Markets

Are EM Asia Equities Really That Cheap? February 09, 2015

Posted by Knowledge Leaders Team in Markets

Several financial market commentators have recently been making the case for EM Asian stocks based on their valuation level. One of the commonly used charts is the first one below, which shows the forward 12-months price to cash flow valuation for EM Asia relative to North America.

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Regional Winners And Losers In The US From The Drop in Oil Prices February 05, 2015

Posted by Knowledge Leaders Team in Markets

The drop in oil prices has brought up a few questions with respect to who will benefit and who will be negatively impacted.  There are regional PMI surveys and Federal Reserve surveys that can help fill in some of the gaps.  For example, below is the Dallas Fed New Orders index and the Houston PMI.

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Picking Up Signs Of Economic Distress In The US February 04, 2015

Posted by Knowledge Leaders Team in Markets

Recent US economic data has been disappointing.  While perhaps statistical noise, more weak signs continue to mount.  Let’s start with the durable goods orders reported recently.  The headline stat is a very volatile series because aircraft and/or military orders can be quite lumpy.

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What Would The Cost Of “Insurance” Be On A Million Dollar Portfolio? February 03, 2015

Posted by Knowledge Leaders Team in Markets

Imagine you had a plain vanilla $1 million equity portfolio that was solely invested in the S&P 500 and you were starting to feel a little nervous about stocks because of high valuations or deteriorating earnings estimates. How would you go about protecting yourself if stocks began to decline in earnest?

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Unimpressive Manufacturing PMI Results Out of Europe February 02, 2015

Posted by Knowledge Leaders Team in Markets

Markit’s PMI Manufacturing survey data released today showed little change in euro area countries’ headline readings, as most continued to hover around the all-important 50 level: The largest monthly improvement was in France (~2 points) while Ireland’s survey fell the most (~2 points), and no country came close to the three-point move posted by Austria

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World Inflation Continues To Tumble January 30, 2015

Posted by Knowledge Leaders Team in Markets

Our basic proxy for global inflation continues to fall further. The year-over-year change of the CPI of 33 countries (using a simple average) has fallen for eight straight months and now sits at just 1.42%.

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Long Duration Bonds Seem Like The Right Play January 30, 2015

Posted by Knowledge Leaders Team in Markets

The Barclays US Aggregate Treasury total return index is up nearly 6% year-over-year. This index has a modified duration of 5.75 years. Not a bad return considering the on-the-run 5-year treasury is currently yielding 118 basis points.

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Global Healthcare: The Alpha Drip Feed Continues January 29, 2015

Posted by Knowledge Leaders Team in Markets

Looking across the global equity markets, it is clear that an asset allocation approach based on sector exposures has worked better than any geographic allocation.  In particular, an overweight allocation to the health care sector would have benefited portfolios tremendously.

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Is There A Case For German Equities? January 27, 2015

Posted by Knowledge Leaders Team in Markets

With the highest productivity in Europe, a sizeable current account surplus and rock bottom interest rates, is there a case to made for German equities?  Germany’s competitiveness, export performance and trade surplus should increase as the Euro weakens helping German exporters in markets outside of the Euro bloc.

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Correct Sector Allocation Unlocks The Power Of Compounding January 27, 2015

Posted by Knowledge Leaders Team in Markets

We talk a lot about sector allocation. It is incredibly important for investors, especially over the long-term. The correct sector allocation can lead to massive outperformance while the wrong sector allocation significantly increases your career risk.

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Traders Still Hugely Short Treasury Bonds January 26, 2015

Posted by Knowledge Leaders Team in Markets

Shorting long duration treasury bonds really is becoming the modern day widow maker, as we noted last August. Yet, despite all the pain endured since last August for anyone shorting treasuries, traders still maintain a historically large short position in futures and options on the 10-year.

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