Democratic Presidential candidate Joe Biden is leading US President Donald Trump in the most recent polls undertaken by Siena College and the New York Times. They show him leading by 14 points. The scenario is a bit worrying for Wall Street. Investors are wary that Biden will unleash a wave of negative policies that will stymie American companies.
Tag: Stock Market
World Economies Reopening Post Coronavirus – What It Means for Everyone in the Near Future
Currently there are over 3 million cases of coronavirus and over 211,000 dead around the globe. In the US there are over 1 million cases of the infected documented at present. Many nations are starting to reopen, including Italy. In the US some of the first states to reopen are Oklahoma and Georgia. However, many other states plan to open soon too, but with restrictions. The restrictions include wearing masks and people asked to be 6 feet apart. The US Guidelines on the reopening three phases here.
Coronavirus Impacts on Indiana and Society
As US coronavirus cases continue to rise exponentially, states are taking drastic measures in an attempt to slow the spread of the virus. Confirmed cases in the U.S. are now approaching 46,000 and there have been nearly 600 deaths. My home state of Indiana is one of the latest to issue a statewide stay at home order. Residents have been ordered to not leave their home except for essential work functions and permitted activities such as taking care of others, obtaining necessary supplies, and for health and safety. The order will be in effect from March 25 to April 7.
Things You Need to Know About Retiring in 10 Years
Retirement planning can be pretty challenging if you have not prepared ahead of time. It is important to assess your savings for retirement throughout but it becomes more critical during the retirement red zone. Ten years before or after retirement are regarded as a red zone by financial professionals. How your retirement portfolio behaves during this time determines your standard of living after you retire.
Coronavirus: WHO Declares Pandemic, Stock Markets Crash
The World Health Organization (WHO) announced Wednesday that the new coronavirus would be characterized as a global pandemic. Prior to WHO’s announcement of this qualitative situation, the number of confirmed cases of infection worldwide surged 13 times compared to two weeks ago, and the epidemic situation in countries outside China continued to deteriorate.
Gaining Tax Benefits Using Fixed Index Annuities
If you want to save your hard earned money, you’ll have to learn how to jump through legal hoops in the tax code. The latest of these is the SECURE Act signed by President Trump. Among the most efficient ways to make the greatest use of your money is fixed index annuities. The SECURE Act, for the first time, lets you roll up your 401(k) and other savings accounts into a tax-free annuity.
Coronavirus Impact On Global Economy and Expected Outcomes
Coronavirus has become a global scare. The World Health Organization considers coronavirus “High Risk.” The emergence of an economic storm could be inevitable. Kondratiev cycles predicted economic slowdown. Kondratiev explained the existence of large economic cycles by the fact that the duration of functioning of various created economic goods fluctuates. Similarly, they require different time and different means to create them. Large cycles can be seen as disrupting and restoring the economic equilibrium of a long period. The main reason for them lies in the mechanism of accumulation, accumulation and dispersion of capital sufficient to create new elements of infrastructure.
Coronavirus Fears Present Phenomenal Opportunities for Savvy Income Investors
As fears of the continued global spread of the Coronavirus (COVID-19) continue to drive financial markets to new lows, savvy investors should take note of the excellent opportunities that this massive global sell-off is creating.
The World Health Organization on Coronaviruses:
“Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV).
Coronaviruses are zoonotic, meaning they are transmitted between animals and people. Common signs of infection include respiratory symptoms, fever, cough, shortness of breath and breathing difficulties. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death. A novel coronavirus (nCoV) is a new strain that has not been previously identified in humans.”
Dogs of the Dow: Blue Chip Dividends with 4% Income
This review looks at the performance of the Dogs of the Dow Portfolio which produces over 4% in dividend income alone, and also examines the benefits the portfolio can provide to income investors.
Performance Highlights
- Annualized Return Since Inception of 12.32%
- Average Dividend Yield of 4.03%
- Alpha of 1.89 (vs. Benchmark*)
- Beta of 0.77 (vs. Benchmark*)
Designed for the Long Term
The Dogs of the Dow Portfolio was designed to produce high levels of dividend income over time with less volatility than the stock market. With an average dividend yield of over 4% alone and a lifetime return of over 12%, the Dogs of the Dow’s effectiveness over the years lies in both its repeatability and scalability.
Though the stocks in Durig’s Dogs of the Dow Portfolio more than likely will change from year to year, the underlying screens used to select them remain the same.
Durig searches for and selects a group of of the highest yielding dividend stocks from the Dow Jones Industrial Average (DJIA) which have fallen out of favor (aka the “dogs”) and holds them for one year. Over time, these “dogs” tend to have “more room to run” with respect to their share price.
Time in the market nearly always beats timing the market.
Durig’s Dogs of the Dow is a simple, yet effective strategy that was specifically designed to earn you more income by capturing the dividends of some of the highest yielding blue chip stocks of the Dow Jones. Over time, reinvested dividends can help to boost total return and potentially grow the dividend income the portfolio produces.
Why Blue Chip Dividend Stocks?
Historically, blue chip dividend stocks have shown themselves to be resilient under downward market pressure, and are thought to offer relative stability in hectic markets as compared to non-dividend paying stocks. Additionally, companies that pay dividends tend to have much stronger fundamentals, such as stable earnings and growth, effective management and stronger financials.
The dividends paid by blue chips can also help to diversify income streams, and because dividends (and earnings) tend to grow over time they typically outpace inflation, preserving the value of your hard earned dollars. These dividends can also help to lessen historical volatility, explained in a recent article:
“During the overall market downturn in 2002, when non dividend-paying stocks fell by an average of 30%, while dividend-paying stocks only declined on average by 10%. Even during the severe 2008 financial crisis that precipitated a sharp fall in stock prices, dividend stocks held up noticeably better than non dividend stocks.”
Less historical volatility equates to a smoother and more comfortable ride for investors.
Durig’s Dogs of the Dow Portfolio can be extremely efficient in a tax advantaged account (such as an IRA) since neither capital gains nor dividends are taxed, allowing your investment to grow tax-free.
Avoid the Crowd
The majority of blue chip investors find themselves in an overly crowded mutual fund structure. While it may seem nice to share gains and losses but in actuality pooled investments are far more muddled, and typically more costly due to high administrative costs, hidden fees, and can create unwanted tax inefficiencies.
Avoid the crowd with a low cost, individually managed Dogs of the Dow account that offers a much cleaner investment environment.
Start building a better retirement today with the Dogs of the Dow.
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Summary
The Dogs of the Dow Portfolio has continued to generate strong levels of dividend income over time with less historical volatility, and with over over 4% in dividend income, investors can sleep easier at night.
For those that wish for more income and less volatility with the potential to grow income over time, Durig’s Dogs of the Dow Portfolio is an excellent, low cost solution with professional management and support dedicated to helping you achieve your income goals.
Learn More
If you have any questions or would like further information Durig’s Dogs of the Dow Portfolio Strategy, please call Durig at (971) 327-8847, or email us at info@durig.com.
Durig Capital has several high yield portfolios available, click below to learn more.
Fixed Income 2 – FX2
Dividend Aristocrats
Income Aristocrats
Dogs of The Dow
Dogs of The S&P 500
Dogs of Europe
European Dividend Aristocrats
Risk Disclaimer: Any content on this review should not be relied upon as advice or construed as providing recommendations of any kind. It is your responsibility to confirm and decide which trades investments to make. Invest with only with risk capital; that is, with money that, if lost, will not adversely impact your lifestyle and your ability to meet your financial obligations. Past results are no indication of future performance. In no event should the content of this correspondence be construed as an express or implied promise or guarantee.
Durig Capital is not responsible for any losses incurred as a result of this article Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
Disclosure: The primary benchmark* used was SPDR® Dow Jones Industrial Avrg ETF Tr.
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Low Cost, Individualized, Income Portfolios – 2019
A year-end performance review of Durig’s Portfolio Solutions, designed to help you earn income, covering some of the key benefits that each can provide. The following portfolios will be reviewed in this article:
- Fixed Income 2 (FX2) Managed Income Portfolio
- Dividend Aristocrats – High Dividends & Growth Over Time
- Income Aristocrats – Multi-Asset Income Portfolio
- Dogs of the Dow – High Blue Chip Dividends
- Dogs of the S&P 500 – Blue Chip Dividends
Fixed Income 2 (FX2) Managed Income Portfolio
Income Aristocrats: Higher Income, Less Sleepless Nights
Following the success of it’s Dogs of the Dow and Dogs of the S&P 500 Portfolios, we now take an in-depth look at the latest addition to our portfolio of investment solutions, the Income Aristocrats Portfolio. A remarkably well diversified portfolio, the income aristocrats effortlessly blends three different portfolio strategies (Fixed Income 2, Dogs of the S&P 500, and the Dividend Aristocrats) into an excellent vehicle for generating cash flow.
Dogs of the Dow Do it Again
This review explores the performance of the Dogs of the Dow Portfolio, with nearly 4% in dividend income alone, and considers the many merits of blue chip dividend stocks such as those held in the portfolio.
Performance Highlights
- Year-to-Date Return of 13.03%
- Trailing 1 Year Return of 10.31%
- Annualized Return Since Inception of 14.03%
- Average Dividend Yield of 3.98%
- Alpha of 4.47 (vs. Benchmark*)
- Beta of 0.75 (vs. Benchmark*)
Dividend Aristocrats: Income Growth Over Time + Historical Outperformance
In this review, Durig examines the ways in which holding a diverse portfolio of dividend paying, high quality blue chip stocks can help to provide investors some much needed stability.
Performance Highlights
- Lifetime Return of 14.06%
- Average Dividend Yield of 3.34%
Quality Investments That Deliver
As trade tensions between the US and China continue to plague financial markets, investors are looking for high quality investments that can still deliver.
Durig has found the solution; blue chip dividend stocks.
Dogs of the S&P 500 Outperform Peers Across the Board
Durig benchmarks the performance of its Dogs of the S&P 500 Portfolio and explores how holding a diverse portfolio of blue chip dividend stocks can benefit investors in today’s markets.
Performance Highlights
- Year-to-Date Return of 32.02%
- Trailing 1 Year Return of 26.07%
- Annualized Lifetime Return of 14.29%
- Alpha of 4.52 (vs Benchmark*)
- Beta of 0.73 (vs Benchmark*)
- Average Dividend Yield of 4.29%
Saudi Aramco to Make Largest IPO in History
Thе Sаudі Cаріtаl Mаrkеt Authоrіtу (CMA) said оn Sunday іt hаd аррrоvеd a request by thе Sаudі Arаbіаn Oіl Company (Arаmсо) to rеgіѕtеr аnd put part of its ѕhаrеѕ fоr рublіс ѕubѕсrірtіоn оn November 10 for lіѕtіng. Sаudі Arаmсо Chаіrmаn Yasir al-Rumayyan аnnоunсеd that thеrе аrе nо сurrеnt рlаnѕ tо рut thе ѕhаrеѕ of Sаudі оіl gіаnt on a global ѕtосk еxсhаngе after Aramco confirmed its іntеntіоn tо ѕеll shares іn thе lосаl mаrkеt only. Currеntlу, Tаdаwul is оnlу subscribed tо thе Saudi dоmеѕtіс mаrkеt.
Income and Growth Strategies That Are Working in Today’s Market
In this special review, Durig benchmarks the performance of its three unique blue chip equity portfolios, the Dogs of the Dow, Dogs of the S&P 500, and the Dividend Aristocrats, all of which are designed to capture high quality blue chip dividends of some of the most reputable companies on wall street.
With interest rates continuing to fall and attractive yields becoming increasingly difficult to find, many investors are turning away from conventional fixed income investments such as US Treasuries.
Dividend Aristocrats: Income Stability and Growth Over Time
A review and performance recap of Durig’s highly successful Dividend Aristocrats Portfolio that also compares the portfolio to another aristocratic dividend portfolio. The Dividend Aristocrats Portfolio was also designed with income stability in mind, maintaining investment focus on only higher quality blue chip companies known as “Aristocrats.”
October Performance Highlights
- Average Dividend Yield of 3.51%
- Lifetime return of 9.44%
- Excess Return of 3.27% (vs. benchmark)*
- Alpha of 7.95 (vs. benchmark*)
- Beta of 0.18 (vs. benchmark*)
Dogs of the S&P 500: Over 4.5% Income with Strong Historical Performance
A benchmark performance review of Durig’s unique Dogs of the S&P 500 Portfolio that examines the income benefit the portfolio can provide, also exploring some of the achievements the portfolio has had in lifetime performance.
October Performance Highlights
- Average Current Dividend Yield of 4.68%
- Year-to-Date Return of 20.38%
- Trailing 1 Year Return of 17.63%
- Annualized Lifetime Return of 10.41%
- Alpha of 1.69 (vs Benchmark*)
- Beta of 0.72 (vs Benchmark*)
Dogs of the Dow: Find Blue Chip Peace of Mind with Over 4% Income
A monthly performance review of Durig’s Dogs of the Dow Portfolio that explores several benefits that income producing investments such the Dogs of the Dow can help to provide.
Performance Highlights
- Lifetime Return of 12.87% (annualized)
- Year-to-Date Return of 8.30%
- Alpha of 4.89 (vs benchmark)*
- Beta of 0.77 (vs benchmark)*
- Average Current Yield of 4.18%
Income Aristocrats: High Income with Less Historical Volatility
Durig takes an in-depth look at it’s newest addition to its portfolio of investment solutions, the Income Aristocrats. An extremely diversified portfolio, the income aristocrats seamlessly blends the Fixed Income 2, Dogs of the S&P 500, and the Dogs of the Dow strategies into an income generating machine.
Dividend Aristocrats – A Path to Growing Your Income
A monthly performance review of the Dividend Aristocrats, a diversified blue chip stock portfolio built around some of the highest yielding dividend payers listed on the S&P 500. We also examine the various benefits the strategy can offer investors in volatile markets.
(performance is net of fee, 9-17-19)
Performance Highlights
Annualized Return Since Inception of 8.03%
Average Current Yield of 3.52%
Dogs of the S&P 500: Dividend Yield of 4.66% with Strong Historical Growth
This week, Durig takes a closer look at the various benefits that its Dogs of the S&P 500 Portfolio may provide investors in light of today’s unpredictable financial markets. September Performance Highlights (See bullet points above).
A Multi-Benefit Income Strategy
Durig’s Dogs of the S&P 500 Portfolio has the dual benefit of growth and income from a variety of the highest yielding (with regard to dividends) blue chip companies listed on the S&P 500. The portfolio is able to capture the highest quality blue chip dividends through its use of strategic weighting, achieving an average dividend yield of 4.66%, with the growth component of this strategy helping to boost the total year-to-date portfolio return to 20.78%, and a trailing 1 year return of 13.77%, outpacing the S&P 500 itself in both year-to-date return and trailing 1 year return. This multi benefit strategy allows investors to capture strong growth in principal, while still generating a healthy level of diversified income and realizing strong historical returns.
Dogs of the Dow – High Dividends, Historical Outperformance
This week, Durig Capital recaps the recent performance of its own unique version of the Dogs of the Dow Strategy and benchmarks it to that of its closest peers. Also explored is the importance of portfolio correlation to the overall market, and how correlation can help to provide investors an idea of how a portfolio could theoretically perform under various market conditions.
Durig’s Dogs of the Dow – September Performance Highlights
- Year-to-Date Return of 9.41%
- Trailing 1 Year Return of 6.73%
- Annualized Lifetime Return of 13.85%
Dividend Aristocrats – Grow Income Over Time
The Dividend Aristocrats Portfolio, Durig Capital’s newest exciting investment solution is now open for investment. This portfolio strategy targets the “cream of the crop” among a diversity of blue-chip companies listed on the S&P 500, seeking the companies with only the highest yields and have a stable history of increasing dividends.
Income Growth Over Time
Dogs of the S&P 500 – Less Blue Chip Volatility – More Peace of Mind
Over the last few months, the ongoing trade-war between the U.S. and China has escalated into something of a volatility generating machine, with some market indices jumping up or down hundreds of points in a single day as new tariffs are added, sentiments of certain key political figures are expressed, etc. Causality aside, the markets are boiling and have many investors looking to find a way to beat the heat without having to leave the kitchen entirely. This week, Durig Capital explains how investors can do just that with its Dogs of the S&P 500 Portfolio.
Dogs of the Dow – Durig’s Continued Outperformance Over Time
This week, Durig Capital recaps the recent performance of its own unique version of the Dogs of the Dow Strategy and benchmarks it to that of its closest peers. Also explored is the importance of portfolio correlation to the overall market, and how correlation can help to provide investors an idea of how a portfolio could theoretically perform under various market conditions.
Durig’s Dogs of the Dow – July Performance Highlights
12.41% Year-to-Date
12.87% Trailing 1 Year Return
15.98% Annualized Return Since Inception
Beta of 0.72 (vs. Benchmark*)
(Performance shown above is as of 7-31-19)
Dogs of the Dow: Does It Work, and Should It Have a Place in Your Portfolio?
Last month, Durig Capital explored several variations of the classic Dogs of the Dow Investment Strategy. Later in the article, we examined the historical performance of these strategy variations, benchmarked against the performance of Durig’s own unique Dogs of the Dow Portfolio Strategy. The original strategy designed by Michael O’Higgins in the book “Beating the Dow” in 1991 was designed for just that; beating the Dow Jones Industrial Average (DJI).
Did Chairman Powell Just Change Course? Did Trump Influence Him?
Federal Reserve Chairman Jerome Powell said “The Fed will act as appropriate to sustain economic expansion.” Powell claimed “The outlook for the U.S. economy has become cloudier since early May, with rising uncertainties over trade and global growth causing the central bank to reassess its next move on interest rates.”
He also said “The crosscurrents have reemerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy.” To add to the disappointments, economic reports also show a big surprising drop in consumer confidence, plus added weakness in the housing market.
Dogs of the Dow: Durig’s Past Performance Runs Ahead of the Pack
This week, Durig Capital explores a popular variation of the classic Dogs of the Dow investment strategy, introduced by Michael O Higgins in the early 1990’s. The strategy has been widely accepted by some for its simplicity and repeatability, yet denounced by others for the exact same. Durig Capital believes less complicated is better; fewer moving parts mean fewer potential points of failure, and has done well historically with it’s own unique version of this simple strategy, discussed later in the article.
Is the Economy Slowing? A Few Indicators Are Saying Yes.
- Interest Rates: The 10-year Treasury is hitting around 2.08%, down from 3.25% just three months ago.
- Oil is down around $53 per barrel. Down from about $65 in April.
- Industrial Production has hit multi-year lows.
- Gold and the dollar are moving up.
These four indicators have many forecasting both a tougher time ahead and a rotation into safe havens. The central focus of concern is the trade wars with China and the new tariffs with Mexico.
Isooctane Market to Increase Considerably
The global isooctane market is estimated to value at approximately $99 billion in 2019, and is expected to register a CAGR of 2.1%. The first five-year cumulative revenue (2019–2023) is projected to be over $517 billion, which is expected to increase considerably over the latter part of the five-year forecast period.
Moringa Products Market to Expand with CAGR of 12.9% By 2026
The global moringa products market is estimated to value over $6 billion in 2019, and is projected to register a CAGR of 12.9% in terms of revenue over the forecast period. The first five-year cumulative revenue (2019–2023) is projected to be over $41 billion, which is estimated to increase moderately over the latter part of the five-year forecast period.
Dow Jones, S&P 500, and Oil Out of the Correction Phase with Nasdaq Still in Bear Market and Real Estate Unknown
- Thus far, the Dow has climbed 10.1% from its Dec. 24 low, while the S&P 500 has gained 10.4% from that Christmas Eve low, when stocks put in the worst trading action on the trading day before Christmas on record.
US and China Feds Help Change the Market Outlook
- Fed Chairman Jerome Powell sparked a huge stock market rally after he delivered just the message investors wanted to hear — that the Fed will be flexible on policy and it is in no hurry to raise interest rates. The central bank’s balance sheet wind-down was on “autopilot.” He reversed that impression and reassured investors Friday that the Fed would be flexible with all of its policy tools, including the balance sheet.
- The Federal Reserve’s pledge to be more “patient” with its interest rate hikes erased one of the biggest obstacles to a stock market rally that went on for much of President Donald Trump’s time in office.
- The central bank “will be patient” as it weighs future interest rate hikes in light of low inflation, adding that policymakers will also take into account recent stock market volatility. Powell seemed to deliberately convey a more cautious approach to rate hikes this year than he did during a news conference last month after the Fed raised rates for a fourth time in 2018.
- Federal Reserve Chairman Jerome Powell said Friday he would not resign from his post if President Donald Trump asked him to. Powell also said he had not received any direct communication from the White House about unhappiness with the central bank’s rate policy, and no meeting with Trump has been scheduled.
- A further step by China’s central bank late Friday to secure liquidity to the slowing economy may also help assuage concerns. Apple Inc. last week cut its revenue outlook for the first time in almost two decades, citing weakness in China’s economy as one of the reasons. U.S. and Chinese officials will begin trade negotiations on Monday in the hope of reaching a deal during a 90-day truce between President Donald Trump and his counterpart Xi Jinping.
- Previous: World Markets: The Good, Bad and Ugly
- Previous: What is an Inverted Yield Curve and What Does It Mean?
- Previous: What is a “Neutral” Interest Rate? Powell and Trump Have Different Opinions
- Previous: Higher Interest Rates are Negatively Affecting many Markets & Trending others Investments Upwards.
- Previous: Is Fed Tightening Going to Cause a Recession? Many Experts Think Yes!
2019 Stock Market Bulls vs Bears Predictions
- The fear is that the economy may already be slowing, and raising rates too high would be a mistake by unnecessarily causing it to slow further. On the brightest side in this economic cycle the nation’s unemployment rate continues to decline, and job growth remains on a healthy pace.
- The question everyone is asking is: Are the gut-wrenching ups and downs in the U.S. stock market just noise? Or is the flirtation with a bear market an early warning sign of what the U.S. economy can expect in 2019? The Fed will be the ultimate arbiter of how things play out.
- 4 factors that could affect the stocks outcome: Technology stocks have unique challenges; Global growth has already been slowing; President Trump is a factor; Borrowing costs could hurt.
- “The decline in global growth will mean a weaker tailwind for global markets, which could begin to anticipate an end of the economic cycle as 2019 progresses, and solid domestic demand in the euro zone will not be sufficient to offset reduced export growth.
- One can legitimately worry about global geopolitical and economic uncertainties coming out of Europe, trade tensions with China, slowing global economic growth, and a hawkish Federal Reserve Bank (The Fed) raising interest rates.
- Deep and lasting market declines tend to make businesses and consumers afraid, and they pull back on spending, which is how the market can spill over into the economy and cause damage.
World Markets: The Good, Bad and Ugly
- A partial government shutdown, Treasury Secretary Steven Mnuchin’s questions about banks’ health and signals that President Donald Trump could fire Federal Reserve Chairman Jerome Powell upset markets on Monday, sending the Dow down. After markets tanked on Christmas Eve, Trump said Tuesday that he remains confident in Mnuchin, renewed his criticism of the Fed, accusing it of hiking rates too fast.
Has the Market Bottomed? A Lot of Smart People Think So!
- The stock market has reached a bottom following a tumultuous 10 weeks that’s seen the S&P 500 in and out of correction territory. Others have predicted a rally of up to 10 percent in the next 30 days. One investment strategist is standing by his 2,850 year-end S&P 500 price target, “A lot can happen in a month.”
- Renowned oil trader Andy Hall says he would bet that crude prices are more likely to go up than down following a collapse over the last two months. A correction like the one gripping the market tends to trim supplies and boost demand.
- The stock market is setting up for another rally, according to Elliott Wave theory. As long as the S&P 500 holds 2,640 points, the index could rise to over 2,800
- Cramer’s Conclusion? Don’t buy tech ETFs, buy winners. Yes, it is time for single-stock rewards. To understand the potential basis for a tech rally, we have to understand why we had a tech wreck to begin with. “I think the CPU shortages and the lack of investment say it’s time to buy — and for the first time in ages.”
- “We are going to start getting into this oversold territory. You’re going to see the buyers coming in and starting to pick up some bargains.” If trade doesn’t improve, and if the yield curve keeps flashing yellow or red, there’s still one point of optimism; the selling has to stop at some point. Here are some potential bargains.
- Previous: Is the Stock Market Going Up or Down? Lets Break Down Some Components.
- Previous: Are Markets Pricing in a Global Slowdown?
- Previous: Is Fed Tightening Going to Cause a Recession? Many Experts Think Yes!
What is a “Neutral” Interest Rate? Powell and Trump Have Different Opinions
- Interest rates are just below neutral, they doesn’t need stimulus and it doesn’t need slowing down. A neutral federal funds rate corresponds to the economy being at full recovery.
- Officials indicated that further post-meeting statements might be altered to remove the reference to “further gradual increases” in the target range as long as current conditions persist. The reason for doing that is to stress that the committee is not on a preset course with rates and instead will be evaluating future decisions based on incoming economic data.
- Powell’s comments are truly a game changer for the U.S. dollar and stocks. Federal Reserve Chair Powell is adopting a less hawkish stance. Although he believes that the economy will continue to grow at a solid pace with low unemployment and inflation around 2%.
- Trump Attacks Fed: kept up his criticisms with Powell, saying rising interest rates have hurt the economy. “So far, I’m not even a little bit happy with my selection of Jay, Not even a little bit. I’m not blaming anybody, but I’m just telling you I think that the Fed is way off-base with what they’re doing.”
- Previous: Higher Interest Rates are Negatively Affecting many Markets & Trending others Investments Upwards.
- Previous: Is Fed Tightening Going to Cause a Recession? Many Experts Think Yes!
Is the Stock Market Going Up or Down? Lets Break Down Some Components.
- The Dow is having its worst start to a Thanksgiving week since 1973. The three U.S. major indexes ended the day lower than where they started in 2018. Damage in the tech sector is one of the main drivers behind the recent turmoil, and there is no lack of bad signs.
- The recent sell-off started when Fed Chairman Jerome Powell said that rates were a long way from neutral, sparking questions about whether Fed officials were going to increase the cost of borrowing money more than forecast.
- A vicious US stocks sell-off wiped away the entire gains made by investors in 2018.
- Whether technology stocks can slough off the worries will depend on whether the companies can continue to deliver strong earnings growth even if the global economy does soften significantly. Recent earnings reports from major tech companies have done little to reassure investors.
- Gold prices have gone in the wrong direction, losing about $100 in the price per ounce and leading gold exchange-traded funds to year-to-date losses near 5 percent. As investors fear that the end of the bull market in stocks is near and volatility in stocks continues, gold may get some attention.
- Libor, A key measure of what banks charge each other to borrow dollars for three months recorded its biggest daily rise in eight months on expectations that the U.S. Federal Reserve would increase short-term lending rates next month.
- Previous: Are Markets Pricing in a Global Slowdown?
- Previous: Is Fed Tightening Going to Cause a Recession? Many Experts Think Yes!
Hidden Factors Driving these Markets: Natural Gas up 40% and Oil Down 20%
- The surprise drop in equity markets and rise in Natural Gas led to margin calls which may have forced the hedge funds to dump profitable crude oil positions in order to raise much needed cash. This changed what was a normal oil correction intro a route.
- Traders made a pair trade, simultaneously going long oil futures, betting on a crude price rise, while shorting natural gas, or betting that prices of the fuel would fall. The opposite has taken place, and now those investors have been forced to unravel both ends of those trades as crude-oil prices have cratered.
- Selling by momentum traders produced a snowball effect for retreating oil prices. Traders sold into a gradually firming Oil market shorting Natural Gas. This trade worked for years. When the trades started failing they had large margin calls, causing a collapse.
- Natural gas soared the most in nine years on forecasts for a lingering U.S. cold spell. The cold temperatures spurred concern that supplies may not be adequate to meet demand over the winter.
- Investors have gone from contemplating the prospect of oil at $100 to sub-$50 in less than two months. Stocks and Bonds to currencies, assets worldwide are gripped by oil’s largest one-day drop in three years.
- Previous: Oil Prices In First Days of Iran Sanctions with A Bear Market, Whats Next?
Are Markets Pricing in a Global Slowdown?
- Fears about a no-deal Brexit and a growing rift over Italy’s budget are putting pressure on the euro and the pound. Rising global uncertainty and a widening U.S. yield differential with other economies provide support.
- The Eurozone economy grew at its weakest pace in more than four years during the third quarter as the public mood darkened. It takes time to see a potential impact given the manufacturing process takes rather a long time until new goods are imported and exported.
- China just reported its weakest quarterly growth since the depths of the global financial crisis in early 2009. “We think more easing will still be needed in order to stabilize growth,” says a senior economist who watches China.
- In Japan the pace of retail sales have slowed from the prior month. Trade data showed an unexpected drop in exports in September, raising the specter of a marked moderation in economic growth.
- Weaker-than-expected growth in South Korea’s economy is raising fresh questions about a second-straight quarterly decline in corporate capital investment and a sharp drop in hiring are evidence that the economy is losing steam.
Is Fed Tightening Going to Cause a Recession? Many Experts Think Yes!
- Despite strong GDP and low unemployment rate, we should prepare for economic disruption. If there’s a recession shaping up, and there probably is, it’s just a question of how soon it’s going to arrive, Bear markets and recessions are mostly the result of the Fed tightening when the economy is exuberant.
- Strong GDP growth, the lowest unemployment rate in almost 50 years, and a stable price level are just right. If Fed increases turn out to be too “hard” then the sectors that rely on long-term borrowing, like construction, will take a blow to the head. The economy will stumble, and slower growth will take hold. There is no way to know at this point if Federal actions over the next 12 months will be “just right” as interest rate increases have already been promised.
- Perhaps the Fed is entirely correct to send the message that there is considerably more to come in its current tightening cycle. In fact, there is an increasingly compelling argument that the forward-looking Fed is still “behind the curve”.
- Private-sector wages and salaries rose 3.1 percent in the third quarter, the best pace since 2008. The Fed’s outlook calls for gradual interest-rate hikes to keep the economy from overheating. Transportation and warehousing pay got a 4.3 percent boost over the past year, the most since the three months ending September 2002.
- Janet Yellen Past Fed Chair Opinion: The Federal Reserve should stick to raising interest rates to slow down the economy despite the market turmoil. The Fed could be the possible cause of a recession if it tightens too much, but it doesn’t have to be a deep recession.
- Previously: Higher Interest Rates are Negatively Affecting many Markets & Trending others Investments Upwards.
- Previously: Labor Market is the Best It’s Been for 50 years – Is That What’s Hurting the Stock Market?
Nasdaq After 2 years of Growth Now in Correction Territory; Where Do We Go?
- Risks are piling as “significantly.” Headwinds such as looming Fed hikes, a housing market that is rolling over and growth and trade-war worries festering.
- Strong earnings may not be enough to move the barometer for tech because sentiment is so negative. Investors have to pick their spots in tech right now. GDP could be the kiss of death. If GDP falls, techs will get crushed
- Midterm elections loom over the stock market as Republican control of the White House and both houses of Congress will end after a two-year stretch. That could be bad news for stock investors. The worst stock market returns have come when the president is a Republican, and the Republicans and the Democrats each control one house of Congress.
- Gold is likely to continue to benefit from stock market volatility and weakness, short-covering and rising risk aversion. The potential catalysts for increasing geopolitical risk include tensions over Italian government finances and mounting pressure from the West on Saudi Arabia over the death of dissident journalist Jamal Khashoggi.
- Short-term bond funds are offering more yield than they have since before the financial crisis plus investors aren’t getting paid much more to invest further out the maturity spectrum.
- Q3 FAANG Earnings Likely to be Solid: investors’ darling and the biggest driver of the nine-year bull run.
- Previously: Stock Market: Buy with Both Arms or Bubble Ready to Bust?
- Moringstars top rated bond SMA during higher interest rate spikes, this short term fixed income investment SMA provided the best 1,3 & 5% year track record in high yield fixed income again according to Morningstar.
Stock Market: Buy with Both Arms or Bubble Ready to Bust?
- Why U.S. investors should be buying this stock market pullback ‘with both arms’.
- A rare and worrisome thing just happened: Stock-bond correlation breakdown. “Usually when one goes up, the other goes down as a kind of hedge. The central bank has taken risk premium out of the market and now it’s starting to come back in and we’re seeing a correlation starting to reverse between stocks and bonds.”
- Here’s how smart investors think about stock market sell-offs: Just because the sale could possibly get even better isn’t a reason to ignore the fact that it’s on sale now.
- Why stock markets crash: Can we tell if a bubble is about to burst? Hindsight is not foresight.
- US inflation is the world’s most important economic variable. Recent increases in the benchmark Treasury 10-year note signals unhinged inflation expectations the Federal Reserve must address.
- Inflation is shaping up weaker than expected despite Fed assurances.
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