Archive for Bonds

Stocks and Bonds Appear to be Stuck – What Does This Mean for Investors?

U.S. equities remained stuck in the same narrow trading range for the fifth straight week. The S&P 500 index suffered only a fractional loss, but it took a surge higher on Friday to salvage even that, as anxiety over trade and interest rates was set aside following the April jobs report and some soothing comments from Warren Buffet. The S&P 500 once again flirted with its 200-day moving average at 2616 in intraday trading on Thursday, but again managed to close higher. At the same time, it has failed to close above its 100-day moving average, now at 2705, since April 18, and has done so only twice since March 21.

The economy generated 164,000 new non-farm jobs in April, and including the upward revision to the March report delivered growth in-line with the Bloomberg consensus forecast of 194,000. Together with a modest downtick in the participation rate, the unemployment rate fell to 3.9 percent, its first print below 4.0 percent since 2000. That move will undoubtedly intensify the debate over the relevancy of the Phillips curve, which is used as an indication of the relationship between the unemployment and inflation rates, but at least for this report average hourly earnings growth year-over-year remained relatively benign at 2.6 percent.

There was little movement in bonds during the week. The ten-year note yield fell just one basis point to 2.95 percent, and the two-year rose three to 2.50 percent. High yield credit spreads widened modestly, extending a three-week trend, but ended the week right at the year-to-date average of 350 basis points, and well below its five-year average of 467 basis points. Investment grade spreads also widened modestly last week, but the trend is a little less benign. BBB rated corporate yield spreads have been widening since the start of February, when they bottomed at 115 basis points. The spread ended last week at 148, the widest since last September. While that bears watching, it is still below its five-year average of 180 basis points.

The Fed Seems to be Relatively Confident  

The Federal Reserve left interest rates unchanged last week as expected. In its meeting statement the Fed acknowledged the recent rise in inflation toward its 2.0 percent target, but did so in the context of that target being symmetrical, which it referenced twice. The implication seems to be that the Fed will remain relatively sanguine should inflation rise somewhat above the longer-term target, at least temporarily. At the same time, however, the Fed said nothing to alter the view that it remains on course to raise rates at least twice more this year.

…read more

Read more here: Stocks and Bonds Appear to be Stuck – What Does This Mean for Investors?

3 ETFs for Trading the Spike in Volatility

A prolonged period of low volatility, which has been the dominant case in the market over the past year, is a common sign that investors are becoming or already are complacent. It should just about go without saying that, when the broad market becomes careless with its capital, it is often a strategic decision to turn defensive. With the rise in popularity of exchange-traded funds (ETFs) that are used to track the volatility index, also known as the fear index, it is now possible to hedge or bet on rising or falling levels of volatility. In this article, we look at several charts that can be used to trade the rise in volatility and try to determine how active traders will look to position themselves over the weeks ahead.

iPath S&P 500 VIX Short-Term Futures ETN

One of the most popular exchange-traded products used by retail and professional traders to gain exposure to volatility is the iPath S&P 500 VIX Short-Term Futures ETN. The VXX ETN has been the topic of much discussion in the media in recent months because of massive trade currently under way that is destined to make approximately $265 million in profit in the event that a set of very specific conditions are met. (For more detail, see: Traders ‘Shocked’ by VIX Bet That Could Pay $265M.)

Taking a look at the chart below, you can see that the ETN has been trading within a defined downtrend. However, the recent rise in volume combined with the break above the trendline now suggests that the story is changing and that higher levels of volatility could be coming. Heightened volatility could also be used to suggest that the markets could be nearing a turning point and heading for a pullback toward long-term levels of support. (For related reading, check out: Tracking Volatility: How the VIX is Calculated.)

 

Breakouts on the charts of key volatility-related ETFs suggest that investors may want to protect against further volatility in coming weeks. …read more

Read more here: 3 ETFs for Trading the Spike in Volatility

Category: VXX, UVXY, XIV

Immunomedics Stock Breaks Out, Consolidation Likely

Immunomedics, Inc. shares have soared more than 40% over the past five sessions after preliminary data from its Phase 2 clinical trial showed a positive treatment effect. Patients that received a weekly dose of labetuzumab govitecan experienced median progression-free survival of between 3.6 months and 4.6 months, depending on the dosages. These figures were better than competing therapeutics that have achieved regulatory approval.

Given the stock’s multi-day run-up, traders could see some profit taking on Tuesday and Wednesday as early traders lock in profits. The good news is that many analysts were bullish on the stock even prior to these new Phase 2 results. For instance, Cowen & Co. analysts indicated that IMMU-132’s biologics license application (BLA) is on track. The analysts expect an update in the second half of the year while maintaining a robust $15.00 price target on Immunomedics stock. (See also: Immunomedics Breaks Out, but Will It Last?)

Immunomedics shares broke out to fresh highs, but some consolidation is likely given the five-day run-up. …read more

Read more here: Immunomedics Stock Breaks Out, Consolidation Likely

Category: IMMU

Biogen Stock Is Ready for a Breakout

A 2.78% percent loss this year for shares of Biogen Inc. (BIIB​) was accompanied by overwhelming institutional selling, thus leading this stock to underperform. But now it looks like the tide may have shifted in favor of institutional buying.

When looking for the strongest candidates for long-term upside, it often pays to look at companies with a history of solid fundamentals and then take advantage of their recently struggling prices.

Biogen, a biotech company in a leading sector with a strengthening technical chart, makes a strong case for bullish investors. For MAP, the strongest indicator of positive price momentum is by measuring potential institutional accumulation. Last month we flagged a potential institutional buy signal in Biogen, which is notable since prior to that signal there were six potential institutional sell signals for the year. We want to see evidence that the tide may be turning in favor of institutional buying when looking for new bullish candidates. In the chart below, Biogen recently shifted away from overwhelming distribution, and may start to see increasing accumulation.

Source: Tradingview.com

MAP’s process focuses on identifying companies with healthy fundamentals accompanied by outsized unusual institutional activity to try and measure potential accumulation/distribution at the single-stock level. By studying these data points we can hypothesize which equities institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest quality stocks.

Many of the best-performing stocks over the years have exhibited continual institutional support, telling a story of where big firms may see opportunity. A company, like Biogen, which resides in a strong sector, is growing its revenues and growing its earnings, which may keep institutions holding for years to come.

When deciding on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for Biogen being:

  • Recent three-month closing highs achieved ($295.61 on July 26)
  • Three-month outperformance vs. the overall market (+~17.3% vs S&P 500)
  • Three-month outperformance vs. the sector (+~14.5% vs XLV)
  • And most importantly, institutional support

Institutional investors are showing buying signals for Biogen stock. …read more

Read more here: Biogen Stock Is Ready for a Breakout

Category: BIIB

Not there yet Janet Yellen: System is safer now, though ‘all-too-familiar’ risks remain

Federal Reserve Chair Janet Yellen, looking back a decade after the onset of the financial crisis, said Friday the financial system is safer now than it was then though some adjustments to regulations may be needed.

The central bank chief spoke at the Fed’s annual conference in Jackson Hole, Wyoming.

Though the speech is closely watched in financial markets, Yellen offered no clues about the future of monetary policy, instead focusing on the history of the crisis and what regulators have done in response. She warned that future crises are inevitable but said the housing meltdown taught valuable lessons.

“The events of the crisis demanded action, needed reforms were implemented, and these reforms have made the system safer,” she said in prepared remarks.

Yellen rejected arguments that regulation had stifled banking activity, insisting that higher capital requirements actually promoted loan growth.

Her review came less than six months before her term ends in February. President Donald Trump has been circumspect about whether he will reappoint her, and Yellen has refused to speculate about her future.

 

Fed watchers had been looking for some level of reflection from Yellenabout the Fed’s response to the crisis, and that was the focus of the speech. She cited the need for the bailout programs put into place in response to a liquidity crush on Wall Street and touted the effectiveness of the new regulations, such as the Dodd-Frank reforms.

However, she said the Fed is continually reviewing the moves to see what’s working and what might be holding back the system.

“A broader set of changes to the new financial regulatory framework may deserve consideration. Such changes include adjustments that may simplify regulations applying to small and medium-sized banks and enhance resolution planning,” she said.

“More broadly, we continue to monitor economic conditions, and to review and conduct research, to better understand the effect of regulatory reforms and possible implications for regulation.”

For instance, she said the Volcker Rule, which limits banks’ ability to trade for their own benefit, may need some “simplifying.” She also said regulations should be examined to make sure they aren’t disproportionately harming community and regional banks.

She cautioned against wholesale changes, particularly when it comes to risk-taking in the financial markets.

“Any adjustments to the regulatory framework should be modest and preserve the increase in resilience at large dealers and banks associated with the reforms put in place in recent years,” she said.

Yellen also was expected to address the current climate and the potential for dangers ahead like the real estate bubble that precipitated the crisis.

Fed officials have expressed varying levels of worry about the continuing climb of risk assets like stocks.

Indeed, Yellen cited the likelihood of “the all-too-familiar risks of excessive optimism, leverage and maturity transformation re-emerging in new ways that require policy responses.” read more

The pay is too damn low: July Jobs Report Shows Growth, but Wages Stubbornly Stagnant

The July employment report was almost about as good as it gets. The U.S. economy generated 209,000 new jobs, well in excess of the anticipated 180,000. As expected, the unemployment rate fell to 4.3 percent, matching the May low for this cycle. Average hourly earnings have yet to accelerate, but the pace did increase modestly in the month, and the participation rate edged higher. If the Fed does, indeed, intend to shrink its balance sheet starting in September, there was likely nothing in this report that would dissuade it from doing so. And following the report, expectations for a December rate hike increased to 40 percent from the 37 percent the day prior.

The one missing ingredient at this level of unemployment remains the stubborn refusal of wages to increase in a meaningful way. The last time the unemployment rate was close to this low, in 2007, wages were growing between 3.0-3.5 percent on a twelve-month basis. It should be noted, however, that back then core inflation was running between 2.0-2.3 percent as measured by the Personal Consumption Expenditure (PCE) deflator, not the 1.5 percent pace of this past June.

We will see how consumer prices started out the third quarter on Friday with the July Consumer Price Index report. The twelve-month headline rate is expected to edge higher to 1.8 from 1.6 percent in June, while the core rate is expected to be unchanged at 1.7 percent.

As labor continues struggling to participate fully in this recovery, shareholders are the beneficiary. Profit margins remain high, and corporate earnings are exceeding expectations. Second quarter earnings season is now roughly 90 percent complete, and according to Factset, S&P 500 companies in the aggregate are reporting an increase in margins compared to last year.[i] And earnings are likely to grow by 10.1 percent when full second quarter results are in, well ahead of the expected 6.4 percent pace at quarter end. Only the consumer discretionary sector is expected to see a decline.

The third quarter looks less promising. Estimates have been lowered since the end of the second quarter, as expectations for the energy sector in particular have been reduced along with the price of oil. Earnings in the third quarter are now expected to grow by 5.6 percent, down from 7.1 percent on June 30. But it should be noted that third quarter estimates are now lower for all but technology and telecom, which is still expected to suffer a decline, just of somewhat lesser magnitude. Nevertheless, current estimates of 9.5 percent for the full year have remained relatively steady.

Despite the robust July jobs report, bond yields fell for the week. The ten-year note closed at 2.26 percent, down from 2.29 the prior week, although it did bounce off its lows following the jobs report on Friday. The two-year note rose just one basis point on the week to 1.36 percent. The dollar rebounded sharply after the jobs report as well, arresting for the time being its year-long decline. Stocks edged higher, with the S&P 500 adding just 0.2 percent to close just one point shy of the record set the week before. The Dow Jones Industrial Average did manage to set another new record high at week’s end, its eighth consecutive record close.

Congress is in recess until after Labor Day, and with earnings season winding down, equity investors will be grasping about for something to fill the void as we get into the historically-weak months of August and September.

 

…read more

Read more here: July Jobs Report Shows Growth, but Wages Stubbornly Stagnant

Is a Honeywell Bid for JDA Software Imminent?

Rumors that Honeywell (NYSE: HON) was discussing the acquisition of supply-chain software firm JDA Software first surfaced on Aug. 8, according to “people familiar with the matter.” Word had it the price being considered was about $3 billion, including JDA Software’s $2 billion plus in debt.

Neither Honeywell, JDA Software, nor its largest shareholder, New Mountain Capital, are commenting. However, the latest murmurings suggest an announcement confirming the deal could come as early as Monday. Though Honeywell is widely known as an industrial conglomerate, bringing JDA Software into the fold would be in line with CEO David Cote’s expressed plans to expand his company’s suite of software-driven manufacturing and supply chain solutions.

Just last month, Honeywell announced a $1.5 billion deal to buy supply-chain and warehouse-automation software provider Intelligrated. And according to Cote, half of Honeywell’s 23,000 engineers are already focused on developing software. Though JDA Software, with its significant debt load, may not seem the most attractive of acquisitions — it was recently downgraded by Moody’s due to “risk of impairment” unless it reduced debt or found a capital infusion — there’s no faulting Cote’s decision to enhance Honeywell’s manufacturing-related technologies.

The manufacturing industry has been one of the earliest adopters of Internet of Things solutions, and is expected to lead the charge as the world becomes increasingly connected. Of the four industries expected to generate over half the estimated $14.4 trillion in annual sales IoT will account for by 2022, manufacturing’s 27% share is head-and-shoulders above the 11% retail will garner, and three times that of information services and the finance and insurance industry’s projected 9% shares. …read more

Read more here: Is a Honeywell Bid for JDA Software Imminent?

Category: HON

Pick the best travel credit card like a pro

 

Travel rewards have become about much more than just earning airline miles, and if you’ve been carrying the same card for years, you might be missing out on better rewards for the same or lower fee as banks and airlines fight for your business.

If you don’t want to think much, and just want one card with a good offer, a comparison site like MileCards.com will let you enter your spending habits and tell you which cards earn you the most miles, or you can browse a list of the best travel credit cards.

But travel pros who have racked up millions of miles diversify their loyalty to reap the most rewards.

Gary Leff, an air travel expert who writes the View From the Wing blog, suggests three reasons to get a card. The first reason is the sign on bonus, which can offer significant value. The second is to take advantage of perks offered by the card, including free bags and priority boarding. And third, you should use a card that lets you rack up miles most quickly based on your spending pattern.

Very few cards offer do all three of these things well, so experts often hold more than one credit card to get the most out of things.

For example, many of the airline branded cards offer a first free checked bag. If you tend to use the same airline a couple times a year and check a bag, you can save the annual fee in bag fees, plus get perks like priority boarding. But these cards rarely offer you the most miles for every dollar you spend.

Instead, consider putting your spending on a card that earns transferable points, while keeping the airline card for the perks.

Transferable points are a favorite of Brian Kelly, founder of The Points Guy blog. They let you book travel two ways. First, you can transfer them into real airline miles with several airlines. Second, you can choose to use them like cash to book flights on any airline.

That makes them really flexible – you can add to the miles you’ve earned by flying, or you can use them like cash if you don’t want to deal with the rules of airline miles for a trip. Chase, American Express, and Citibank each have cards that offer transferable points. Many offer special bonuses on spending categories like dining and gas, so they can earn points more quickly than a single airline card.

Regardless of what card you choose – get to know the benefits. Many travel credit cards offer coverage that’s similar to the travel insurance airlines and travel agencies will try to sell you. You could be reimbursed if you need to cancel a trip because you get very ill, or get covered for a hotel if your flight gets delayed. There’s no extra charge – just book your flight with the card to activate the coverage. These benefits aren’t …read more

Read more here: Pick the best travel credit card like a pro

Category: bonds, cloud, computers, data, dell, earnings, earnings season, healthcare, nasdaq, nyse, oil prices, stock market, stocks, utilities, wall street, csx, nj, jnj, tast, intc, jpm, fast, gs, bac, ge, lly, wfc, c, unh, emc, tri

Free trade

By The Economist online
BACK in the 1970s, after American regulators abolished fixed commissions for brokers who helped their clients trade shares, the likes of Charles Schwab and Fidelity were the insurgents. They dispensed with the expensive frills that most rivals offered, such as research and investment advice. That, in turn, allowed them to offer share trading to the masses at bargain prices. Twenty years later, the internet spurred the growth of a new wave of discount brokers, including E*Trade and TD Ameritrade. Now for the next challenger.

Whereas full-service brokers demand a percentage of the value of the assets in their clients’ accounts (typically 1-1.75% a year), the discount firms charge around $9 a trade. That is highway robbery, however, by the standards of a new online brokerage, Robinhood, which enables clients to trade shares free of charge, via a new mobile app.

 

Instead of taking commissions from customers, Robinhood receives them from the trading venues to which it steers their orders, a controversial but common practice. It also earns returns from the cash clients leave in their accounts, and plans soon to offer margin trading—the buying of…

…read more

Read more here: Free trade

Category: Business and finance, Approved, Finance and economics, FINANCE

US nonfarm payrolls totaled 242K in Feb

Amid fears that the U.S. could be joining a global slowdown, the economy added a better-than-expected 242,000 jobs in February while the unemployment rate held steady at 4.9 percent. Economists were expecting 190,000 new positions and no change in the jobless figure.

Despite the strong headline number, the closely watched average hourly wages actually declined for the month, falling 3 cents and equating to a 2.2 percent annualized jump, down from 2.5 percent in January. Fed policymakers are looking at wages for evidence of inflation. The average hourly work week also declined 0.2 hours to 34.4.

The bulk of the job gains came from health care, retail and bars and restaurants, which added 57,000, 55,000 and 40,000 new positions, respectively. Construction added 19,000 but mining-related industries lost 19,000 jobs.

Job quality was titled toward part time, which the household survey indicated grew by 489,000, while full-time positions increased by just 65,000.

Get the market reaction here.

A separate unemployment gauge that includes those not actively looking for a job or at work part-time for economic reasons fell to 9.7 percent, the lowest reading since May 2008. A declining labor force participation rate had played a big role in the decline of the headline jobless number, but the gauge rose in February to 62.9 percent, its highest level since January 2015, as the civilian labor force increased by 555,000.

Revision to previous months added 30,000 jobs, with December going from 262,000 to 271,000 and January pushed up to 172,000 from 151,000.

chart

“The report says that we have a healthy economy and it’s beginning to get people back into the market. But it’s not pressuring wages yet,” said William E. Spriggs, chief economist at the AFL-CIO. “We need everyone to be aware that our wages have not rebounded, so we still have a ways to go before the labor market is really tight.”

The figures come amid a turbulent time both for the economy and financial markets. Despite the recent stock rally, the S&P 500 is still down about 2.5 percent for 2016.

Federal Reserve officials are looking for wage-driven inflation as a trigger to continue policy normalization. The U.S. central bank in December enacted a quarter-point hike in its interest rate target, the first such move in more than nine years…read more @ CNBC

 

 

 

%d bloggers like this: