Market Insights

In the Spotlight

Weekly Market Thoughts
Dow 36,000

As usual, I was reading the new issue of Barron’s magazine while drinking my coffee this past Saturday morning. This is a ritual which I have been performing for the last number of years. Saturday morning is quiet time in the Greiner household. My wife, Pam, sleeps later than I during the weekends. This allows me to get caught up on my reading and research. Barron’s is one of my regular reads.

View Article

May 26, 2015

Weekly Market Thoughts
Too Topical to Let Pass By

Hardly a day goes by without someone in Washington making comments about the need to raise the minimum wage. Folks seem pretty free and loose to throw out historical statistics regarding the minimum wage and how entry-level workers today are being underpaid as compared to workers in the past. Commentators have added the minimum-wage issue to the income disparity discussion. Some in Washington are suggesting the minimum wage should be raised to $15 per hour, an increase of 106 percent from the current rate of $7.25 per hour. What are some of the potential ramifications on our national economy of such a wage increase? What are the facts which proponents of the wage increase are using in their arguments?


May 18, 2015

Weekly Market Thoughts
The Fed and Interest Rates - Into the Weeds

This week’s piece is inspired by Horace “Woody” Brock, President of Strategic Economic Decisions. I have followed Dr. Brock’s work over the last 10 years and have found his insights to be particularly profound and useful when analyzing major, long-term macroeconomic trends. In “The Fed Funds Rate: RIP”, Woody relies on work by Fed Vice Chairman, Stanley Fischer, who is the former governor of the Bank of Israel and first deputy managing director of the International Monetary Fund (IMF). He also cites the work of Professor Benjamin Friedman at Harvard University.


May 11, 2015

Weekly Market Thoughts
Asset Valuation - Expensive or Cheap?

Last week, Federal Reserve Chairperson, Janet Yellen, gave a speech at the Finance and Society conference. The U.S. market declined somewhat following her speech, as she commented:


May 4, 2015

Weekly Market Thoughts
OPEC - Gone Are the Days

Over recent months, I have written five different pieces regarding oil prices. I have covered many fronts as to the price decline in oil - from my recent piece titled “Good Deflation” (published February 2, 2015) to last year’s “Iraq Instability and Oil Prices” (published July 7, 2014). Oil prices have rallied over the last five weeks from the low reached last month. On March 17, oil traded at $43.46 per barrel (WTI). Last Friday, prices rebounded to $57.74 per barrel, up 32.8 percent from the lows witnessed in March. Still, prices are down 46 percent from June 2014.


April 20, 2015

Weekly Market Thoughts
Passages

Our economic theme for 2015 has been “Smoke From a Distant Fire.” The theme highlights the view that economic and capital market risks (and opportunities) abound overseas. In addition, our theme states that the global economy will face a transition this year – a central bank leadership transition. After years of the Federal Reserve being the world’s monetary stimulus agent (through repeated quantitative easing (QE) actions, other central banks will pick up the baton and start their own QE actions. This action has occurred as the European Central Bank (ECB) has launched its own QE policy.


April 13, 2015

Weekly Market Thoughts
The Costs

One of the significant advantages I enjoy to other economic and market pundits is my direct contact with clients. I speak to very smart business people across the country who are clients and friends of Mariner Wealth Advisors. These folks (many of you are reading this piece) are smart, engaged and success-oriented. My role with most of these relationships is to act as Mariner’s economic and capital market spokesperson – an effort which I drive.


March 30, 2015

Weekly Market Thoughts
The Long Equity Cycle - Stock Market Conditions - Part 3

Today’s commentary is the third and final installment covering our current thoughts about short and longer-term considerations regarding the U.S. equity markets. Our two previous releases outlined the following observations about the U.S. stock market:


March 23, 2015

Weekly Market Thoughts
The Long Equity Cycle - Stock Market Conditions - Part 2

Last week we highlighted why, over the long term, it makes sense for most investors to not be completely void of U.S. equity exposure in their investment portfolios. We demonstrated that more than half of the available return in the S&P 500 index since 1979 was generated during the 50 “best” return days. Out of 9,200 trading days, more than half of the market’s overall return occurred in ½ of 1 percent of the trading days. With these odds, it is hard to justify being completely void of equity exposure at any time.


March 16, 2015

Weekly Market Thoughts
The Long Equity Cycle - Stock Market Conditions - Part 1

This month marks the sixth anniversary of the bottom in U.S. stock markets related to the secular Bear market of the 1999 – 2009 era. Since the S&P 500 intra-day low of 666 reached in March 2009, the S&P 500 has risen by a stunning 218 percent! Is this type of return unusual following the end of the secular Bear market? Hardly. In my opinion, it is a strong signal that the U.S. market is experiencing its fourth secular Bull market since 1920.


Weekly Market Thoughts
"Nega-Coups"

What do you call a bond which carries a negative interest rate? It’s called a “nega-coup,” short for negative coupon. Negative coupons, or interest rates on bonds, is a rather novel reality in today’s sovereign debt (government backed) market. These are government bonds (mostly issued in Europe and Japan) where the investor is guaranteed to lose money if the bond is held to maturity.


March 3, 2015

Weekly Market Thoughts
Kashmir

The State of Kashmir, India, is located in the northern portion of the country, with the Himalaya mountain range the dominant geological feature of this beautiful land. Pakistan actually controls the northwest portion of Kashmir and India controls the central and southern portions. When one thinks of the Indian landscape, one does not think of the beautiful mountain range in Kashmir that includes K2, the second-highest peak on earth. And yes, the region is known worldwide as the home of cashmere wool.


Weekly Market Thoughts
Millennials - They Are Coming

Demographics (the statistical data of a population, especially those showing average age, income and education) provide a certain amount of validity to the “science” side of economic forecasting. For example, if four million people in the United States are currently 40-years old, we can rather accurately determine the number of 50-year olds there will be in 10 years (given death rates and immigration data). Typically, people who are 40 (or 50 for that matter) are productive at a certain rate and have other consumption preferences.


Weekly Market Thoughts
Asset Allocation - The Big Questions

Much of my time is spent considering the current and potential future events which may influence global investment markets. These events vary in size and scope and can lead to both opportunities and risk.


Weekly Market Thoughts
Welcome to the Machine

Welcome, my son, welcome to the machine
Where have you been?
It’s alright we know where you’ve been

Pink Floyd


Weekly Market Thoughts
Good Deflation

De ‘flaSH(e)n: the action or process of deflating or being deflated; reduction of the general level of prices in an economy.
In past commentaries, I’ve written about deflationary pressures, a primary risk the world’s financial system faces. Inflation, a general rise in prices, occurred in the 1970’s and the early 1980’s. It wasn’t pretty, and it took a major economic contraction (1980 – 1982) for the world to work its way out of that period.


Weekly Market Thoughts
Europe Goes QE

This past week, Mario Draghi, the President of the European Central Bank (ECB) announced that the ECB was going to launch Quantitative Easing (QE) strategies, in which European central banks will purchase $65 billion of bonds from the open market every month. There wasn’t a “formal” time frame announced during which these purchase actions would occur. It appears total purchases will be approximately $1 trillion, closely resembling the U.S. Federal Reserve’s QE3 action in size and scope.


Weekly Market Thoughts
Volatility

Investors despise price volatility. Currently, people are worried about the recent free-fall in oil prices and the plunge in bond yields to below 0 percent in the Eurozone and Japan. Last week, Swiss authorities allowed the Swiss Franc to float freely to the Euro. This surprise move caused the Franc to soar by 10 percent to the euro in one day. Conversely, the Swiss stock market declined by almost 10 percent, also in one day.


Weekly Market Thoughts
Oil Considerations and Active Management

In 2014, a number of events will go down in history as major, market-moving events. From an economic viewpoint, though, perhaps no other event will have a more significant and long lasting impact than the collapse of oil prices. At this time last year, oil was trading well above $100 per barrel. Last week, the price of a barrel of West Texas Intermediate oil traded at less than $50.


Weekly Market Thoughts
Smoke from a Distant Fire

Today, we release our 2015 outlook for the global stock markets. Last week, I discussed our views on global economies. We think 2015 will be a year of growth for the world’s economies. The U.S. economy should also grow nicely; although, the current socio/political and economic risks (primarily overseas) have the capability of derailing global economic growth.


Weekly Market Thoughts
Smoke from a Distant Fire

Today, we release our 2015 outlook for the global stock markets. Last week, I discussed our views on global economies. We think 2015 will be a year of growth for the world’s economies. The U.S. economy should also grow nicely; although, the current socio/political and economic risks (primarily overseas) have the capability of derailing global economic growth.


Weekly Market Thoughts
2015 - Smoke from a Distant Fire

Over the next three weeks, we will release our 2015 outlook for the global economy and capital markets. As most know, I enjoy utilizing themes in my work – themes tend to keep me on track and, in the future, remind me of what I said in the past. Themes help keep me accountable.


Weekly Market Thoughts
Oil and Stock Prices

This past week the U.S. equity market gave in and corrected in price as oil prices continued their downward march. There seems to be a fundamental disconnect between declining oil prices and declining stock prices. Nonetheless, the Dow Jones Average dropped 678 points, or 3.8 percent last week. The S&P 500 index lost 73 points, its largest point decline since 2011. Meanwhile, oil prices continued their rapid paced decline with West Texas Intermediate closing at $57 per barrel, down 12 percent this month.


Weekly Market Thoughts
Finger on the "Buy" Button

All are aware of the recent oil price decline, exacerbated by OPEC’s decision last week to maintain current production levels. The day that decision was announced, oil prices declined 10% to close at roughly $66 per barrel. OPEC’s decision was a direct frontal assault on U.S. (and other areas) oil production, which has been ramping upward for the last 5 years. Indeed, since 2009, U.S. oil field production has risen from a low of around 5 million barrels per day to 9.5 million barrels per day. This increase in production has allowed U.S. oil imports (OPEC exports) to fall, as the U.S. has become more energy “independent.” OPEC is fighting back to regain their “market share” loss – in the only way they can – by promoting actions that will drive global oil prices lower.


Weekly Market Thoughts
Oil Prices and Short Term Market Thoughts

Public investment markets are inherently volatile. Oil prices have been declining since June 7th when West Texas Intermediate was selling at $107 per barrel. Last week, the same barrel of oil was selling at $66, reflecting an over-supply of oil on the world market, which has driven oil prices lower. Last Thursday, OPEC decided not to cut production, confounding expectations. Oil prices declined by 10% following the decision.


Weekly Market Thoughts
The Slow Grind of Higher Inflation

Memories run deep and fade slowly. I entered the investment management business in 1979, a time when consumer prices were increasing by more than 10% annually and the 10-year Treasury yield was heading towards a peak-yield of almost 16%, as shown in the chart below. Inflation was an economic malady that some believed the world would never escape. This is similar to the view that many hold today, that the world will never escape low inflation, low interest rates and disinflation.


Weekly Market Thoughts
Asian Tigers

Recently, I have written a number of weekly pieces outlining my thoughts as to the emerging markets –those stock markets in the world besides those in Europe, the U.S. and Japan. As highlighted in my earlier pieces, these markets are in economies that have historically higher GDP growth rates than in the developed world. As has been pointed out, these economies should continue to have higher systemic growth rates than those in the more developed world.


Weekly Market Thoughts
Fed Rate Increases, the Emerging Markets and the Oddity of Post-Election Stock Market Cycles

During a conference in Paris last week, two Federal Reserve officials spoke of their concerns of an increase in market volatility next year due to rising interest rates. Both Janet Yellen, Federal Reserve Chairwoman, and William Dudley, New York Fed President, made statements along these lines.


Weekly Market Thoughts
Liftoff!

Bull markets are fun. While the world’s stock markets struggled during the first half of October, they have equally soared during the second half. This past week, the markets, like a strong Saturn rocket booster, lifted off and powered higher on a consistent basis. The S&P 500 closed the month of October at 2018, lifting off from the low on October 15th of 1862, representing an upward charge of 8.4%.


Weekly Market Thoughts
Growth on Track

Investors are faced with a rising level of asset price volatility. Stock and other risk-based asset prices are rising and falling rapidly. This is indicative that investors are unsettled and worried about various factors. Additionally, investors are aware that U.S. stocks aren’t cheap (we believe foreign stock markets are cheaper) and the Federal Reserve is ending Quantitative Easing (QE) activities. Risk-based asset prices have struggled and volatility has risen during past periods when the Fed is moving away from QE activities. Concerns regarding the onset of an economic contraction (recession) have risen. We believe these fears to be misguided as our outlook for 2.5% - 3.0% GDP growth in 2015 stands.


Weekly Market Thoughts
Change of the Seasons

Change is in the air. In the Midwest, the days are getting shorter, the nights cooler and the leaves on the trees are changing color. It is beautiful and the Kansas City Royals are in the World Series for the first time since 1985. It is a great time to be in Kansas City.


Quarterly Market Perspectives
Correction

As we have previously noted, the September-October timeframe has traditionally been a difficult period for the global stock markets. This year has been no exception to that rule. The “bears” were growling on Wall Street this past week as stock prices retreated across the globe.


Quarterly Market Perspectives
And the Band Played On

I recently saw this title and quote in a piece from our friends at BCA Research. Talk about ironic. Little did Mr. Prince know how right his statement would prove to be, a year later. To say the least, the music stopped, as did the dancing. While we don’t believe the world’s economy, banking system and capital markets are anywhere near as levered as they were in 2007, it is still productive to stop and see where we are with the major upward move in asset values we have witnessed over the last 5 years …that is, until the just-completed quarter.


Weekly Market Thoughts
The U.S. is Taking the Growth Gold

The U.S. economy is working. In relation to other economies, our overall economic growth rate has been outright stellar. Last Friday, the September jobs report showed that 248,000 jobs were created during the month. The unemployment rate fell an additional .2% to 5.9%, the lowest level of unemployment since the summer of 2008. Unemployment peaked in 2010 at 10.0%. Consequently, unemployment has fallen 41% from its peak.


Weekly Market Thoughts
Buy Your Straw Hats in Winter

The Current State of the Emerging Markets
The old sage of Wall Street, Bernard Baruch once said: "buy your straw hats in the winter time." Is now the time to be buying straw hats?


Weekly Market Thoughts
And the Bank Played On

"When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”
Charles Prince, CEO Citigroup, July 9, 2007
I recently saw this title and quote in a piece from our friends at BCA Research. Talk about ironic. Little did Mr. Prince know how right his statement would prove to be a year later.


Weekly Market Thoughts
Investment Considerations Concerning Productivity and Societal Wealth

Over the last few months we created a somewhat exhaustive series of pieces, which attempted to answer the following questions:
• Why is the standard of living higher in one country relative to others?
• What creates “social wealth” – over long periods of time, what are the consistent variables which increase societal wealth and consequently “better” and longer life spans for the citizens of those societies?


Weekly Market Thoughts
Across the Pond

Most who follow the news know that Europe’s economy has not been growing well. As a matter of fact, Europe’s growth has been so poor that it makes the U.S. economic growth engine look outright stellar. Over the last 12 months the euro zone economy has grown by 0.15%, with the reported 2nd quarter GDP growth rate stagnating at 0.0%. This is not a short-term trend. It’s been 15 years since the euro zone last saw GDP growth above 1% on a sustainable basis. Why is Europe stuck in a slow/no growth environment?


Weekly Market Thoughts
Where Has All the Income Gone - Part 3

Much has been made in the popular press regarding income disparity (you may have heard the spread being called income inequality). I have attempted to dig deeper into the issue of income disparity. I have come to the conclusion, after reading studies completed by Dr. Horace “Woody” Brock of Strategic Economic Decisions (picture left) that income disparity is the result of another, deeper economic phenomena, rather than a phenomena in itself. In other words, income disparity is a symptom of an economic problem rather than the core problem which needs investigation.


Weekly Market Thoughts
Where Has All the Income Gone - Part 2

Income disparity and labor market weakness are issues that are front-and-center for the economic leaders currently visiting Jackson Hole, Wyoming. Last week, I created the first of our Income Series, studying the history of income disparity in the U.S. Income disparity – the difference between the highest and lowest earners in our society –has always been with us, as most of the world employs a market-based compensation system, which pays one worker more than another due to job, skill level and location. Nothing new here.


Weekly Market Thoughts
Where Has All the Income Gone?

At times, I notice an event that strikes me as a major socio/political issue with extreme economic overtones. Recently, I completed a three-part commentary regarding the importance of productivity in any economy. Today’s piece begins to cover an issue that has become a hot-button topic for our society – one that needs rational, thoughtful study. The topic is income disparity.


Weekly Market Thoughts
Questions

Due to the newly increased volatility in the capital markets, I thought it appropriate to summarize our thoughts on asset prices. Many of these thoughts have been recently published.


Weekly Market Thoughts
Correction - Price and Time

Stock prices started retreating this past week, driven by newfound concerns that good economic news is bad news for the stock market. What? Normally, good economic news is good news for the market, right?


Weekly Market Thoughts
Rarified Territory - Market Correction Ahead?

Is the stock market going to “correct” in the near future? Frankly, I don’t know and nobody else does either. But, I do know market history – and history would indicate that small capitalization stock values, in particular, have entered rarified territory. Let’s take a look at some historical standards regarding the current upward move in stock prices.


Weekly Market Thoughts
Slow Growth is a Choice

In today’s piece, I ask you to consider that statement. Many economists/pundits have made the case over the last few years that the developed world’s GDP growth is destined to remain slow. In 2007, I wrote a theoretical piece entitled “The Long, Hard Slog,” which outlined my view that the United States was heading into an environment where GDP growth was going to be much slower than normal, due to high debt levels and national demographic structure. I made the case that slow growth was baked into the economic cake for a period of time.


Weekly Market Thoughts
The Wealth of Nations - A Historical Quantum Shift

Today’s piece is the third (and final) part of our trilogy on economic productivity. In previous writings, we discussed the strong tie between real per-capita productivity growth, the historical track record of productivity growth and the subsequent wealth of a nation. We presented detailed evidence showing that global per-capita real productivity growth rates remained very low until the mid-19th century. As a result of this low productivity growth rate, global GDP growth also remained very low until the mid-19th century.


Quarterly Market Review
Controlling Risk

Last summer, we published a piece about risk in the markets – specifically, the concept of “deep” risks versus “shallow” risks and how a deeper understanding and acceptance of both can help better inform and guide investors. In looking back on the first half of 2014, I thought it appropriate to dust off and redistribute some of this commentary, as it seems once again relevant in light of recent events and market activity.


Weekly Market Thoughts
Iraq Instability and Oil Prices

Recent events in the Middle East are weighing heavy on our minds. Given these events, we believe it is necessary to take a break from our Productivity trilogy to discuss the economic ramifications of the armed conflict in Iraq. We will return to our final productivity piece in future writings.


Weekly Market Thoughts
Wealth of Nations - Part 2

In our earlier piece, we wrote about why it is important for a nation’s workforce to not only be large and fully employed but also productive. By “productive,” I mean a workforce that is producing a high and growing level of output – creating more value by work than what is consumed. High levels of productivity lead to high levels of savings, which leads to high levels of investment, which leads to high levels of growth, which leads to more jobs… you get the picture. Without high levels of productivity, workers live hand-to-mouth, meaning that savings and economic growth do not occur.


Weekly Market Thoughts
Wealth of Nations

When many folks hear the phrase “Wealth of Nations,” they immediately think of Adam Smith’s legendary socioeconomic work published in 1776 under the full title of An Inquiry into the Nature and Causes of the Wealth of Nations. The work was one of the first serious thought pieces regarding how wealth is created and the role of a market-based economy in that process. The book covers a number of broad-based economic concepts, such as the division of labor, productivity and the usefulness of free markets.


Weekly Market Thoughts
Something's Going On...

As our regular readers know, I’m somewhat of a history buff, in general, and am particularly interested in financial market history. Last week’s piece, titled “Carry On,” highlighted that, from a news perspective, the week prior to the writing was very quiet. This week, we have something notable to talk about that impacts history, in general, as well as financial market history. Global drivers of asset values never take long vacations.


Weekly Market Thoughts
Carry On

Long ago in my youth, I served in the U.S. Navy as a Yeoman in an Anti-Submarine Warfare squadron. When a superior officer addressed you, the officer would end the conversation with the words “Carry On.” For those who haven’t served in the military, this phrase means what it sounds like – you are permitted to “carry on” with your business.


Weekly Market Thoughts
What is the Shape of Our Economy? What is the Shape of Our Market?

The month of May is now in the books. The old market saw of “Sell in May and Go Away” has not yet proven prophetic – not yet. For those unaware of this saw, the theory is as follows. Historically, the vast majority of positive stock market movements (going back to 1950) have occurred during the months from October to April. May through September have proven difficult periods for stock market movements. The saying “Sell in May and Go Away” has gained wide acceptance, and as with many things within the stock market, when everybody knows something will probably happen – it won’t. But the period of May through September is still young.


Weekly Market Thoughts
The Income Question

I would like to pose a series of questions. These questions may strain your sense of equality, what is justified and what should be the norm.


Weekly Market Thoughts
Economic Mobility

People and businesses are moving. This isn’t news, as people physically move from one part of the country to another on a regular basis. A major economic benefit we Americans enjoy is our freedom to choose the part of the country in which we live. Business regulations, tax rates and overall social attitudes vary across the country. This variance allows us to gain comfort in our local environment. Many people talk a big game, but when they move from one part of the country to another, they are voting with their feet.


Weekly Market Thoughts
Shifting Sands - Revisited

Early last year, we created a three-part thought piece on the potential for rising interest rates. Because it has been more than a year since this discussion, we thought it appropriate to revisit the issue and perhaps provide a new twist on this very important, long-term investment theme. When we wrote the piece last year, the 10-year U.S. Treasury Bond was yielding 1.62%. Today, that bond is yielding 2.63%, a rise in rates of a little more than 1%. While this doesn’t seem to be a significant issue, if an investor had purchased the 10-year Treasury at the time of our original writing, the total return the investor would have experienced to date (interest less price decline of the bond) would have been -7.1%. A poor return for a supposedly “safe” investment. Let’s revisit the Shifting Sands theme.


Weekly Market Thoughts
Buy Your Straw Hats

Stock investors are consistently confronted with choices. As the markets seldom stand still, changing valuations tend to drive changing opportunities. In our opinion, investors are wise not to chase performance or short-term dislocations, but when changes in longer-term pricing trends occur, it is the wise investor who starts to ask what fundamentally has changed to drive asset-class returns/valuations beyond normal comparisons.


Weekly Market Thoughts
Investing in Real Estate Through REITs

Most of us have at least some experience with real estate investments. For many Americans, their home is the single largest investment they will make in their lives. In this piece, we’ll take a look at real estate investments as a part of an overall diversified strategy. In particular, I will discuss what real estate investing is and how REITs (Real Estate Investment Trusts) work, how they tend to perform over time and how exposure to these investments can impact your portfolio.


Weekly Market Thoughts
Flying Too Close to the Sun

According to Greek legend, Icarus, the son of Daedalus, wanted to fly using wings of feathers and wax. Icarus receives guidance not to fly too close to the sun (the heat will melt the wings) nor too low (the seawater will dampen the wings). Upon his maiden flight, Icarus is having so much fun flying that he forgets the warning about flying too high. His wings melt, and he plummets into the sea and drowns.


Weekly Market Thoughts
The Unemployed

Most of us spend much of our lives working for a paycheck. We are awake for an average of 459,000 hours during our lifetimes. Consequently, we spend 24% of our lifetime waking hours at work. This includes all of the time we are children and retired elders. Working for a paycheck is a staple of most of our lives – it is part of most of our identities.


Weekly Market Thoughts
Inflation - Where Art Thou?

The world’s stock markets have been struggling with the political dislocation in Ukraine and the growth slowdown in China. We wrote recently on our concerns regarding the issue with Ukraine/Russia. Today’s piece provides some insight into the growth issues in China.


Weekly Market Thoughts
Emerging Markets Update - Are We There Yet?

The world's stock markets have been struggling with the political dislocation in Ukraine and the growth slowdown in China. We wrote recently on our concerns regarding the issue with Ukraine/Russia. Today's piece provides some insight into the growth issues in China.

Ready to learn more? Take the first step

Take the first step and start the conversation about your financial future with more confidence. Click to schedule a call with one of our advisors or enroll directly in our investment services.

Take the first step

Stay up to date:

Subscribe to FirstPoint Commentary to receive the latest news, updates and wealth planning insights. Subscribing is easy. Simply enter your email address below.

Subscribe