Would you rather be a borrower or a lender?
We pose the question as the national average rate for a 30-year fixed mortgage still hovers near record lows at 4.19 percent, according to bankrate.com. All things being equal, this simple fact steers us towards wanting to borrow. Money is cheap.Read more »
Cash is king. We've heard it before, and we were reminded this morning why cash on the balance sheets of corporate America matters to global investors.
Jonathan Golub, chief U.S. market strategist at RBC Capital Markets LLC provided the insight on Surveillance (6 to 8 a.m. U.S. East Coast time). He brought a chart showing how leverage has declined and cash has risen over the past twenty years. The data reflects net debt-to-equity, and cash as a percentage of assets for the S&P 500 Index, excluding financials.Read more »
Today we look back, in order to plan ahead.
So far this year, the S&P 500 Index is trending along a well-documented seasonal pattern observed over several decades. An uptrend lifts the index by about 8 percent thru July, then gives way to a gentle decline before moving higher into year end.Read more »
Waking up to the overnight announcement of a significant dividend increase by Philip Morris International Inc. (PM) reminds us how important income is to total return. The company will increase its quarterly dividend by $0.06 to $1.00, resulting in an annual dividend yield of 4.8 percent. The news follows a similar announcement by International Paper Company (IP) yesterday.
On a pretax basis, dividends have accounted for nearly half (46 percent) of total return for the S&P 500 Index during the past 25 years. Put another way, if you'd reinvested all dividends received since 1989 into buying additional shares of stock, your total return would be nearly double the return if you'd done nothing.Read more »
Two well-respected strategists present a clear message to investors today: Buy the stocks of companies exposed to cyclical strength in the U.S. economy.
JPMorgan Chase & Co. chief investment strategist Kate Moore made her case on Surveillance this morning, arguing that labor markets are improving faster than many believe (including the Federal Reserve). Chris Verrone, head of technical analysis at Strategas Research Partners, highlights technical outperformance of the group in his note to clients this morning. Together, they offer two perspectives with one clear message favoring cyclicals.Read more »
Investment advice from the fund manager of the decade, David Herro of Harris Associates:
Morningstar, Inc. named Mr. Herro top manager in 2010 after his exceptional run overseeing the Natixis Oakmark International Fund (NOICX). He joined us this morning on Surveillance to explain why he's buying stocks today in Europe. When we asked for his criteria, he generously offered three key metrics he uses to screen for possible value opportunities.Read more »
Finally a geopolitical topic we can be happy about: falling oil prices.
U.S. crude oil futures have fallen nearly 9 percent during the past six months. In spite of a resurgent militia in Iraq and the simmering crisis in Ukraine, no major supply disruptions have occurred. In addition, mild weather and increased U.S. shale production have created ample supply.Read more »
Britain captures the spotlight this morning, as Ireland and the U.K. post the strongest Purchasing Managers Index figures among G-20 nations.
Today's data from across the Atlantic also surpasses the U.S. PMI and manufacturing figures released yesterday. While all 49 economists in a recent Bloomberg survey predict the Bank of England will maintain its current low interest rate policy at the conclusion of tomorrow's two-day meeting, BOE Governor Mark Carney has also made clear any weakness to growth is coming largely from exports, not U.K. domestic demand. In other words, Britain's internal economy is doing well. Additional data tells the story.Read more »
Vacationing last week on the island of Nantucket provided both fresh air and fresh perspective. Returning Tuesday morning, we are struck by the stark difference implied by stock prices at all-time highs and bond yields at 15-month lows.
Rising stocks imply optimism, falling yields suggest the opposite. The two opposing views took center stage this morning on Surveillance, where Holland & Co. Chairman Michael Holland outlined the bull case, and Bank of Tokyo-Mitsubishi UFJ Ltd. economist Chris Rupkey highlighted the macro concerns.Read more »
"Oh give me a home, where the buffalo roam, and the bankers ramble all day."
Bankers, economists and journalists alike have flocked to Jackson Hole, Wyoming, for the annual economic symposium sponsored by the Federal Reserve Bank of Kansas City. This year's attendees have traveled from more than 40 countries to hear several dozen financial experts "discuss key long-term policy issues of mutual concern."