With Neymar out injured, just about everyone in Brazil knew it would be tough against Germany. Nobody ever expected this. The Germans tore apart Brazil’s porous defense time and time again Tuesday, routing the hosts 7-1 in the World Cup semifinals, the largest margin of defeat at this stage in the history of the tournament. The astounding scoreline is sure to overshadow Miroslav Klose’s record-setting 16th career World Cup goal. The strike pushed Klose past Brazil great Ronaldo, who was at the Mineirao Stadium on Tuesday as the Germans advanced to their eighth World Cup final. Germany will face either Argentina or the Netherlands on Sunday at the Maracana Stadium in Rio de Janeiro with a chance to win for the fourth time.
After a prolonged slump, the U.S. job market is beginning to pick up. This article talks about how companies have been beefing up their staffing and payrolls to spur consumer spending, with the Dow rising to a record high of 17,000 following reports on the unemployment rate dropping to just 3.1 million.
Job growth blew past expectations and the unemployment rate fell to the lowest level since before the financial crisis peaked six years ago, creating a firm foundation for a stronger U.S. economic expansion.
Payrolls rose by 288,000 workers following a 224,000 gain the prior month that was bigger than previously estimated, Labor Department figures showed today in Washington. The 1.39 million increase in employment over the past six months is the biggest over a similar period since early 2006.
Companies such as Ford Motor Co. (F)are adding staff and boosting output to meet improving sales, which in turn will lead to gains in incomes that will spur even more demand. The yield on Treasury securities climbed as the jobs report called into question how much longer Federal Reserve policy makers can keep their benchmark interest rate near zero to nurture the economy.
“We’re seeing a self-sustaining recovery where production growth leads to job growth, which leads to consumption growth,” said Robert Stein, deputy chief economist at First Trust Portfolios LP in Wheaton, Illinois, and the top forecaster of payrolls the past two years, according to data compiled by Bloomberg. “With the unemployment rate coming down, the Fed is in a bit of a bind.”
The Dow Jones Industrial Average climbed above 17,000 for the first time on the improving labor market as Treasury securities dropped. The Standard & Poor’s 500 index rose 0.5 percent to 1,985.44 at the close in New York, and the yield on the benchmark 10-year note increased to 2.64 percent at 1:24 p.m. from 2.63 percent late yesterday.
Fed’s Projection
The decrease to 6.1 percent from May’s 6.3 percent put the jobless rate at the lowest level since September 2008. Fed policy makers had projected in their meeting last month that it wouldn’t get that low until the end of the year.
The gains in hiring and drop in joblessness prompted economists at banks such as JPMorgan Chase & Co. to push forward their estimate for when the central bank will raise the benchmark interest rate for the first time since 2006.
The median forecast in a Bloomberg survey of 94 economists called for a 215,000 advance in payrolls. Estimates ranged from gains of 145,000 to 290,000 after a previously reported 217,000 advance. The unemployment rate, which is derived from a separate Labor Department survey of households, was projected to hold at 6.3 percent, according to the survey median.
The need to fill openings prompted employers to give those out of work for the longest time a serious look. The number of Americans unemployed for 27 weeks or more fell to 3.1 million, the fewest since February 2009.
Factories took on the most workers in four months, while payrolls at private service providers climbed by the most since October 2012. An index gauging the breadth of private-industry hiring in June climbed to 64.8 from 62.9 a month earlier.
“The labor market is literally exploding,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “It’s a full-on expansion. The economy is creating millions of jobs.”
Another report today showed service providers including construction firms and retailers expanded in June at the second-fastest pace in almost a year, indicating more momentum in the economy. The Institute for Supply Management’s non-manufacturing index eased to 56 in June from May’s 56.3, which was the highest since August, according to the Tempe, Arizona-based group.
Separate figures from the Labor Department today showed little change in the number of Americans filing applications for unemployment benefits last week, a sign that employers are limiting dismissals. Fewer firings typically foreshadow an acceleration of job growth.
Trade Gap
Figures from the Commerce Department showed the U.S. trade deficit narrowed 5.6 percent in May to $44.4 billion, helped by record exports. The value of petroleum imports was the smallest since November 2010.
Today’s payrolls report showed that private employment, which excludes government agencies, rose by 262,000 in June after a 224,000 gain the prior month.
Paige Sims, 33, said a networking event helped her get hired as a product safety engineer at General Electric Co. She started work on June 30 after searching for about four months.
“It was a little easier” to find employment given her work experience of almost 10 years and her location in Greenville, South Carolina, a growing, highly industrial city with many large manufacturing facilities, she said.
Finding Work
“The labor market is growing for technical people like engineers and scientists, and may be a little more sluggish for those who’re in other fields,” said Sims.
At Dearborn, Michigan-based Ford, hiring is so strong that the automaker predicts it may beat a 2011 plan to bring on 12,000 new workers by 2015.
That’s because of stronger demand for automobiles. Cars and light trucks sold at a 16.9 millionpace in June, the strongest since July 2006, after a 16.7 million rate in May, based on data from Ward’s Automotive Group. Deliveries at General Motors Co. and Ford, the two largest U.S. automakers, exceeded analysts’ estimates.
Recent strides in the labor market underscore the economy’s snapback from a first-quarter contraction. The economy shrank at a 2.9 percent annualized rate from January through March, the biggest drop-off since the first quarter of 2009, the Commerce Department reported last month. Consumer purchases grew at the weakest pace in five years.
Growth Outlook
Gross domestic product probably bounced back in the second quarter and will expand at an average 3.1 percent rate in the remaining two quarters of 2014, according to the median forecast in a Bloomberg survey conducted June 6 to June 11. Household purchases are also expected to improve, it showed.
Recent data are consistent with the outlook. Factories, propelled by the strongest orders of the year, sustained gains in June and are poised to be part of the rebound, the Institute for Supply Management’s manufacturing report showed this week.
Today’s Labor Department’s payrolls report also showed factory hiring increased by 16,000 in June. Employment at private service-providers jumped 236,000. Retailers took on 40,200 employees.
Average hourly earnings rose by 0.2 percent for a second month, to $24.45 in June from the prior month, and increased 2 percent over the past 12 months.
Fed Chair Janet Yellen said last month that she expects consumer spending will continue to grow at a “healthy rate,” in part as bigger income gains materialize.
“My own expectation is that as the labor market begins to tighten, we will see wage growth pick up some,” Yellen told reporters on June 18 after the Fed’s policy meeting. “If we were to fail to see that, frankly I would worry about downside risk to consumer spending.”
Yellen’s dashboard of job market progress spans nine measures, including payrolls, the jobless rate, underemployment, labor force participation, and the share of long-term unemployed workers. It also monitors the job openings rate, layoffs and discharges, the hires rate, and the quits rate.
Elizabeth Lesar nurtures relationships between investment firms and investors, maximizing revenue by focusing on equities, alternative investments, and fixed income. For more discussions on finance and investing, subscribe to this blog.
Fixed income securities are simply loans that investors make to corporate or government borrowers. These investments come in various shapes and sizes, where a fixed rate of return or interest in the form of dividends or coupons is paid to the investor on a regular basis until the security’s maturity date arrives.
When a fixed income security’s predetermined maturity date arrives, the principal amount of the investment is repaid in full to the investor or security holder by the corporate or government issuer.
The following are two of the most common types of fixed income investments available to aspiring investors.
These securities are direct debt obligations from the federal US government and are considered the safest kind of debt since the federal government is the only entity in the entire country permitted to print money. Revenue from these US Treasury bonds is used to raise capital for federal initiatives or to service existing outstanding debt.
Issued by corporations or government entities, money market funds are open-ended fixed income mutual funds invested in debt securities such as banker’s acceptances, certificates of deposit, commercial paper, government securities, repurchase agreements, and other extremely liquid and safe securities. They have short maturity rates and run low credit risks.
For over fifteen years, Elizabeth Lesar has been maximizing revenue by building and nurturing relationships between investment firms and investor clients, with a focus on equities, fixed income, and alternative investment techniques, in the tri-state area of New York. For more information on her professional background and accomplishments, visit this blog.
The mere thought of investing in stocks can be daunting, especially when one has little to no experience. Here are some tips for the beginning equity investor to a good start.
When one buys company stock, one is essentially buying partial ownership of the company. As partial company owner, one has a set of rights and responsibilities. These rights include access to financial information on the company, such as financial statements, to assist in analyzing and making future decisions.
As owner, one has the right to be privy to the company’s internal mechanisms, especially areas that can affect its growth or stability. Thus, it is the stockholder’s responsibility to cultivate a behavior like that of a company owner and assert entitlements to essential company information.
Be prepared to hold
Stocks can be volatile, especially during the short term. The market is fickle from day to day, so it would be extremely futile to base decisions on micro-movements. Short periods rife with various bursts of activity.
The real key to capital gains from stocks is patience. It takes time for a company or a business to grow in a value that the market will recognize and reward accordingly. As stock investor, one should be wise not to heed surface market popularity. Instead, focus on fundamental company performance when making decisions to stand by or to sell.
For over fifteen years, Elizabeth Lesar has been specializing in maximizing revenue generation for investment firms and their clients, with a focus on equities, fixed income, and alternative investments in the tri-state area. To learn more about her and her financial marketing services, visit this Pinterest account.
Gather a group of investment professionals in a room to hear from panelists on the subject of “In Pursuit of Yield: Alternatives to fixed income,” and chances are that the discussion will be both lively and offer different views.
That was the scene Thursday in Toronto at the fourth Canadian Alternative Investment Forum, an all-day event called at a time of very low interest rates, high stock market prices and a year just passed that saw a 10% plus decline in 30-year Canada bonds.
“It’s a double whammy,” said David Kaufman, the panel’s moderator. ‘There’s no return and investors will lose when rates rise,” added the chief executive of Westcourt Capital Corp., when discussing what lies ahead for fixed income buyers. And all the key reasons to own bonds – capital preservation, moderate total returns and an asset class that isn’t that correlated with other asset classes – get a cross, Kaufman said.
Accordingly, different ways to approach the fixed income problem, an asset class that has traditionally accounted for about 40% of a pension funds’ assets, were required, argued Kaufman.
For Paul Sandhu, a manager of investment grade bonds at Marret Asset Management, the solution is a long/short strategy that aims to be interest rate neutral all backed up by a moderate (1.7 times) amount of leverage. “We are betting on the movement of the corporate spreads and being an active trader,” he said, adding that the interest rate risk is hedged out by selling government bonds. The firm buys and sells corporate bonds in three markets: Canada, the U.S. and Europe.
Over the past two years, Sandhu said the returns, on average, have been double digit, and higher than what a passive strategy would have generated. Aside from the strategy, Sandhu said that depth of the team implementing the strategy is a key factor investors need to focus on when deciding whether to allocate resources to this approach.
For Jeff Peskind, founder of New York-based Phoenix Investment Adviser, the solution is, as always, obtained by buying non-investment grade bonds, the firm’s focus for the past decade. “We don’t want to take duration or interest rate risk,” declared Peskind who prefers to take credit risk, in part because of his view that bankruptcies, and hence defaults, will continue their recent trends and “remain low for a few years.” In his view, “high yield is the place to be in an unfair Treasury world.”
But what about the US$1-trillion of junk, garbage perhaps, that has been raised over the past two years? Won’t that come crashing down because of a weakening economy? Not so, he said, because over the past three years, debt to cash flow ratios for junk bond issuers have averaged 4.5 times – or less than what prevailed in the three years up to 2008. “There’s a lot more debt but it’s not as bad as pre-crisis,” he said, noting that his firms “add value” by spending considerable time on legal and operational due diligence before investing.
Andrew Torres, chief investment officer at Lawrence Park Capital Partners, also uses “active trading strategies” to generate returns. As with Marret, the strategy entails owning investment grade bonds and selling Canada bonds (and at times equity put options) against that holding.
Over the past two years, the firm’s credit strategies fund posted a 15.54% return and 4.55% over the twelve months to Feb. 28.
Elizabeth Lesar is a highly respected figure in the finance industry. She is known for her technical expertise in alternative investments, equities and fixed Income products, and revenue generation which she complements with a solid background in marketing and client service solutions. Read this blog to find out more about her accomplishments in the different categories of finance.
The Investment Company Institute has created a new classification system for mutual funds that highlights the emergence of what experts called mainstream alternative strategy funds. The article below advises on how investors can benefit more from the new changes in mutual funds categories.
Normally, that’s a big reason for concern, a sign that something is afoot and that management has been following a new path.
This time, however, it’s because the Investment Company Institute – the trade association for the fund industry – “modernized” its investment-objective classifications for funds. Truthfully, this is all about helping the public understand trends in mutual fund investing, and it’s something that the ICI does every 10 to 15 years.
The changes won’t actually affect your funds directly either. Ratings agencies like Morningstar and Lipper have their own classifications for funds, and even if ICI has put a fund you own into a new category, that simply reflects what the fund has been doing – and has been allowed to do – according to its prospectus. It does not give management new leeway.
The changes do, however, reflect new attitudes for the fund business, and those kinds of things will trickle down to investment advisers and, eventually to consumers like you.
As a general rule, when old methods are “refined,” they wind up being pitched to consumers as being “improved.”
Under the ICI’s old classification system, there were 33 categories for open-end mutual funds; the new system has 42 categories and while many of the new categories were added to bond funds and related to the funds’ time horizons, the biggest change was reflective of the emergence of “alternative strategy funds.”
The ICI now has an alternatives objective within its domestic equity, world equity, hybrid and bond categories.
That means, in short, that alternatives are officially mainstream.
As such, investors are going to find themselves being pitched more and more of these ideas, which is a shame because the label is so misleading.
Technically, most long-time investors would tell you that an “alternative investment” is anything that’s not in stocks, bonds or cash, the three biggest, most general categories. In fact, if you ask individual investors about their alternative investments, most will mention real estate, gold or precious metals and possibly commodities.
But that’s not how the powers of the mutual fund world see things.
The ICI defines a domestic equity alternative strategy fund as seeking “to provide capital appreciation while minimizing risk while employing long/short, market-neutral, leveraged or inverse strategies.” The other new alternative categories, similarly, include mention of those kinds of sophisticated investment tactics.
To borrow from “Cool Hand Luke,”one of my favorite old movies, “What we’ve got here is failure to communicate.”
Gregg S. Fisher, chief investment officer at Gerstein Fisher, runs real estate funds, which for most investors would have fallen into the “alternative” camp long ago.
He suggests a common-sense definition for alternatives that is unique based on the investor.
“People should think of alternative asset classes as things that are different from what they already own,” Fisher said in an interview for my radio show. “If I’m somebody who owns a lot of stocks and bonds, then an alternative might be real estate. On the other hand, if I am someone who already owns a lot of real estate, then an alternative for me would not be real estate, it might be stocks or bonds.
“The best way to think of alternatives is not as some exotic derivative instrument, or whatever people are thinking,” he added, “but in fact it’s just something that’s different from all of the other things you own.”
When industry types create new categories and come up with new ways to weigh and measure funds, invariably there’s a proliferation of effort to tell investors that they need to change their portfolio to adjust.
That’s the wrong thing to take from the ICI changes. The trade association is not so much encouraging the development of more and varied alternatives as it is trying to make sure that the new/different strategies don’t pollute the rest of the data stream and muck up statistics for the rest of the players.
It’s reflecting a trend that has been emerging in the fund world for years now, not encouraging investors to adopt the movement.
That’s important because as “alternative funds” become their own asset class, they’re being sold as a key portfolio ingredient to folks who don’t want or need the complexity and cost, who can’t understand the strategies well, and who might be nervous if they really knew what they were buying.
Investors who go for a portfolio evaluation and review, or who hire a financial planner are more likely than ever to hear that they “don’t have an allocation to alternatives,” when the truth is that their portfolios have gotten along fine without them for years, or when the appropriate alternatives might be real estate or gold.
Just because the fund industry has recognized alternative funds as mainstream doesn’t mean that investors should. When fund companies create these funds, “alternative” always sounds like “another way to make money,” but investors should not lose sight of the fact that it’s another way to lose money too.
An authority in alternative and traditional investments, Elizabeth Lesar helps investors maximize returns through partnerships and ground-breaking investment paradigms based on tried and tested fundamental principles. Subscribe to this Twitter account for select news on investment management and marketing.
Securities that pay a fixed rate of return either in fixed periodic payments or via return of principal upon maturity are called fixed income investments. Common examples of such type of security are treasury bonds, municipal bonds, corporate bonds, exchange traded funds, annuities, money market accounts, and certificates of deposit.
Fixed income investments offer a few key advantages to their holders. One is predictability – since returns from these products are both expected and accounted for, fixed income investors don’t need to watch daily market movements closely because they aren’t affected by short-term fluctuations.
Furthermore, there are countless varieties available in a wide range of terms in the fixed income market. Any discerning investor can easily choose which fixed income products will suit their needs.
Lastly, holders of fixed income investments can opt not to trade when current asset valuations don’t appeal to them.
While fixed income investments are low in risk, their returns are historically lower than returns from equities trading. Additionally, they do not protect their holders during high inflation periods, when consumer goods cost more but the amount of investment returns remains the same.
Equities, on the other hand, are inherently riskier, but bring in a significantly higher payoff to their holders when the issuing company does well.
A good portfolio is one that reflects a balanced combination of fixed income and equity investments. Equities create opportunities for larger returns, while fixed income products maintain a net of safety for one’s portfolio.
An industry-savvy and ethical marketing executive in the financial sector with over fifteen years of experience in the alternative and traditional Investments arena, NYC-based Elizabeth Lesar has been maximizing revenue production by providing the best solutions for her clients’ investment needs. Follow this Twitter page for her news and updates.
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