Wednesday, 31 May 2017

J. Siegel: The market is fairly valued

One of the most bullish market-minded specialist in the last years, Jeremy Siegel, has come to protect US indices in the light of their new record highs.
The stock market is very fairly valued at its current levels, said Siegel, in interview for the CNBC financial magazine.
according to the specialist, the R-E ratio of the technology sector making up the S&P 500 on the basis of this year's forecasts is still under 20. Amazon, Netflix and a few more companies are with ratios over 100.
Siegel recalls that companies like Apple are still under 20.
In 1999, the technology sector, a component of the broad index, was traded with a 90% R-E ratio, recalls the Professor of Finance at Wharton University.
Is there a danger of overheating? There is always such a danger, according to the analyst, however, the market isn't in the danger zone.
In the last six trading sessions, the Dow Jones industrial average, S&P and Nasdaq rose each day. The S&P and Nasdaq indices registered recordings at the end of last week and Dow is 32 points from a historic peak.
Overall, the dollar's depreciation is very positive for the market as well as interest rates on 10-year bonds at 2.25%. Shares are still the place where investors have to hold their money, the expert says.

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Tuesday, 30 May 2017

The three questions about oil, following OPEC's decision

OPEC may extend its production constraints for another nine months, but after the initial party, the questions faced by investors are as follows:
Will the strong relations between Russia and Saudi Arabia be maintained after the agreement? Will the members of the cartel succeed in resisting the temptation of larger production, in the midst of a boom in extraction by US state-owned manufacturers? And perhaps the most important question - what is the long-term policy of OPEC countries?
The last question is very important because we saw how OPEC's policy can be radically turned to 180-degree only within a few years.
The war on US state-owned producers, and Saudi Arabia, seriously reflected on the producers themselves, and they were the first to "flicker", not to resist the low price of oil they themselves attempted to initiate. And the goal was clear - to bring US producers to bankruptcy.
What worries the experts is that there are no clear signals about the exit strategy and what the parties' policy will be after.
These concerns, among market participants, materialized in the price of oil. Brent lost 5 percent, to $51.24 a barrel after the decision, neutralizing a major part of the growth after representatives of Russia and Saudi Arabia publicly announced they would support production cuts last week.
Or have we witnessed the materialization of the market rule "buy on rumors, sell on news".

More bad news about gold?

The attitudes to gold have deteriorated seriously over the past month. But in May, something interesting happened.
Despite the fall in the price of precious metal, positive attitudes among investors have risen seriously. This, according to analysts, is a counter-indicator and may point to impending weakness and trouble for the metal.
Countertraders are recalling that such an environment has led to a serious depreciation of the noble metal in the past.
In a downturn of $13 in the price of gold this month, metal analysts' recommendations in the short term have risen by 42 percent.
We can not fail to recall that next month the Fed will meet. Although the expectations for interest rate hikes in June have fallen sharply, in the last few weeks and following the shorthand of the committee meeting last month, such an event remains a threat to gold.
A potential rise in interest rates at a June meeting could lead to a rise in the dollar and a cheaper precious metal.

Sunday, 28 May 2017

J. Boulard: Inflation in the US is growing at an unsatisfactory pace

The current US price hike is lower than what it should be if the Fed wants to reach target inflation of 2%, according to James Bullard, head of the St. Louis reserve.
Bullard commented that prices are currently 4.6% lower than those between 1995 and 2012, when inflation grew by targeted two percent.
Too low inflation was one of the main reasons for the Fed not to raise interest rates in the US more than three times since the big crisis, but since the end of last year, the reserve has seen signs of accelerating inflation.
These views, however, materialized in the expectations of a large number of market participants for three rises in interest rates this year.
Bullard also commented that he expects a minimal impact on long-term interest rates, such as the fall in the Fed's balance sheet, which he hopes will begin in the second half of this year.
Unemployment in the United States is at 4.4% in April, below the Fed's steady levels. Most of the Fed representatives expressed the view that we will see three interest rises this year and inflation may be one of the few brakes for that.

Thursday, 25 May 2017

The dollar is cheaper after the Fed's minutes

The dollar dropped after the Fed meeting of the previous session yesterday.
It makes it clear that the members of the Monetary Policy Committee have agreed to refrain from more aggressive interest-rate action until it becomes clear that the observed slowdown in the US economy has been a temporary phenomenon.
Analysts believe the Fed's statements confirm the thesis of most market participants that we will probably see no more than two interest rises this year.
The euro appreciated against the dollar and traded at levels of 1.1236 early this morning. Later, the single currency reached the highest values ​​of about 1.1250.
The pound also rose against the dollar, again trying to get back above the psychological limit of 1.3000 against the dollar.

R. Schiller: Stay in the market because the indexes can rise by another 50%

Nobel laureate Robert Schiller believes that investors must remain on the market because the bullish market can last for years.
According to him investors should hold some positions in their portfolio. The market may rise by 50% from now on. This happened around 2000 when these levels were reached. It increased by 50%.
Shiller thinks that if someone wants to diversify because the United States has a high SARE ratio, you can go anywhere in the world and find lower ratios. We may even see a higher new peak for the CAPE ratio, this is not a forecast, Schiller said in an exclusive interview with CNBC.
The expectations expressed by the economist become conditional that he finds a negative correlation between future profitability and high CAPE ratios.
And while the current CAPE ratio is at a level of 29, which is above the historical average of 17, Schiller does not predict a market downturn.
The analyst sees a real opportunity for stock and property prices to move up for years.

Wednesday, 24 May 2017

How much did the ETF-fund fees have fallen since the financial crisis?

The index funds are the big news of the last decade. They seriously "eat" the share of hedge funds in the asset management industry and the consultancy sector.
One of the main reasons for the wide popularity of these investment schemes is undoubtedly the low fees they collect, unlike the traditional scheme 2-20 of the hedge funds - 2% of the assets and 20% of the profits.
According to a study by the Investment Company Institute, the spending rate of US index funds fell by nearly a third from 2009 to 2016. Or it is down by 32% on average to 23 basis points (or 0.23% of the value of assets), down from 34 basis points in 2009.
The data covers the long-term bullish market that emerged after the financial crisis of 2008.
Meanwhile, the index funds industry is now managing assets worth more than $2.3 trillion, according to FactSet data. The assets of the industry are constantly reaching new and new highs every month in recent years.
The largest index managers, including Vanguard and BlackRock, through their funds, have already announced a reduction in their fees several times. The three largest companies in the sector manage over 70% of the total assets of the industry.
Many of the most popular index funds have a fee of less than 0.1% of their assets. For example, BlackRock's S&P 500 fund has fee at just 0.04%, which means $4 for every $10,000 invested.
Funds investing in fixed income instruments have an average charge of 0.2%, where the fall is far less against the average 0.26% in 2013.

BofAML: There's no way we can see expensive yen and expensive developing currencies

A strange situation is present in the currency markets at the moment, according to experts from the US investment Bank of America Merrill Lynch. Investors are long in currencies in emerging markets as well as in the yen! According to analysts of the financial institution, this situation can not last long.
The bank expects the yen to fall cheaper compared to other major currencies and the developing currencis situation to become mixed later this year when the Fed continued to raise interest rates. The tax reform of the new president, is also expected to have a positive impact on the yen against the dollar.
With a potential correction for the US markets, which is considered unlikely at this stage, the yen is likely to appreciate, and emerging market currencies to become cheaper, the financial institution said. Even under this scenario, however, we will see a shift in the direction of trade in the yen accepted as an "island of salvation" and developing currencies.

Saturday, 20 May 2017

The dollar continued to fall in price against the backdrop of political instability in the US

On Friday, the dollar continued to depreciate against other major currencies, having updated at least six months, due to the fact that political instability in the US continues to exert powerful pressure on the US currency.
EUR / USD rose by 0.84% ​​to a new high in six months, 1.1196.
However, the dollar remained under massive pressure after this week's publications, from which it follows that US President Donald Trump asked the former director of the FBI, James Komi, to suspend the investigation into the relations with Russia by National Security Adviser Michael Flynn.
On Wednesday, the US Department of Justice appointed Robert Mueller as a special adviser who would monitor the investigation of Russia's alleged interference in the US presidential election campaign in 2016.

The bitcoin rate exceeded $1900 for the first time

On Friday, the bitcoin rate for the first time exceeded $1,9 thousand against the backdrop of global political uncertainty. Since Monday, the market capitalization of bitcoin has increased by $4 billion - up to $31.8 billion, while on April 25 it was $20.6 billion.
According to Coindesk, bitcoin went up on Friday to $1951.87.
Demand for crypto-currencies in Japan and South Korea had a significant impact on bitcoin dynamics. Trading volumes of bitcoin paired with the Japanese yen and the South Korean won have increased, now they account for 48.6% of the total volume of operations, according to data from the site CryptoCompare.
Recently, Japan passed a law allowing retailers to take bitcoin as a legitimate means of payment, which spurred the growth of operations with the crypto-currency. At the same time bitcoin to yen is more expensive than with a direct exchange for dollars: on Friday - 228.78 thousand yen, or about $2058.

Thursday, 18 May 2017

Here's how much you would have had if you invested $1,000 in the Amazon IPO

On May 15, exactly 20 years ago, Amazon's initial public offering took place. The company became public as an online book seller, which was only three years old.
Perhaps no one, however, expected the company's share growth of about 50,000% over the next twenty years. In other words, $1,000 invested in its shares on the first day after the IPO at a closing price would be over $491,000 to the current date if they are still held.
This kind of profit overcomes even registered, by great investors like Warren Buffett.
There is a peculiarity of course. Having held the company's shares throughout those years required iron discipline. Because they had a drop period on average 36% of their highest value each year over the past twenty years.
To a large extent, Amazon's success lies in its cloud-based business, as well as the expansion of its major trading business, which has led to bankruptcy, to many traditional retail chains.

Ray Dalio: The magnitude of the next drop will be epic

Ray Dalio is founder and head of the world's largest hedge fund - Bridgewater Associates. Dalio's success is not accidental, but a result of his qualities and hard work. Therefore, when Dalio talks, the entire investment community listens carefully.
First good news. According to Dalio, the world economy is currently in very good shape.
"The economy is at or close to its best, and I do not see any serious economic risks on the horizon for the next year or two," Dalio said in a statement in a social media website, LinkedIn, on Friday.
Now the bad news ...
"We are afraid that any magnitude of the next downturn, which will come sooner or later when it comes, will produce much greater social and political conflicts than the ones that existed so far," according to the genius investor.
World markets are currently at new peaks after stabilizing over the last eight years, following the financial crisis. Central banks have contributed to a major part of good performance on global stock markets, with interest rates maintained at ultra-low levels, the expert said.
And although the growth began, with Trump's election victory, it was not the only a factor contributing to the strong appreciation of the stock. Good corporate results and prospects for the next quarter were another catalyst to reach new historical highs.
Dalio's fears, however, are that the debts that arise in the system, including pension and health care, can create a slow and steady "squeeze" of the economy and markets. Instead of a sharp shock that can be overcome quickly, Dalio predicts that we will see a "gradual" contraction, which will be the most damaging for people with the lowest income.
Meanwhile, serious financial assessments by US companies, coupled with the 23-year minimum of the VIX index, raise concerns among many investors and analysts that we can see a serious correction of US indices.

Wednesday, 17 May 2017

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Sunday, 14 May 2017

Good data for Germany

Germany's economic growth accelerated to its highest pace in more than a year, in the past quarter, according to data, published on Friday.
Growth amounted to 0.6% for the first three months, up from 0.4% quarter-on-quarter. Investment growth was the main contributing factor to the raise.
The figures confirm the thesis of the ECB President, Mario Draghi, that the eurozone economy is recovering at a good pace.
Research shows that the German economy retains its good performance in the second quarter as well.
Confidence in economic recovery and stability is enormous, according to Jens Kramer, a NordLB economist in Hannover, quoted by Bloomberg as saying.
The result in the first quarter responded to analysts' average expectations. On an annual basis, the increase was 1.7%.

Emerging markets currencies - extremely hot

Developing countries' currencies are the big winners this year. The Mexican Peso, for example, is the most growing currency since the beginning of the year, marking its strongest growth for over four years.
The emerging currencies reported their best start of a year, which happened only three times this century, and the good times ahead could still be ahead, according to analysts.
Twenty of the 24 currencies of emerging economies have seen a rise since the beginning of the year, driven by a more than 8 per cent appreciation of the Mexican peso and the Polish zloty. Of the four currencies that have declined since the beginning of the year, none have lost more than 1% of their value.
The average growth of a developing countries' currencies since the beginning of the year was at 4.7% or the best performance since 2006. Low financial asset ratings, coupled with returning investors to these markets, could trigger further currency growth, experts say.
Analysts at the Templeton Global Bond Fund are particularly positive about the currencies of India, Mexico and Brazil.
Earlier this year's results for emerging currencies compete with those of 2003, 2006 and 2011.
A key factor in the future performance of developing countries' currencies will be the trajectory of the dollar and whether the Fed will be willing to raise interest rates two or more times by the end of the year.

Saturday, 13 May 2017

GS: Low volatility, creates historical chance for buying options

There is much talk recently about the record low volatility. And while this is a serious market distortion that is unlikely to last for too long, it creates historical opportunities for investors, according to Goldman Sachs. More specifically, in the direction of buying options.
In fact, the low volatility indicates the minimum premiums set in the call and put options.
The VIX Volatility Index, based on these premiums, for the next month, has reached a level of 8% recently or unprecedented since 1988.
"The record low volatility is predetermined by both low volatility in individual companies and by the lack of correlation between stocks," analysts from the US investment bank say.
This, however, brings with it exceptional opportunities for investors to invest in options.
There are many companies that are expected to announce their results in the coming weeks and from which investors can benefit, at low premiums and in an environment of anticipated more severe change in their prices.
From GS give an example with companies such as Johnson & Johnson, Wells Fargo & Co. and Honeywell International, which are listed in the 10 most attractive oportunities for trading options.
The US financial institution also recommends investors to stick to the straddle strategy. This is an option strategy that involves a more serious move in the asset's value rather than the direction. It involves the simultaneous purchase of put and call options with the same strike.

J. Gundlach: Replace US with Emerging Markets

After the strong rise in US indices since November, taking them to new record highs, legendary investor Jeffrey Gundlach, head of the DoubleLine Capital Fund, has a tip to investors. And he is - to replace their US investments with those of the emerging markets.
Referring to US stocks, which, according to Gundlach, account for about 50 percent of world stock exchange capitalization, compared to a share of only 24 percent of global GDP, Gundlach believes US state ratings are "staggered".
For this reason, the expert offers investors to shorten the SPY index fund based on the broad  S&P 500 index and to extend the EEM, an emerging market indexed fund.
Ghundlach is not the only one with such recommendations. A survey of Bank of America Merrill Lynch in April shows that investors are leaving US markets at the fastest pace in a few decades. They prefer the markets in the eurozone and the Asian countries.
In addition, more than 44% of institutional investors like the emerging markets, which is the highest percentage in five years.
Also 83% of respondents, from the US bank, find the US market to be overvalued.
A series of factors contributed to these expectations, including the double-digit growth of US indices since the US presidential election in November.

Friday, 12 May 2017

Can the Dow Jones Index reach 100,000 by 2030?

When is the right time to invest in the Dow Jones blue chip index? The answer is right now, according to Ric Edelman, author of the book "The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later".
The blue chip index is at a level of about 21,000 points. To increase to the psychological limit of 100,000 points, it will need an increase of 376%.
"If I'm wrong, then we're likely to see levels of 150,000 points for the index," Edelman said. "Most likely, we will see incredible profits in the US as well as globally in the future," said the finance expert.
Edelman's book aims to educate investors about how to save on retirement in a world of technological boom and expected life expectancy.
"If you think you will retire at the age of 65 and die at 85, forget it," Edelman added. "You'll probably live up to 110 or 120".
According to the author, "retirement will not exist in the 21st century. "This means you will have to work longer and you have to save much longer," the author said.
Edelman, is also turning to the technologies that help people in their investment decisions. Technology has substantially reduced the cost of investment, mainly through the use of index funds.

Sunday, 7 May 2017

J. Gundlach: A correction in the summer

Interest rates will rise, and stocks will fall temporarily this summer, predicted the famous investor Jeffrey Gundlach, in an interview with CNBC.
Gundlach expects interest rates on 10-year US bonds to rise and in the summer to expect a rise in Fed interest rates that will come along with a stock market correction.
"I think it's much more likely that stocks will fall when interest rates rise," Gundlach said in the interview.
Gundlach is the head of the DoubleLine Fund and speaks during a closed conference about the hedge fund industry.
Interest rates on 10-year bonds lately are at levels close to 2.28%, or with a decline of 2.432 at the end of last year.
Meanwhile, the S&P 500 has not fallen by more than 10% since its last peak in February last year.
Gundlach reminds, however, that there is still no recession "on the horizon". The US economy is expected to accelerate its growth in the second quarter. For comparison, GDP growth in the first quarter of the world's largest economy has been weakest in three years.
With regard to gold, Gundlach predicts that the noble metal will have the potential to rise, and oil will continue to experience downward pressure over the long term due to its improved extraction technology.
"Generally, raw materials are likely to fall behind inflation, due to technological changes," the expert also predicts.

L. Fink: Bad times are coming for financial consultants

Financial advisers and asset managers must begin planning for the future how they intend to survive in a forthcoming consolidation wave in their sector, said not everyone else, but Larry Fink, executive director of the largest fund management company in the world.
This, Fink did on the last day of the Morningstar Investment Conference in Chicago.
Expected consolidation in the asset management sector will result of the pressure from advanced technologies, expected regulation, and cost-cutting pressures, in the midst of lower fees and commissions, Fink said.
Fink's thesis is that a smaller number of asset management companies will be needed in the future.
"You are in a fantastic industry, it has provided exceptional opportunities for a good lifestyle. But that will change," Flynk said.
For asset management companies, new technologies will make data analysis much easier. The democratization of information will make it increasingly difficult to fight the markets, the genius manager said.
With advances in technology, customers will become less and less likely to pay heavy fees and commissions to managers.
The financial consultants also have the challenge of attracting young clients, much more open to new technologies and other ways of communicating.
Flynk gave an example with the institution he manages, where the number of workers is anchored at 13,000 for years, despite the asset management boom.
In conclusion, Flynk warned that the huge debt of the US poses a serious threat to the future growth of the US economy.

Saturday, 6 May 2017

Where did the fear of the market disappear?

The United States bombed Syria last week, which led to a sharp reaction by Russia. However, the markets did not react, with leading US indices are at or close to new records.
The question that is harassing the experts is - "Where did the volatility disappear?"
The broad US state index S&P 500 still rises, with the index was at about +0.1% before the bombing in Syria.
"If someone pledges potential military conflicts in the future, it definitely counts on a serious correction for the market," according to analyst Gordon Johnson of Axiom, quoted by CNBC.
"To be honest, we have been in the secondary bullish market since 2009, so people who manage money have not seen a downward trend in the market at all. Everyone wants to believe it is possible. So they do not take the bad news into account", the expert added.
According to experts, a certain level of concern among investors is generally healthy during the bullish market. And such fears are currently almost absent, at least on the basis of the levels of the popular index measuring the volatility of the market is traded - VIX.
The latter is at levels of just under 11, or close to its lowest values, over the past few years.
The VIX Index uses the options based on the S&P500 wide index to measure the magnitude of expected volatility over the next 30 calendar days.
A value of the indicator below 13.5 points for such a long period of time means only one - the market participants are not afraid. According to many analysts, the VIX index is a "counter-indicator," which means low values ​​indicate a lack of fear and a potential downturn in the market.

Employment data in the US above expectations

The report of employment in the world's largest economy were well above analysts' average expectations. The newly created jobs were 211,000 in April, and the unemployment rate was 4.4%.
However, wage growth, at a 2.5% annual rate, was slightly below analysts' average expectations.
In any case, the data suggest that investors are likely to witness a June interest rate rise as well as at least one more to year-end.
The data showed that the US labor market recovered after much weaker results in March. A month earlier, only 79,000 new jobs were created.
The result also exceeded the average expectations of analysts predicting 190,000 new jobs in April.
Despite the good data, the euro appreciated against the dollar as it was close to cross the psychological limit of 1.1000, days before the presidential elections in France.
And while similar levels of euro against the dollar indicate expectations for a near-certain Macron victory, a surprise result in favor of Le Pen, according to analysts, could send the euro between 3 and 6% down on Monday.

Wednesday, 3 May 2017

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