Perspective on a Rough Start to 2016
by Burt White of LPL Financial,
It has been a rough start to 2016 for the stock market. In fact, it’s been one of the worst starts to a year in the history of the S&P 500. This week we look at how stocks have done historically after other similarly bad starts, compare current fundamental and technical conditions to prior bear market lows, and discuss some potential catalysts that could help turn stocks around. While recession odds have risen (we place the odds at about 30%), we do not expect the S&P 500, down 12.5% from 2015 highs, to enter a bear market.
Watch Out for Falling Angels
by Anthony Valeri of LPL Financial,
The potential downgrade of over $100 billion worth of investment-grade rated bonds into the high-yield market looms as the next challenge for corporate bonds. The decline in oil and commodity prices may lead to $120–150 billion worth of bonds leaving the investment-grade corporate bond market and entering the high-yield bond market.
Is the Year of the Monkey a Good Sign for Bulls?
by John Canally of LPL Financial,
Yesterday was the Chinese New Year, and with it comes the year of the Monkey. There are 12 animals in the Chinese zodiac, as it is based on a 12-year cycle. Take note that the Chinese New Year starts anywhere from mid-January to mid-February and is based on the lunar calendar.
Groundhog Day?
by John Canally of LPL Financial,
In recent weeks, there have been plenty of “groundhogs” in the financial markets and in the financial media. For some investors, the fear is that the market’s performance in January 2016 will be repeated over and over again, as in the classic 1993 film Groundhog Day starring Bill Murray and Andie MacDowell. Other investors fear that 1998 will play out all over again, triggered by central bankers’ policy mistakes, volatile currency markets, wave after wave of currency devaluations, and eventually a sovereign default.
Results 201–250
of 359 found.
