“No persons are more frequently wrong than those who will not admit they are wrong.” -Author FRANCOIS DUC DE LA ROCHEFOUCAULD POINTS TO PONDER 1. The Fed’s ultra-easy monetary policy is looking increasingly out-of-phase with the mounting evidence of a healing US economy. The manufacturing version of the Institute… Read More
“The mood in the market is better, but the fundamental problems of the euro zone remain unresolved.” – NOUIEL ROUBINI, NYU Professor of Economics (and one of the few academics to warn in advance of the housing bubble’s demise). 1. The US stock market has witnessed a persistent narrowing… Read More
“There’s clearly a buyers strike in the market for state and local government debt that is largely based on fear and misperception. The mass selling of munis, which represent the bedrock of the US economy, is incredible.” – Influential strategist and economist DAVID ROSENBERG POINTS TO… Read More
“The aggressiveness of our accommodative policy may soon backfire on us if we don’t begin to gradually reverse course.” – Philadelphia Fed President, CHARLES PROSSER, referring to the Federal Reserve’s government bond buying program. POINTS TO PONDER 1. A few years ago, the US economy was artificially stimulated… Read More
“The most reliable way to anticipate the future is by understanding the past.” -JOHN NAISBITT, Megatrends Author Special message: First, Happy New Year to all! Based on our clients’ investment results for 2010, it was certainly a happy old year. We’d be thrilled to see anything approaching those returns… Read More
Click here to view as PDF. “Could or would a state default? Not really―Illinois is probably in the worst shape, and there are states that I would avoid but basically the states are not going to default in Pimco’s opinion.” -Bond guru Bill Gross POINTS TO PONDER By David Hay, Chief Investment Officer 1. The view that commodity prices are in a perpetual bull market continues to be heavily reliant on Chinese demand. Oil is a prime example of this, but China is aggressively attempting to lower the energy intensity of its economy. Over the last five years, China’s energy consumption growth rate has declined noticeably. 2. China’s push to forcefully ramp up its nuclear power production has received considerable press. India’s efforts, by contrast, have attracted much less attention despite its intent to spend $100 billion as it strives to raise nuclear-generating capacity from 4 gigawatts (enough to power four midsize cities) to 40 gigawatts by 2020. Read More
Click to view as PDF. “Indeed, the euro must still be one of the greatest shorts out there—what sort of credibility can the currency possibly have when the Irish banks managed to pass those European stress tests last summer?” – DAVID ROSENBERG, prominent economic strategist POINTS TO… Read More
Click here to view as PDF. “Pessimism is so often wrong because people assume a world where there is no change or innovation. They simply extrapolate from what is going on today, failing to recognize the new developments and insights that might alter current trends.” -Bill Gates POINTS TO PONDER 1. Year-end supply pressures and credit fears continue to hit the tax-free bond market, driving yields on some gilt-edged issues with intermediate maturities up to 5%. Predictably, retail investors, who own roughly 70% of all municipal debt, are fleeing at a rate not seen since the outstanding buying opportunity seen in 2008. 2. Canada’s residential real estate market has fully recovered partially due to an influx of wealthy Asian buyers. Its “Business Immigration Program,” requiring an upfront investment of $400,000, is cited as one reason the average home price in Vancouver, BC, is nearly $1 million. Read More
Click here to view as PDF. “The US as a net debtor is one of the oldest canards.” -GaveKal Research’s Charles Gave POINTS TO PONDER 1. Due to both a negative reaction to the Fed’s second round of quantitative easing (QE II) and this week’s surprisingly pro-growth tax proposals by President Obama, yields on the 10-year Treasury note surged by precisely 100 basis points (1%) from early October to a peak of 3.33% on Wednesday. Municipal bond yields have also jumped, pummeling prices. 2. In another boost to investing against the herd, leading mutual fund evaluator Morningstar has found that the least popular fund categories have outperformed the most in-favor by nearly 5% per year over the past decade. Currently, blue-chip US stocks are held in lowest esteem while emerging markets and commodities are fund-investor favorites. 3. One persuasive bit of evidence undercutting the popular notion that Americans over-consume and under-save is that for the last 50 years discretionary consumer spending has actually declined somewhat. Higher medical expenditures are a growing portion of total outlays, much of which is reimbursed by the government. Read More
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