Category Archives: Wall Street

2013 Remaining Market Outlook

Investors continue to listen for clues from the Federal Reserve (“Fed”) and are making adjustments to their portfolios to brace themselves for an inevitable environment of rising interest rates. Whether the Fed actually increases rates later this year, in 2014 or by the middle of 2015 is somewhat irrelevant as market perception of interest rates has already changed and affected bond prices and their associated yields. Reductions in the Fed’s monthly bond purchase program (which could start as soon as later this year but is more likely to start early in 2014) will also impact bond prices and yields. As result, we would expect the rotational shift out of fixed income funds and into equity and alternative asset class funds to continue.Read more

Investors on Defensive heading into 1st Quarter Earnings Season

For the first quarter of 2013, defensive sectors were the front runners as Health Care, Consumer Staples and Utilities were top quarterly performers. This took many by surprise as one would tend to believe that more economically sensitive sectors (Ex. Cyclicals) would be out in front of a market that was accelerating higher at a considerable speed. Alexandra Scaggs recently wrote in a Wall Street Journal (WSJ) article entitled, “Stock Rally Strikes a Defensive Tone” that these three sectors are “…relatively insulated from the state of the economy; people will cut back on spending in tight times but not on medication, food or electric bills.” Perhaps this reveals the types of sectors that are positioned to perform better within a “plow-horse economy” or perhaps this is a result of the risk tolerance comfort level of many investors who re-entered the stock market during the first three months of the New Year. To this end, Scaggs wrote in the same WSJ article cited above that some investors seem to be, “…concerned about growth in the U.S. and abroad…searching for investments that will offer steady cash payouts as interest rates remain low.”Read more

What to Make of the Dramatic Drop in Gold Prices

As I write this post on April 15, spot Gold prices, according to Bloomberg, settled down approximately 9% for the day (which marks the biggest one day decline since February of 1983) while spot Silver prices were down approximately 12% for the day. Other precious metals, and industrial metals for that matter, have not escaped the recent downward pressure on commodity prices as Platinum, Palladium, Aluminum and Copper also posted losses on April 15. It is worthwhile to note that other Energy and Agriculture commodities are also down for the day.Read more

The Stock Market and the Economy: A Tale of Two Cities

Since the end of the 4th quarter of 2011, the U.S. economy has been contracting. 2nd Q GDP’s most recent revision came in at 1.3% - a pretty concerning level - with most components revised down from previous estimates. Moody’s Economics Group reported that this third estimate was a downward revision from the 1.5% reported in the advance release and a reduction from 1.7% in the second release. While some of the slowdown came primarily from a decline in farm inventories, due to the drought in the mid-west, consumer service spending, exports and durable goods all declined as well. Barron’s noted that business activity contracted in September, for the first time in 3 years, while durable goods orders declined 13% in August vs. July - the biggest decrease in three years as well. Unfortunately, the most recent news doesn’t appear to be getting any better. As Bespoke Investment Group put it in their September 28, 2012 “Week in Review” article, “It certainly wasn’t a great week on the economic front, as 11 reports came in worse than expected, versus just 6 that came in better than expected,” and, “It’s hard to imagine where this market would be without QE3.”Read more

Spain Reminds us that the Worst is Yet to Come in Europe

Spain, which has the 4th largest economy in Europe, is currently struggling with high unemployment (the highest unemployment rate in Europe), increased borrowing costs, a stressed banking system and rising tensions amongst its citizens as it relates to austerity measures being considered by Spanish Prime Minister Mariano Rajoy. Does this sound all too familiar? Take out the word “Spain” and insert the word “Greece” and the first sentence might have been the beginning of one of our market commentaries from several months ago.Read more