Entries filed under 'Financial Markets'

    Trying to Predict the Market? Tune Out the Equity Strategists!

    November 4, 2014 11:50 AM by Brian Foerster

    Even before the recent pullback, the market was lagging the growth in earnings. 

    Volatility has returned to the stock market, causing concern in some quarters. But this seems to be an overreaction, given the relative strength of the U.S. economy and the fact that even at the recent low of 1,862 in mid-October the S&P 500® Index was still slightly up for the year. Since then, it has rebounded to a new high. (Although, due to market volatility, the market may not perform in a similar manner in the future.)

    More important, investors need to view the recent volatility in a longer-term context. Two key statistics are worth noting: 1) annualized return and 2) average earnings growth.

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    Bonds: Geopolitical Risk Rears Its Head

    July 18, 2014 2:30 PM by Zane Brown

    Developments in Ukraine and the Middle East sparked volatility in fixed-income markets on July 17. Here’s a look at the implications for investors. 

    Geopolitical risk, which largely has been brushed aside by the fixed-income market in 2014, seized the spotlight on July 17. News of a downed Malaysian airliner in Ukraine, and military incursion by Israel into Gaza, fueled a “flight to quality” trade that pushed U.S. 10-year Treasury prices higher and yields lower. The yield on the 10-year note touched 2.44% on the session, matching the low for 2014 (all data on bond yields and spreads in this post are from Bloomberg). High-grade corporate bonds also benefited, as investors redirected assets toward higher credit-quality securities. 

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    Stocks: A Stark Reminder of Global Risk

    July 18, 2014 2:25 PM by Milton Ezrati

    Fresh news of geopolitical turmoil spurred selling on July 17. How might markets behave in the aftermath?

    U.S. equity investors appear to have disregarded a growing number of geopolitical threats as they bid major indexes higher in 2014. But the shock of a downed Malaysian airliner in Ukraine, coupled with news of an incursion by Israeli ground forces into Gaza, spurred widespread selling in U.S. stocks on July 17. 

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    Turning the Lights Up on Utilities

    June 11, 2014 3:57 PM by Glenn McIsaac

    If you want to know what has powered the S&P 500, check out utilities, one of the top three performing sectors since 2004, with an average annual return of 10.4%. 

    In their search for total return, many investors have fallen in love with utilities stocks. And who could blame them? Over the past decade, the utilities sector has been one of the top performing components of the Standard & Poor's 500 (See Chart 1) due to solid earnings growth (an average compound annual growth rate of 4%) and declining interest rates.

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    High-Frequency Trading: A Little Less Frenzy, Please

    April 24, 2014 10:05 AM by Ted Oberhaus

    High-frequency trading may be the villain du jour when it comes to selling books, but we’ve had some of our best minds on the subject since 1999. 

    A Trader's Perspective

    Can a trading strategy that involves holding stocks for milliseconds to minutes, or that has no intrinsic interest in the companies behind the stocks, actually be considered investing? Few would argue that it is. In fact, most would say it is pure speculation. Does that make it bad? Actually, high-frequency trading (HFT) is a complex issue that deserves more thoughtful consideration than the recent media frenzy about HFT allows. 

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