Rate Hike This Week Off The Table (probably…)

The weekly market update is posted at Alpha Baskets and includes the following; Last week was a rough one for capital markets in terms sentiment. Billionaire after billionaire (Soros and Gross et al) made headlines with bearish outlooks for equities with George Soros appearing to load up on gold. In conjunction with pessimistic chatter was a buying panic of sorts in sovereign debt, most notably the German bund which now has a yield of two basis points. The UK gilt is also at an all time low of 1.23% as the odds of the Brexit increase. Barron’s believes global markets would “freak out” if the Brits vote to exit. The Swiss ten year note plunged to -0.45% and Japan’s JGB charges 14 basis points. The Ten Year US Treasury Note has not been left behind, its yield fell to 1.64%, lower than where it was during the Februarypanics in oil and equities, thanks in part in record foreign demand. Please click through for the entire update. Devil’s Tower taken in...

Closed End Fund Palooza

My latest post for Alpha Baskets looks at the extensive closed end fund coverage in Barron’s over the weekend and includes the following; Yes, CEFs often have very high yields which creates an appeal but hopefully it is clear that an 8% yield in a 1% or less world equates to risk taking, a lot of risk taking. A portfolio that blends different income segments with different risk and volatility profiles is a reasonable way to go but loading up on the highest yielding stuff is going to lead to pain and anguish at some point. Please click through to read the entire post. Urban camouflage BMW in Verona   Matte black Harley in Prescott, AZ....

Jobs Report: Whoops (and Copa America recap)

The weekly market update is posted and includes the following; Contributing to the confusion was that ADP reported 173,000 jobs for the month and while ADP isn’t exactly flawless it usually isn’t this far off. Of course many of the numbers are subject to revision and the headline number was likely distorted by about 35,000 or 40,000 by the Verizon strike (those workers should come back in the next report) but this leaves the FOMC in a bit of an awkward position. For months, in this report we have expressed uncertainty over how the FOMC would be able to hike into this environment. Clearly the rhetoric would have us believe a hike is coming soon but the report, if nothing else, makes this an even more interesting FOMC cycle. Please click through to read the entire update. But before you do… Last night we went to the opening round Copa America match between Mexico and Uruguay at University of Phoenix Stadium. Mexico dominated the first half scoring in the third or fourth minute of the game. The second half was much more competitive and Uruguay tied it on a header in the 72 minute immediately after Mexico got a red card (Uruguay had a red card earlier in the match). Mexico scored the go ahead goal in the 82 minute and the place went crazy. The Mexico fans were celebrating with beer flying around all over the place and while we got some on us it was beer that was going up in the air and then coming back down. Three or four rows behind was a small Uruguayan contingent...

Hopefully The Short Run Doesn’t Kill You

Before getting to today’s post, that jobs number was a doozy. Many of the components were bad. Yes it was distorted by 35,000 or 40,000 for the phone company strike and many of the components are subject to revision but for now we have a bad report. For months I have taken the position of not understanding how the Fed could raise in the current malaise and this report says the malaise is alive and well so it will be interesting to see what actually happens. My latest post at Alpha Baskets looks at Barron’s interview with Andrew Lo from MIT and includes the following; There is a balancing act that is crucial to effective asset allocation. If, talking generically, small cap can average 8% annualized over some long period of time that can do a lot of heavy lifting for a portfolio. There would be years much lower than the average and some that are much better than average. Some of the popular small cap index ETFs fell close to 60% in the last bear market but have outperformed during this bull market. It makes sense to expect that small cap would go down more than large cap in the next bear market and then rise more in the bull that follows. Please click through to read the entire post. Bad jobs data? How about some vehicles from Italy?  ...