Investing
Commodities Are Hit Across The Board, Pushing The Oil Market To Bear Market Status
Friday, June 01, 2012 09:10

Tags: commodities | investing | markets

Increasing signs of recession in the European economy are crushing commodity prices. Commodities have experienced the largest monthly price drop since 2008 as demand for oil has decreased to the point of bear market status.

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Oil is not the only commodity being hit. Standard and Poors measures an index comprised of 24 raw materials components that trades as the S&P GSCI Spot Index. The GSCI saw price declines of 13% during the month of May. Copper declined 12% over the month.
 
The costs of hedging against the default of Spanish bonds rose on the last day of May to unprecedented levels, pressuring the euro and causing the euro/dollar relationship to weigh heavily on commodity prices. Analysts at Citigroup forecast that the euro will trade on par with the dollar by the end of 2012. Futures for crude oil have fallen to the 20% level, which is, of course, the signal point of a bear market.

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Gross Domestic Product Is Revised Downward For 2012, Making Investors Feel The Slowdown Will Continue
Friday, June 01, 2012 09:07

Tags: economy | U.S. economy | US investing

Gross domestic product estimates for the US economy over 2012 have once again been revised downward, this time to 1.9%. Hopes that the economic recovery has staying power have largely dissipated. The ongoing month-on-month disappointments indicate that economic growth is indeed slowing down—and to the point where economists and investors feel it is settling in.

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The surge at the beginning of the year, both in market action and economic indicator reports, gave investors hope that a recovery was imminent and that momentum was strong. As it is, increased thoughts that a third Fed easing may be needed are entering more investors’ minds.
 
Some analysts think the efforts by the government to ease have made things worse and have contributed to the slowdown. Easing efforts have made it easier for consumers to spend but seem so far to have done little to make a meaningful contribution to economic growth.
 
The thought here is that consumers are still way overleveraged and that the government’s efforts are only extending the stabilization process, not instigating the economy's much needed growth. So the debate of whether a third quantitative easing is truly needed should become a source of increased debate in the coming weeks, especially as the last round of bond maturity exchange involved in Operation Twist becomes complete toward the end of June.

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As More Investors Trade Municipal Bonds Online, The MSRB Takes A Closer Look At Online Platforms
Thursday, May 31, 2012 10:02

Tags: bonds | municipal bonds | online financial advice

Online trading is becoming more popular with municipal bond investors. So the Municipal Securities Rulemaking Board (MSRB) is keeping a closer eye on trading sites to make sure investors are being treated fairly and that the sites follow MSRB rules.

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The MSRB began requesting demonstrations from several online brokerages in 2011. Most firms only allow investors to buy municipal bonds online. Some are now beginning to allow them to sell them online, as well. There are about 10 sites with robust online municipal bond trading platforms. Fidelity, Ameritrade, Schwab, Scottrade, and E*Trade Financial Group are among them.
 
It’s difficult to tell how much of overall municipal bond trading is done online since there is currently no way to separate electronic trades from traditional trades. Trading online in municipal and corporate bonds through Schwab’s platform has increased to 58% from 40% just a few years ago. Most online retail traders simply pay the prices shown on the screen and do not attempt to negotiate a better price.
 
Concern that online investors may not be getting the best price as well as the fact that bond recommendations from the sites may not fit MSRB suitability standards is causing the MSRB to take a closer look at the platforms.

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High Net Worth Investors Have Apparently Decided To Wait Out The European Crisis
Thursday, May 31, 2012 09:48

Tags: high net worth | investment strategies | investor behavior

The wealthy are becoming disheartened by the flagging US economic recovery. Spectrem Group’s most recent survey of millionaires has found them less confident despite the strong start to the year, both in the equity markets and in improving economic reports.

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Europe is the primary damper on millionaire investors’ enthusiasm. The Spectrem Millionaire Investor Confidence Index showed a reading of 10 in March, 8 in April, and 3 in May. The reading has not seen a five-point drop since before this time last year.
 
Investors seem poised to keep their investment powder dry until some type of realistic resolution to the  crisis in Europe becomes apparent.

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Hedge Fund Managers Going Abroad To Pick Up Bargains For Their Portfolios
Thursday, May 31, 2012 09:33

Tags: alternative investments | European crisis | global investing | US investing

Alternatives may be losing their luster here in the States but many hedge fund managers are going abroad to try to pick up cheap assets for their funds. Foreign banks may be forced to dispose of distressed assets in the process of managing the European crisis and these managers are going over as ready buyers.

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Some managers are traveling so often that jet lag has become a non-event. They get to know areas they frequent so well that some even become regulars at the local pub. Beaten-down equities, corporate bonds, and loans have garnered the most interest. Hopefully, there are strong returns in store when market values recover.
 
Not only are existing funds going abroad to take advantage of opportunities, new funds are also being created. At this point, opportunities, particularly in Europe, may hold much less risk since they have already been battered in the marketplace.
 
Fund managers are being prudent and meeting regularly with bankers, foreign investors, and policy makers to develop a better feel for the political and economic environment. This also helps them learn who to trust and who to avoid. This may be a case when going against the crowd in the US might be worth considering.

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