July 31st: More Sellers than Buyers

Stocks closed down today with the S&P 500 and the Dow Jones Industrials both down 1.8% despite yesterday’s stronger-than-expected GDP report, numerous earnings reports which beat Street expectations and no hints of early interest rate moves from the Fed.  Bearish or negative news stories weren’t much different from the day or week before – unrest in the Middle East, sanctions on Russia in response to fighting in the Ukraine and an on-going argument between Argentina and a hedge fund over Read more [...]

Late July Muni Minutes

Long-term bonds have posted solid gains thus far in 2014, with rates holding low longer than most expected. The composition of the municipal bond market is heavily weighted with short duration bonds. The looming sentiment of rising rates and inflation has investors focused on reinvestment risk; however, a supply imbalance systemic of voters’ hindrance for governments to take on additional debt has municipals as a whole outperforming their peers. This is demonstrated in the S&P Municipal Bond Read more [...]

Contributing to the Active vs. Passive Debate: The Grand Launch of the SPIVA® Europe Scorecard

Following the success of the SPIVA publications in the U.S. and elsewhere, we have decided to launch a similar publication for Europe to shed some light on the ongoing active vs. passive debate.  Similar to the publications in other regions, SPIVA Europe will be published twice a year; mid-year and at the end of the year. Let’s have a look at the results of the past year. Euro-Denominated Equity Funds The past year saw a strong rebound of the European equity markets, as measured by the Read more [...]

Will the S&P/Case-Shiller Reverse The Trend Or Are Spreads The True Indicator?

Today’s Pending Home Sales for June month-over-month came in lower than the expected 0.5% at a -1.1%.  The prior May number was a 6.1% later revised to a 6.0%.  Tomorrow the S&P/Case-Shiller 20-City Composite Home Price Index is due for release at 9am. Heading into the release, the spread of the S&P/ISDA CDS U.S. Homebuilders Select 10 Index is at 155.7, steadily increasing the cost of insurance throughout the month after an initial step down the first week.  Year-to-date the cost Read more [...]

Now Your Penny Is Worth More: It’s What’s On The Inside That Counts

Do you know what is inside that seemingly copper penny? It may be more valuable than you think. I'll give you a hint: It rhymes with think. Inside the industrial metals, we usually speak of copper and aluminum, especially in the context of the spread trade where it seems aluminum is perpetually more abundant than copper. Also, copper has a reputation, though not well-deserved in my opinion, of predicting the health of the economy, earning a nickname of "Dr. Copper." However, this year, nickel Read more [...]

Big Week for Economic Numbers and the Fed

By lunch time next Friday (August 1st) we will have many more numbers about the economy, maybe we will know more about the economy.   The week starts slow with pending home sales on Monday, likely to show that sales of existing home are okay. Tuesday brings the S&P/Case-Shiller Home Price Indices; recent months revealed that the pace of price increases is slowing.  After warming up with two days of data, Wednesday brings second quarter GDP and the Fed’s announcement following its two day Read more [...]

Weighing In: On Diversification

Diversification is one of the main reasons investors use commodities in their portfolios. Despite the fact that in only 4 years since 1970 did commodities and equities drop in the same year (1981, 2001, 2008, 2011), investors lost confidence in commodities as a diversifier as the correlation spiked with equities after the crisis. That confidence is starting to return as investors watch the correlation fall into negative territory, even lower than the historical averages of 0.20 for the DJCI and Read more [...]

Back to the Future for Small-caps

Suppose you were a financial advisor during the height of the financial crisis in the first quarter of 2009, and you presciently theorized that the market was bottoming as Federal Reserve policies and emergency U.S. Treasury rescue programs took hold to reestablish confidence in capital markets. Your theory was to favor small-cap stocks because you believed massive monetary stimulus would result in strong fundamental growth and multiple expansions for this group. The challenging question you would Read more [...]

Don’t Doubt the Economy

Amidst the worries over some future Fed tightening, misplaced angst about inflation and chatter about the S&P 500 touching 2000, investors seem to be ignoring a few reliable economic indicators.  One of the more consistent signs is the weekly initial unemployment claims report – people applying for unemployment insurance.  The news is good and the economy is strong. The chart shows a four week moving average to smooth out a few bumps and some noise. The pattern is clear all the way Read more [...]

Mid-July Muni Minutes

Detroit: The anniversary of the city of Detroit essentially declaring bankruptcy by cancelling payments on $40 million of debt obligations last summer is not dragging down the state of Michigan. As observed by the S&P Municipal Bond Michigan General Obligation Index, the state’s debt is trading on par with the rest of the U.S. municipal bond universe.   Both Michigan G.O. bonds and the S&P Municipal Bond Index have annual returns between 6-7% with yields struggling to eclipse 3%. The Read more [...]