Low Volatility ETF's

There is a growing batch of US and global low-volatility ETF's - many of which sport decent dividend yields.  See this article by David Fabian of FMD Capital Management about the "Ins and Outs of Low Volatility ETF's."

Continue reading
182 Hits

Green Shoots and Market Bottoms – A contrarian and rational perspective

Written by Puneet Gupta, Chief Investment Officer of The Absolute Return, LLC.    

The Global Financial Markets are a real-time barometer by which the health of the economy can be assessed and even predicted.  Just as high volatility tells you that something is very wrong, in the same way low volatility and rising or stable equity prices with broad market participation tell you that things are robust no matter what the gloom-and-doomers may be saying, or that seemingly stable prices but with narrow market participation tell you that the tide may be ripening for a turn.  Macroeconomic data of course is crucial even though it can be lagging, to inform and re-inforce the story derived from the markets.

Continue reading
2180 Hits

3 Value ETF's for a Surging Market

Written by David Fabian of FMD Capital Management.   The stock market has now broken out to new all-time highs and many investors may be ill-positioned to take advantage of the latest surge.  Based on sentiment indicators, fund flows, and structural positioning the overwhelming momentum has been with defensive areas of the market.

The unrelenting decline in interest rates and grasp for yield has been a tremendous beneficiary to traditional safe havens.  Treasury bonds, utility stocks, REITs, low volatility indexes, and precious metals have all surged this year. 

But what about the areas that have been overlooked or just plain abandoned altogether?

Continue Reading

Continue reading
1342 Hits

Hedging Your Investment Portfolio - ETF Opportunities

Written by David Fabian of FMD Capital Management.   Hedging your portfolio is a strategy that is often employed by those who want to take out some downside protection against the possibility of a market drop. The most successful application of this process is to reduce your exposure in highly appreciated long positions with the assets that demonstrate inverse or non-correlated properties to the broad equity market.

This will allow you the flexibility of reducing your risk profile without having to shift your holdings to cash or disturb your existing cost basis in a taxable account. Playing defense in the midst of a correction or even a bear market may help you sleep better at night knowing that your capital has some layer of protection from a measured move lower.

Continue reading
2220 Hits

The Only Graph Needed To Explain The New Year's Dive in 2016

Written by Daniel Alpert.   A practically unnoticed phenomenon underpins the negative U.S. economic data trends we saw in Q4 2015 and the enormous increase in market volatility in the first week of 2016: the United States’ global competitors are—once again—using vast pools of low-wage, underutilized labor, a huge excess of domestic production capacity, and/or the ever-stronger U.S. dollar, to grab whatever share of demand they can in order to maintain/recover growth in a sluggish global economy.

Continue reading
3870 Hits

A Disturbance In The Force: The Bull and Bear Case

Written by David Fabian of FMD Capital Management.     Starting in the hole for the year sucks.  It’s psychologically defeating and immediately makes you feel like you are playing catch up for the entire first quarter, if not the first half.  Most investors I speak with are rightfully scared and questioning the “buy the dip” game plan that worked so steadily over the last several years.

Continue reading
2112 Hits

Applying the Brakes: Four Long and Winding Roads to "Normalcy" for the Fed.

Written by Daniel Aplert for the Levy Economics Institute.  Published on December 15, 2015.     It is highly likely that this week will see the Federal Reserve’s Open Market Committee elect to increase the Fed Funds policy rate of interest for the first time since June of 2006, and after slashing the rate to the lowest level in history—approaching the so-called zero lower bound.

But the return journey to interest rate policy rate normalcy will be a long and winding one. The ability to influence longer term interest rates, over which the Fed has no direct control, will be even more limited (in fact, after the Fed’s move and any interim market volatility, long term market interest rates are likely to fall if the global economy maintains it present trend).

Continue reading
1850 Hits

Pessimism Reigns Supreme On Wall Street

Written by David Fabian of FMD Capital Management.   On the Investor Insights blog we have been providing a great deal of coverage on the divergences between the “haves” and “have nots”. The performance chasing in high flying stocks like Amazon, Netflix, Google, and Facebook has created a wide gap between the “average” stock in the S&P 500 Index.

Continue reading
1864 Hits

How do consumers respond to lower gasoline prices?

Written by James Hamilton for Econbrowser.   Click here to access the original article on Econbrowser. 

 U.S. gasoline prices averaged $3.31 a gallon over December 2013 to February 2014 but only $2.31 a gallon over December 2014 to February 2015. How did consumers respond to this windfall in their spending power? A new study by the JP Morgan Chase Institute has come up with some interesting answers.

Continue reading
2452 Hits

Nine Items on My Radar Screen: Are They on Yours?

Written by Marc Chandler.   1.  Temporal Inconsistencies at the Fed:  The Fed's decision to delay the beginning of the normalization of monetary policy of undermines confidence in when lift-off will actually take place. It is clear that many, like ourselves, thought September was a likely opportunity, have now pushed lift-off to December, largely skipping the October meeting due to its proximity and the absence of a scheduled press conference.   In recent months, the FOMC has recognized that market-based measures of inflation expectations were soft but that survey-based measures were stable. Last week the FOMC singled out the softer break-evens as part of the justification to wait before hiking.  

Continue reading
3890 Hits

Euroland Has No Plan B: It Needs An Urgent Recovery Plan

Written by Jorg Bibow for The Levy Economics Institute.  At last, the eurozone economy appears to be experiencing some kind of recovery. GDP started growing again in the spring of 2013, following seven quarters of decline, with domestic demand shrinking for even nine consecutive quarters between 2011 and 2013. Today, it is conceivable that within a year or so the eurozone might recoup its pre-crisis level of GDP, perhaps marking the end of a “lost decade.”

But it is too soon to declare victory and become complacent. The eurozone remains fragile and the recovery uneven. Having primarily relied on export demand for its meagre growth since 2010, developments in China and elsewhere in the emerging world are posing an acute threat. More recently home-grown demand benefited from peculiar tailwinds that are temporary in nature. It is unclear at this point whether these forces will merge into a stronger self-sustaining recovery, while the likelihood of renewed and spreading political instability along the way keeps rising. It seems unwise, in fact hazardous, not to have a plan B ready at hand should growth falter once again.

Continue reading
2197 Hits

The News Is Always Worst At The Bottom

Written By David Fabian of FMD Capital Management.     There is an old saying on Wall Street that I will paraphrase as: the news is always best at the top and worst at the bottom. That is because good news drives buyers in and bad news generally causes widespread selling and/or panic as sentiment reaches extremes. Once all of the band wagon investors have either jumped on or stepped off a trend, the price begins to reverse course.

This axiom is more of an observation of investor behavior rather than an actionable trigger for calling tops and bottoms. However, I am reminded of this logic when I look at the situation in emerging market countries and even more so with Brazil.

Continue reading
3197 Hits

A Cycle of Financial Fragility?

Margin LoansWritten by Greg Hannsgen for the Levy Economics Institute.       Can a bull market founded largely on credit survive? A forthcoming Levy Institute working paper I wrote with Tai Young-Taft of Bard College at Simon’s Rock (link for those interested) represents an attempt to deal with the role of financial instability—along with other sources of economic fluctuations—in the dynamics of the economy.

Here, I’ll focus mostly on the role of margin loans that are used by many investors and traders to leverage positions in stock. The model developed in the paper includes a role for several policy tools that might be used in attempts to stabilize the economy: a fiscal-policy rule with public production and unemployment rate targets, along with public-sector R&D, financial supervision and regulation, and a target for the inflation-adjusted interest rate on government debt.  

Continue reading
3552 Hits

The Interest Rate Dance

Written by David Fabian of FMD Capital Management.     The current rise in interest rates has an eerily-similar feeling to the panic and frustration after the Fed’s surprise announcement to taper quantitative easing in 2013.  Just like then, the bond market is reacting more to the thought of a change in Fed policy and not the change itself.  Investors should always remember that the  markets are not logical, they are psychological.  So with the strong non-farm payroll numbers that were released this morning, there is renewed anticipation that the Fed will be forced to hike in October, instead of the first quarter of 2016.

Continue reading
3193 Hits

What is the New Normal for the Real Interest Rate?

Reposted from Econbrowser, written by James Hamilton.

The yield on a 10-year Treasury inflation protected security was negative through much of 2012 and 2013, and remains today below 0.25%. Have we entered a new era in which a real rate near zero is the new normal? That’s the subject of a new paper that I just completed with Ethan Harris, head of global economics research at Bank of America Merrill Lynch, Jan Hatzius chief economist of Goldman Sachs, and Kenneth West professor of economics at the University of Wisconsin, which we presented at the U.S. Monetary Policy Forum annual conference in New York on Friday.

Continue reading
15838 Hits

Sovereign debt scares– is the U.S. immune?

Many people are finally coming to a realization that should have been evident long ago: Greece’s debts are not going to be repaid. And as discussion turns to who might be next, it seems a good time to revisit the question of whether the United States could some day find itself in similar trouble. I am substantially more optimistic about this than I was a couple of years ago, and here is why.

Reposted from Econbrowser, written by James Hamilton

Continue reading
3399 Hits