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The Black Cloud Still Looms Large
- The oil market continues to search for any signs of life.
- The trend for oil remains definitively down.
- This bodes ill for capital markets in general and the high yield bond market in particular.
What U.S. Investors Can Expect From ECB QE
- The ECB is finally doing whatever it takes.
- Investment markets immediately rejoiced on the news, but is this sustainable once the program actually gets underway starting in March?
- Not all asset programs are created equal, and the ECB's QE program is not necessarily like the Fed's QE programs.
- It is reasonable to consider exactly what U.S. investors can expect from the ECB’s QE program moving forward.
Will The ECB Kill The Gold Rally?
- The European Central Bank is expected to take the latest “extraordinary” step in global monetary policy by announcing its own quantitative easing program on Thursday.
- Such aggressive monetary policy actions would presumably be positive for the gold price.
- Recent history has shown that gold has performed very poorly in the wake of these extraordinarily accommodative monetary policy announcements.
Is The Market To Be Hanged In A Fortnight?
- It is a fortnight filled with events that have the potential to meaningfully shape the future direction of the market.
- Four separate episodes are set to play out that each have major implications on how capital markets are likely to perform in 2015 and beyond.
- And unfortunately for investors, the risks associated with these events are currently tilted to the downside.
- Investors should be prepared for increased volatility and proceed with caution as a result.
Expect The Unexpected
- Global capital markets have become increasingly burdened by the capriciousness of human decision making by global policy makers and central bank leaders.
- Despite its perceived benefit in recent years, such heavy management may ultimately serve as a great detriment to markets in the end.
- Investors that not only expect the unexpected but anticipate it stand to benefit most as global capital market volatility continues to increase.
2015 Outlook: Pain
- Market prediction for 2015: Pain.
- U.S. stock market volatility is likely to increase notably with its relative outperformance over global stocks and other asset classes put to the test.
- A variety of asset classes and strategies provide the opportunity for strong returns in the coming year.
Monitoring Global Market Hot Zones
- The world is not without risk as we enter 2015.
- A growing number of countries are increasingly grappling with debt problems that have the potential to eventually lead to default.
- It is worthwhile to monitor developments within these at risk countries to protect against both direct and indirect negative impacts from any future deterioration.
2014's Trash Could Be 2015's Treasure
- It has been another strong year for U.S. stocks in 2014.
- But a number of more specialized asset classes and categories posted performance that notably outperformed the S&P 500 Index by a fairly wide margin this year.
- In many cases, those categories that landed at the top of the leader board in 2014 were many of the same categories that languished at or near the bottom last
- Thus, it is reasonable to consider those asset classes and categories that are limping to the finish line in 2014, for some might end up as winners in 2015.
Fires Still Burning In The Oil Patch
- The massive decline in oil prices over the last several months has clogged the headlines with bullish and bearish views on how to proceed.
- This can leave many investors feeling confused about what actions if any they should take in response going forward.
- At times like these, it is often helpful to begin by taking the simplest approach, which is to look at what prices alone are telling us.
- So far, they suggest that fires are still raging across the oil sector and that more challenges may lie ahead.
Can U.S. Stocks Four-Peat In 2015?
- The U.S. stock market finds itself in rarefied territory as it enters 2015.
- For only the sixth time in the past 150 years, the U.S. stock market has registered a double-digit annualized gain for three consecutive calendar years from 2012 to 2014.
- Can the U.S. stock market score a four-peat in 2015 and register yet another year of double-digit annualized gains?
- While the sample size is certainly limited, history suggests such a feat could be a tough one to pull off.
What Gift Will Santa Bring Stock Investors This Year?
- The time for the Santa Claus Rally is upon us.
- Stocks have historically performed famously well during the period between Christmas and New Year’s Day.
- But exactly how well have stocks performed?
- And what can we reasonably expect Santa to bring to stocks investors in terms of performance in 2014?
The Global Defenders
- Investors may be wondering whether we may be approaching a juncture starting in 2015 when stock markets from other parts of the globe are ready to take the lead.
- Many may also worry about assuming too much cyclical risk exposure in their developed international allocations given the current state of the global economy.
- The global defenders are those that have trailed the U.S. in relative performance and have a more defensive sector bias in the composition of their domestic stock market.
Has QE3 Really Come To An End?
- In October, the U.S. Federal Reserve carried out its final asset purchases as part of its latest asset purchase plan designed to help stimulate economic growth.
- Yet the Fed's balance sheet has continued to expand in the weeks since, increasing by more than $15 billion through mid-December.
- As a result, it is reasonable to explore whether QE3 has really come to an end and if the Fed is still engaged in outright asset purchases.
This Is How A Bear Market Starts
- At this advanced stage of the six year bull market, some investors are understandably concerned about how much higher stocks can go from here.
- How can investors know when the bull market in U.S. stocks has finally ended and a new bear market has gotten underway?
- Fortunately, today’s stock market is providing a live and active case study right now that is demonstrating exactly what it looks like when a bear market is just getting started.
The Black Bear Is Unleashed
- A black bear has been unleashed on capital markets.
- A number of characteristics make the sharp decline in oil and energy shares notably different from what so many have grown accustomed over the last six years.
- The recent struggles in the energy sector may go on much longer than many are anticipating and may eventually spread to the broader market.
- Fundamentals, policy and sentiment are all working against oil moving forward.
A Growing Black Cloud Over The Market
- A storm is brewing over the high yield bonds in particular and capital markets in general.
- The primary culprit has been the precipitous decline in oil prices.
- Exactly how great is the direct exposure?
- What are the specific companies that are worth monitoring?
- What are the implications, if any, for the stock market?
The Black Friday Massacre
- Friday was a massacre for energy investors.
- Following the announcement by OPEC on Thursday that it would keep its production target unchanged, the price of oil cratered lower by more than 10%.
- The stocks of various U.S. oil companies were also completely mauled once U.S. markets reopened after the Thanksgiving holiday for a shortened trading session on Friday.
- After the pullback, it is worthwhile to explore whether attractive buying opportunities are now presenting themselves in the energy space or if investors are better served to wait.
Feasting On The Stock Market Harvest
- Many investors are engaging in tax loss harvesting as the calendar year draws to a close.
- Tax loss harvesting also can provide spillover benefits for value oriented investors that are standing at the ready with cash to snap up potential bargains.
- Such a strategy can bring good fortune in the coming year for those that are busy acquiring bargains that others have cast aside from their own portfolio basket.
Stocks: Clear Sailing Into 2015
- Bullish investors are once again firmly in charge.
- Stocks have successfully navigated some recently challenging stretches to achieve new highs.
- It appears to be setting up as smooth sailing for stock investors as they move toward the end of 2014.
Playing Defense All Around The World
- Many investors today are feeling conflicted.
- In one respect, they see a U.S. stock market that appears completely unyielding in its persistence to the upside.
- On the other hand, they see a stock market that may soon be left exposed to the downside without the crutch of more QE from the Fed.
- Playing defense all around the world may provide a way to participate in further stock upside while also protecting against the downside.
- The economic and market outlook appears impossible for Germany over the next few years.
- The world's fourth-largest, heavily export-dependent economy is facing a fundamental problem.
- With future growth prospects increasingly fading, this bodes ill for the future performance of the German equity market.
2 Countries For Old Bulls
- The bulls are off and running once again in the U.S.
- But what about stocks across the rest of the world?
- While the bulls are stampeding in the U.S., the bears are out of hibernation and on the hunt across most other parts of the globe.
Oh No Canada
- I have long favored owning Canadian stocks when attractive opportunities present themselves.
- The country is well positioned in several industries that are key to long-term global economic growth.
- It is reasonable to consider whether an investment in Canadian stocks is a worthwhile strategy at the present time.
The Best Offense Is A Good Defense
- Stocks are once again in rally mode and bullishness is back on the street.
- But the details behind this rally suggest that all may not be entirely copasetic with the markets as we move toward the end of the year.
- The best offense for your stock portfolio may continue to be a good defense.
Stocks: Considering Life Without The Fed 'Put'
- It is a belief that has been firmly ingrained in the minds of investors for nearly three decades.
- It is the Fed ‘Put’, which is the expectation that the U.S. Federal Reserve will intervene aggressively to support stock prices during any sustained correction or market crisis.
- But following nearly three decades of pursuing this monetary policy approach, it is reasonable to question whether the days of the Fed ‘Put’ may now be over.
- If this is indeed the case, it is worthwhile to consider the potential implications for the stock market going forward.
Japan Stimulus: Not My Cup Of Sake
- Bank of Japan announced that it was raising the stakes on its already unprecedented monetary stimulus program.
- The stakes are high with this move, as the long run stability of the global financial system may ultimately hang in the balance.
- In the meantime, it is worthwhile to consider the sustained near-term impact on global financial markets, including both U.S. and Japanese stocks.
A Once In A Generation Change For Stocks
- The Federal Reserve is currently undergoing a monumental change in its monetary policy priorities.
- This shift marks a major departure from the focus that has defined the Fed’s work for more than a generation.
- This transition will have dramatic implications for years if not decades to come on financial markets that have become so heavily dependent on the persistently generous support of monetary policy.
- Stock investors will almost certainly be required to work much harder to generate consistently positive returns than has been required over the past few decades.
Stocks And Seasonality: Caveat Emptor
- November and December are regarded as some of the best times of the year for stock investors.
- It is has been the prospects of this seasonality that has helped assuage investor concerns following the recent correction.
- But November and December should not be ignored for its potential risks as we move into the final two months of 2014.
Victory For The Bears
- The last two weeks has provided a pivotal and decisive victory for long suffering stock market bears.
- A series of fireworks took place over the past two weeks that continued through the close of Friday’s trading.
- It has become increasingly likely that the end of the nearly six-year long bull market may soon be upon us.
- If the upcoming week was not already interesting enough, investors face an added risk factor as the markets reopen for trading.
- Monday is the Columbus Day holiday, which results in some unusual trading conditions and the potential for greater than normal price volatility.
- As a result, investors should take caution in reading too much into what comes out of Monday’s trading.
Stocks: The Most Important Week In 6 Years
- The time for the stock market to bounce is now.
- At last, after two long years the S&P 500 Index and its 200-day moving average have finally met once again.
- And this time, the fate of the third longest bull market in history hangs in the balance.
- The week ahead is the most decisive for investment markets in years.
Finding The Bull Market Peak
- The stock market has suddenly encountered an identity crisis.
- Violent swings have frayed the nerves of many investors that had become accustomed to a market that existed for so long with little volatility.
- Recent history offers some clues as to what a bull market peak actually looks like and whether we are currently in the midst of one today.