Is the labor market headed for a fresh round of trouble? Today’s weekly jobless claims report provides some new motivation for going over to the dark side on this question. The usual caveat applies, of course: divining the future from any one number in this volatile series can be misleading. Unfortunately, the jump in new filings for unemployment benefits is no longer an isolated data point.
Author Archives: James Picerno
Damned If You Speak, Damned If You Don’t
Ben Bernanke’s performance at the Federal Reserve’s historic first-ever press conference succeeded in pleasing no one while further stoking criticism from all sides. Perhaps that was inevitable. There was almost zero chance that one more prepared speech, or even taking questions from the press like a run-of-the-mill politician, would change deeply entrenched views about what the Fed could or couldn’t do. But the former Princeton professor gave it a shot.
Commodities, Inflation & Strange Bedfellows
Ben Bernanke is scheduled to deliver his first formal press conference later today on behalf of the Federal Reserve. It’s a safe bet that the subject of inflation will be front and center. Although consumer price inflation is low by historical standards, there’s no shortage of worries about the direction for pricing pressures. Fed critics are quick to note that the consumer price index (CPI) is higher by 2.7% for the year through last month. More worrisome, we’re told, is that the trend is up sharply from as recently as last November’s 1.1% annual pace.
Strategic Briefing | 4.26.2011 | The Fed’s First Press Conference
Fed Sweating the Details of First News Conference
The Wall Street Journal | Apr 26
The Federal Reserve is doing some careful stage planning for its first-ever public news conference Wednesday afternoon following a two-day policy meeting. Details that would be extremely mundane for most other institutions—such as who gets in, how Chairman Ben Bernanke should kick things off, and how questions will be asked—have potentially market-moving importance in this instance. Analysts and traders on Wall Street have been scrambling to find out what to expect. “People are trying to get their arms around the whole thing,” said David Greenlaw, chief U.S. economist with Morgan Stanley. He has quizzed colleagues who follow the European Central Bank, which, like other central banks, has held news conferences for years, to understand how it might unfold.
The New Finance For A New Era
The myth persists that buy-and-hold strategies are worthless. We live in a new era, we’re told. The old rules of finance are gone. Ours is new age of active management for all portfolios at all times. But the reality is that not much has changed. Markets are still volatile, predicting return is still hard, and trading costs and taxes still take a heavy toll on gross returns over time. There are, however, new insights that inspire modifying the old advice. But that still falls short of throwing out the baby with the bathwater.
Book Bits For Friday: 4.22.2011
● The Strategic Dividend Investor
By Daniel Peris
Summary via publisher, McGraw Hill Business
There’s a big difference between investing in the stock market and investing in companies through the stock market. The Strategic Dividend Investor shows you why, over the long run, investing in companies with high and rising distributions is far superior to “playing the market.” Responsible for $4.5 billion in dividend-anchored portfolios, Daniel Peris demonstrates that, for most investors, buying a stock in the hope of making a quick buck by selling it in a few weeks or months is far from the best way to create wealth. Instead, you should use the stock market as a means of receiving a share of excess profits—dividends—from corporations in which you own stock. Over time, those payments—and the growth of those payments—represent the vast majority of stock market returns.
Tactical ETF Review: 4.21.2011
The bulls are in control, according to our survey of ETF proxies for the major asset classes. As detailed below, sellers appear to be in the minority these days. The leading exception is found in U.S. bonds broadly defined, where a standoff between the bulls and bears drags on. Otherwise, optimism has broken out across the major asset classes. We’re not complaining, but a party that reaches into virtually every corner of the capital and commodity markets raises questions about what comes next. Let’s just say that this is a good time for rebalancing your portfolio. Whenever you can adjust the asset mix on your terms, it’s a good day. But gift horses don’t last forever, at least not in ample quantities. On the other hand, momentum is strong and it’s usually a force to be reckoned with. In any case, let’s take a closer look at the party already in progress…
The Power & Peril Of Rearview Mirrors
Investors shouldn’t be slaves to market history, but neither can they afford to ignore the past. The thought comes to mind as I look through the new edition of the Ibbotson SBBI Classic Yearbook.
A Rebound In Housing For March, But The Old Challenges Still Apply
Today’s update on housing construction and newly issued building permits for March brings some welcome news after the sharp declines of February. But let’s not kid ourselves: the housing market is still depressed on several fronts and today’s numbers don’t really change much. What they do suggest is that residential real estate has found a bottom. That’s not much, but it’s an improvement over the dire outlook implied by February’s reports.
Another Review of Dynamic Asset Allocation
The March/April 2011 issue of the Financial Analysts Journal carries a review of my book, Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor