HO HO HO! Merry Christmas

How would you like some heating oil (HO) for Christmas?  Chances are you wouldn't really like that too much, especially if you agree with this report from Morningstar that quotes, "Nobody would ever put oil in their house unless there was no gas on their street." Despite the S&P GSCI Heating Oil (spot return) losing 12.7% this month through December 18, it is the only commodity in the energy sector whose excess return of -11.5% is greater than its spot return.  With oil prices falling Read more [...]

The Ruble’s Currency Crisis

After sliding slowly down for most of the year, The Russian ruble dropped 20% in the last ten days. The slide began with the weakening Russian economy, sanctions imposed by the US and the EU last summer and falling oil prices.  All these factors were present for many weeks and none explain the sharp move seen at the right hand end of the chart where the ruble/dollar rate jumps. There were two immediate causes. The first, and less important, was a bill passed by Congress authorizing additional Read more [...]

Blood in the bourses of Moscow

Things are not all well with Russian equities.  The S&P Russia Broad Market Index has lost more than half its value in U.S. dollar terms since the summer.  There is figurative blood on the streets.  If we were to follow the example of the founding members of the Rothschild banking dynasty, we would be lending money to Russian companies and buying up their shares. The case for investing in Russia now is certainly thought-provoking.  At current prices, the Russian BMI is trading on a trailing Read more [...]

The Commodity Flip NOT Flop Of 2014

Six months ago, commodities looked like they were on the brink of a comeback. The S&P GSCI Total Return gained 7.4% YTD through June 20 at its high.  Back then, almost a record number of commodities, 12, were in backwardation, reflecting shortages in Brent Crude, Cocoa, Copper, Corn, Cotton, WTI Crude Oil, Feeder Cattle, Gold, Live Cattle, Natural Gas, Soybeans and Unleaded Gasoline. Now, the S&P GSCI TR has lost 1/3 of its value, mostly coming from oil since taken together WTI Read more [...]

Ouch! Oil Prices Sting Lower Credits, Pushing Yields Lower on Safer Bonds

The yield-to-worst of the S&P/BGCantor Current 10 Year U.S. Treasury Bond Index moved down 22 bps last week, to close at 2.09%.  This level of yield has not been seen since June 2013.  The lowest level seen for this index was 1.4% in July 2012.  The index returned 1.49% MTD and 12.33% YTD as of Dec. 12, 2014. This week, investors will be eyeing any news that comes out of the Fed’s last meeting for the year, which will be wrapping up this Wednesday.  Any indication on the timing of a Read more [...]

Inside the S&P 500: The Dividend Aristocrats

Dividends are ever-popular with investors, but owning dividend stocks or an ETF which tracks an index focused on dividends comes with one big worry: will the companies continue to pay dividends?  One of the surest signs that a stock is about to collapse is when the company announces it is reducing or eliminating the dividend.  While there is no way to guarantee that a stock will continue paying dividends, many investors look to the company’s past history for some hint of what it might do in the Read more [...]

A Keynesian Puzzle for Fed Watchers

The Wall Street Journal and Bloomberg surveys both report that Fed watchers and economists continue to expect the Fed to raise interest rates beginning in mid-2015.  There is enough widespread agreement that the Fed will move on interest rates next year that some forecasters now predict that the Fed’s next policy statement will drop the phrase “for a considerable period of time” when describing how long rates will remain at current levels. At the same time, a few Fed officials and regional Read more [...]

Low Chinese CPI: A Commodity Catalyst?

Following weak Chinese economic data, several headline stories broke about commodities crashing although the only sectors with consistent losers are energy and grains.  One news story stated, "Copper prices resumed their decline on Wednesday, after data showed that inflation in China slowed to the lowest level in five years, underling concerns over a slowdown in the world's second largest economy." This might seem backwards given the CPI is a reflection of historical prices rather than an expectation Read more [...]

How Do You Communicate Risk Management in a Year When it Doesn’t Matter?

The S&P Dow Jones Indices Financial Advisor Channel has followed the progress of Exchange Traded Fund (ETF) Strategists with interest for over four years. In fact, we have developed close working relationships with many of those firms. They are often champions of indexing; power-users of ETF use in portfolio management. Whether one tracks ETF strategists by assets under management (AUM) or inflows, the last four years have shown that business has been good for these firms as a collective body Read more [...]

A Comparison in Market Performance for First Six Months of Modi in 2014 versus First Six Months of Manmohan in 2009

As of Nov. 26, 2014, Modi “Sarkar” (Modi’s government) has completed six months of leading the central government.  Since Mr. Modi assumed office, there have been high expectations from the corporate community, not just in India, but across the world.  This is represented by the barometer of the market in India: the S&P BSE SENSEX.  Over the past few months, the S&P BSE SENSEX has repeatedly recorded new all-time highs.  A similar atmosphere was seen in 2009, when it became clear Read more [...]