Salient to Investors: Unemployment at 7.5 percent, estimates for the narrowest budget deficit since 2008, and a 1.1 percent inflation rate are keeping yields and volatility contained despite disunity among Fed officials over when to curtail QE. Gary Droscoski at GAM USA expects the sideways move to continue for the next couple of months
READ MORE... →Salient to Investors: US balanced funds received record inflows of $35.2 billion from January to April, the most in any four months, showing easing individuals’ reluctance to join the record-breaking rally in the S&P 500 Index. Inflows into hybrid funds reached records in February 1994 in the middle of a 417 percent gain
READ MORE... →Salient to Investors: Bruce Stout at Aberdeen Asset Mgmt says: Optimism is too high for stocks and bond yields are too low His fund’s fixed-income holdings are at the lowest level in 25 years. The main problem is trying to get yield in a world where there is no yield, but
READ MORE... →Salient to Investors: John Williams at FRB of San Francisco said: Any move to reduce the pace of the Fed’s bond buying could be followed by an increase should the economy weaken again – this is uncharted territory. The Fed could begin slowing its purchases as early as this summer and end the program late
READ MORE... →Salient to Investors: Barry Knapp at Barclays predicts the Fed will maintain its current rate of asset purchases into 2014, as the labor market is again the Fed’s focus. Knapp said an improving labor market rather than accelerating inflation made the Fed end its last 3 easings – May 1983, February 1994, Feb-to-August, 2004. In
READ MORE... →Salient to Investors: Goldman Sachs study says: Bond investors do not perceive the 6 biggest US banks as too big to fail, including itself. The 6 banks have had an average funding-cost advantage over smaller competitors of 0.31 percent since 1999 – widest in the financial crisis and now an average 0.10
READ MORE... →Salient to Investors: The Market Flash writes: The Quantity Theory of Money is under fire in academia because changes in technology and innovations by financial institutions have rendered the theory a less than complete view of the world – with important implications for investors from a macro point of view.
READ MORE... →Salient to Investors: Margie Patel at Wells Capital Mgmt says the market will rise over the balance of the year because the fundamentals are so good – any correction will be mild and either now or in the summer. Charles Evans at FRB of Chicago sees self-sustaining growth at escape
READ MORE... →Salient to Investors: US 30-year loan rates are at the highest in 6 weeks at 3.51 percent. Low rates are fueling a frenzy of demand in some markets as buyers compete for a tight supply of properties. Areas such as San Francisco, Atlanta, Phoenix and Reno saw rises of more than 30 percent in
READ MORE... →Salient to Investors: Julia Coronado at BNP Paribas says Q2 growth is going to be slower than Q1 as the sequester and budget cuts restrain, and core inflation starting to decelerate reflects a lack of purchasing power: Coronado said any discussion of Fed reducing QE will be postponed. David Sloan at 4Cast said housing permits suggest
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