New single-family home sales retreated again last month, falling by nearly 17% in February on an annualized basis, the Census Bureau reports. That’s the biggest monthly fall since last May.
Author Archives: James Picerno
Strategic Briefing | 3.23.2011 | High Yield Bonds
Junk Bonds: What to Do Now
The Wall Street Journal | Mar 22
It may be time to take some junk out of your trunk. Until recently, high-yield or “junk” bonds have been on a tear, posting double-digit returns in 2009 and 2010 and sending prices higher and yields close to all-time lows. But investors are starting to pare back their appetite for risky assets. For the first time since early December, there were net outflows from high-yield bond funds last week—some $801.9 million—according to EPFR Global, a Boston research firm that tracks fund flows.
ProShares Debuts Short Junk Bond ETF (SJB)
ETFdb | Mar 22
ProShares, the Maryland-based firm known for a suite of leveraged and inverse ETFs, has launched the first ETF offering daily inverse exposure to junk bonds. The ProShares Short High Yield (SJB) will seek to deliver daily results that correspond to -100% of the daily change in the iBoxx $ Liquid High Yield Index. That index serves as the underlying for the ultra-popular iShares iBoxx $ High Yield Corporate Bond Fund (HYG), which has more than $8 billion in assets and consists of more than 400 individual junk bonds.
Worrying About Inflation
Wharton professor Jeremy Siegel, author of the best seller Stocks for the Long Run
End The Fed? And Replace It With… ???
The celebrated investor Jim Rogers thinks we should abolish the Federal Reserve. Asked in an interview yesterday what he’d do as Fed chairman, he replied: “I’d shut it down.”
What Goes Up…
It’s no secret that the Federal Reserve’s balance sheet has exploded in recent years, courtesy of the blowback from the financial crisis of late-2008 and the Great Recession. That includes holding more Treasuries. But not all Treasuries are equal when it comes to maturities on the books at the central bank. Most of the ballooning portfolio of government-held debt is in medium-term Treasuries with maturities of 5-to-10-year maturities, according to Fed data. Some of this (all of this?) will flow back into the private sector with QE2’s scheduled unwinding later this year. Barring any glitches, the market’s on track to see a fair amount medium-term Treasuries on sale this year.
The Limits Of The Yale Model
The Economist wonders if the so-called Yale model, an aggressive use of conventional and alternative asset classes, will shine as brightly in the years ahead as it has over the past quarter century. The rationale for thinking positively comes from the capable investment hands of David Swensen, who’s managed Yale’s endowment since 1985, delivering stellar results. His strategy, explained in his 2000 book Pioneering Portfolio Management
Book Bits For Saturday: 3.19.2011
● The Little Book of Alternative Investments: Reaping Rewards by Daring to be Different
By Ben Stein and Phil DeMuth
Excerpt via publisher, John Wiley
This book is largely about finding legitimate assets that will make your finances less tied to the churn of the stock market. To the extent that you succeed, the tradeoff is that you really will be less tied to the stock market. When stocks are rocketing to the stars, you won’t be. When stocks are melting through the earth, you won’t be. It will be less clear to you from day- to- day how you are doing. This can be liberating but also can be anxiety producing, especially if you’re used to checking the Dow Jones Industrial Average every 15 minutes or 15 seconds. It requires a leap of faith that there is life beyond stocks. We want to interest you in accepting a higher degree of stock market de- correlation into your life than you probably have at present.
Strategic Briefing | 3.18.2011 | Stagflation Risk
Supply Disruptions Pose Threat of Stagflation
The Wall Street Journal | Mar 17
A scramble for supplies prompted by Japan’s crisis may add to the specter of stagflation stalking the U.S. economy. Already, high oil prices and geopolitical uncertainty have taken some of the buzz out of 2011 growth prospects. The first quarter in particular looks like it will end on a much weaker note than initially thought. Morgan Stanley’s tracking estimate of annualized real gross-domestic-product growth has dropped from 4.5% to 2.9% over the past six weeks. A similar one from tracking firm Macroeconomic Advisers has slipped to 2.5%.
Initial Jobless Claims Fall & Industrial Production Slips
New filings for jobless benefits dropped by 16,000 last week to a seasonally adjusted 385,000, the U.S. Labor Department reports. That’s the fifth reading below the 400,000 mark since the end of recession in June 2009. Meanwhile, the widely watched four-week moving average slipped to just over 386,000, the lowest level since the recovery began.
Consumer Prices Accelerate In February On Higher Energy Costs
U.S. consumer price inflation ticked higher last month, the Bureau of Labor Statistics reports. Headline inflation rose by a seasonally adjusted 0.5% in February, up from 0.4% the month before. Core inflation, however, remained modest, advancing 0.2% last month, unchanged from January’s rate.