Editorial Results (free)
1. Playing the Pullback
- Wednesday, August 26, 2015
After four years of up, markets have quickly entered correction territory. Unfortunately, since most investors operate with short memories, the current pullback feels major since recent comparisons have been minor. However, markets corrections don’t presage negative annual returns.
2. Why China Devalued: Global Oversupply
- Friday, August 21, 2015
If I demand a new widget today, a supplier will build one for me. If I later change my mind, the widget will still exist. Perhaps my supplier relied on debt to fund its construction. If so, the supplier now has to find a new source of demand or they must restructure the loan.
3. What the Fed Says Will Matter More than What It Does
- Wednesday, August 12, 2015
At her first press conference in March of 2014, Fed Chair Janet Yellen timestamped the first interest rate hike as “something in the order of around six months” post the Fed’s bond buying QE campaign.
4. Departing Thoughts from Asia
- Wednesday, July 29, 2015
This entry will be my last submission penned while living in Asia, so rather than discuss the market’s recent wiggles, I thought I would share some top of mind takeaways as I prepare to depart Hong Kong.
5. Checking the Vitals
- Wednesday, July 22, 2015
Now that the Greece flare up and China arrhythmia have subsided, let’s perform a quick physical on the markets to reassess the vitals.
While it’s true that the U.S. central bank seems determined to raise rates, most of the rest of the world is still cutting them. History reveals that rate movements adhere strongly to inertia. In other words, up movements last a while, down movements last a while and sideways movements last a while. To wit, 10-year U.S. Treasury bonds yield around 2.3 percent, roughly what they have yielded since mid-2011.
6. Waddell and Associates Honored by CNBC
- Saturday, July 18, 2015
Memphis-based wealth management firm Waddell and Associates Inc. has been ranked 29th on CNBC's list of “Top 100 Fee-Only Wealth Managers” for 2015.
7. Waddell and Associates Honored by CNBC
- Friday, July 17, 2015
Memphis-based wealth management firm Waddell and Associates Inc. has been ranked 29th on CNBC’s list of “Top 100 Fee-Only Wealth Managers” for 2015.
8. Money & Markets Around the World
- Wednesday, June 24, 2015
On central bank policy: At an early press conference, Janet Yellen quipped that the U.S. Fed might initiate rate hikes six months after QE, corresponding with March of 2015. She has been backpedaling ever since.
9. Investors, Mind Your Footing
- Wednesday, June 17, 2015
Bonds Can Lose Money After All. Heightened Fed concerns mixed with rising inflation indices in the U.S. and Europe have continued to press interest rates higher across the curve.
As a consequence, the vast majority of bond market indices have turned negative on the year. The Barclays U.S. Aggregate Bond Market index has shed 0.73 percent, while the longer dated U.S. Treasury 20+ Year index has fallen more than 7 percent through June 11.
10. Mr. Market Raises Rates
- Wednesday, June 10, 2015
While the Fed deliberates over short-term interest rate policy, Mr. Market has acted and raised long-term rates.
Recall that long-term sovereign bonds trade in relation to one another globally. Over the past couple of years, U.S. Treasuries have traded at yields 1.5 percent higher than the 10-year German bond. The 1.5 percent spread accounts higher level of inflation in the U.S., making the inflation-adjusted yields pretty similar.
11. What Would Janet Do?
- Wednesday, June 03, 2015
We have now entered the Fed’s target time zone to raise rates. Clearly, the Fed wants to hike rates as a way to signal that the economy no longer requires “emergency assistance.”
Since the markets are obsessed with the pace and slope of rate hikes, and have not moved at all for months because of it, let’s try and climb inside the mind of the Fed to answer, “What will Janet do?”
12. Do Not Fear What You Should be Afraid Of
- Wednesday, May 27, 2015
There are factors conspiring in the market’s industrial kitchen right now that might lead to a fit of indigestion for investors. This week we will look at the three main ingredients and discuss how to medicate.
13. Do Not Fear Europe’s Recovery
- Wednesday, May 13, 2015
Interest rates determine the cost of capital for corporations, directly influence the capitalized value of corporate earnings and establish relative value positions within the currency markets. Simply stated, meaningful shifts in interest rates create meaningful shifts in the investment marketplace.
14. Blame Fed for Lame Q1 GDP?
- Wednesday, May 06, 2015
The U.S. economy grew 0.2 percent in the first quarter, well below analyst consensus. The fairly typical excuses followed the release, from weather to port strikes, to the first quarter growth curse that has stifled Q1 numbers since the financial crisis. The Fed even brushed off the weak numbers as a consequence of “transitory factors.”
15. Don’t Buy This ‘Market’
- Wednesday, April 29, 2015
Last week, the Nasdaq, the S&P 500 and the New York Stock Exchange composite indexes all hit new historic highs, bolstered by falling rate hike expectations. In the market environment of the day, economic softness causing falling revenues and falling prices (see first-quarter earnings season) holds less influence than falling interest rates.
16. Expect the Fed to Fold
- Friday, April 24, 2015
Last Wednesday, the International Monetary Fund released its World Economic Outlook report. While it did not change its forecast for the pace of global economic growth in 2015, it did alter the composition.
17. Rising Dollar, Falling Expectations
- Wednesday, April 01, 2015
The first quarter of trading for 2015 came to a close on Tuesday, March 31. As of March 26, the U.S. dollar stands 8 percent higher for the year, the yield on the 10-year Treasury stands 8 percent lower on the year and the S&P 500 has fallen a conviction-less 0.10 percent.
18. Big Day Lived Up to the Hype
- Thursday, March 26, 2015
We have asserted since late 2014 that March 18th would mark the biggest day of 2015 as the Fed mapped out its medium-term interest rate policy.
A hawkish (restrictive) statement on March 18th would boost the dollar, increase market interest rates and decrease stock market values. A dovish statement (stimulative) on March 18th would weaken the dollar, lower interest rates and increase stock market values. With so much riding on the decision, debate and pre-positioning became fierce!
- Tuesday, February 03, 2015
Bass Pro Shops will host a job fair to fill 600 full-time and part-time jobs Tuesday and Wednesday, Feb. 3-4, from 8 a.m. to 7 p.m. at the Memphis Cook Convention Center, south exhibit hall, 255 N. Main St. Visit basspro.com/careers for more information.
- Saturday, January 31, 2015
On Location: Memphis will host screenings of Oscar-nominated animated short films Tuesday, Feb. 3, at 7 p.m. and Oscar-nominated live-action short films Wednesday, Feb. 4, at 7 p.m. at Malco Studio on the Square, 2105 Court Ave. Tickets are $10 per night and are available at onlocationmemphis.org.
21. Why the Market has Fallen in 2015
- Wednesday, January 28, 2015
The stock market overreached in 2013, expecting big things from 2014. Earnings estimates for 2014 were for growth of 10 percent-plU.S. . High expectations boosted valuations above long-term averages.
22. Why the Market Has Fallen in 2015
- Thursday, January 22, 2015
Stronger dollar = higher valuations. The stock market overreached in 2013, expecting big things from 2014. Earnings estimates for 2014 were for growth of 10-plus percent. High expectations boosted valuations above long-term averages.
23. 2015: The Currency War
- Thursday, January 15, 2015
War sounds scary. In the traditional sense, war evokes casualties and loss. For investors, currency wars simply convey economic redistribution.
For instance, if there were only two stores in town selling identical items and one store raised prices while the other store lowered prices, demand would certainly follow the discount … but overall demand would be the same.
24. Don’t Be a Hero, Leave Rates at Zero
- Wednesday, December 24, 2014
As if we needed further evidence that investment markets price off of central bank soliloquies, markets worldwide rallied 4.5 percent last week in reaction to a short press release from the U.S. Fed.
25. Fear Drives US Stocks Higher
- Wednesday, December 17, 2014
In 2014, more than 600 hedge funds have disbanded. Even accounting for the carnage of 2009, this amounts to a record pace of “smart money” failures. In the more pedestrian mutual fund realm, active money managers are having their worst year of relative performance ever.
26. US Decoupling
- Tuesday, December 09, 2014
The Eurozone, Japan and select emerging markets all seem to be struggling economically with low inflation levels, poor policy responses, and low demand. Meanwhile, the U.S. keeps posting surprisingly strong economic numbers.
27. I Choose Memphis: Philipp von Holtzendorff-Fehling
- Monday, November 24, 2014
“I Choose Memphis” spotlights Memphians who are passionate about calling this community home. New Memphis Institute provides the profiles.
Name: Philipp von Holtzendorff-Fehling
28. Dollar, S&P Levels Point to 1996
- Thursday, November 20, 2014
As trading becomes more mechanized, investors must consider not only market fundamentals but also what‘s driving the algorithms. With the proliferation of ETFs, less analysis occurs at the security level, and more analysis occurs on the technical level.
29. Fed Folds Quantitative Easing
- Wednesday, November 05, 2014
Nearly five years after the conclusion of the Great Recession, the U.S. Federal Reserve has chosen to conclude its quantitative easing program. Ben Bernanke thought long and hard about the potential for Central Bank “emergency measures” like QE throughout his academic career. His devotion to Milton Freidman and the quantity theory of money (money supply * velocity = GDP) provided the orthodoxy for the U.S. response to the financial crisis.
30. China’s Growth Gut Check
- Wednesday, October 29, 2014
The global economy is a symphony of regional and local economies interconnected by trade, interest rates and currency movements. We can generalize the influence of our leading instrumentalists in the following ways.
31. The Return of King Dollar
- Wednesday, October 01, 2014
The market’s game ball in the third quarter goes to the U.S. dollar. The U.S. dollar rose 7 percent, boosted by the comparative hawkishness of the U.S. Fed. The currency has now advanced for 11 consecutive weeks, its longest winning streak in nearly 20 years (although the uptrend actually started in mid-2011). What should you know about the return of King Dollar?
32. Robotic Rise of the S&P
- Wednesday, September 24, 2014
The S&P 500 hit a new all-time high again last week for the 34th time so far this year. However, U.S. stocks appear increasingly detached.
While the S&P 500 has risen nearly 10 percent year-to-date, stocks outside the US have returned less than 3 percent. In fact, U.S. stocks have pummeled their international competition by an astounding 70 percent over the last five years.
33. Government for the Prosperity of the People
- Wednesday, September 17, 2014
The reporting out of the US on China is uniformly downbeat. By applying our western perspectives, China appears inhumane, politically oppressive, over-indebted and fragile.
From the American perspective, functional nations should look more ... well ... like us. They should have democracy, inalienable property rights, free and open markets, freedom of expression, apple pie, etc. Our national belief in the ideology of American exceptionalism defines our worldview.
34. Woeful Period for US Markets
- Thursday, September 11, 2014
September 8, 2014, S&P 2000 = 11 + 4 percent + 11 percent + 1.5 percent + 2.5 percent. The last five years have been consistently wonderful for the U.S. markets. Over the time period, the S&P 500 has advanced more than 17 percent annually. Only four bull markets (advances uninterrupted by a 20 percent decline) have lasted longer and returned more. What has this bull been eating?
35. The Dollar Strikes Back
- Wednesday, September 03, 2014
Movements between the dollar, euro, and yen profoundly impact global flows of goods and capital. Given recent language and policy shifts from the U.S. Federal Reserve (FED), the European Central Bank (ECB) and the Bank of Japan (BOJ), let’s re-examine global currency trends.
36. Meet Hong Kong
- Wednesday, August 27, 2014
I just realized that while I have now lived in Hong Kong for nearly a month I have failed to properly introduce you. Allow me to give you the tour.
Between 1842 and 1997, the British controlled the 425-square-mile territory of Hong Kong, which includes Kowloon, the New Territories and over 200 smaller islands. Its proximity to China and its naturally deep water ports make Hong Kong an ideal trade destination. When China reopened in the 1980s, manufacturing boomed in nearby Shenzhen, and Hong Kong became the natural financial and logistics center ... in a way, China’s front office.
37. Fuchs Joins Vaco Logistics as Recruiter
- Wednesday, August 27, 2014
Eddie Fuchs has joined Vaco Memphis as an executive recruiter for Vaco Logistics, where he’ll consult with distribution, transportation and manufacturing companies to help identify candidates for leadership and specialized skill positions. Fuchs, who previously worked in the business development department of Intermodal Cartage Co., was recently named to the Greater Memphis Chamber’s 2014 Young Memphians list.
38. Fed-Casting the Next Six Months
- Thursday, August 21, 2014
The central questions for this aging bull market involve the timing, pace and degree of interest rate increases. Low interest rates make equity earnings larger and more valuable. Freeze interest rates here and stocks look cheap. Increase them to historical norms and stocks look expensive.
39. Where the Values Aren’t
- Thursday, August 14, 2014
Downturns, while painful, can be very useful for the information they provide.
The S&P 500, representative of U.S. large cap stocks, declined 4 percent between July 24 and Aug. 7. Limiting our data set to this time period produces a couple of interesting observations. First, while interest rates didn’t actually move as feared, interest rate sensitive investments did. Master limited partnerships, utilities and high dividend payers underperformed over the period. Second, the emerging and frontier markets outperformed notably.
40. Asia Feels Boost From US GDP
- Thursday, August 07, 2014
Yippee, GDP! Last week, the U.S. government reported that GDP in the second quarter grew 4 percent and revised the first-quarter number upward from -2.9 percent to -2.1 percent. U.S. equity markets celebrated briefly and then became seriously fearful of Federal Reserve inflation countermeasures.
41. FedEx Founder Highlights Economic Club Fall Slate
- Thursday, July 31, 2014
FedEx founder Fred Smith will make a rare public speaking appearance in Memphis Nov. 6, as part of the fall 2014 lineup of speakers planned for the Economic Club of Memphis.
42. Asia Votes for Growth
- Wednesday, July 30, 2014
I write to you this week from Hong Kong. For the next 12 months I will be working remotely from China in order to closely evaluate conditions within the Asian economies. In addition to my usual market musings I will share my Asian insights and inspirations as they arise … like this one.
43. Second-Quarter Scoreboards
- Friday, July 04, 2014
With central bank stimulus offsetting moribund economic data and geopolitical depressants, this market continues its low volume, low volatility ways. With the absence of news and trading strategies capturing our attention at the moment, let’s take a look back at the second quarter and identify the winners and losers.
44. What Could Possibly Go Wrong?
- Wednesday, June 18, 2014
The most commonly cited indicator of complacency, the VIX or volatility index, recently hit a low of 10.73, a level not seen since early 2007.
Now a low VIX does not in any way signal an imminent crisis, but it does indicate a very complacent consensus susceptible to even slightly unpleasant surprises. Sadly, when the markets cannot find a reason to sell, Murphy ’s Law always provides one.
45. What’s Up With Low Rates?
- Wednesday, June 04, 2014
As 2013 drew to a close, investors bid up “risky” assets and sold “safe” assets in anticipation of a robust 2014. “Risky” stocks rose 30 percent and the “safe” 10-year Treasury bond lost 4 percent.
46. How Low Can We Go?
- Thursday, May 29, 2014
With the S&P 500 back at all-time highs, investors may be experiencing a bit of altitude sickness. With the S&P 500 now up 180 percent from the bottom, it’s right to question how much upside remains. However, the better question might be how much downside lies below.
47. Economic Experts Offer Analysis, Forecast
- Monday, May 19, 2014
A report from Fitch Ratings May 14 declared that going forward the U.S. economy will have to grow without the help it has enjoyed in recent years from things such as low interest rates and government spending.
48. Prescott Earned Place in Sports Hall of Fame
- Friday, May 16, 2014
On Easter Sunday, April 17, 1960, a 13-year-old Allie Prescott and his father were sitting down the third-base line at Russwood Park watching an exhibition game between the Cleveland Indians and the Chicago White Sox.
49. IronHorse Makes New Hire, Launches Mutual Fund
- Saturday, May 10, 2014
Memphis-based investment firm IronHorse Capital Management has hired a managing director for national sales, a new hire that comes at the same time as the firm has launched its first mutual fund product.
50. The Market Whisperer
- Saturday, May 10, 2014
When economic analysis gets reduced to a binary choice between opposites like bullish or bearish, up or down, strong or weak, the complexity that helps explain the way things are gets lost in a thicket of sound byte-ready oversimplification.
51. Low Expectations Catch Up With Reality
- Wednesday, April 30, 2014
There is no better propellant for a market than low expectations. The S&P 500 has gained roughly 3.5 percent during this earnings season as expectations recalibrated with reality.
According to Factset, the the S&P 500 collectively will earn .2 percent less than they did a year ago, versus pre-earnings season expectations of a 1.5 percent decline. So, don’t confuse this rally in sentiment with a rally in fundamentals. That will come later in the year … or so it is expected.
52. Daily News Seminar Looks at State of Economy
- Tuesday, April 29, 2014
The recession that gutted the economy in recent years has, among other things, replaced good, high-paying jobs with jobs that don’t pay especially well.
That’s among the findings of a new report from the National Employment Law Project, which analyzed trends related to jobs in the aftermath of the recovery. It’s one example of how there’s plenty of ground to dig into as part of an analysis of the qualities of the economy of the moment, and The Daily News’ next seminar will do just that.
53. Return to Value
- Wednesday, April 16, 2014
Last week, we discussed that the wrestling match between stimulus and global debt deleveraging will continue to create anxiety and volatility for investors. Viewing the world through this prism helps to clarify seemingly baffling market movements.
54. Renewing Our Vows
- Thursday, April 10, 2014
Last week, U.S. indices ascended briefly back into record territory on supportive comments from global powerbrokers.
In Europe, Mario Draghi, the head of the European Central Bank, initiated a bold conversation on monetary stimulus measures. Reality has set in across the Eurozone that the euro is too strong and inflation too weak for enduring economic expansion.
55. Now Tack!
- Thursday, April 03, 2014
In sailing, when the wind shifts direction, you must move your sails or risk losing the wind. The first indication of a shifting breeze comes from the telltales, strips of lightweight material attached to the sails that foreshadow a change in conditions. Recently, the market telltales have been active.
56. Higher Markets Ahead?
- Wednesday, March 26, 2014
Fed testimony last week addressed burning economic and policy questions for investors. How did they respond? Fearfully, joyfully and indifferently. Just as they have to nearly every news item so far this year.
57. Looking Backward and Forward
- Thursday, March 06, 2014
The Look Back This time last year we predicted that 2013 would revive investor animal spirits. In fact, investors were downright euphoric last year, absolutely gorging themselves on stocks, buying at a record pace.
58. How to Fight the Flat
- Thursday, February 27, 2014
Markets have regained their composure after a sharp, but necessary, sell off in early January. Sentiment has now retreated from the euphoric levels reached toward the end of last year, to more neutral levels.
59. Muddling Through the Muddling Through
- Wednesday, February 12, 2014
Last week’s December jobs number was billed as an economic tiebreaker after a string of mixed data. The release depicted a softening employment environment. The U.S. economy created 113,000 jobs in January against expectations of 185,000. Over the trailing three months, the economy has added an average of about 150,000 new jobs per month versus 200,000 per month reached last summer/fall. With the jobs market downshifting, can the Fed do more?
60. Understanding 2014
- Wednesday, February 05, 2014
Last week, the government released GDP statistics for the fourth quarter of 2013. Overall, the economy expanded at a 3.2 percent clip (above estimates). For the full year, the economy grew a less impressive 1.9 percent, but momentum was clearly built into the back half of the year. Expectations for 3 percent annual growth in 2014 remain intact.
61. What to Expect When You’re Expecting
- Wednesday, January 22, 2014
S&P 500 corporate earnings in 2013 likely grew about 6 percent. The S&P 500 price index, however, grew 29.6 percent. The difference between the growth in earnings and the growth in the price index amounts to P/E expansion.
62. Consider Selling Momentum, Buying Contrarian
- Wednesday, January 15, 2014
The S&P 500 has been the world’s performance bell cow since the great recession on the relative strength of the U.S. economic recovery. The S&P 500 has outperformed the MSCI All World ex USA All Cap Index by 17 percent over the last year, 11 percent annualized over the last three years and 5 percent annualized over the last five years.
63. Council Approves Ballpark Deal
- Wednesday, January 08, 2014
Memphis City Council members approved the city’s $19.5 million purchase of AutoZone Park Tuesday, Jan. 7, and another $4.5 million in improvements to the baseball park.
The deal includes the St. Louis Cardinals buying the Memphis Redbirds franchise and entering into a 17-year lease with the city of Memphis at $300,000 a year.
64. It Pays to Look Forward
- Wednesday, January 08, 2014
The thundering herd that carried the equity markets into the record books in 2013 seemed spooked by the first few trading days of 2014. Should we read into this?
Perhaps, but it more likely indicates portfolio rebalancing rather than a widespread repositioning of wagers. Those rebalancing their portfolios need to sell stocks to provide currency to replenish underperforming asset classes. For those that shifting wagers, what new bets might pay off in 2014?
65. What Does the Fed Say?
- Friday, December 27, 2013
Ben Bernanke announced a tapering of the Federal Reserve’s asset purchase program from $85 billion to $75 billion at his final FOMC meeting last week, and contrary to pundit fears, the Dow Jones Industrial Average threw him a going away celebration by rallying to new highs. What he said:
66. The Economy in 2013: Naughty and Nice
- Wednesday, December 18, 2013
Thanks to the Federal Reserve’s dedication to increasing your net worth, 2013 will go down as one of the most prosperous years on file. Stock prices have increased more than 20 percent and U.S. home prices have increased nearly 15 percent. These gains hit national headlines, but the gains for back-page asset classes are equally impressive.
67. The Healing Continues
- Thursday, December 12, 2013
With another successful earnings season in the books, earnings news will move to the backburner for financial market observers. In the midst of this earnings vacuum, economic news moves to the forefront, as investors try to determine if the strong earnings will be sustainable via a healing economy. Or, if the economic support is beginning to deteriorate, perhaps earnings have peaked.
68. Keep Your Eye on the Ball
- Wednesday, November 13, 2013
Markets bounced around a bit last week due to the continued volley between economic/earnings expectations and interest rate expectations. As a market observer, you must fully grasp this dynamic to translate daily volatility.
69. Stocks March Into Higher Realm
- Wednesday, October 30, 2013
Found: New Highs!
Markets continued their record march this week as a tepid jobs report reinforced expectations for further Fed stimulus. In anticipation of “print it” Janet’s reign, the 10-year Treasury yield has frozen at 2.5 percent. With a valuation of 17x trailing operating earnings, S&P 500 earnings yield nearly 6 percent. Obviously 6 percent is more than 2.5 percent, making stocks more attractive than bonds. To wit, equity mutual funds have added $32 billion in assets since May 31, while bond mutual funds have shed $128 billion. The longer interest rate expectations remain anchored at low levels, the more enticing the gap between the earnings yield for stocks and the interest rate yields for bonds. This explains the continued push into record territory for the stock market. As rate increase fears abate, stocks escalate.
70. Avoid the Blog Bait
- Wednesday, October 23, 2013
Last week, the keystone cops in Washington signed yet another procrastination resolution to our festering debt and deficit issues. No matter. The market rallied into our fiscal D-Day and right after it to new all-time highs. Why? While the volume of reporting on the debt ceiling has grown substantially, the event itself is old news. Congress has raised the debt ceiling 45 times since the late 1970s. The debt level reached within 2 percent of the ceiling 37 of those times.
71. Community Oasis
- Saturday, October 19, 2013
A visitor walking the winding, sun-dappled paths of Memphis Botanic Garden past stands of maple trees and beds of hydrangeas might never guess that there was a time when a black cloud hung low over the East Memphis attraction.
72. Buying Yellen
- Friday, October 18, 2013
President Obama recently made it official that Janet Yellen will succeed Ben Bernanke as the head of the Federal Reserve. Janet has spent much of her career as a dedicated and vocal advocate for the unemployed. With participation rates low, and the unemployment rate high, the markets anticipate that Janet will continue, if not augment, Ben Bernanke’s expansionary monetary policies. A renewed enthusiasm for monetary stimulus has had observable market impact.
73. Memphis Financial Experts ‘Not Worried’ About Shutdown
- Thursday, October 03, 2013
David Waddell, president and CEO of Memphis-based Waddell & Associates, had a two-word response when asked what financial and economic impact there might be from the current dysfunction in the nation’s capital.
74. A Dose of Fiscal Truth: Important, Not Urgent
- Wednesday, October 02, 2013
I recently received an email from a client asking how in the world the U.S. would overcome its bulging debt pile. There are three parts to this answer.
First, the annual deficits we run (tax receipts – spending) tend to correlate more with economic activity than policy. Through August, bolstered by an expanding economy, government revenues have increased 13 percent, contributing to a 35 percent reduction in the deficit. We will likely finish the fiscal year with a deficit of 4.5 percent, still high by historic standards, but much lower than the 10 percent hit during the crisis. Deficit figures are overwhelmingly a function of economic activity.
75. The Fed Sets Fed Policy
- Thursday, September 26, 2013
The Fed has two primary job descriptions. First, keep prices stable. Second, promote an environment of economic growth that provides employment opportunities. Which is more important?
Economic crises at their core typically consist of disruption in financial and currency markets. Once the financial transmission mechanisms fail, hard recessions and unemployment spikes follow. I struggle to identify a crisis scenario where the catalyst was a spike in unemployment that led to a disruption in the financial and currency markets. Therefore, a central bank’s first and highest priority should be maintaining price stability.
76. Time for a Rally Gut Check
- Wednesday, September 18, 2013
A couple of weeks ago, we discussed the lack of unanimity in the emerging markets sell-off. While the emerging markets index suggested distress within the class, a closer look revealed that only a few countries were truly under fire.
77. The Data Have Spoken
- Thursday, September 12, 2013
Each new month delivers a flurry of economic data. The current deluge will weigh heavily on the Federal Reserve’s decision to maintain or reduce quantitative easing. Let’s quickly review the recent releases and handicap the Fed’s taper temptation.
78. A Welcome Divergence
- Friday, September 06, 2013
One of the most dominant themes prior to the financial crisis was the great convergence of global markets. Bond markets seemed to synchronize around a “global” rate regime and stock markets seemed to synchronize around “global” growth rates. What began with the disaggregation of European bond yields has now spread across asset markets as well.
79. Rates Are Rising, Rates Are Rising
- Wednesday, August 28, 2013
On July 22, 1981, the federal funds rate (the interbank overnight benchmark rate) hit a historic high of 22.36 percent. On Dec. 11, 2011, it bottomed at .04 percent. Between 1981 and today, large company stocks returned nearly 11 percent on an annualized basis. As consensus suggests, falling interest rates undoubtedly make stocks more valuable.
80. My Taper Paper
- Wednesday, August 21, 2013
Last week, we discussed the recent upshift in the global economy. The next major moment for the market will occur on Sept. 18 when 65 percent of economists expect that the Fed will announce a “tapering” of its quantitative easing program. The movement in the 10-year Treasury bond interest rate confirms this expectation as rates have now climbed to 2.84 percent, up from 1.6 percent three months ago.
81. The New One Thing
- Wednesday, August 14, 2013
Now that earnings season has essentially ended, the stock market needs a new muse. The next earnings season begins in early October. In between, analysts will tweak models and revise forecasts, but real data releases overpower estimate releases. In mid-September, the Fed will either reduce bond purchases or buy more time. President Obama will choose between the over-politicized Larry Summers, the over-dovish Janet Yellen or the over-qualified Don Kohn to succeed Ben Bernanke as the next Fed head. We will also soon revisit Washington’s favorite debate over the debt ceiling.
82. State Rules Get Tighter Scrutiny
- Tuesday, July 30, 2013
NASHVILLE (AP) – Gov. Bill Haslam took office with a 45-day freeze on implementing any new government rules.
Since that time, the administration is using less dramatic and less direct ways of affecting the bureaucratic regulatory process.
83. Two Acts Remain in Bernanke’s Screenplay
- Wednesday, July 17, 2013
After weeks of volatility, driven by complex Fed speculation after a chorus of mixed messages, Chairman Bernanke re-focused marketplace attention on the Fed’s core purpose. As per Congress, The Federal Reserve Act directs: “the Federal Reserve...shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential…to promote the goals of maximum employment, stable prices and moderate long-term interest rates.”
84. Central Bank Bumper Cars
- Thursday, July 04, 2013
Markets last week called Bernanke’s bluff and ended the second quarter on a high note. As we well know, Bernanke spooked markets with a timeline for dousing quantitative easing by mid-year 2014. Bond markets convulsed and the 10-year Treasury yield climbed from 1.61 percent to 2.67 percent. Why would Chairman Bernanke do such a thing?
85. King Kong Versus Godzilla
- Wednesday, June 19, 2013
Among attentive investors the recent bout of market volatility has reprised fears of country, currency, economic decline and general market collapse. When global macro-market events occur, large trading positions that have been spooling quickly unspool, leading to jarring movements like those we are witnessing in Japan. These environments become a bit of a predator’s ball, as short-term traders feast on volatility, which only amplifies volatility further.
86. Glacial Job Creation Equals Glacial Stimulus Reduction
- Thursday, June 13, 2013
This has been the weakest job recovery on record. The 175,000 new jobs created in May did slightly exceed analyst estimates, but also slightly trailed population growth. The percentage of the U.S. adult population with a job equals 58.6 percent. This number hit 67 percent back in 2000. Adjusting this ratio for the “retirement effect” to only include those aged 25 to 54 increases the rate to 76 percent, but it still hasn’t budged for three years and is 5 percent lower than it was in 2007. This cannot be explained by retirees. Our job creation machine is malfunctioning.
87. Daily News Seminar Spotlights Financial Hot Topics
- Monday, June 10, 2013
Craig Dismuke, the chief economic strategist of Vining Sparks IBG LP, opened his keynote address at The Daily News’ “Money and Markets” seminar Thursday, June 6, with a story that brought some insight into the wisdom that people – often erroneously – ascribe to experts in various fields, including economists.
88. Safe Can Sometimes Become Risky
- Wednesday, June 05, 2013
When is safe unsafe? Ever since the Federal Reserve began its zero interest rate policies, investors have searched for higher yielding assets. This makes sense. If you need income to run your household or make your pension distributions, you must locate investments that provide yield. If Treasury bonds will not, what will?
89. Reacting To Fed Dread
- Thursday, May 30, 2013
In an otherwise exceptionally dull trading week, markets worldwide reacted violently last Wednesday to Ben Bernanke’s mixed congressional testimony and the Fed meeting minutes released later in the day. Why so skittish?
90. National Economy Headlines Seminar
- Monday, May 20, 2013
The next installment of The Daily News’ ongoing seminar series will offer a comprehensive look at the state of the economy, with insight from a panel of thought leaders and a keynote from the chief economic strategist of Vining Sparks IBG LP.
91. How High Can We Go?
- Wednesday, May 15, 2013
Total stock market returns combine dividends with a change in earnings and a change in multiples. Right now, the dividend yield on the S&P 500 is 2 percent. The earnings estimate for the S&P 500, for year-end 2014 as projected by Standard and Poor’s, approximates $120, as trailing earnings equal $100 per share.
92. The No-Growth Rally
- Friday, May 03, 2013
Over 200 S&P 500 companies have now reported earnings. While 70 percent or so have beaten expectations, the blended earnings growth rate has basically flat lined. Using revenues as a purer gauge adds little encouragement. Revenues have also flat lined over the last year. Without an uptick in global economic activity or the ability to pass on price increases to customers, US earnings look winded. How can the rally persist without growth?
93. Rotten Golden Apples in a Can
- Thursday, April 25, 2013
It has been a particularly tough stretch for sage taxicab investors. My recent taxi tips have centered on three clear winners. Gold, Apple and Cash. Let’s evaluate.
Cab Tip #1: Central Bank Money Printing = Gold Prices Rising
94. Lofty Company
- Thursday, April 04, 2013
For creating the overnight package-delivery business four decades ago, and for everything his company has done since, FedEx Corp. founder Fred Smith has been placed among an elite group of chief executives by the business magazine Barron’s.
95. The Cyprus is Falling!
- Thursday, March 28, 2013
The Cyprus economy is $23 billion. (The Vermont economy is $26 billion.) Bank loans in Cyprus are eight times the size of GDP, compared with 3.5 times in the Eurozone and 1 times U.S. GDP. With leverage ratio’s that high, a small deterioration in loan performance can render the banking system insolvent.
96. Look at the Facts, Not Rhetoric
- Wednesday, March 20, 2013
CITE YOUR SOURCE. In human psychology, fear seems more legitimate than hope. Claims of “impending doom,” and “bursting bubbles” elicit fast emotional responses that seem impervious to critique. So many programs, speeches and advertisements prey on this phenomenon today.
97. Waddell Recaps 2012 at State of the Union Address
- Saturday, March 09, 2013
Once a year, Waddell & Associates president and CEO David Waddell presents a “State of the Union” address to clients.
98. Urbanization Equals Global Opportunities
- Tuesday, March 05, 2013
The worldwide adoption of competition and capitalistic principles has unlocked tremendous prosperity growth. At the core of this prosperity movement are the unique advantages created by urbanizing the world’s population. Urban populations are more productive, more innovative and more efficient than their rural peers.
99. Waddell Recaps 2012 at State of the Union Address
- Monday, March 04, 2013
Once a year, Waddell & Associates president and CEO David Waddell presents a “State of the Union” address to clients.
100. Waddell’s Ideals Centered on Consistency, Honesty
- Saturday, March 02, 2013
At a recent appearance in Nashville before an audience of 100 clients, friends and employees at the Country Music Hall of Fame, David Waddell of Waddell & Associates Inc. gave his company’s annual state of the union address.