Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘WSJ’

What if Obama Voters Remember How Lousy the Obama Era Was?

Posted by hkarner - 14. Oktober 2018

Date: 13-10-2018
Source: The Wall Street Journal By James Freeman

The left worries that young people and minorities don’t hate Trump enough.

During the Obama administration there was much confident chatter on the left about the “coalition of the ascendant.” This rising population of young people, social liberals and minority voters not only carried Barack Obama to two national victories but was allegedly destined by demography to exert an increasing leftward tug on American politics. The potential problem for leaders of this coalition is that along the way some of their followers may have noticed the results of their policies.

A few warning signs have been appearing lately as the Obama generation makes it way into the workplace and as minority voters seem unwilling to hate President Donald Trump as much as Democratic politicians and the press expect them to do.

“It’s time for some alarm about the midterms,” writes David Leonhardt of the New York Times. “The most recent polls have underscored the real possibility that Republicans will keep control of both the Senate and House. According to Mr. Leonhardt: Den Rest des Beitrags lesen »

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Italy Issues a Euro Dare to Germany

Posted by hkarner - 13. Oktober 2018

Date: 12-10-2018
Source: The Wall Street Journal

Rome would be foolish to leave the currency, but it could accidentally goad Berlin to push it out.

Italian Minister of Economy and Finance Giovanni Tria

There Italy goes, threatening to blow up the euro again. The uproar over the budget proposal put forward by the new left-right insurgent government has reignited fears that the eurozone’s third-largest economy is on the path to fiscal ruin and will drag the rest of the currency bloc down with it. It could happen, although not in the way or for the reason you may think.

The numbers look bad. The coalition of the right-wing League and sort-of-left-wing 5 Star Movement is proposing to overspend revenues by 2.4% of gross domestic product for the next few years—and that’s if GDP growth meets their rosy assumptions. This is a crisis, we’re led to believe, compared with the 1.6% of GDP deficit Brussels might otherwise have accepted from technocratic Economy Minister Giovanni Tria.

If a 0.8-point difference in budget projections sounds to you like a flimsy reed on which to hang a currency crisis, you’re not alone. The strongest case for the degree of upset this budget is causing is that it’s clear Rome’s new leaders have no plan for paying down a national debt equal to 130% of GDP. Italy is probably too big to be saved by other eurozone countries—and were it to renege on its debts, it could well bring down a smattering of French and German banks with it. Den Rest des Beitrags lesen »

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What’s Bubbling Under the Surface of the Stock Market

Posted by hkarner - 11. Oktober 2018

Date: 10-10-2018
Source: The Wall Street Journal

The best and the worst performing stocks did a role reversal. It’s something investors should keep a close eye on.

The Last First, and the First Last
The best performing stocks of the past week were among the worst in the year upto last week’s reverse, and vice-versa.

The pillars of this year’s stock rally crumbled in the past week, even as the overall market had only a mild decline thanks to support from what had been among the most-hated companies.

Beneath the small fall of 1.5% was a near-perfect reversal, with the pedigree performers turning into market mongrels and many of the year’s worst stocks back in favor.

The leading examples are dramatic: General Electric was the best stock in the S&P 500 to own over the past week—and the 496th performer for the year up to that point. Advanced Micro Devices , AMD -6.79% Abiomed and Netflix were by far the shares to hold this year until last week, and since then all have lost money, ranking 393rd, 481st and 443rd in the index.

The reversal was marketwide. Grouped into deciles of roughly 50 stocks (there are 505 stocks in the inaptly named index) ordered by their performance over the past week it is clear that the best performers were previously the worst, and the worst performers were previously among the best.

The pattern isn’t so clear when sorted the other way round. The best performers for the year so far did become the worst: The top 50 stocks on average made 51% up to Wednesday last week and lost 3.7% since then. But plenty of stocks that had a terrible time this year carried on being awful in the past week, too. The bottom 50 stocks on average fell 27% for the year to last Wednesday, before losing another 2.4% since, to make them the second-worst decile.

I’m hopeful that the reversal will see a resurgence of cheap value stocks previously abandoned by investors, mitigating losses among the fashionable FANGs and other technology disrupters. But for now value stocks are also down, just by less than the highflying growth stocks.

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A Frenzy of New Market Bets Is Fading

Posted by hkarner - 11. Oktober 2018

Date: 10-10-2018
Source: The Wall Street Journal

Investors have funneled trillions into passively managed funds since the financial crisis, but the flood of new money is slowing

One sign that investors’ doubts are growing despite a buoyant market for U.S. stocks: the slowdown of new money into the investment world’s most popular products.

Net inflows into U.S. mutual funds and exchange-traded funds are down 46% through the first three quarters of the year, according to new data tracked by Morningstar. They totaled $281.7 billion this year through September, compared with $517.2 billion during the same period in 2017, Morningstar said.

Slow Flows
Clients are pulling money from actively-managed funds and committing less newcash to cheaper, passively-managed investments. Den Rest des Beitrags lesen »

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The Price of Financial Advice Is, Finally, Falling

Posted by hkarner - 9. Oktober 2018

Date: 08-10-2018
Source: The Wall Street Journal

As the rest of Wall Street cuts all kinds of fees in a race to zero, financial advisers have been the exception. That is changing.

Financial advisers these days are having to work to justify asset-management fees of 1% or more.

Mutual-fund and index-fund fees keep falling. Trading is free, depending on where you do it. Even hedge funds have started to drop their notoriously high charges.

The only holdouts in the race to rock-bottom fees have been traditional investment advisers. Now that is starting to change.

Technology is reshaping the wealth-management industry, bringing down the cost of delivering advice and putting pressure on traditional fee models. At the same time, the massive, continuing transfer of wealth from baby boomers to their children means heirs are re-evaluating their financial relationships and putting advisers on the defensive. Den Rest des Beitrags lesen »

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Investment in Infrastructure Is Booming

Posted by hkarner - 9. Oktober 2018

Date: 08-10-2018
Source: The Wall Street Journal

Private-equity firms are on course to raise a record amount to invest in pipelines, telecom assets and the like

An Italian train station. In April, private-equity firm GIP purchased Italy’s second-largest high-speed train operator, known as Italo.

Private-equity firms are on track to raise a record amount for infrastructure investing in 2018, as money managers bet on the growing need to upgrade and expand the world’s railroads, natural-gas pipelines and data centers.

The firms collectively raised $68.2 billion in the first three quarters of the year, up 18% over the same period in 2017 and already surpassing the $66.2 billion they amassed in all of 2016, according to data from Preqin.

Leading the charge are KKR & Co., Stonepeak Infrastructure Partners and I Squared Capital, which each raised a roughly $7 billion investment vehicle this year. Den Rest des Beitrags lesen »

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Yields on Italian Bonds Hit 4½ Year High on Budget Concerns

Posted by hkarner - 9. Oktober 2018

Date: 08-10-2018
Source: The Wall Street Journal

Selloff of Italian bonds and banks revives concerns over the “doom loop” between weak lenders and fragile government finances

Investors continued to sell off Italian government bonds on Monday as the country’s populist government clashed with the European Union over budget targets.

Yields on the country’s 10-year bonds hit a 4½ year high, rising 17 basis points to 3.593%. The two-year bond yield jumped to 1.557% near its highest level since June. Bond yields move inversely to prices.

Italian stocks sold off with the FTSE MIB shedding 2.3%. A potential ratings downgrade of the country’s debt by major credit credit-rating firms also weighed on sentiment, analysts said. Banking stocks also suffered heavy losses, Banco BPM losing 5.8% and UBI Banca falling 4.9%.

The moves put pressure on the broader European market, with the euro falling by 0.4% against the dollar.

“Step by step, the pressure on Italy is ratcheting up,” said Richard McGuire, head of rates strategy at Dutch lender Rabobank. “The danger is of this becoming a self-fulfilling prophecy.”

Italian shares and government bonds have been selling off in recent days after the government significantly widened its budget-deficit target for next year to 2.4% of gross domestic product, creeping closer to the EU’s 3% limit.

Late last week, the European Commission, the EU’s executive arm, said Italy’s budget plans are a “significant deviation” from the recommended fiscal policies and a “source of serious concern.”

On Monday, Italy’s interior minister, Matteo Salvini, criticized European Commission President Jean-Claude Juncker and Economics Commissioner Pierre Moscovici. Den Rest des Beitrags lesen »

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Traders Bet on Return of $100 Oil

Posted by hkarner - 9. Oktober 2018

Date: 08-10-2018
Source: The Wall Street Journal

Narrowing supplies from Iran and robust global growth drive market’s bullish sentiment

An oil facility in Iran last year. Shrinking supplies from the country are contributing to bullish sentiment on oil. Brent, the benchmark for global crude prices, is up 26% this year.

A hot streak in the oil market is setting off a wave of bets on how high prices can go.

With crude prices rallying for four straight weeks, trading of oil options—contracts that give the right but not the obligation to buy or sell—has surged.

The number of bullish contracts that pay out if Brent futures surpass $100 a barrel by January—up 19% from the current level—has more than doubled since the beginning of September, data from Intercontinental Exchange analyzed by QuikStrike show.

Shrinking supplies from Iran, along with strong global growth, has fired up bullish sentiment in the oil market. Uncertainty over how much politically troubled OPEC members can pump to make up for production shortfalls could propel prices to $100, say analysts and officials in the Organization of the Petroleum Exporting Countries. Den Rest des Beitrags lesen »

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The Achilles’ Heel for Italy’s Populists: Weak Banks

Posted by hkarner - 7. Oktober 2018

Date: 05-10-2018
Source: The Wall Street Journal

New government’s plans for higher deficit unsettle investors as much as they do Italy’s European partners

ROME—As Italy’s populist government approaches a showdown with the European Union over its budget, financial-market tremors are hurting the country’s banking system and threatening the economic growth Rome wants to stimulate.

Italian bank shares and bonds have suffered sharp selloffs in the past week as Italy’s government stumbled toward a budget that looks set to break EU rules on fiscal discipline. Rome’s new, EU-skeptic governing coalition between the antiestablishment 5 Star Movement and the nativist League has said it aims for a budget deficit of 2.4% of gross domestic product next year, three times what the previous, pro-EU government planned.

Rome’s optimistic forecasts for growth and tax revenues are expected to draw tough scrutiny from EU authorities, who fear the true deficit could end up dangerously high for a country with an already worrisome national debt. The 5 Star and League’s fiery rhetoric against EU officials have further spooked foreign investors, who fear the European Central Bank—the ultimate guarantor of bond-market stability in the eurozone—is unlikely to support a government that defies the bloc’s economic orthodoxy.

Despite some stabilization in markets since Wednesday, after the government promised slightly smaller deficits in the medium term, Italian bonds and banks remain under heavy pressure.

“It is almost killing the recovery of the banking sector. And this will be a shock for the economy,” said Nicola Nobile, a Milan-based economist for forecasting company Oxford Economics. The danger, he said, is a return of the credit crunch that choked off Italy’s recovery after the eurozone crisis earlier this decade. Den Rest des Beitrags lesen »

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Unilever Drops Plan to Leave London Amid Shareholder Revolt

Posted by hkarner - 6. Oktober 2018

Date: 05-10-2018
Source: The Wall Street Journal

Anglo-Dutch consumer-goods giant says it still believes that simplifying its structure would serve its best long-term interests

Unilever PLC on Friday abandoned its plan to ditch its London headquarters in favor of the Netherlands after facing mounting opposition from some of its largest investors.

The maker of Hellmann’s mayonnaise and Ben & Jerry’s ice cream had planned the move as part of a broader consolidation of its British and Dutch operating companies to make it more nimble.

However, a parade of big institutional investors said they would oppose the plan at a shareholder vote later this month. The move would have cost Unilever its place in the U.K.’s FTSE 100 index, forcing some investors to sell. Den Rest des Beitrags lesen »

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