The Markets - May 11, 2015
Government bonds have gone wild!
Sure, you might expect high-yield bonds to act unpredictably from time to time. That's why they're high-yield bonds. They don't receive investment-grade ratings - BBB through AAA - from leading credit rating agencies because they're not considered to be as creditworthy as investment grade bonds and carry a high degree of risk.
The Markets - May 4, 2015
Stock markets tipped into the red last week.
Major indices in the United States and elsewhere dipped lower as U.S. economic growth came in below expectations. The Commerce Department reported gross domestic product (GDP) grew by 0.2 percent annualized during the first quarter. Growth was hindered by the strength of the U.S. dollar, which made exports less attractive, and cold winter weather. U.S. market performance also reflected last week's earnings news for technology stocks which wasn't quite as rosy as the previous week's.
The Markets - April 20, 2015
It's a topsy-turvy world.
In the United States, during the last quarter of 2014, about seven million (13 percent) of all mortgaged residential properties were underwater, meaning the mortgage loan amount was at least 25 percent higher than the estimated market value of the property, according to RealtyTrac.com. That's a significantly lower number than the 12.8 million that were underwater early in 2012. Regardless, it's an unhappy situation for the homeowners who may wish they lived in Spain.
The Markets - April 13, 2015
How much is one trillion?
If you waited one trillion seconds, it would take 31,688 years.
If you had a trillion dollars, and spent $10 million a day, it would take 273 years to go broke.
If you taped $100 bills end-to-end, you could wrap the earth 41 times with $1 trillion dollars.
Alternatively, you could paper over Delaware in $100 bills - twice.
The Markets - April 6, 2015
The global economy performed a bit like a Rube Goldberg contraption during the first quarter of 2015, although it's doubtful many countries found humor as economic, financial, and political events triggered other economic, financial, and political events across the world.
The Markets - March 30, 2015
So, when is the Federal Reserve going to increase the rate for overnight borrowing?
It's a question that has plagued bond investors throughout the first quarter of 2015. In January, 10-year Treasury yields fell as low as 1.6 percent. Early in March, they rose to about 2.2 percent before falling back below 2.0 percent. The Financial Times reported:
"Higher volatility is typical when markets are on the cusp of a major turning point, and that has been the story so far this year for U.S. Treasury debt... The year has already been characterized by big swings in bond yields, which move inversely with prices... The lack of a clear signal over when policy shifts towards a tightening phase may provide the central bank with greater flexibility but does not quell the uncertainty facing investors."
The Markets - March 23, 2015
Financial markets gave the Federal Reserve a standing ovation last week. At least, that was Barron's interpretation. What did the Fed do to deserve it?
"...the Fed did what everyone expected, signaling that it could raise interest rates at any meeting starting in June. Yet, Yellen and team still found a way to assure the market that it wouldn't do anything rash, insisting that the labor market would need to strengthen further, and that inflation would have to be heading for its 2 percent target before they make a move. Even then, the projected path of interest-rate hikes would be slow and steady - and unlikely to undermine the market."
The Markets - March 16, 2015
Franklin D. Roosevelt's first inaugural address was delivered in 1933 in the midst of the Great Depression. He said, "This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself - nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."
The Markets - March 9, 2015
If you looked at last week from the perspective of the children's book, If You Give a Mouse a Cookie, it might have gone like this:
If you give the United States a positive employment report,
Investors are going to ask whether interest rates will move higher.
When they conclude the Federal Reserve may increase rates sooner rather than later,
American stock markets may dip lower...
The Markets - March 2, 2015
"Well, I never heard it before," said the Mock Turtle; "but it sounds uncommon nonsense."
It was an Alice in Wonderland week. European countries, companies, and entrepreneurs were getting paid to borrow money, and ordinary Joes with money in some European banks got letters saying the banks would be charging to hold their money.