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ETF Market Commentaries


2018 & 2019 Earnings Snapshot
Oct. 03, 2017 - First Trust -  View from the Observation Deck
1. With just three months left in 2017, we thought it would be a good time to look ahead to the 2018 and 2019 year-over-year earnings growth projections for a number of major stock indices.
2. We often note that we believe that corporate earnings determine the direction of stock prices over time, particularly when the major indices are trading at or near record highs.

Stocks Won
Oct. 02, 2017 - First Trust -  Next Monday (October 9th) will be exactly ten years from the stock market peak before the Financial Panic of 2008.

Biotechnology Stocks Still At Reasonable Valuation Levels

Sep. 28, 2017 - First Trust -  View from the Observation Deck
1. From 3/9/09 through 9/27/17 (current bull market),the S&P 500 Biotechnology Index posted a cumulative total return of 437.45%, compared to 337.92% for the S&P 500 Health Care Index and 344.09% for the S&P 500 Index, according to Bloomberg.
2. The all-time high for the S&P 500 Biotechnology Index was established on 7/20/15 at a reading of 4,371.83.The index’s P/E ratio stood at 22.80 at the end of July 2015.The index began to sell-off after it peaked on 7/20/15.

Low Inflation Is No “Mystery”
Sep. 25, 2017 - First Trust -  Last week, at her press conference, Federal Reserve Chair, Janet Yellen said continued low inflation was a “mystery.”

Fed Resists the Doves
Sep. 20, 2017 - First Trust -  The big news today wasn’t the Federal Reserve’s decision to start gradually reducing its balance sheet in October. Almost everyone expected that. Instead, the big news was that twelve of the sixteen members of the Fed’s interestrate setting body – the Federal Open Market Committee – think the Fed will be raising interest rates by at least 25 basis points later this year.

S&P 500 Index’s Dividend Payout Still Trending Higher
Sep. 19, 2017 - First Trust -  View from the Observation Deck
1. S&P 500 Index companies paid out a record high $104.01 billion in cash dividends in Q2'17.
2. It marked the 3rd consecutive quarter in which cash dividend distributions exceeded $100.00 billion.Over the past 39 quarters through Q2'17,the average quarterly dividend payout was $73.90 billion.

Fed Preview
Sep. 18, 2017 - First Trust -  No one expects the Federal Reserve to raise rates at the meeting this week. A rate change of any kind, either up or down, would be a complete stunner. Instead, the big news on monetary policy this week is very likely to be the Federal Reserve announcing it will begin gradually trimming its balance sheet at the start of October.

Time To Drain The Fed Swamp 
Sep. 11, 2017 - First Trust -  The Panic of 2008 was damaging in more ways than people think. Yes, there were dramatic losses for investors and homeowners, but these markets have recovered. What hasn’t gone back to normal is the size and scope of Washington DC, especially the Federal Reserve. It’s time for that to change.

S&P 500 Index Stock Prices Relative To Their 52-Week Highs

Sep. 07, 2017 - First Trust -  View from the Observation Deck
1. The averages in the chart simply reflect where the stocks in the S&P 500 Index stood, by sector,relative to their 52-week highs as of 8/31/17. Investors can compare today's snapshot to the one we did on 3/30/17 (click here to view).
2. From 8/31/16 through 8/31/17,the S&P 500 Index,which is capitalization-weighted, posted a total return of 16.21%, according to Bloomberg.On a price-only basis,which excludes dividends,the index was up 13.85%.

Hurricane Economics
Sep. 05, 2017 - First Trust -  The hits keep coming. Hurricane Harvey left destruction in its wake, and now, Hurricane Irma has Florida in its sights.

How The S&P 500 Index Has Performed Since The Brexit Vote

Aug. 31, 2017 - First Trust -  View from the Observation Deck
1. On 6/23/17,the citizens of the United Kingdom (UK) voted to exit (“Brexit”) the European Union (EU).The term Brexit came from merging the words Britain and exit.
2. The EU is an economic and political partnership involving 28 European countries.The UK is the first member to opt out of the EU. It is scheduled to exit on 3/29/19, according to BBC News.

Don’t Fret DC Debt Drama
Aug. 28, 2017 - First Trust -  Think that title sounds familiar? It is. We’ve been here before. And, as before, the “debt ceiling” is a gold mine for some politicians, journalists and analysts. A possible government shutdown, or reaching a “hard” debt ceiling, are both fun for pessimists to talk about.

Tracking The Retail Investor’s Appetite For High Yield Corporate Bonds

Aug. 22, 2017 - First Trust -  View from the Observation Deck
1. High yield corporate bonds are speculative-grade securities (a much higher level of credit risk) that tend to pay a higher rate of interest than their investment-grade counterparts.
2. One of the primary indicators used for assessing risk levels in the high yield corporate bond market is the industry default rate.A bond default occurs when the issuer fails to make an interest or principal payment within the specified period.

Third Quarter Real GDP – 3.8%!
Aug. 21, 2017 - First Trust -  While the Sunday morning talk shows discuss the number of Civil War monuments that can dance on the head of a pin…and a rare Eclipse grabs focus…investors might be shocked at how the economy has accelerated.

Let the Private Sector Take the Reins on Infrastructure
Aug. 18, 2017 - First Trust -  The Trump administration took its first steps to address infrastructure Tuesday, with the president signing an executive order aiming to expedite environmental review and permitting processes. Some will decry the fact that these actions weren’t accompanied by a multi trillion-dollar spending bill.

A Snapshot of Growth vs.Value Investing
Aug. 15, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we do on an ongoing basis. Investors can compare today's snapshot to the one we did on
6/13/17 (click here to view).
2. Growth style investing tends to outpace value style investing when the earnings growth rates of companies accelerate faster than the
broader market,such as right after the economy exits a recession.

Consumers Are Doing Fine
Aug. 14, 2017 - First Trust -  It’s hard to read the business pages or watch the business news without seeing a story about the death of the consumer. In particular, the business press continues to be obsessed by relative weakness among traditional brick and mortar stores.

Equity Mutual Fund Managers Have Plenty Of Dry Powder
Aug. 08, 2017 - First Trust -  View from the Observation Deck
1. Dry powder is a slang term referring to marketable securities that are highly liquid and considered cash-like, according to Investopedia.
2. As of 6/30/17,the value of liquid assets held by all U.S. equity mutual funds totaled $310.9 billion.

“Shiller P-E” Still Wrong Signal 
Aug. 07, 2017 - First Trust -  For many years now a relatively large contingent of analysts, investors and journalists has been convinced the stock market was in a bubble because the “Shiller P-E” ratio was just too high. Back on 8/12/2013, in our Monday Morning Outlook, we made our case that the Shiller model was too pessimistic. Now that looks like a pretty good call.

Unfortunately, Still a Plow Horse 
Jul. 31, 2017 - First Trust -  Yes, Friday’s report of the Q2 real GDP growth rate was a little faster than average, but, with one exception, it remains the same Plow Horse it’s been for the past eight years. The US economy has grown at an annual rate of 2.1% since the economic recovery started in mid-2009. So the second quarter 2.6% rate was a little faster, but not much – average it out with Q1, which was 1.2% and you get 1.9%.

Foreign Sales For Big Multinational Companies Fell Again In 2016

Jul. 27, 2017 - First Trust -  View from the Observation Deck
1. S&P 500 Index foreign salesrepresent products and services produced and then sold outside of the U.S.The percentagesin the chart represent companies that reported full information.
2. While foreign sales were above average (45.86%) from 2008 through 2014,sales declined markedly over the past two years(see chart).

The Road to Normal Starts in September
Jul. 26, 2017 - First Trust -  The Federal Reserve made no changes to interest rates today and made almost no changes to the text of its statement. However, the wording changes it did make strongly support our view the Fed will announce the start of balance sheet reductions at the end of its next meeting on September 20.

Moderate Growth for Q2

Jul. 24, 2017 - First Trust -  Since the start of the economic recovery in mid-2009, real GDP has grown at an average annual rate of 2.1%. The second quarter of this year doesn’t look much different. Our calculations suggest real GDP grew at a 2.5% annual rate in Q2, exactly the same as the consensus forecast.

S&P 500 Index Companies Continue To Reward Shareholders

Jul. 22, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post shows the surge in the amount of capital that S&P 500 Index companies have committed to stock dividends and stock buybacks since the quarter (Q1'09) in which the index bottomed in the last bear market.
2. As indicated in the chart, using first quarter data points,the S&P 500 Index increased its combined outlays (dividends + buybacks) from $83 billion in Q1'09 to $234 billion in Q1'17 (preliminary), or an increase of 181.93%.

Hey Government: It’s Time to Get Serious!

Jul. 17, 2017 - First Trust -  At eight years, the current economic recovery is the third longest on record. Personal income, consumer spending, household assets, and net worth, are all at record highs. Stock markets are at record highs. Corporate profits are within striking distance of their all-time highs. Federal tax receipts are at record highs.

Still Waiting For The Great Rotation Out Of Bond Mutual Funds

Jul. 15, 2017 - First Trust -  View from the Observation Deck
1. As indicated in the chart,with the exception of 2013 and 2015, investors appear to have had a big appetite for bond mutual funds since 2007,which was just one-year prior to the punishing 2008-2009 financial crisis.
2. From 2007 through April 2017,investors poured a net $1.31 trillion into bond funds,according to the ICI.Year-to-date through April 2017, net inflows totaled a whopping $89.33 billion, up from $36.35 billion over the same period in 2016.

Debt-Laden Companies? #FakeNews?
Jul. 10, 2017 - First Trust -  Remember the weak May payroll report – just 138,000? Didn’t think so. But, back then, that first report on May was reported as a massive economic slowdown that should stop the Fed from further rate hikes.

The Bull Keeps Running
Jul. 03, 2017 - First Trust -  In March 2009, the stock market started its current bull run. At first, it was a V-shaped bounce from the 2008 Panic lows after mark-to-market accounting was changed.

The Big Banks Just Got The Green Light To Boost Their Dividend Payouts

Jun. 29, 2017 - First Trust -  View from the Observation Deck
1. Today’s blog post comes on the heels of the news that all 34 banks subjected to the Federal Reserve’s annual stress testing process all passed, meaning they had sufficient capital to withstand a massive financial shock and deep recession, as well as the wherewithal to return more capital to shareholders via dividend increases and stock buybacks.
2. It was the first time since the annual tests began in 2011 that all of the financial institutions received passing grades, according to The Wall StreetJournal.

QE Didn’t Work
Jun. 19, 2017 - First Trust -  Last week the Federal Reserve hiked the federal funds rate by ¼ of a percentage point for the fourth time since December 2015. The funds rate is still below the rate of inflation, which means the Fed is still a long way from becoming tight.

Less Loose
Jun. 12, 2017 - First Trust -  When the Federal Reserve raises rates by another quarter percentage point on Wednesday, you’re going to see many stories about monetary policy getting tight and the potential threat that poses for the economy in general and the bull market in stocks in particular.

Retail Equity REITs Under Pressure In 2017
Jun. 08, 2017 - First Trust -  View from the Observation Deck
1. Today’s blog post is timely due to the rise in the number of announced store closures in the U.S.As of 6/3/17,there were nearly 5,100 planned store closures for 2017, according to Business Insider.
2. Credit Suisse estimatesthat the number of announced closures could rise to 8,640 by the end of 2017,and expects 20% to 25% of malls(roughly 220 to 275 shopping centers) to shut down over the next five years, according to Business Insider. From 2000 through 2016,the biggest year for store closures was 2008, with 6,163.That was year-one of the financial crisis.

Long Housing, Short Autos
Jun. 05, 2017 - First Trust -  Late last week automakers reported selling cars and light trucks at an annual rate of 16.7 million units in May, down 3% from May 2016. If you look at a twelve-month moving average, sales peaked back in April 2016 and have been trending lower, ever since.

We Don’t See No Stinkin’ Bubbles! 
May. 30, 2017 - First Trust -  Now that we’re eight years into a bull market, some investors just assume something has to go wrong. As a result, we see lots of stories and get lots of questions about “bubbles,” as in "what market or sector is in a bubble already?"

An Update On The “Trump Rally”
May. 30, 2017 - First Trust -  View from the Observation Deck
1. Donald J.Trump's victory on 11/8/16 appears to have injected some optimism into the equity markets via his pro-growth, pro-U.S. policy ideas, in our opinion.
2. From 11/8/16 (date Donald Trump won the U.S. presidential election) through 5/26/17,the S&P 500 Index posted a total return of 14.23% (not shown in chart), according to Bloomberg.

The Outlook For S&P 500 Index Earnings Reflects Strength Through Year-End

May. 23, 2017 - First Trust -  View from the Observation Deck
1. Today's chart is intended to give investors some visual perspective on where equity analysts think earnings are headed. Earnings estimates are subject to change.
2. From Q1’15 to Q4’17 (see chart), S&P 500 Index earnings are expected to rise from $26.21 per share to an estimated $35.25 per share, or an increase of 34.50%.

Tax Cut Politics 
May. 22, 2017 - First Trust -  While some investors are freaking out about investigations, tweets, or the personality of President Trump, we are still watching policy. So far, some regulation has been rolled back and more is on tap, the Supreme Court has a more market friendly make-up, and there is a hiring freeze on many government agencies. These policies will help economic growth, but they are not enough to get it above 2.5% annually.

A Snapshot Of Moving Averages
May. 16, 2017 - First Trust -  View from the Observation Deck
1. In today's post, we are showing the percentage of stocks in a number of major U.S.stock indices that are trading above their respective 50-Day and 200-Day moving averages.
2. Moving averages tend to smooth out day-to-day price fluctuations and can be a useful tool for traders to identify both positive trends and reversals, in our opinion.

A Healthy US Consumer
May. 15, 2017 - First Trust -  News of the consumer’s death has traveled fast.
It’s not hard to find stories of beleaguered and battlewearied consumers. Famed retail giants are slashing revenue and earnings outlooks, creating worries about retail space in general and malls in particular. Auto sales are slowing, auto loan delinquencies are rising, while delinquent student loans create their own paroxysms of fear in analyst minds.

The Real Rate Of Return On The 10-Year Treasury Is Real Low

May. 09, 2017 - First Trust -  View from the Observation Deck
1. As of the close of 4/28/17,the yield on the 10-Yr.T-Note was 2.28%, while the trailing 12-month Consumer Price Index (CPI) headline rate stood at 2.40%, according to Bloomberg.
2. That translated into a real rate of return (yield-inflation) of -0.12%. From 1965 through April 2017,the average real rate was 2.41% (6.41% avg.Yield - 4.00% avg. CPI), according to Bloomberg.

Reasons to be Bullish

May. 08, 2017 - First Trust -  We wish we had a dollar for every time we’ve heard that the bull market in equities is only due to loose money. We have consistently disagreed, arguing that although the Federal Reserve is loose, the bull market is primarily a function of the rebound in profits after the disaster in 2008-09.

Prepare for Q2 GDP Surge
May. 01, 2017 - First Trust -  Economic data is volatile. Weather, seasonal adjustments, calendar flukes, and measurement errors all affect the data. Nonetheless, those with a political axe to grind, or an economic forecast of recession or boom, will grab one piece of data and act as if they have discovered the Holy Grail.

First Quarter GDP (Advance)
Apr. 28, 2017 - First Trust -   The first estimate for Q1 real GDP growth is 0.7% at an annual rate, slightly below the consensus expected 1.0%. Real GDP is up 1.9% from a year ago.
 Business investment in equipment and structures were the largest positive contributions to Q1 real GDP growth. Slower growth in inventories was the largest drag on real GDP.

The Rebound in Homebuilder Sentiment has Outpaced the Rebound in Homebuilder Stocks

Apr. 27, 2017 - First Trust -  View from the Observation Deck
1. Today's post shows that the homebuilding industry has essentially recovered from its downturn with respect to homebuilder sentiment, but valuation levels of homebuilder stocks still reflect a deep discount to their peak in 2005.
2. The National Association of Home Builders Market Index (SA) measures builder sentiment. An index reading above 50 indicates that sentiment is positive.

France and the Euro
Apr. 24, 2017 - First Trust -  When the French elected François Hollande as President in 2012, the global left rejoiced. Mr. Hollande ran on a platform of protecting workers from capitalism. He wanted to raise the top income tax rate to 75%. Analysts predicted a political turn to the left across Europe, if not beyond.

Sell in May and Go Away! What is so Scary?
Apr. 18, 2017 - First Trust -  View from the Observation Deck
1. The old axiom in the stock market about selling your stocks at the close of April and then buying back in at the start of November once made some sense from a seasonality standpoint.
2. When the U.S. was more of an industrialized economy it was not uncommon for plants and factories to close for a month or longer in the summer to retool and allow employees to vacation.

Still Plowing Away
Apr. 17, 2017 - First Trust -  As we wrote three months ago, it’s going to take much more than animal spirits to lift economic growth from the sluggish pace of the past several years. Measures of consumer and business confidence continue to perform much better than before the election. But where the economic rubber hits the road, in terms of actual production,…not so much.

A Snapshot Of What Investors Are Paying For Stocks
Apr. 11, 2017 - First Trust -  View from the Observation Deck
1. Today’s blog post features a table showing the price-to-earnings (P/E) ratios of a few major stock indices.Our goal is to provide investors with a global perspective on where valuations have been and where they are projected to go.
2. We believe that a 10-year perspective is appropriate because it captures where valuations stood prior to the 2008-2009 financial crisis.

This Recovery Isn’t Boom or Bust
Apr. 10, 2017 - First Trust -  Last Friday, payroll employment data, from a survey of businesses, showed the US created just 98,000 jobs in March. The consensus of forecasters had expected job growth of 175,000. The other jobs number, which comes from a survey of households, showed 472,000 new jobs in March.

Technology Stocks Have Delivered Strong Returns In The Current Bull Market

Apr. 04, 2017 - First Trust -  View from the Observation Deck
1. From 3/9/09-3/31/17 (current bull), all four of the technology-related indices featured in the chart outperformed the S&P 500 Index.
2. The average annualized total returns for the period were as follows: ISE Cloud Computing Index (+29.95%); Dow Jones Internet Composite Index (+27.72%); Philadelphia Semiconductor Index (+23.00%); S&P 500 Information Technology Index (+22.33%); and S&P 500 Index (+19.28%), according to Bloomberg.

WSJ Leak: Fed May Shrink Balance Sheet

Apr. 03, 2017 - First Trust -  If you read us regularly, and we hope you do, you know that we write each week about a topic we think is both important and timely. Last week, we were either clairvoyant, or extremely persuasive

2017 & 2018 Earnings Snapshot
Mar. 28, 2017 - First Trust -  View from the Observation Deck
1. Today's blog features corporate earnings projections for 2017 and 2018. We provide updates on an ongoing basis.
2. The 75.56% plunge in the price of crude oil from the close of 6/20/14 through 2/11/16 resulted in a sharp decline in the earnings of energy-related companies in 2016. The 82.11% rise in the price of crude oil from the close of 2/11/16 through 3/27/17, however, projects to a triple-digit rise in earnings in 2017 (see chart).

The Fed is A Proxy for Government
Mar. 27, 2017 - First Trust -  Well, that was fun! The GOP’s attempt to reform healthcare hit a brick wall of politics. Conservative Republicans wanted to completely “repeal” Obamacare, while moderates and leaders were willing to keep much of it as long as it cost less. Moving one way or the other lost too many votes. Democrats refused to participate. So, the bill died.

Investors Continue To Favor Passive Funds Over Actively Managed Funds

Mar. 21, 2017 - First Trust -  View from the Observation Deck
1. Today's blog features corporate earnings projections for 2017 and 2018. We provide updates on an ongoing basis.
2. The 75.56% plunge in the price of crude oil from the close of 6/20/14 through 2/11/16 resulted in a sharp decline in the earnings of energy-related companies in 2016. The 82.11% rise in the price of crude oil from the close of 2/11/16 through 3/27/17, however, projects to a triple-digit rise in earnings in 2017 (see chart).

February Housing Starts
Mar. 16, 2017 - First Trust -   Housing starts rose 3.0% in February to a 1.288 million annual rate, beating the consensus expected 1.264 million. Starts are up 6.2% versus a year ago.  The rise in starts in February was entirely due to single family units; multi-family starts declined. In the past year, single-family starts are up 3.2% while multi-family starts are up 13.0%.

S&P 500 Index Top-Line Growth Estimates
Mar. 14, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post provides investors with a three-year look into the expected revenue growth rates of the companies that comprise the S&P 500 Index.
2. On 3/10/17,the S&P 500 Index stood at 2,372.60, or 0.97% below its all-time high of 2,395.96,set on 3/1/17, according to Bloomberg. The current bull market in stocks entered its 9th year after the close of trading on 3/9/17.

Robots Create Jobs, Don't Steal Them
Mar. 13, 2017 - First Trust -  If robots are supposed to take all our jobs, they’re not very good at it. Nonfarm payrolls rose 235,000 in February, rising faster than even the computer models thought they would. This was the 84th month in a row of private sector job growth, the longest streak on record.

A Snapshot of U.S. Styles/Market Caps
Mar. 07, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post is intended to expose potential opportunities within the growth and value styles of investing, as well as by market capitalization (market cap).
2. At any given time, the equities markets are likely being led up or down by one of the three market cap classifications (large-cap, mid-cap or small-cap).Often this leadership role can be held for a multi-year period.

Watch Reserves, Not Rates
Mar. 06, 2017 - First Trust -  As Washington DC melts down, entrepreneurs keep moving, people keep working and spending; the economy keeps growing. The Federal Reserve keeps meeting and speaking, too, but now it appears they will actually act.

U.S. Equities Have Boosted Their Global Standing In The Current Recovery

Feb. 28, 2017 - First Trust -  View from the Observation Deck
1. The current U.S. economic recovery commenced in Q3’09, according to the National Bureau of Economic Research.The last U.S. recession ran from December 2007 through June 2009.
2. As indicated in the chart,the total market cap of U.S. exchange traded equities rose from $12.73 trillion on 9/30/09 to $25.20 trillion on 12/31/16, or an increase of 97.96%.

Trade Is Not Our Enemy
Feb. 27, 2017 - First Trust -  We think it was Art Laffer who said it best. Let’s say the US invented a cure for cancer and China a cure for heart attacks. If China decided to ban the cure for cancer, should the US retaliate by banning the cure for heart attacks?

Time for a Rate Hike
Feb. 21, 2017 - First Trust -  According to the futures market, there is a 38% chance the Federal Reserve raises rates when it meets in mid-March. If the Fed were to stand by what it has said the past several years, the odds should be much higher. But the market is used to the Fed finding reasons to put off justified rate hikes.

Some Perspective On The Performance Of The S&P 500 Index

Feb. 21, 2017 - First Trust -  View from the Observation Deck
1. Are U.S.stocks overvalued? While there are many metrics that can be used to argue one side or the other, we believe there is room for an eyeball test using historical returns.
2. The last bar in the chart (shaded gold) represents the average annual total return for the S&P 500 Index since 1926. Since it covers such a long period, it tends to change modestly with each passing year.

A Snapshot Of Fixed-Rate Bond Yields & Total Returns
Feb. 14, 2017 - First Trust -  View from the Observation Deck
1. The purpose of today's blog post is simply to show investors how traditional fixed-rate bonds have performed over the past 1-, 3- and 5-years.
2. We believe that the information in the chart can help investors establish realistic expectations with respect to fixed-rate bond yields and performance potential moving forward.

Keep It Simple, Stupid (KISS) 
Feb. 13, 2017 - First Trust -  The biggest tax debate in Washington right now is not between Republicans and Democrats, but between Republicans and Republicans. Both sides of the debate seem to understand that the US tax code, particularly the fact that the US has the highest corporate tax rate of any industrialized country, is harming the competitiveness of US companies.

A Snapshot of Growth vs.Value Investing
Feb. 07, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we do on an ongoing basis. Investors can compare today's snapshot to the one we did on 10/27/16 (click here to view).
2. Growth style investing tends to outpace value style investing when the earnings growth rates of companies accelerate faster than the broader market,such as right after the economy exits a recession

Room to Grow
Feb. 06, 2017 - First Trust -  The US economy has grown at an average annual rate of only 2.1% since the recovery started in mid-2009, far slower than during the economic expansions of the 1980s and 1990s.

Biotechnology Stocks Have Not Been This Cheap In A Decade

Jan. 31, 2017 - First Trust -  View from the Observation Deck
1. From 12/31/06 through 12/30/16,the S&P 500 Biotechnology Index posted an average annual total return of 13.92%, compared to 9.57% for the S&P 500 Health Care Index and 6.94% for the S&P 500 Index, according to Bloomberg.
2. Over that 10-year period,the average year-end P/E ratio on the S&P 500 Biotechnology Index was 19.00.As indicated in the chart, the year-end P/E estimates for 2017 and 2018 are significantly below the period average.

How U.S.& Other Developed Market Equities Have Fared Since Japan Peaked in 1989

Jan. 24, 2017 - First Trust -  View from the Observation Deck
1. China’s growth story has garnered a lot of attention from investors and the financial media over the past 10 to 15 years.Some pundits believe that China could one day supplant the U.S. as the world’s largest economy.We’ll see.
2. The same type of tale wasspun aboutJapan in the late 1980s.It did not come to fruition.In fact,China surpassed Japan to become the second-largest economy in the world in 2010, according to The Wall StreetJournal.The U.S. is still the largest.

American Carnage?

Jan. 23, 2017 - First Trust -  A memorable part of President Trump’s inaugural speech pointed to mothers and children trapped in poverty, rusted-out factories, a flawed school system, and crime and gangs and drugs. He described these problems as “American carnage” and stated emphatically that it “stops right here and stops right now.”

Another Plow Horse Quarter
Jan. 17, 2017 - First Trust -  Animal spirits are back!
Confidence surveys have soared since the election. The Conference Board’s future expectations measure hit the highest level since 2003. The NFIB small business confidence index rose at its fastest pace ever. Other surveys are up, too.

A Snapshot Of The S&P 500 Index Earnings Beat Rate
Jan. 17, 2017 - First Trust -  View from the Observation Deck
1. As we head into corporate earnings season featuring Q4’16 results, we thought it would be a good time to review the percentage of S&P 500 Index companies that top their earnings estimates on a quarterly basis.The index currently has 505 constituents.
2. From Q4'12 through Q3'16 (16 quarters),the average quarterly earnings beat rate for the 500 companies that comprise the index was 69.2%, matching the results posted a year ago in Q4’15.

Some Insight Into The S&P 500 Index Dividend Payout
Jan. 12, 2017 - First Trust -  View from the Observation Deck
1. As of the close of 2016, 418, or 83%, of the constituents in the S&P 500 Index distributed a dividend to shareholders, up significantly from 351 at the end of 2002 (not shown in chart), according to S&P Dow Jones Indices.The bear market in stocks that proceeded the bursting of the bubble in the technology sector in March 2000 ended in October 2002.
2. For comparative purposes,since 1980,the highest number of dividend-paying stocks in the S&P 500 Index at year-end was 469 (1980), according to S&P Dow Jones Indices.

Big Government Causes Slow Growth
Jan. 09, 2017 - First Trust -  In 1930, Pluto was declared the ninth planet. In 2007, it was demoted to “dwarf planet” status by astronomers after considering new evidence. There are now only eight planets.

S&P 500 Index Top-Line Growth Estimates
Jan. 03, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post provides investors with a three-year look into the expected revenue growth rates of the companies that comprise the S&P 500 Index.
2. On 12/30/16,the S&P 500 Index closed the year at 2,238.83, or 1.45% below its all-time high of 2,271.72,set on 12/13/16, according to Bloomberg

2017: Dow 23,750, S&P 2700 
Dec. 26, 2016 - First Trust -  We have used the metaphor of the “Plow Horse” to define the US economy since 2009 – an economy driven by new technology and entrepreneurship (fracking, the cloud, smartphones, big data…), but held back by the friction of a growing and burdensome government.

OPEC Production Cuts Solidify Case for Oil Recovery
Dec. 21, 2016 - Cohen & Steers -  As signaled in September, the Organization of the Petroleum Exporting Countries (OPEC) convened in November to establish a production target to help stabilize the global oil market. The agreed upon supply cuts should accelerate and solidify the rebalancing of oil markets already underway, supporting our base case for higher oil prices over the next two years.

Investors Continue To Favor Passive Funds Over Actively Managed Funds

Dec. 20, 2016 - First Trust -  View from the Observation Deck
1. Those investors directing capital into mutual funds and exchange traded funds (ETFs) favored passive investing over active management for the 12-month period ended November 2016.Here is a link to last year’s post measuring the same period with similar results (click here to view).
2. Passive mutual funds and ETFs reported net inflows totaling $479.8 billion, compared to net outflows totaling $358.8 billion for those actively managed (see chart).

Greedy Innkeeper or Generous Capitalist?

Dec. 19, 2016 - First Trust -  The Bible story of the virgin birth is at the center of much of the holiday cheer this time of year. The book of Luke tells us that Mary and Joseph traveled to Bethlehem because Caesar Augustus decreed a census should be taken. Mary gave birth after arriving in Bethlehem and placed baby Jesus in a manger because there was “no room for them in the inn.”

The Fed Turns Hawkish

Dec. 14, 2016 - First Trust -  The Federal Reserve unanimously decided to raise rates in 2016 – finally! – by a quarter of a percentage point earlier today, as the markets expected. The federal funds rate is now set to hover between 0.50% and 0.75%.

Sector Performance Via Market Capitalization Since The Presidential Election

Dec. 13, 2016 - First Trust -  View from the Observation Deck
1. From 11/8/16 through 12/12/16,small-capitalization (cap) stocks outperformed both mid- and large-cap stocks, as measured by the S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index (see top line of table).
2. As indicated in the table, there were two sectors in the S&P 500 Index that posted negative total returns in the period. All of the sectors in the S&P MidCap 400 Index and S&P SmallCap 600 Index posted positive total returns.

Rally is Real, Not “Hope & Faith”
Dec. 12, 2016 - First Trust -  Since the presidential election, the S&P 500 is up 8.4%, the Russell 2000, a small cap stock index, is up almost 20% and the Dow is closing in on 20,000. Financial stocks have surged.

Interest Rates Spiked In November And Investment Grade Bond Prices Fell

Dec. 06, 2016 - First Trust -  View from the Observation Deck
1. Intermediate-term interest rates moved markedly higher following the presidential election.In general,asinterest ratesrise,fixedrate bond prices tend to fall, particularly those of the highest credit quality.
2. From 11/8/16 through 11/30/16,the yield on the benchmark 10-year Treasury note (T-note) surged 52 basis points,from 1.86% to 2.38%, according to Bloomberg. Its yield stood at 1.60% on 9/30/16.

Caution on Dollar-Meddling
Dec. 05, 2016 - First Trust -  If there’s one theme tying together many of the policies President-Elect Trump and Congress will try to enact, it’s making the US a better place to invest. This includes peeling back Obamacare, drastically cutting the top tax rate on corporate profits, moving from the depreciation of business investment to immediate and full expensing, and allowing more investment in energy infrastructure.

Populist Uprising or Conservative Revival? 
Dec. 01, 2016 - First Trust -  Steve Moore, economic advisor to President-Elect Donald Trump told a DC-newspaper, The Hill, and the Republican leadership; “Just as Reagan converted the GOP into a conservative party, Trump has converted the GOP into a populist working-class party.” (The Hill, Jonathan Swan, 11/23/2016)

U.S. Crude Oil & Natural Gas Rig Counts Are Trending Higher

Nov. 29, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post illustrates the dramatic reduction in the number of active U.S. crude oil and natural gas rigs since energy prices peaked in 2014, as well as a bit of a rebound in the counts in the second half of 2016.
2. Rig count cuts are generally done in an effort to curb production in response to declining energy prices. Rig counts tend to rise when energy producers sense that higher prices are not only coming, but are sustainable.

Higher Rates Won’t Crush Housing
Nov. 28, 2016 - First Trust -  In the past 7 ¾ years, we have consistently urged investors to separate their politics from their investing. It’s way too easy to say, “Their guy is in the White House; so everything must be awful – and if anything good happens, it must be fake, or a ‘sugar high’.”

The U.S.Dollar Is Once Again Testing The Upper Limits Of Its Recent Range

Nov. 22, 2016 - First Trust -  View from the Observation Deck
1. Today’s chart is an update of a previous post we did back in August showing the fluctuations in the U.S. Dollar Index (DXY) since mid-2014.
2. From 6/30/14 through 11/18/16, the U.S. Dollar Index rose from a reading of 79.78 to 101.21, or a gain of 26.86%, according to Bloomberg.

Big Boom for Stocks 
Nov. 21, 2016 - First Trust -  The S&P 500 hit a low of 666 on March 6, 2009 and was up 213%, excluding dividends, through November 4, 2016. Since then, the S&P 500 is up another 4.6%, and closed just 0.5% from a new all-time high last Friday.

Investor Sentiment In Equities Shifted After Midyear
Nov. 15, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post features the total return performance of the S&P 500 Index and its 11 major sectors over three specific time periods.
2. The shift in investor sentiment that we eluded to pertains to the sell-off in those sectors that performed extremely well for the 12- month period ended 6/30/16 (see chart). We are referring to Utilities, Telecommunication Services, Real Estate and Consumer Staples, which posted total returns ranging from 18.66% to 31.47%.

Revolution

Nov. 14, 2016 - First Trust -  Elections have consequences and the impact on U.S. economic policy of last week’s election will be enormous. We’re sure we’ll be writing about all of these issues in much greater depth over the next several months, but, for now, here’s a broad outline of what to expect.

Saving Private Sector
Nov. 09, 2016 - First Trust -  In the movie “Saving Private Ryan,” multiple brave soldiers give their lives to save one (the last-surviving of four brothers) in World War II. During a final, chaotic and riveting battle scene, Ryan is miraculously saved, but with tremendous loss of life. A bloody and dying, married, teacher from Pennsylvania – Captain Miller (played by Tom Hanks) – tells the farm boy from the Corn Belt – Private James Ryan (played by Matt Damon) – to “earn it.” “Earn” the sacrifice!

A Snapshot of Bond Valuations
Nov. 08, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do on an ongoing basis so that investors can monitor fluctuations in bond prices relative to changes in interest rates and the global economy.
2. From 5/31/16 through 11/4/16 (chart period),the yield on the benchmark 10-year Treasury note (T-Note) declined by seven basis points, from 1.85% to 1.78%, according to Bloomberg. It was as low as 1.36% (7/8/16) in the period.

Q3 Productivity (Preliminary) 
Nov. 03, 2016 - First Trust -   Nonfarm productivity (output per hour) increased at a 3.1% annual rate in the third quarter, much faster than consensus expected gain of 2.1%. Non-farm productivity is unchanged versus last year.  Real (inflation-adjusted) compensation per hour in the non-farm sector increased at a 1.7% annual rate in Q3 and is up 1.1% versus last year. Unit labor costs rose at a 0.3% rate in Q3 and are up 2.3% versus a year ago.

Finding the Signal Through the Noise: Does High Yield Have Room to Run?
Nov. 01, 2016 - State Street Global Advisors -  The high yield market is on pace for its fifth best annual performance in 20 years,1 and assets under management for the high yield corporate bond ETF market hit a record at the end of the third quarter as investors seek yield in a world where yield is hard to come by.2

A Snapshot of Micro-Cap Stocks vs. Small-Cap Stocks
Nov. 01, 2016 - First Trust -  View from the Observation Deck
1. While there is no official set of parameters that define a micro-capitalization (micro-cap) stock,the U.S. Securities and Exchange Commission (SEC) defines them as companies with a market value of less than $250 or $300 million. Some money managers may stretch it to the $1 billion mark or so in order to expand the universe of stocks and/or increase liquidity, in our opinion.
2. As of 2015,there were over 20,000 publicly traded companies and more than 60% of them were micro-caps, according to The MicroCap Conference, which defines a micro-cap company as one that is valued at less than $500 million. Micro-caps account for less than 3% of total equity market capitalization.

Brexit Redux? 
Oct. 31, 2016 - First Trust -  It’s not like we all don’t know that certain media outlets favor certain candidates. Some outlets seem “more fair” than others, but some go to absurd lengths to spin the news

Third Quarter GDP (Advance)

Oct. 28, 2016 - First Trust -   The first estimate for Q3 real GDP growth is 2.9% at an annual rate, beating the 2.6% the consensus expected. Real GDP is up 1.5% from a year ago.
 The largest positive contributions to the Q3 real GDP growth rate were consumer spending, net exports, and inventories.

A Snapshot Of Moving Averages
Oct. 25, 2016 - First Trust -  View from the Observation Deck
1. In today’s post, we are showing the percentage of stocks in a number of major U.S.stock indices that are trading above their respective 50-Day and 200-Day moving averages.
2. Moving averages tend to smooth out day-to-day price fluctuations and can be a useful tool for traders to identify both positive trends and reversals, in our opinion.

Growth Stepping Up
Oct. 24, 2016 - First Trust -  Real GDP has been soft in the past year, growing only 1.3% in the year ending in the second quarter. In the four quarters before that, however, real GDP grew 3%. That’s what it’s supposed to be like in a Plow Horse economy, with real GDP growth averaging around 2%, sometimes a little faster, sometimes slower

Sector Performance Via Market Capitalization
Oct. 18, 2016 - First Trust -  View from the Observation Deck
1. From 12/31/15 through 10/17/16,small-capitalization (cap) stocks outperformed both mid- and large-cap stocks, as measured by the S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index (see table).
2. In that period, the only sector that posted a negative total return was Health Care. It was down in the S&P 500 and S&P SmallCap 600 Indices. Ironically, it performed well in the mid-cap space.

Does Growth Kill or Is There No Growth?
Oct. 17, 2016 - First Trust -  Two weekend articles, in major US newspapers, left us shaking our heads. The Washington Post wrote that "economic growth actually kills people," while The Wall Street Journal published a piece saying, ironically, we should get used to slow growth - it's normal.

Some Insight Into The S&P 500 Index Dividend Payout
Oct. 11, 2016 - First Trust -  View from the Observation Deck
1. Today's chart provides a comparison of the contributions to the S&P 500 Index's dividend payout, by sector, using current levels (9/30/16) versus the end of 2006.
2. We chose 12/31/06 levels in order to highlight where contribution levels stood prior to the 2008-2009 financial crisis.

Inflation Ready to Rise
Oct. 10, 2016 - First Trust -  One of the key excuses for the Federal Reserve to hold off raising rates again and again, and to raise them very slowly, is that inflation remains extremely low

S&P 500 Index Dividend-Payers Still Distributing Lots Of Cash To Shareholders

Oct. 04, 2016 - First Trust -  View from the Observation Deck
1. S&P 500 Index companies paid out $98.30 billion in stock dividends in Q2'16,up 4.1% from the $94.45 billion distributed in Q2'15.
2. It marked the seventh consecutive quarter in which cash dividend distributions exceeded $90 billion.Over the past 35 quarters through Q2’16,the average dividend payout was $70.8 billion.

Cut Spending to Grow Economy
Oct. 03, 2016 - First Trust -  Austan Goolsbee, former Chairman of President Obama’s Council of Economic Advisors, was interviewed by Paul Gigot on Fox News this past weekend and asked about slow economic growth. He argued that “a lack of ‘aggregate demand’ around the world and in the United States” is reducing business investment and slowing economic growth.

Indonesia by Numbers
Sep. 30, 2016 - Aberdeen Asset Management -  With a population of over 250 million, Indonesia’s growth potential is undeniable. President Joko Widodo, or Jokowi as he is more widely known, has been pushing for reforms in the Southeast Asian archipelago. The country is making steady progress. It has vowed to improve infrastructure and open opportunities to foreign investors, which should bode well for its long-term prospects.

2nd Quarter GDP (Final)
Sep. 29, 2016 - First Trust -   Real GDP growth in Q2 was revised up to a 1.4% annual rate versus a prior estimate of 1.1%. The consensus expected 1.3%.
 The largest upward revisions were for business investment, inventories, and net exports.

The Growth In State Tax Collections May Be Better Than Some Think

Sep. 29, 2016 - First Trust -  View from the Observation Deck
1. The latest data on state tax collections in the U.S. is as of Q1’16.We have provided data going back 40 quarters (10 years) to Q2’06.
2. Totalstate tax collectionsregistered gainsin 34 of the 40 quarters,on a year-over-year basis,or 85% of the time.Five of the six quarters where growth rates turned negative occurred during the 2008-2009 financial crisis.

The Recovery In Financials Could Include Rising Dividend Payouts

Sep. 27, 2016 - First Trust -  View from the Observation Deck
1. As indicated in the chart, from 2004-2007,the financial companies in the S&P 500 Index accounted for nearly 30% of the S&P 500 Index’s dividend payout. In that period, no other sector even reached 15%.
2. The chartshows a steep plunge in the contribution from financial companiesin 2009 and 2010.This was an unfortunate byproduct of the 2008-2009 financial crisis.

It’s Still the Fed, And It’s Not Magic
Sep. 26, 2016 - First Trust -  We hate to do this and we hope we don’t put you to sleep so early in the week, but it’s time to talk about monetary policy. Specifically, the “transmission mechanism” of monetary policy

Rate Hike Looks Set for December
Sep. 21, 2016 - First Trust -  The Federal Reserve kicked the rate hike can down the road once again, but looks very likely to raise rates in December.

Technology Stocks Have Delivered Strong Returns In The Current Bull Market

Sep. 20, 2016 - First Trust -  View from the Observation Deck
1. From 3/9/09-9/19/16 (current bull), all four of the technology-related indices featured in the chart outperformed the S&P 500 TR Index.
2. The average annualized total returns for the period were as follows: ISE Cloud Computing TR Index (+29.99%);Dow Jones Internet Composite TR Index (+28.05%);Philadelphia Semiconductor Index (+23.12%);S&P 500 InformationTechnology TR Index (+21.70%); and S&P 500 TR Index (+19.00%), according to Bloomberg.

The Glass Half Empty
Sep. 19, 2016 - First Trust -  We get called perma-bulls, wrongly we think, becausewe were late to call 2008 a Panic, and because we've pushedback against the doom and gloom of the past 7 1/2 years. Time and again over the past several years, we’ve argued the Plow Horse economy would continue to grow   

This Covered Call Index Tends To Beat The Broader Market In Low Return And Negative Return Climates

Sep. 15, 2016 - First Trust -  View from the Observation Deck
1. From 2001-2015,the CBOE S&P 500 BuyWrite Index (an index designed to measure a covered call strategy) outperformed the S&P 500 Index in six of the 15 calendar years. It is has lagged year-to-date thru 9/13/15 (see chart).
2. Over that 15 year period (2001-2015), the S&P 500 Index posted an average annual total return of 5.00%, compared to 3.93% for the CBOE S&P 500 BuyWrite Index, according to Bloomberg.

Leveraged Loans (Senior Loans) Could Be One Of The Beneficiaries Of Higher Interest Rates

Sep. 13, 2016 - First Trust -  View from the Observation Deck
1. Conventional thought says that it is prudent to shorten the duration of one's bond holdings when interest rates are on the rise. With respect to pricing,fixed-rate bonds are particularly vulnerable to rising interest rates.
2. Today’s post seeks to illustrate that investors may shift capital in and out of floating-rate corporate securities based on the rise or fall of either short-term or longer-term interest rates.

Fundamentals, Not Headlines
Sep. 12, 2016 - First Trust -  The S&P 500 dropped 2.5% on Friday while the yield on the 10-year Treasury note rose to 1.67%, the highest since June. You’ll have to excuse us if we’re unimpressed.

QE Is Not A Magic Elixir
Sep. 06, 2016 - First Trust -  In the Wild West, traveling salesmen sold Magic Elixirs that cured anything that ailed you. These days, the elixir is Quantitative Easing (QE) – it supposedly saved the world from Armageddon, lifted stock prices, drove down bond yields, and, according to at least one analyst, created the fracking boom.

The Bull Market In The S&P 500 Index May Be Picking Up Steam After A Sluggish 2015

Sep. 06, 2016 - First Trust -  View from the Observation Deck
1. From 1981 through 2015, the average number of stocks in the S&P 500 Index that finished the calendar year in positive territory was 312, according to data from S&P Dow Jones Indices.
2. As indicated in the chart,the number of stocks in the index that were up through the first eight months of 2016 totaled 355, outpacing each of the previous five-year averages.

The U.S.Dollar Index Has Been Range Bound Since March 2015

Aug. 30, 2016 - First Trust -  View from the Observation Deck
1. The U.S.dollar hasstrengthened significantly relative to other major world currenciessince the middle of 2014.A strong dollar can make U.S.goods and services less competitive,with respect to price, in the global marketplace.
2. From 6/30/14 through 8/29/16 (period in the chart),the U.S.Dollar Index rose from a reading of 79.78 to 95.58,or a gain of 19.80%, according to Bloomberg.When measuring the index from 6/30/14 to its high (100.33) for the period on 3/13/15,the index rose by 25.76%. From 3/13/15 (high) through 8/29/16, however,the index was down 4.73%.

Bull Market Has Further to Run
Aug. 29, 2016 - First Trust -  Now, the pessimists can’t stop talking about profits. S&P 500 reported earnings are down 3.4% and the government’s economy-wide measure of corporate earnings are down 4.9% from a year ago.

2nd Quarter GDP (Preliminary) 

Aug. 26, 2016 - First Trust -   Real GDP was revised to a 1.1% annual growth rate in Q2 from a prior estimate of 1.2%, matching consensus expectations.
 The largest downward revisions were for net exports, government purchases, and inventories,

S&P 500 Index Stock Prices Relative To Their 52-Week Highs

Aug. 23, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post updates three previous posts done on 7/7/16 (click here to view), 5/17/16 (click here to view) and on 2/16/16 (click here to view).
2. The S&P 500 Index, which is capitalization-weighted, posted a total return of 13.22% for the 12-month period ended 8/22/16, according to Bloomberg.On a price-only basis,which excludes dividends,the index was up 10.74%

Shut Out the Pessimists
Aug. 22, 2016 - First Trust -  You know the economy is getting better when the pessimists’ theories on economic doom have been so wrong for so long they have to start recycling the old ones.

The U.S. Crude Oil Rig Count Is Rising But The Natural Gas Rig Count Is Not

Aug. 18, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post illustrates the dramatic reduction in the number of active U.S. crude oil and natural gas rigs since energy prices peaked in 2014.
2. Rig count cuts are generally done in an effort to curb production in response to declining energy prices. Rig counts tend to rise when energy producers sense that higher prices are not only coming, but are sustainable.

Beware of Popular Narratives

Aug. 15, 2016 - First Trust -  Narratives matter. They affect political outcomes and influence investment decisions. Narratives serve a purpose, but in serving that purpose they are often highly misleading, especially when they are invented to cover up a mistake, or to convince people to vote a certain way. These days, there are three main narratives impacting investors.

Retail Investors Continue To Invest In Foreign Stocks
Aug. 09, 2016 - First Trust -  View from the Observation Deck
1. Over the past 6½ calendar years (2010-6/16), retail investors funneled a net $399.85 billion into open-end World Equity mutual funds, according to data from the Investment Company Institute (ICI).
2. As indicated in the chart, all periods registered net inflows despite multiple negative total returns for the MSCI Daily TR Net World (Ex-U.S.) Index and MSCI Daily TR Net Emerging Markets Index.

June International Trade
Aug. 05, 2016 - First Trust -   The trade deficit in goods and services came in at $44.5 billion in June, larger than the consensus expected $43.0 billion.
 Imports rose $4.2 billion, led by crude oil, pharmaceuticals, and cell phones & other household goods. Exports increased $0.6 billion in June, led by civilian aircraft and corn.

Utilities Looking A Bit Rich After Staging Strong Rally In 2016

Aug. 02, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we did on 7/9/15 (click here to view).
2. The yield on the 10-year Treasury note fell from 2.32% on 7/9/15 to 1.45% on 7/29/16, or a decline of 87 basis points, according to Bloomberg.

GDP Distortions
Aug. 01, 2016 - First Trust -  As recently as two years ago, more than 70% of Americans thought the US economy was still in recession. We’re not sure what that figure is today – maybe pollsters are too busy with the election – but we’d bet it’s still very high.

State Street Fee Revenue Drops on Weaker Market Conditions
Jul. 27, 2016 - WallStreetJournal -  State Street Corp.’s shares jumped nearly 7% after the trust bank reported a quarterly profit that beat Wall Street estimates on lower costs.

Consumer Stocks Have Outperformed The Broader Market Over The Past 10 Years

Jul. 26, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post compares quarterly total returns for the S&P 500 Index versus a 50/50 split between the S&P 500 Consumer Discretionary Index and the S&P 500 Consumer Staples Index.
2. For the 10-year period ended 6/30/16,the 50/50 split outperformed the S&P 500 Index in 21 of the 40 quarters.

Fed Policy Not in Tune With Data
Jul. 25, 2016 - First Trust -  If the Fed were completely honest and transparent, its statement on monetary policy on Wednesday would be only two words: “We goofed.”

June Existing Home Sales 
Jul. 21, 2016 - First Trust -  Existing home sales increased 1.1% in June to a 5.57 million annual rate, beating the consensus expected 5.48 million. Sales are up 3.0% versus a year ago.

The Search For Yield In the Bond Market
Jul. 19, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post shows where some major bond index yields stood at the close of 6/30/16, and also where they closed in June over the past three, five and seven years.
2. The U.S. economic recovery began in Q3’09, according to the National Bureau of Economic Research

Real GDP Accelerating
Jul. 18, 2016 - First Trust -  Forecasting economic growth from quarter to quarter is a humbling experience. Even when you get the trend right – and it’s hard to beat our forecast of Plow Horse growth – there’s always a quarter here and there that will throw you for a loop.

BlackRock CEO: Investors Are ‘Afraid’
Jul. 14, 2016 - WallStreetJournal -  BlackRock CEO Laurence Fink speaks after profit at asset manager slips and assets rise to record

June PPI
Jul. 14, 2016 - First Trust -  The Producer Price Index (PPI) increased 0.5% in June, coming in above the consensus expected rise of 0.3%. Producer prices are up 0.3% versus a year ago.
The rise in producer prices in June was broad-based, with final demand services, up 0.4% and final demand goods up 0.8%. Energy prices rose 4.1% in June while food prices increased 0.9%. Producer prices excluding food and energy rose 0.4%.

3 Reasons U.K. REITs May Withstand the Brexit Fallout
Jul. 13, 2016 - Cohen & Steers -  With negative sentiment swirling around the U.K., is it time to be a buyer of Britain? We believe many U.K. REITs are well positioned to weather economic uncertainty, aided by stronger balance sheets, greater focus on core assets and an emphasis on cash flow growth over development.

A Snapshot Of S&P 500 Index Dividend Increases In The Current Bull Market

Jul. 12, 2016 - First Trust -  View from the Observation Deck
1.. Today’s blog post is just one perspective of the recovery that Corporate America has staged since the end of the financial crisis in 2009, as measured by dividend increases of S&P 500 Index component companies.The current bull market in stocks commenced on 3/9/09.
2. Stock dividend distributions are one measure of a company’s financial well-being.Dividend increases are an important barometer because companies are not likely to raise their dividend payouts unless they can sustain it for an extended period of time, in our opinion.

Ignore the Central Banks
Jul. 11, 2016 - First Trust -  How many times does Chicken Little have to wrongly squawk before investors get it? Yes, payrolls increased just 38,000 in May, and yes, British voters opted for political independence from the European Union. And, yes, Stock markets swooned. But, they will likely hit new highs this week. Just another head fake, brought to you by the bad news bears.

Bill Gross: the Market’s Game of ‘Monopoly’ Is Coming to an End
Jul. 06, 2016 - WallStreetJournal -  The game is ending, and some people haven’t even figured out the rules yet.

Watch Earnings, Not Fearful Forecasts
Jul. 05, 2016 - First Trust -  We wish we had a dime for every recession forecast we’ve heard in the past seven years. Like someone with hypochondria, fearful forecasters feel economic doom and gloom is right around the corner after every dip in economic data or shift in economic policy.

Commodity Prices Up Sharply In Q2’16
Jul. 05, 2016 - First Trust -  View from the Observation Deck
1. Commodity prices posted their third best quarterly showing in the past 40 quarters (10 Years) in Q2’16, as measured by the Bloomberg Commodity Total Return Index. It was the best quarter for gains since Q4’10.
2. The Bloomberg Commodity Total Return Index was up in 21 of the past 40 quarters, or 52.5% of the time.The index, however, has posted four quarters of double-digit losses since Q2’14 (see chart).

June ISM Manufacturing Index
Jul. 01, 2016 - First Trust -  The ISM manufacturing index rose to 53.2 in June, easily beating the consensus expected level of 51.3. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

Equity REITs Have Shined Relative To Financials Over The Past 15 Years

Jun. 28, 2016 - First Trust -  View from the Observation Deck
1. On September 16, S&P Dow Jones Indices will be adding an 11th sector to the S&P 500 Index:Real Estate Investment Trusts (REITs), according to its own release.
2. Currently,REITs are classified as an industry group within the financialsector.Today’s chartshowsthe relative performance of equity REITs and Financials for standard time periods.

Uncertainty Not All Bad 
Jun. 27, 2016 - First Trust -  If you listen to elite policymakers around the globe, they all seem to agree on one thing: the need to avoid “uncertainty.” In their thinking the battle against uncertainty is a never-ending struggle, and if only the world were more certain the economy would be doing much better

How Some Major Bond Indices Have Fared Over The Past Five Years

Jun. 21, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post is a simple exercise we can do to quickly assess how the various major bond categories are performing.
2. We are using a five-year time frame because it has historically been characterized as a long-term holding period for securities.

Policy Stagnation
Jun. 20, 2016 - First Trust -  Back in the 1970s, President Jimmy Carter told us that we were just going to have to learn to live with less. The mood among establishment economists in the late 1970s was gloomy. The world was running out of oil; inflation was an odd phenomenon that was beyond our control. Sure, we could get lower unemployment, but only by letting inflation get even higher. Somehow, the US had lost its post-war economic mojo and just wasn’t going to get it back.

Municipal Quarterly Update – 1st Quarter 2016
Jun. 15, 2016 - First Trust -  1st Quarter 2016 Municipal Market Performance and Highlights
• While municipal bonds posted positive total returns during the first quarter of 2016,munislagged other asset classes including U.S. Treasuries. The Barclays Municipal Bond Index returned 1.67% for the three months ended March 31, 2016,while the Barclays Municipal 10 Year Revenue Index had a total return of 1.98%. In comparison, the Barclays U.S. Treasury Index returned 3.20% for the three months ended March 31, 2016.(Source: Barclays, SIFMA.org)

Fed Projects Very Slow Path for Rate Hikes 
Jun. 15, 2016 - First Trust -  At her post-meeting press conference Fed Chief Janet Yellen emphasized that it’s important not to “overreact” to one or two reports on the economy. But that’s exactly what the Fed did by refraining from raising rates at today’s meeting and notably altering its projections for future rate hikes.

The Outlook For 2016 Earnings Indicates Recovery Mode For Q2, Q3 & Q4

Jun. 14, 2016 - First Trust -  View from the Observation Deck
1. Today's chart is intended to give investors some visual perspective on where equity analysts think earnings are headed following a disappointing showing by the S&P 500 Index in Q1’16.
2. As indicated in the chart,the consensus estimates from equity analysts tracked by Bloomberg reflect an upward trajectory for earnings over the next three quarters. Earnings estimates are subject to change.

Why Does Japan Still Charge Taxes? 
Jun. 13, 2016 - First Trust -  Investors often wonder why governments don’t operate more like households, balancing their budgets year by year. Seems like good advice, right? If households can’t live beyond their means forever, governments shouldn’t either. But, what if your household could borrow for free? In other words, what if you were Japan!

A Snapshot Of European Equities
Jun. 07, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we did on 2/2/16 (click here to view).
2. The 2016 earnings growth rate estimates (see chart) are in some cases much higher than they were back in February.This was due to 2015’s earnings being revised lower.

Brexit Is Freedom
Jun. 06, 2016 - First Trust -  Earlier this year, NHL hockey fans were asked to vote for the captains of the four teams to face off in this year’s new AllStar tourney. Three of the picks were players you’d expect: Jaromir Jagr from the Florida Panthers, Alex Ovechkin from the Washington Capitals, and Patrick Kane from the Chicago Blackhawks: True Gods of the Rink, who have scored hundreds of points.

A Snapshot Of Bond Valuations
Jun. 02, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do on an ongoing basis so that investors can monitor fluctuations in bond prices relative to changes in interest rates and the global economy.
2. From 1/15/16 (1/18 was a holiday) through 5/31/16 (chart dates),the yield on the benchmark 10-Year Treasury Note (T-Note) declined 19 basis points, from 2.04% to 1.85%, according to Bloomberg. It was as low as 1.66% (2/11/16) in the period.

Greece is Already Bankrupt 
May. 31, 2016 - First Trust -  One of the recurring pessimistic themes of the past several years is that Greece is about to default on its debt. Now that Greece is negotiating again, this fear is back. Some wonder if a major European financial firm, like Deutsche Bank, will also fail.

April Durable Goods
May. 26, 2016 - First Trust -  New orders for durable goods rose 3.4% in April (+3.9% including revisions to prior months). The consensus expected a gain of 0.5%. Orders excluding transportation rose 0.4% in April, slightly above the consensus expected increase of 0.3%. Orders are up 1.9% from a year ago while orders excluding transportation are down 1.4%.

U.S. Equities Still The Dominant Market On The Globe
May. 24, 2016 - First Trust -  View from the Observation Deck
1. Today’s post is an update of one we did on 8/25/15 showing the changes in total world equity market capitalization (market cap) over a 10-year period (8/21/05 thru 8/24/15).We have extended the chart through 5/23/16.
2. This snapshot is a reminder to all investors that, while stocks have the potential to build wealth over time,stock markets do not go up in a straight line.

Fed Teeing Up Rate Hike
May. 23, 2016 - First Trust -  Just a couple of weeks ago the odds of the Federal Reserve raising rates in June were slim to none. The federal funds futures market put the odds of a rate hike around 4%.

China’s economic stimulus: finally working, but for how long?
May. 19, 2016 - Aberdeen Asset Management -  We believe China’s substantial monetary and fiscal stimulus is finally translating into stronger economic activity. Whether this boost is sustained, or fizzles out under the weight of the large structural imbalances in the Chinese economy, may be one of the defining features of this year’s global economic and investment landscape. 

April Housing Starts
May. 17, 2016 - First Trust -  Housing starts increased 6.6% in April to a 1.172 million annual rate, easily beating the consensus expected 1.125 million. Starts are down 1.7% versus a year ago.

S&P 500 Index Stock Prices Relative To Their 52-Week Highs

May. 17, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we did on 2/16/16 (click here to view).Today’s chart reflects improvement across the board.
2. The S&P 500 Index, which is capitalization-weighted, posted a total return of -0.51% for the 12-month period ended 5/16/16, according to Bloomberg.On a price-only basis, which excludes dividends,the index was down 2.64%.

April PPI
May. 13, 2016 - First Trust -  The Producer Price Index (PPI) increased 0.2% in April, coming in below the consensus expected rise of 0.3%. Producer prices are up 0.1% versus a year ago.

Interest Rate Levels Do Not Portend A Bear Market In Stocks

May. 12, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post is intended to provide a little historical perspective as to where two key benchmark interest rates stood prior to U.S. equities, as measured by the S&P 500 Index,succumbing to bear markets.
2. A bear market in stocks is defined as a decline of 20% or more in the price level of a benchmark index,such as the S&P 500 Index

April Employment Report
May. 06, 2016 - First Trust -  Nonfarm payrolls increased 160,000 in April, missing the consensus expected 200,000. Including revisions to February/March, payrolls rose 141,000.

2016 & 2017 Earnings Snapshot
May. 03, 2016 - First Trust -  View from the Observation Deck
1. Today's blog features corporate earnings projections for 2016 and 2017. We provide updates on an ongoing basis.
2. The plunge in the price of crude oil since mid-2014 has resulted in a sharp decline in the projected earnings of energy-related companies in 2016 and a subsequent triple-digit projected surge in 2017.

Apple vs The Fed

May. 02, 2016 - First Trust -  Honest question: How much time does the Apple Inc. Board of Directors spend debating whether the Federal Reserve will hike rates once or twice more in 2016? We don’t really know the answer, but we would guess the best answer is zero.

First Quarter GDP (Advance)

Apr. 28, 2016 - First Trust -   The first estimate for Q1 real GDP growth is 0.5% at an annual rate, slightly below the 0.7% the consensus expected. Real GDP is up 1.9% from a year ago.  Consumer spending and home building provided the largest positive contributions to Q1 real GDP growth. Business investment, inventories, trade, and commercial construction subtracted from growth.

A Snapshot Of Major Emerging Market Stock Indices
Apr. 28, 2016 - First Trust -  View from the Observation Deck
1. Emerging markets continue to be a mixed bag. As indicated in the chart, economies steeped in natural resources,such as Russia and Brazil, have performed quite well due in part to the rebound in the price of crude oil.
2. Year-to-date through the close on 4/27,the price of a barrel of crude rose by 22.38% to $45.33, according to Bloomberg.The price of crude oil was up 72.95% from this year’s closing low of $26.21 per barrel on 2/11.

OPEC and the Ash Heap of History
Apr. 25, 2016 - First Trust -  Almost thirty-five years ago, President Reagan went to the British House of Commons and said “freedom and democracy will leave Marxism and Leninism on the ash heap of history.” Reagan chose his words carefully, using a phrase – the ash heap of history – very similar to the one used by the Russian Communist revolutionary Leon Trotsky against his political enemies. Within a decade, the Berlin Wall was no more and neither was the Soviet Union.

A Snapshot of Growth vs.Value Investing
Apr. 19, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 2/11/16 (click here to view).
2. Growth tends to outpace value investing when the earnings growth rates of said companies accelerate faster than the broader market,such as right after the economy exits a recession.Growth has slowed of late.

The Q1 Curse Strikes Again
Apr. 18, 2016 - First Trust -  Remember the recession of 2011, or 2014, or 2015?
Each of those years started out with either a contraction or anemic first quarter economic growth. But despite these slowdowns, the US economy didn’t fall into recession. Instead, it was just more Plow Horse growth.

March CPI
Apr. 14, 2016 - First Trust -   The Consumer Price Index (CPI) increased 0.1% in March, coming in below the consensus expected rise of 0.2%. The CPI is up 0.9% from a year ago.  “Cash” inflation (which excludes the government’s estimate of what homeowners would charge themselves for rent) rose 0.1% in March and is up 0.4% in the past year.

It’s Time To Get Real
Apr. 14, 2016 - First Trust -  View from the Observation Deck
1. As of the close of 4/13/16,the yield on the 10-Yr.T-Note was 1.77%.That is just one basis point above its 1.76% close on 12/31/12 (we will reference this again), according to Bloomberg.
2. This morning’s release of the Consumer Price Index (CPI) headline rate showed that U.S. inflation stood at 0.9% in March, according to the Bureau of Labor Statistics.

The Bears Get Excited Again 
Apr. 11, 2016 - First Trust -  Since March 9, 2009, stock market bears have used every negative piece of economic data to argue their case. Last week they were hyperventilating over first quarter real GDP growth estimates. After recent inventory data, the Atlanta Fed GDPNow Model said annualized growth will be just 0.1% in Q1. It could be zero, or even negative

Not A Bad Bull Market After All
Apr. 07, 2016 - First Trust -  View from the Observation Deck
1. Today’s chart features performance figures for some major domestic and foreign stock and bond indices in the current bull market, which for equities commenced after 3/9/09.
2. Nearly all of the average annualized total returns depicted in the chart compare favorably to a couple of long-term historical averages

Don’t Short the Participation Rate!

Apr. 04, 2016 - First Trust -  Last Friday was an interesting day. For years now, the US has consistently added jobs and the unemployment rate has steadily fallen. But, the Pouting Pundits of Pessimism keep arguing that a falling unemployment rate is only because of weak growth in the labor force.

Companies Are Repurchasing Stock At A Better Than Average Clip

Mar. 29, 2016 - First Trust -  View from the Observation Deck
1. Stock buybacks are one way that a company can return capital to shareholders, particularly those companies that reduce outstanding share count.
2. Companies with excess cash can also spend it on such things as capital expenditures,stock dividends, mergers and acquisitions (M&A) and R&D.

US Needs Sensible Debt Financing
Mar. 28, 2016 - First Trust -  Instead of imposing strict fiduciary rules on Wall Street, banks, investment houses, and financial advisors, the government should apply similar rules to the managers of the federal debt. This is particularly true because unlike the private sector – which faces tough market competition every day – the debt managers at the Treasury Department have a monopoly.

Commodity Prices Get Some Relief From Decline In The U.S.Dollar

Mar. 22, 2016 - First Trust -  View from the Observation Deck
1. Commodity prices declined in each of the past five calendar years (see chart), as measured by the Thomson Reuters/CoreCommodity CRB Commodity Index.
2. The U.S.Dollar Index (DXY) posted gains in four of those five years.The only exception was a slight decline of -0.51% in 2012

Money Misperceptions 
Mar. 21, 2016 - First Trust -  1 – The Panic of 2008 was not caused by tight monetary policy. 2 – Zero percent interest rate policy (ZIRP) and Quantitative Easing (QE) did not save the US or global economies. 3 – Monetary policy in the US is getting looser as the Fed hikes rates, and, 4 – negative interest rates in Japan and Europe are not working.

Real Estate in a Class of Its Own

Mar. 15, 2016 - Cohen & Steers -  How the New Real Estate GICS Sector Classification Could Bring a $100 Billion Influx of Demand and Lower Volatility

Some Insight Into The S&P 500 Index Dividend Payout
Mar. 15, 2016 - First Trust -  View from the Observation Deck
1. Today’s chart provides a comparison of the contributions to the S&P 500 Index’s dividend payout, by sector, using current levels (3/11/16) versus the end of 2008.
2. We chose 12/31/08 levels in order to capture the fallout from the financial crisis.The U.S. was in a recession at that time.The recession lasted from December 2007 through June 2009, according to the National Bureau of Economic Research.

Don’t Fear Consumer Debt 
Mar. 14, 2016 - First Trust -  For decades, the issue of debt has often dominated discussions of economics. It’s especially true these days with a $19 trillion federal debt and the fact that home loans were at the heart of the Panic of 2008. Lately, some analysts have fretted about student loans and many think economic growth in this recovery has been driven by borrowing.

Retail Investors Partial To Foreign Equities Over The Past Two Years

Mar. 08, 2016 - First Trust -  View from the Observation Deck
1. From 1/14 through 1/16 (most recent monthly data), investors liquidated a net $46.68 billion from open-end mutual funds (does not include money market funds), according to the Investment Company Institute (ICI).
2. The major fund categories in the chart indicate that investors funneled the most capital into foreign equities, which is interesting considering all of the attention focused on the slowdown in global growth over the past two years.

Beware Trade-Recession Scare Story

Mar. 07, 2016 - First Trust -  Friday’s robust report on job growth ought to put the nail in the coffin on recent fears about a recession. Payrolls rose 242,000 and civilian employment, an alternative measure of jobs that includes small business start-ups, increased 530,000. In the past year, these two measures are both up approximately 2.7 million. Obviously, we’re not in a recession.

February Employment Report
Mar. 04, 2016 - First Trust -  Nonfarm payrolls increased 242,000 in February versus a consensus expected 195,000. Including revisions to December/January, payrolls rose 272,000.

A Snapshot Of The Top Performing S&P 500 Sector Indices Over Time

Mar. 03, 2016 - First Trust -  View from the Observation Deck
1. The first thing that pops out to us looking at the chart is the sheer number of defensive sectors that posted the highest total returns in the 16 respective periods.
2. Of the 16 periods featured in the chart, 13 of the sector indices that performed best, or 81.25%, are considered defensive in nature.They are Telecommunication Services, Consumer Staples, Health Care and Utilities.

Currency Mayhem 
Feb. 29, 2016 - First Trust -  With both the European Central Bank (ECB) and the Bank of Japan moving to a Negative Interest Rate Policy (NIRP), conventional wisdom says the US dollar will continue to strengthen. After all, the Fed is tightening while everyone else seems to be working overtime to ease policy.

Block Trading In The S&P 500 Index Has Turned For The Better

Feb. 23, 2016 - First Trust -  1. The S&P 500 Index set its all-time high on 5/21/15 at 2,130.82. From 5/21/15 through 2/22/16,the index declined by 8.70% to 1,945.50.
2. As indicated in the two charts, both block (10,000 shares or more) and non-block (< 10,000 shares) trading patterns in the S&P 500 Index have mostly signaled a selling bias since 5/21/15.

January CPI
Feb. 19, 2016 - First Trust -  The Consumer Price Index (CPI) was unchanged in January, coming in above the consensus expected decline of 0.1%. The CPI is up 1.4% from a year ago.

Preferreds May Present Buying Opportunity Amid Bank Profit Concerns

Feb. 18, 2016 - Cohen & Steers -  Growing worries over bank profitability have pressured bank stocks and credit, including preferred securities. We discuss why the pillars of the preferreds story remain intact—and why we believe market turbulence may present a compelling entry point.

No Sign of Recession in the Data

Feb. 16, 2016 - First Trust -  So far this year, the S&P 500 is down around 9% and has been down as much as 10.5%, a garden variety correction. But some pessimistic pundits, analysts, and investors are treating the correction as a harbinger of the recession they’ve predicted multiple times before, ever since the economy started to recover in mid-2009

The Average Stock In The S&P 500 Index May Be Down More Than You Think

Feb. 16, 2016 - First Trust -  View from the Observation Deck 1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 1/7/16 (click here to view).

January Retail Sales
Feb. 12, 2016 - First Trust -   Retail sales increased 0.2% in January, beating the consensus expected 0.1% gain. Including revisions to prior months, sales rose 0.4%. Retail sales are up 3.4% versus a year ago.
 Sales excluding autos increased 0.1% in January (+0.2% including revisions to prior months), beating consensus expectations of no change. These sales are up 2.5% in the past year. Excluding both autos and gas, sales are up 3.8% versus a year ago.

China, US Dollar and Oil Create Volatile Brew for 2016 Markets

Feb. 10, 2016 - State Street Global Advisors -  Concerns about growth in China, the impact of a strong dollar and ongoing pressure on the prices of oil and other commodities continued to weigh heavily on global markets as we enter 2016. Furthermore, all eyes continue to be on the Fed as market participants look for signs of the next rate move – whether, when, and how many.

Sector Performance Via Market Capitalization
Feb. 09, 2016 - First Trust -  View from the Observation Deck
1. From 2/5/15 through 2/5/16, large-capitalization (cap) stocks outperformed both mid- and small-cap stocks, as measured by the S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index (see chart).

January Employment Report
Feb. 05, 2016 - First Trust -   Nonfarm payrolls increased 151,000 in January versus a consensus expected 190,000.
 Private sector payrolls increased 158,000 in January. The largest gains in December were for retail (+58,000), restaurants/bars (+47,000), and manufacturing (+29,000). Government payrolls fell 7,000.

A Snapshot Of European Equities
Feb. 02, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we did on 11/5/15 (click here to view). Investors committed a lot of capital to European equities last year.

Municipal Quarterly Update – 4th Quarter 2015
Feb. 02, 2016 - First Trust -  The Barclays Municipal Bond Index returned 1.51% for the three months ended December 31, 2015, bringing the calendar year 2015 total return for the
index to 3.30% (6.60% on a taxable-equivalent basis) (see footnote 1*). Tax-exempt municipal bonds had the highest risk-adjusted returns of any asset class.
Municipal bond yields diverged from U.S. Treasuries. Even in the face of the current global economic malaise of slow growth, falling commodity
prices, and volatile equity markets,the Federal Reserve (“Fed”) finally raised its benchmark rate during the December meeting,the first rate hike since
2006. While the 10- and 30-year U.S.Treasury rates rose 21 basis points (bps) and 15 bps, respectively, to 2.27% and 3.02% from September 30, 2015
to December 31, 2015, 10- and 30-year AAA MMD yields decreased 11 bps and 22 bps, respectively,to 1.92% and 2.82% for the same period.

Fed Not Going Away 
Feb. 01, 2016 - First Trust -  Close your eyes (well, not literally). Imagine a huge manufacturing economy, in Asia, growing very rapidly. It became the second largest economy in the world, from ruin, in just a few short decades and produced 14% of global output. Now imagine it collapses.

As markets swing, momentum can be deceiving
Feb. 01, 2016 - BlackRock -  Weekly commentary overview
Stocks experienced several violent reversals last week before finishing strong. Stocks continue to find support in an old friend: central bank accommodation, most recently from the Bank of Japan.

December Durable Goods 
Jan. 28, 2016 - First Trust -  New orders for durable goods declined 5.1% in December (-5.5% including revisions to prior months), well below the consensus expected decline of 0.7%. Orders excluding transportation fell 1.2% in December (-1.7% including revisions to prior months), below the consensus expected decline of 0.1%. Orders are down 0.6% from a year ago while orders excluding transportation are down 3.2%.

How Large Company Stocks Have Performed In The New Millennium

Jan. 26, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post is intended to show how large-cap equities have performed over specific periods since the start of 2000. Keep in mind that this period includes two severe bear markets, multiple wars, recessions and a global financial crisis.
2. The first column captures the entire period.The second column represents the current bull market, which began the day after the close of trading on 3/9/09.The third column shows performance since the S&P 500 Index registered its all-time high on 5/21/15.

Q4: Sluggish Growth, No Recession
Jan. 25, 2016 - First Trust -  The recent turmoil in the equity markets would make more sense if the US economy were headed for recession. But the economic data aren’t cooperating.

The Energy Sector’s Influence On S&P 500 Index Earnings Is Waning

Jan. 21, 2016 - First Trust -  View from the Observation Deck
1. Even the strongest of themesrun their course in due time.Like the exceptionalshowing posted by technology stocks during the Internet Revolution, energy stocks have succumbed to gravity after rewarding shareholders for over a decade.
2. The price of crude oil closed trading at $26.55 per barrel on 1/20/16,significantly below its 2014-high of $107.26 per barrel (6/20/14) and its all-time closing high of $145.29 per barrel (7/3/08), according to Bloomberg. It was even below its closing price of $31.20 per barrel on 12/31/02, just a little over two-and-a-half months before the U.S. invaded Iraq on March 19, 2003.

Snapshot Of Bond Valuations
Jan. 19, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do ongoing so that investors can monitor fluctuations in bond prices relative to changes in interest rates and the global economy.
2. Perhaps the most notable change since our last post on 11/12/15 was the increase in the federal funds rate on 12/16/15. It represented the first hike in interest rates by the Federal Reserve since June 2006.

Fear is Overbought
Jan. 19, 2016 - First Trust -  The stock market is not the economy, and the economy is not the stock market. Nonetheless, many are convinced that the market correction of the past few weeks is a certain sign of impending recession. Never mind that China just reported 6.9% real GDP growth. Never mind that a barrel of oil costs less than $30, which means consumers are saving hundreds of billions of dollars per year on top of what the drop in natural gas prices has saved them.

Unmasking improvements in corporate Latin America
Jan. 14, 2016 - Aberdeen Asset Management -  With high-profile corporate scandals garnering media attention in Latin America, investors may be hesitant to invest in the region. However, with the adoption of best practices over the past several years, we believe that these incidents are relatively isolated, and mask the improvements throughout the region over the past decade. 

S&P 500 Index Top-Line Growth Estimates
Jan. 12, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do ongoing so that investors can monitor changes in the expected revenue growth of the companies that comprise the S&P 500 Index. It includes estimates for 2017.
2. The S&P 500 closed the trading session on 1/11/16 at 1923.67. It stood 9.72% below its all-time high of 2130.82 (5/21/15), according to Bloomberg.

December Employment Report
Jan. 08, 2016 - First Trust -   Nonfarm payrolls increased 292,000 in December, easily beating the consensus expected 200,000. Including revisions to prior months, nonfarm payrolls increased 342,000.
 Private sector payrolls increased 275,000 in December, while September and October were revised up a combined 51,000. The largest gains in December were for administrative & support services (+58,000, including temps), health care & social assistance (+53,000), construction (+45,000), and restaurants/bars (+37,000). Manufacturing payrolls rose 8,000 while government rose 17,000.

2016 & 2017 Earnings Snapshot
Jan. 05, 2016 - First Trust -  View from the Observation Deck
1. Today's blog is an update of a previous post.We refresh the data every 3-4 months or so. Investors can compare today's snapshot to the last one we did on 9/1/15 (click here to view).
2. With respect to the 2016 earnings growth rate estimates,the 7 indices in the chart with positive double-digit projections are as follows (Highest-Lowest): MSCI Emerging Markets; S&P SmallCap 600; S&P 500 Consumer Discretionary; S&P 500 Materials; Nikkei 225; S&P 500 Information Technology; and S&P MidCap 400.

December ISM Manufacturing Index
Jan. 04, 2016 - First Trust -   The ISM manufacturing index declined to 48.2 in December, below the consensus expected level of 49.0. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)
 The major measures of activity were mixed in December. The employment index fell to 48.1 from 51.3, while the supplier deliveries index dropped to 50.3 from 50.6. The production index increased to 49.8 from 49.2, and the new orders index rose to 49.2 from 48.9.

November Durable Goods
Dec. 23, 2015 - First Trust -  New orders for durable goods were unchanged in November, coming in better than the consensus expected decline of 0.6%. Orders excluding transportation declined 0.1% in November, coming in almost exactly at the consensus expected no change. Orders are up 1.2% from a year ago while orders excluding transportation are down 1.9%.

S&P 500 Index Companies Rewarding Shareholders Despite Modest Recovery

Dec. 22, 2015 - First Trust -  View from the Observation Deck
1. The period depicted in the chart captures the majority of the U.S. economic recovery following the 2008-2009 financial crisis. The previous recession ended in June 2009.
2. From 9/09-9/15, real GDP growth in the U.S. averaged just 2.2%, according to data from the Bureau of Economic Analysis.

November Industrial Production / Capacity Utilization
Dec. 16, 2015 - First Trust -  Industrial production declined 0.6% in November, coming in well below the consensus expected decline of 0.2%. Including revisions to prior months, production declined 0.7% and is down 1.2% in the past year. Utility output declined 4.3% in November, while mining declined 1.1%.

Covered Calls May Be Conducive For This Market Climate
Dec. 15, 2015 - First Trust -  View from the Observation Deck
1. From 2000-2014,the CBOE S&P 500 BuyWrite Index (an index designed to measure a covered call strategy) outperformed the S&P 500 in six of the 15 calendar years. It is outperforming year-to-date thru 12/14/15 (see chart).
2. Over that 15 year period (2000-2014), the S&P 500 Index posted an average annual total return of 4.24%, compared to 4.07% for the CBOE S&P 500 BuyWrite Index, according to Bloomberg.

November Retail Sales
Dec. 11, 2015 - First Trust -  • Retail sales increased 0.2% in November. The consensus expected a gain of 0.3%. Retail sales are up 1.4% versus a year ago.
• Sales excluding autos increased 0.4% in November (+0.3% including revisions to prior months). The consensus expected a gain of 0.3%. These sales are up 0.7% in the past year. Excluding both autos and gas, sales are up 3.4% versus a year ago.

U.S.Dollar Strength & China Slowdown Help Push Commodity Prices Lower

Dec. 10, 2015 - First Trust -  View from the Observation Deck
1. While today’s blog post focuses on the negative influences that a strengthening U.S. dollar and the tempering of economic growth in China have had on commodity prices since mid-2014, we acknowledge that other influences,such as production levels, can also influence prices.
2. From 6/30/14 (rally in the U.S. dollar commenced) through 12/8/15,the U.S.Dollar Index (DXY) posted a gain of 23.43%, compared to a decline of 42.45% for the Thomson Reuters/CoreCommodity CRB Commodity Index (see chart), according to Bloomberg.

Gundlach says time is not right for Federal Reserve to raise rates
Dec. 09, 2015 - Investment News -  Jeffrey Gundlach, whose $51.3 billion DoubleLine Total Return Bond Fund has outperformed 99% of peers over the past five years, said the Federal Reserve may come to regret raising U.S. interest rates amid signs of a fragile economy and a crumbling credit market.

Respect the Auto Sales Surge
Dec. 07, 2015 - First Trust -  Cars and light trucks – SUVs, minivans, and pick-ups – have been a key bright spot in the economy the past few years, particularly with tepid growth in overall manufacturing caused by weak foreign economies and a stronger dollar. The pace seen in September, October, and November marks the first time in history that auto sales have exceeded an 18 million annual rate in three consecutive months.

November ISM Non-Manufacturing Index
Dec. 03, 2015 - First Trust -  The ISM non-manufacturing index declined to 55.9 in November from 59.1 in October, coming in below the consensus expected 58.0. (Levels above 50 signal expansion; levels below 50 signal contraction.)

Many Investors Could Be Underweight Mid- & Small-Cap Stocks

Dec. 01, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post focuses on equity asset allocation via market capitalization (market cap). In other words, how much capital do investors commit to U.S. large-, mid- and small-cap stocks.We use mutual fund and exchange-traded fund (ETF) asset levels as a barometer.
2. As indicated in the chart, as of 10/31/15, investors had committed a combined $4.7 trillion to the three large-cap categories, while committing just $831.0 billion and $605.0 billion, respectively,to the mid- and small-cap categories

Expect Strong Christmas Spending 
Nov. 30, 2015 - First Trust -  We are watching Christmas season sales data very carefully, but we also warn investors that the early data are not very useful. No matter what initial readings show, the underlying fundamentals look relatively strong.

A Snapshot of Growth vs.Value Investing
Nov. 24, 2015 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 9/10/15 (click here to view).
2. Growth tends to outpace value investing when the earnings growth rates of said companies accelerate faster than the broader market,such as right after the economy exits a recession.

Giving Thanks! 
Nov. 23, 2015 - First Trust -  If the US were in the middle of an economic boom, like in the mid-1980s or late-1990s, it would be very easy to be thankful in the week ahead. Instead, a cornucopia of complaints seems to accompany what has been a plodding economic recovery, what we call the Plow Horse Economy.

Stop “QE” Insanity

Nov. 18, 2015 - WBI Investments -  Stop the Insanity!
In response to the 2008 Financial Crisis, governments around the world led by the U.S. Federal Reserve developed a series of monetary policy tools to try to stabilize the financial system.

Micro-Caps Have Been The Sweet Spot In The Small-Cap Space

Nov. 17, 2015 - First Trust -  View from the Observation Deck
1. While there is no official set of parameters that define a micro-capitalization (micro-cap) stock,the U.S. Securities and Exchange Commission (SEC) defines them as companies with a market value of less than $250 million.
2. The SEC refers to companies with market capitalizations below $50 million as“nano-cap”stocks.Due to their low valuations levels, micro-cap companies tend to receive little attention from equity analysts, according to U.S.News & World Report.

The Worst Recovery Ever…For Part-Time Jobs

Nov. 17, 2015 - First Trust -  Mark Twain has been attributed with saying “If you don't read the newspaper, you're uninformed. If you read the newspaper, you're misinformed.” And given the media’s portrayal of the job market recovery over the past six-and-a-half years, we can see where he was coming from.

The Enormous Long-Term Cost of Holding Cash

Nov. 14, 2015 - BlackRock Blog -  By definition, trauma leaves a scar. Fifteen years after the bursting of the tech bubble and more than eight years after the advent of the last financial crisis, many investors are still being impacted by the memory of those traumatic events.

It’s the Domestic Spending; Stupid
Nov. 13, 2015 - First Trust -  Washington DC is out of control. In Orwellian Newspeak, we hear liberals say tax cuts, “cost too much,” but deficit spending is an “investment.” If GOP politicians reduce spending growth from already inflated forecasts, they call it a “‘conservative’ spending cut.” And, politicians from both sides of the aisle pat themselves on the back for “working so hard” to reduce the deficit when it’s really the US taxpayer that provided the muscle. Surging tax receipts have lowered deficits in recent years, not fiscal discipline.

S&P 500 Index Top-Line Growth Estimates
Nov. 10, 2015 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do ongoing so that investors can monitor changes in the expected revenue growth of the companies that comprise the S&P 500 Index.
2. The S&P 500 closed the trading session on 11/9/15 at 2078.58. It stood 2.45% below its all-time high of 2130.82 (5/21/15), according to Bloomberg.

Higher Rates, Higher Stocks 
Nov. 09, 2015 - First Trust -  What’s happened over the past few weeks is not supposed to happen, at least if you use traditional academic-style discount models to assess the stock market. Whether you prefer a dividend discount model or an earnings discount model, both say higher interest rates should reduce the value of equities.

A Snapshot Of Moving Averages
Nov. 03, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is a follow-up to one we did last week showing the performance of the S&P 500 Index after it had registered its first correction in four years (click here to view).
2. The basic premise of that post was to show investors that the S&P 500 Index had recovered at least some of the losses it had sustained during the correction.

Light This Candle
Nov. 02, 2015 - First Trust -  The US stock market reminds us of Alan Shepard in 1961. Exasperated by the long wait in his Mercury Spacecraft “Freedom 7” while NASA engineers fiddled, he said, “Why don’t you fix your little problem and light this candle?” They finally did and he became the first American to go into space

September Existing Home Sales 
Oct. 22, 2015 - First Trust -   Existing home sales increased 4.7% in September to a 5.55 million annual rate, beating the consensus expected 5.35 million. Sales are up 8.8% versus a year ago.
 Sales rose in all major regions. The increase was entirely due to single-family homes, while sales of condos/coops remained unchanged.

The Performance Of Health Care Stocks In The Recent Correction & Subsequent Rebound

Oct. 20, 2015 - First Trust -  View from the Observation Deck
1. Health Care is the only sector that has outperformed the S&P 500 Index in each of the past five years, including this one, according to S&P Capital IQ. It is a top theme in the market, in our opinion.
2. From 12/31/10-10/19/15, the S&P 500 indices in the chart posted the following cumulative total returns (Bloomberg): 301.7% (Biotech.); 252.3% (Managed Health Care); 143.5% (Health Care); 127.0% (Pharmaceuticals); and 90.6% (Health Care Equipment). The S&P 500 Index was up 79.01% over the same period.

GDP: Soft Headline, Solid Fundamentals

Oct. 19, 2015 - First Trust -  The most important part of the quarterly GDP reports is not the headline number. Instead, we like to focus on the underlying trend and what the details of the report mean for future growth.

Just When You Thought It Was Over…
Oct. 15, 2015 - First Trust -  View from the Observation Deck
1. Today's blog is the third version of a post we originally did on 6/12/12, which depicted the rolling 12-month total returns of an of index comprised of intermediate-maturity Treasuries

The Fed DID NOT Save the Economy
Oct. 12, 2015 - First Trust -  Last week the Wall Street Journal (WSJ) opinion page published a piece by former Federal Reserve Chairman Ben Bernanke. The title was “How the Fed Saved the Economy.”

The Bull Market Still Lives 
Oct. 05, 2015 - First Trust -  Stock market corrections (usually defined as 10% pullbacks) are hard to understand. Often they happen in the midst of long-term bull markets. But why? Is it like getting the flu? Is it just emotion? Or, are corrections a necessary cleansing out of excess optimism? Our answer: we don't really know.

The Outlook For Corporate Earnings Remains Positive
Oct. 01, 2015 - First Trust -  View from the Observation Deck
1. As of 9/30/15,the S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index stood 9.89%, 11.65% and 12.39%, respectively, below their all-time highs, according to Bloomberg.
2. Today's chart is intended to give investors some visual perspective on where equity analysts think earnings are headed following the recent correction in the S&P 500 Index, registered in August, and a tough September.

A Shutdown Would Be Positive
Sep. 28, 2015 - First Trust -  Sometimes, news really is important. The Pope’s visit to the U.S. was big, but the resignation of House Speaker John Boehner, effective October 30, was huge.

How to Deal With Continued Volatility
Sep. 28, 2015 - BlackRock Blog -  Investors should expect the current high volatility regime to persist. Russ explains how to contend with the rocky road ahead.

The Prospects For Owning Natural Gas Stocks Over A Particular 5-Month Stretch

Sep. 22, 2015 - First Trust -  View from the Observation Deck
1. The October through February time frame tends to capture the most critical months of the winter weather season in the U.S. with respect to both the anticipated and actual demand for natural gas, in our opinion.
2. In the past 10 October through February time periods,the price of natural gas increased in just 5 of the 10 periods (see chart). The ISE-Revere Natural Gas Index posted a positive total return in 6 of the 10 periods (see chart).

Is Another Bear Market Ahead?
Sep. 22, 2015 - BlackRock Blog -  Russ updates his outlook for U.S. stocks in 2015 and beyond.

The Uber-Dove vs Black Swans
Sep. 21, 2015 - First Trust -  You couldn’t have missed it. Only stages full of GOP presidential candidates or the Super Bowl have ever had more media attention. Yes, we are talking about the Federal Reserve’s thundering announcement on Thursday – of nothing. The Fed decided to keep interest rates at zero, for at least the next few months, after holding them near zero for over six years.

How U.S. stocks performed in the 14 years since 9/11
Sep. 15, 2015 - First Trust -  View from the Observation Deck
1. In response to the terrorist attacks on the morning of 9/11/01 (Tuesday), U.S.stock exchanges shutdown early that day and were closed for the remainder of the week.They reopened on 9/17/01 (Monday).
2. The cumulative total return posted by the S&P 500 Index for the 14-year period featured in the chart was 137%.

2 Sectors to Explore When Rates Rise
Sep. 10, 2015 - BlackRock Blog -  Though the recent market selloff and declining inflation expectations have lowered the probability of the Federal Reserve (Fed) raising rates right away, the exact timing of the hike isn't as important as the market implications of moderately higher interest rates, which are expected to eventually arrive.

OPEC’s Waning Influence
Sep. 10, 2015 - First Trust -  Since the 1970s nothing has struck fear into the heart of the average American driver like the name OPEC. With every rise in prices at the pump came theories that once again this shadowy cartel might be using its influence to reach deeper into the pockets of the US public. However, the domestic shale revolution seems to have changed all that. The US produced 8.7 million barrels of oil per day in 2014 and that number is expected to grow to 9.2 million for this year, according to the EIA. With this surge of domestically produced oil, OPEC continues to lose leverage as a trading partner. 

A Snapshot of Growth vs.Value Investing
Sep. 10, 2015 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 4/16/15 (click here to view).
2. Growth tends to outpace value investing when the earnings growth rates of said companies accelerate faster than the broader market,such as right after the economy exits a recession.

Chinese Auto Stimulus

Sep. 01, 2015 - First Trust -  A tax cut? In China? We couldn't believe our ears! In the wake of a myriad of other measures to shore up its slowing economy, China announced Tuesday that the auto industry would be the focus of its latest stimulus measures. Starting Oct 1st, and continuing through the end of 2016, China will cut the sales tax on cars with engines of 1.6 liters or less from 10% to 5%. 

2015 & 2016 Earnings Snapshot
Sep. 01, 2015 - First Trust -  View from the Observation Deck
1. Today's blog is an update of a previous post.We refresh the data every couple of months or so. Investors can compare today's snapshot to the one we did at the start of the year on 1/6/15 (click here to view).

Markets Volatile, Economy Fine

Aug. 31, 2015 - First Trust -  As you woke up this morning, US stock market futures were down again. They say it’s because the Chinese stock market fell, and in spite of this every summary of Fed intentions that we read suggests a rate hike this year (possibly in September) is still very much on the table

Preferred Securities
Aug. 31, 2015 - Cohen & Steers -  Investment Review
Fixed income markets were generally negative in August, although they fared better than equities in a risk-averse environment. Concerns about slowing growth in China sparked broader market volatility and sent commodities and emerging market stocks sharply lower.

Active Commodities
Aug. 31, 2015 - Cohen & Steers -  Investment Review
Commodities prices declined in August but outperformed broad equity markets. The S&P 500 Index fell sharply in reaction to disappointing economic data and currency devaluation from China.

The Big Picture With Respect To Global Equities
Aug. 25, 2015 - First Trust -  View from the Observation Deck
1. The current correction in stocks is very much a global event.Today’s chart reflects the changes in total world equity market capitalization (market cap) over the past 10 years (thru 8/24/15).

This Correction is Technical, Not Fundamental

Aug. 24, 2015 - First Trust -  Well…what’s up? The Chicago Cubbies, that’s what. They’ve won 19 out of their last 23 games and have the fourth best record in Major League Baseball. Maybe hell really is about to freeze over. Cub’s fans have been waiting for a very long time.

What The Recovery In REITs Looks Like
Aug. 18, 2015 - First Trust -  View from the Observation Deck
1. The FTSE NAREIT All Equity REITs (Real Estate Investment Trusts) Total Return Index closed 7.48% below its all-time high on
8/14/15, according to Bloomberg.
2. The index’s all-time high was set on 1/26/15, an indication that equity REITs had fully recovered from the previous bear market,
which ended in March 2009.

Financial System Healing 
Aug. 17, 2015 - First Trust -  Every month, the National Association of Realtors reports on existing home sales, which are closings on previouslyowned homes. These sales have been doing very well lately, up in four of the past five months and up almost 10% from a year ago. We expect further gains when the next report comes out Thursday morning

A Good Climate For Equity Covered Call Writing
Aug. 11, 2015 - First Trust -  View from the Observation Deck
1. From 1926-2014,the average annual total return on the S&P 500 Index was 10.12%, according to data from Ibbotson
Associates/Morningstar.
2. Since 1990,there were seven calendar years in which the S&P 500 Index posted a total return that was greater than zero, but less
than 11%.

IMF Can’t End Dollar’s Reign
Aug. 10, 2015 - First Trust -  Ever since Quantitative Easing began, a group of so-called Monetarist/Austrian thinkers have predicted “hyper-inflation” and the demise of the dollar as the world’s “reserve currency.”

The Emerging Markets Best Positioned to Withstand a Fed Hike
Aug. 07, 2015 - BlackRock Blog -  Russ explains why not all emerging markets are created equal when it comes to weathering capital outflows associated with higher U.S. interest rates.

Snapshot of U.S. Equity Styles/Market Caps
Aug. 04, 2015 - First Trust -  View from the Observation Deck
1. Today's blog post is intended to expose potential opportunities within the growth and value styles of investing, as well as by
market capitalization (market cap).
2. At any given time,the equities markets are likely being led up or down by one of the three market cap classifications (large-cap,
mid-cap or small-cap).Often this leadership role can be held for a multi-year period.

Even Garth Can’t Argue About Liftoff
Aug. 03, 2015 - First Trust -  Plow On, Garth! Time for Liftoff, Wayne! The first report on Q2 real GDP showed Plow Horse annualized growth of 2.3%, exactly the same as the average growth rate in the past year. Now that’s the definition of a Plow Horse report.

Five reasons to invest

Jul. 29, 2015 - Aberdeen Asset Management -  Asia’s rising economic importance is nearly impossible to ignore. The region’s vast potential is underpinned by a huge domestic market, young workforce and growing middle class population. Asia Pacific's middle classes will soon be larger than Europe and North America combined. At the corporate level, the wide choice of quality companies makes it a stock-picker's haven.

Rising Interest Rates And Stock Performance
Jul. 28, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post provides some historical perspective on how the S&P 500 Index has performed in calendar years when the yield on the benchmark 10-Year Treasury Note (T-Note) finished the year higher than where it began.
2. From 1975-2014,there were 18 such years (see chart).The S&P 500 Index posted a positive total return in 15 of those 18 years.

GDP Rebounds in Q2 
Jul. 27, 2015 - First Trust -  The US economy rebounded in the second quarter from the supposed decline in real GDP in Q1. We say “supposed decline” in Q1 because the government has had persistent problems seasonally adjusting GDP, tending to underestimate growth in the first quarter each year while overestimating growth in the middle two quarters

Is There Still Opportunity in Japanese Stocks?
Jul. 27, 2015 - BlackRock Blog -  After Japan's strong performance this year, some believe the market will soon run out of steam. Heidi Richardson disagrees.

The Biotechnology Sector Is Clearly Outperforming “Big Pharma”

Jul. 21, 2015 - First Trust -  View from the Observation Deck
1. From 1995-2014, biotechnology stocks outperformed their pharmaceutical counterparts in 13 of the 20 calendar years (see chart).
2. Over that 20-year period,the NYSE Arca Biotechnology Index posted an average annual return of 20.55%, compared to 12.00% for the S&P 500 Pharmaceuticals Index, according to Bloomberg.

Tax Cuts on the Horizon 
Jul. 20, 2015 - First Trust -  The one key reason for being bullish on equities the past several years has been valuation. Stocks are cheap based on profits and interest rates.

Growth-Oriented Stocks in the S&P 500 Outperforming Dividend-Payers (2012-Present)

Jul. 14, 2015 - First Trust -  1. One of the ways in which S&P Dow Jones Indices tracks the performance of the constituents in the S&P 500 is by separating those that pay a dividend from those that do not.

Politicians Should Stop Giving Investment Advice

Jul. 13, 2015 - First Trust -  For the past six years, the conventional wisdom has predicted the end of the world. On the left, they say “Tea Party austerity” is a catastrophe and an “income divide” spells doom. On the right, the election of President Obama made collapse inevitable. Anything and everything that could be spun negatively, has been.

2015 & 2016 Earnings Snapshot
Jul. 07, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is a midyear update. Investors can compare today’s snapshot to the one we did at the start of the year on 1/6/15 (click here to view).

End of an Era 
Jul. 06, 2015 - First Trust -  Over this past Fourth of July weekend, in Chicago, the Grateful Dead, or at least what’s left of it, played its last concert. It’s the end of an era, one that epitomized the liberal political earthquake of the 1960s and 70s – VW vans, flower power, tie-dyed tee shirts, drugs, protests, and social justice.

End of an Era
Jul. 06, 2015 - First Trust -  Over this past Fourth of July weekend, in Chicago, the Grateful Dead, or at least what’s left of it, played its last concert. It’s the end of an era, one that epitomized the liberal political earthquake of the 1960s and 70s – VW vans, flower power, tie-dyed tee shirts, drugs, protests, and social justice.

S&P 500 Companies Still Cash Rich Despite Returning More Capital To Shareholders

Jun. 30, 2015 - First Trust -  View from the Observation Deck
1. S&P 500 companies have been rewarding shareholders by increasing stock dividend payouts as well as repurchasing company stock in an effort to boost earnings-per-share growth via the reduction of share count.

Ignore Greece
Jun. 29, 2015 - First Trust -  Don’t let anyone tell you Greece is sticking up for its "dignity" by fighting “austerity.” The current Greek government is sticking up for socialism by fighting reality.

Mid-Year Outlook - Investment Directions

Jun. 29, 2015 - BlackRock -  The year so far has played out largely within our expectations. The divergence in economic growth and central bank policy had some predictable effects, with the most obvious being a stronger U.S. dollar. But there were some surprises. Interest rates unexpectedly plunged early in the year before abruptly rebounding in May. The U.S. economy got off to a rough start, just as Europe notched a surprisingly good first quarter. With six months down, where are the potential opportunities for the rest of 2015?

The Ability Of REITs To Raise Capital Is A Good Sign For Investors

Jun. 23, 2015 - First Trust -  View from the Observation Deck
1. From 12/31/13-3/31/15 (15 months),the FTSE NAREIT All Equity REITs Index posted a cumulative total return of 33.12%, according to Bloomberg.The index, however, was down 5.35% from 3/31/15 through 6/19/15.

Stocks Are Still Cheap
Jun. 22, 2015 - First Trust -  You know those TV shows – the ones about ice trucking, fishing in Alaska, or digging for gold. They’re made to bring out these interesting jobs, but also the danger. They leave you hanging, and break for commercial, just when the truck starts to slide on a bridge, or just when a huge wave is approaching.

Greece is Detroit, Not Lehman

Jun. 16, 2015 - First Trust -  Greece is the land of misinformation. We constantly hear that a Greek default will cause a market panic and be as damaging to financial markets as the default of Lehman Brothers back in 2008. While there is no possible way to know for sure, we believe that a Greek default will look and feel more like the Detroit default. In other words, it may make a great deal of noise, but the European economy will not collapse. In fact, we believe any sell-off in the equity markets is a buying opportunity.

The U.S.Dollar Has A Significant Influence On Commodity Prices

Jun. 16, 2015 - First Trust -  View from the Observation Deck 1. For the 12-month period ended 6/12/15,the U.S.Dollar Index (DXY) posted a 17.86% gain, compared to a 27.57% decline for the TR/CC CRB Commodity Index (see chart), according to Bloomberg.

These Three Equity Income Asset Classes Have Sold-Off Following Strong Gains

Jun. 11, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post seeks to briefly address some inquiries we have been getting lately regarding three sectors of the market often pursued by investors seeking relatively high levels of equity income.

Don’t Deny The Jobs Recovery
Jun. 08, 2015 - First Trust -  You would think that after 63 straight months of growth in private sector payrolls, the longest streak since the 1930s, everyone would agree that the job-market recovery is for real. But, that ain’t the case. A quick Google search still uncovers a whole bunch of pessimistic appraisals of jobs and the economy.

Treasury Yields Are Inching Higher…Again
Jun. 04, 2015 - First Trust -  Treasury Yields Are Inching Higher…Again

View from the Observation Deck
1. The yield on the benchmark 10-Year Treasury Note increased from 1.91% on 4/2/15 to 2.26% on 6/2/15 – an increase of 35 basis
points.While higher of late, it remains well below where it stood (3.03%) at the close of 2013.
2. Bond investors appear to be more-and-more sensitive to any economic data that could tip the balance in favor of a Federal
Reserve interest rate hike, in our opinion.Having said that, net inflows to bond funds remain strong.

Inflation: Dormant, Not Dead 
May. 26, 2015 - First Trust -  Last month we explained why the dreaded threat of hyperinflation hasn’t materialized, and likely wouldn’t materialize, in spite of the huge expansion of the Federal Reserve’s balance sheet the past several years, including QE1, 2, and 3.

Sizing Up The Bull
May. 26, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is intended to provide investors with a snapshot of how five major stock indices have fared in the current bull market.Three are U.S. based and two track foreign equities.

This 50/50 Sector Combo Has Captured Upside While Mitigating Much Of The Downside

May. 19, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is an equity investment approach targeting those investors who are concerned about the risks associated with owning common stocks over time.

Taxes Culprit Behind Slow Sales
May. 18, 2015 - First Trust -  Last week’s report on retail sales in April came in weaker than most economists expected, with no change from the pace of sales in March. As a result, the chorus calling for the Federal Reserve to postpone the start of rate hikes beyond June, already loud, grew even louder

The Big Chill: What’s Wrong with the U.S. Consumer?
May. 14, 2015 - BlackRock Blog -  Most market watchers expect the US economy to bounce back in the second quarter. However, the consumer isn't playing to script. Russ explains.

A Long-Term View on Latin America: Infrastructure Investment and Institutional Reform
May. 08, 2015 - BlackRock Blog -  Armando Senra, BlackRock Head of the Latin America & Iberia Region, discusses the fundamental changes taking place in Latin America and the opportunities for economic growth and investment in the region.

The S&P 500 Beat Rate Hasn’t Skipped A Beat
May. 07, 2015 - First Trust -  View from the Observation Deck
1. From Q1’12 through Q4’14,the average quarterly earnings beat rate for S&P 500 companies was 67.8%.The 67.9% beat rate so far in Q1’15 is on the mark.

Too Late to Invest in EM?
May. 05, 2015 - BlackRock Blog -  While emerging market stocks have had a good 2015 so far, this may still be an attractive time to invest for investors who have been sitting on the EM sidelines.

What Rising Yields Mean for U.S. Stocks
May. 05, 2015 - BlackRock Blog -  Last week’s bond selloff provided a foreshadowing of the U.S. stock segments likely to suffer as the eventual Federal Reserve (Fed) rate liftoff nears.

Puerto Rico bonds a good bet? Jeffrey Gundlach says yes
May. 05, 2015 - CNBC -  Jeffrey Gundlach, founder of investment firm DoubleLine Capital, has made a bold recommendation to investors: Buy Puerto Rican general obligation bonds.

A Snapshot of Q1 Flows and Trends
May. 05, 2015 - First Trust -  US-listed exchange-traded fund (ETF) net inflows totaled $59.1 billion during the first quarter of 2015, according to Morningstar.1 International Equity ETFs and Taxable Bond ETFs received the strongest net inflows, totaling $37.7 billion and $20.2 billion, respectively, while US Equity ETFs had the largest net outflows, totaling $12.6 billion. (See Table 1 below) Within the International Equity category, currencyhedged ETFs received $26.5 billion in net inflows, as US investors sought to avoid foreign currency risk. Within the Taxable Bond ETFs category, net inflows were strongest among High Yield Bond ETFs (+$4.8 billion), Corporate Bond ETFs (+$4.8 billion), Intermediate-Term Bond ETFs (+$3.5 billion), and Preferred Stock ETFs (+$1.9 billion). Interestingly, net outflows for the US Equity category may not be as bad as they seem, as outflows from a single ETF totaled nearly $31.3 billion. Apart from this ETF, the US Equity ETFs category received $18.8 billion in net inflows.

@WSJopinion vs. @BenBernanke
May. 04, 2015 - First Trust -  The Wall Street Journal’s editorial page and former Fed Chair Ben Bernanke are in a tiff. In a nutshell, the WSJ says growth is slow (which is true) and the Fed has overestimated economic growth (true, too); therefore, monetary policy is not working. Interestingly, after saying this, the WSJ says it does think quantitative easing (QE) has boosted the stock market

Would More Government Debt Help the U.S. Economy?
Apr. 30, 2015 - BlackRock Blog -  Russ explains why he's skeptical that massive, debt-fueled government stimulus is what's needed to accelerate the U.S. recovery.

The Price Of Natural Gas Rarely Stays Below $2.50 For Long

Apr. 30, 2015 - First Trust -  View from the Observation Deck 1. The price of natural gas closed yesterday’s trading session (4/29) at $2.61 per million British thermal units (BTUs), up from $2.49 on 4/27.

Where’s the Hyper-Inflation?
Apr. 27, 2015 - First Trust -  If we had a dollar for every time we’ve heard about the threat of hyperinflation, we’d probably have enough money to never worry about it.

A Potential Remedy For A Nagging Problem That Could Get Worse

Apr. 23, 2015 - First Trust -  View from the Observation Deck
1. A study released yesterday (4/22) from TransUnion revealed that out-of-pocket medical costs for U.S. patients rose by 11% in 2014, according to MarketWatch.com

Rear-View Mirror Shows Ugly Q1
Apr. 20, 2015 - First Trust -  We know Plow Horses don’t have rearview mirrors, but economists do. So, let’s not beat around the bush: the economy barely grew last quarter. Right now, we’re forecasting that real GDP expanded at a 0.7% annual rate in Q1. That’s a little below the consensus expected 1.0% growth rate, although above the 0.1% estimate by the Atlanta Fed’s GDPNow Model

Some Government Bonds Yield Less Than Half Of What They Did In 2010

Apr. 14, 2015 - First Trust -  View from the Observation Deck
1. With the exception of the three BRIC-member countries (Brazil, China and India) featured in the chart, yields on 10-Year government bonds issued by many of the world’s largest nations have declined substantially in the last five years.
2. One of the things that has contributed to the decline in government bond yields is the drop in inflation rates throughout much of the globe, in our opinion

June Rate Hike Still on Tap

Apr. 13, 2015 - First Trust -  According to a recent survey by the Wall Street Journal, most economists think a June rate hike is unlikely. In fact, four times as many think the Federal Reserve won’t start raising rates until September or later as currently think the Fed will start in June.

Will 2015 Be The Year The Fed Tightens?
Apr. 09, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 12/11/14 (click here to view).The yield on the benchmark 10-Year Treasury note fell 80 basis points from 3/31/14-3/31/15. It stood at 1.92% on 3/31/15.
2. While the drop in interest rates helped bolster the 1-year total returns for investment grade bonds,speculative-grade and foreign bond returns came in below their respective yields as of 3/31/14 (see gray shaded columns in chart).

Don’t “Dread” The Plow Horse
Apr. 06, 2015 - First Trust -  “Dread” is the perfect word for what many investors have felt in recent years. Some have experienced it daily since the bottom in March 2009. Some experience it whenever the stock market falls

U.S. Retail Investors Continue To Invest In Foreign Stocks
Mar. 31, 2015 - First Trust -  View from the Observation Deck
1. Over the past five calendar years (2010-2014), retail investors funneled a net $294.39 billion into open-end World Equity mutual funds, according to data from the Investment Company Institute (ICI).
2. As indicated in the chart, all five calendar years registered net inflows, despite a couple of negative total return years for the MSCI World (Ex-U.S.) Index and three down years for the MSCI Emerging Markets Index.

Rate Hikes Won’t Kill Housing
Mar. 30, 2015 - First Trust -  Home building plummeted in February, which made perfect sense; this February was the coldest for the most Americans since 1979. What no one expected was that new home sales would soar. Bad winter weather usually doesn’t hurt new home sales as much as it hurts housing starts, but it typically has an impact. This time, though, new homes sales spiked 7.8%, hitting the highest level in seven years.

A Deeper Look at Smart Beta in Fixed Income
Mar. 26, 2015 - BlackRock Blog -  While most tend to think of smart beta as a tool for stock portfolios, there are ways to apply it to bonds. Sara Shores shares a smart beta approach to balancing interest rate and credit risk.

S&P 500 Dividend-Paying Stocks Distributing Record Levels Of Cash To Investors

Mar. 24, 2015 - First Trust -  View from the Observation Deck 1. S&P 500 companies paid out a record-high $92.80 billion in stock dividends in Q4’14, up 9.2% from the $84.98 billion distributed in Q4’13.This is an indication of how healthy Corporate America was heading into 2015, in our opinion. 2. The $92.80 billion distributed in Q4’14 was 96.6% higher than the $47.21 billion in Q3’09 (see chart). Stock dividend distributions are now well above pre-financial crisis levels.

Don’t Fret Student Debt
Mar. 23, 2015 - First Trust -  For the past six years, investors have faced one fear after another. One of those fears has been the more than $1 trillion of student loan debt outstanding. This debt is up 160% since the start of 2006 (and growing) while the share of student loans with payments 90 days late, or longer, has risen from 6.4% to 11.3%.

Two Of The Sectors At The Epicenter Of The Financial Crisis Are Still Recovering

Mar. 17, 2015 - First Trust -  View from the Observation Deck
1. The U.S. bull market in stocks turned six years old on 3/9/15.Today’s post is intended to provide an update on two of the main sectors that were at the center of the financial crisis back in 2008-2009.
2. While the broader stock market indices have been setting multiple record highs over the past 12 months, financial and homebuilding-related stocks still stand well below their respective all-time highs.

Resist the Rate-Hike Huff
Mar. 16, 2015 - First Trust -  In June 2013, then-Federal Reserve Chair Ben Bernanke hinted the time to “moderate” quantitative easing was approaching. The press called this “tapering”. The Fed would end QE gradually, by slowly shrinking its asset purchases rather than going cold turkey.

Worries about the Looming Fed Hike Spill Over
Mar. 10, 2015 - BlackRock Blog -  Many investors are anxious about a possible bubble in stock markets, but those fears seem overblown to us. The greater near-term danger may be a more aggressive Federal Reserve.

Good News is Still Good News
Mar. 09, 2015 - First Trust -  The stock market sold off hard last Friday and the reason looks clear: job creation was stronger than the consensus expected in February, the fourth straight month of upside surprises in payrolls.

Don’t Audit It: Rein It In
Mar. 05, 2015 - First Trust -  Some in Congress want to “Audit the Fed.” But an audit, unless the word is used in a very broad sense, would be redundant and basically irrelevant. The Fed is already audited, by Deloitte & Touche LLP and it releases an annual report that includes the auditor’s opinion, each year.

Searching for Yield Down Under
Mar. 03, 2015 - BlackRock Blog -  The persistence of low yields has had investors searching for income high and low for a while now. Recently, investors are expanding their hunt to some less than obvious places.

A Snapshot Of European Equities in 2015
Mar. 03, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post provides some consensus 2015 earnings estimates and price-to-earnings (P/E) estimates from analysts tracked by Bloomberg.
2. Investors funneled a net $6.46 billion into European stock funds and ETFs for the 12-month period ended 1/31/15, according to Morningstar.Nearly $3.5 billion of it came in January 2015.

Fed Has Less Patience For ZIRP
Mar. 02, 2015 - First Trust -  Economic data will have something for everyone this week. The ISM reports (manufacturing and nonmanufacturing) will likely be held down by unusually harsh weather and the Port closures. But, autos sales should remain strong and January jobs data are set for a gain close to 250,000

Technology & Financial Stocks Contribute Most To S&P 500 Dividend Payout

Feb. 24, 2015 - First Trust -  View from the Observation Deck 1. Today’s chart provides a snapshot depicting the level of contribution each of the 10 major sectors currently make to the dividend payout of the S&P 500, relative to the close of 2005. 2. What investors may find interesting is that the dividend yield on the S&P 500 changed very little from 1.80% on 12/31/2005 to 1.99% to 2/17/15.There were a couple of major changes, however, on a sector level.

Strong Dollar: Good, Not Bad
Feb. 23, 2015 - First Trust -  In fifteen short days, the bull market will be six years old. And, we’ve never seen such a steep wall of worry. Nouriel Roubini called it a “dead cat bounce.” Many said the recession wouldn’t end until 2010, maybe 2011. Supply-siders said the “Fiscal Cliff” would do us in. Keynesians said “The Spending Sequester” would end the boom.

The Surge In The U.S.Dollar Is Noteworthy…But Not Rare
Feb. 19, 2015 - First Trust -  View from the Observation Deck 1. From 6/30/14 through 12/31/14,the U.S.Dollar Index rose by 13.15% to an index reading of 90.27, according to Bloomberg. 2. That surge essentially brought the index back in line with its 20-year average (year-end values).

QE and Currency Wars A Theory With No Evidence 

Feb. 17, 2015 - First Trust -  Some analysts think that central bank policy (specifically, quantitative easing) is the only thing that matters.

Treasury Yields Are Up Sharply In The First Half Of February

Feb. 17, 2015 - First Trust -  View from the Observation Deck
1. The yield on the benchmark 10-Year Treasury Note rose from 1.64% on 1/30/15 to 2.13% on 2/17/15 (midday) – an increase of 49 basis points. Its yield stood at 3.03% on 12/31/13.
2. A strong U.S. nonfarm payroll number in January (257,000/accompanied by substantial upward revisions to December’s and November’s totals), combined with decent corporate earnings (Bloomberg reported that 69.4% of the 395 S&P 500 companies that have reported Q4’14 earnings have topped their estimates) and some hope that Greece’s debt situation can be contained, helped push interest rates higher, in our opinion.

Technology Stocks Have Delivered Strong Returns In The Current Bull Market

Feb. 12, 2015 - First Trust -  View from the Observation Deck
1. From 3/9/09-2/10/15 (current bull), all four of the technology-related indices featured in the chart outperformed the S&P 500.
2. The average annualized total returns for the period were as follows: ISE Cloud Computing (+35.44%); Dow Jones Internet Composite (+31.36%); Philadelphia Semiconductor (+26.23%); S&P 500 Information Technology (+24.95%); and S&P 500 (+23.32%), according to Bloomberg.

Dual Mandate Achieved: Rate Hikes Coming

Feb. 09, 2015 - First Trust -  From 45,000 feet, it certainly looks like the Federal Reserve has achieved, or is very close to achieving, its Dual Mandate of price stability and full employment.

2015 & 2016 Earnings Snapshot
Feb. 03, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 1/6/15 (click here to view).There was a significant downward adjustment in the energy sector for 2015, as well as other notable changes.

Fooled By Extrapolation 
Feb. 02, 2015 - First Trust -  Pundits have a bottomless reservoir of pessimism and also a magnified ability to extrapolate the most recent trends. So, when Q1-2014 real GDP fell at an annual rate of 2.1%, fear turned rampant.

Xpert Spotlight: Currency Hedged ETFs: Offering a world of opportunity for U.S. investors in today’s market
Jan. 30, 2015 - Deutsche Asset & Wealth Managment -  Perhaps one of 2014’s most important lessons was the significant impact that currency fluctuations can have on both the risk and return of international equity investments. Although most international equity indices posted positive returns for the year, U.S. investors at large had a very different experience. Because many access foreign markets through unhedged investments in mutual funds, ETFs and ADRs, they found their return last year more than completely wiped out by currency losses.

What’s So Cool About ETFs?
Jan. 30, 2015 - BlackRock Blog -  Amy Belew explains, after a record-breaking year, why she believes ETFs will remain popular with investors in 2015.

Finding a Tax Cut at the Pump
Jan. 28, 2015 - BlackRock Blog -  BlackRock Chairman and CEO Larry Fink reacts to the drop in oil prices and explains the concept of “good deflation”.

GDP, Strong Again 
Jan. 26, 2015 - First Trust -  With all the focus on Europe in general and Greece in particular, it’s important to keep in mind that the US economy continues to move forward. After real GDP dropped in the first quarter of last year, some analysts were predicting another recession. By contrast, we said the drop was due to unusually harsh winter weather and the economy would rebound quickly.

Higher Inflation Not Only Welcome But Sought In Current Climate

Jan. 22, 2015 - First Trust -  View from the Observation Deck
1. Today,the European Central Bank (ECB) announced that it will soon implement its own version of quantitative easing (QE) in an effort to stimulate growth in the European economy.

Davos – And the Euro 
Jan. 20, 2015 - First Trust -  Perfect! Last week, the Swiss National Bank in reaction to market pressure, ended its crawling peg against the euro. The Swiss Franc surged 40% versus the euro, before settling around 20% higher, and roughly 17% against the already strong dollar. So, guess what? Attendees at The World Economic Forum – an annual gaggle of the global financial elite held in Davos, Switzerland, which starts today – just saw their trip get a lot more expensive.

Bullish, For the Right Reasons

Jan. 12, 2015 - First Trust -  Last week, we forecast the S&P 500 will hit 2,375 at the end of this year (link), so we’re obviously bullish on stocks. Our case is based on fundamentals, specifically, the long-term link between stocks, earnings, interest rates, and the economy as a whole. However, just because we’re bullish, doesn’t mean we agree with every bullish argument that’s out there.

Corporate Cash Holdings Remain High
Jan. 08, 2015 - First Trust -  View from the Observation Deck
1. The S&P 500 Old Industrials companies have more than doubled their cash and equivalent holdings from $606.6 billion in
March 2007 to $1.25 trillion in September 2014.The all-time high is $1.30 trillion (Q4’13).

2015: More Investment and Profits, Higher Rates, Dollar and Stocks

Jan. 05, 2015 - First Trust -  Contrary to popular opinion, business investment is a key factor behind the current recovery. Productive investments have boosted profits to record highs and, in turn, those profits have driven stock prices to record highs. They should continue to do so.

Chicken Little Economics 
Dec. 29, 2014 - First Trust -  It’s now been more than six years since the failure of Lehman Brothers – when the sky fell in and economic panic seized the land. Since then, Chicken Little Economics has inflicted fear and loathing on many investors.

Do You Hear What I Hear? Why Opportunity Rings in FM & EM
Dec. 24, 2014 - BlackRock Blog -  Heidi Richardson takes a closer look at recent volatility in emerging and frontier markets and explains why we’re still optimistic on these segments.

Greedy Innkeeper or Generous Capitalist?

Dec. 22, 2014 - First Trust -  The Bible story of the virgin birth is at the center of much of the holiday cheer at this time of year. The book of Luke tells us that Mary and Joseph traveled to Bethlehem because Caesar Augustus decreed a census should be taken. Mary gave birth after arriving in Bethlehem and placed baby Jesus in a manger because there was “no room for them in the inn.”

A Snapshot Of Major Emerging Market Stock Indices
Dec. 16, 2014 - First Trust -  View from the Observation Deck
1. Emerging markets have been a mixed bag in 2014. As indicated in the chart, economies steeped in natural resources (Russia and
Brazil) have performed quite poorly, particularly in the second half of the year.

Oil Price: Looks Reasonable 
Dec. 15, 2014 - First Trust -  A former economic colleague, and mentor, used to say: “In the Bible, it says an ounce of gold will buy a fine suit of clothing.” We have read the Bible, and we haven’t found this, although there could be some high-powered math, using talents, cubits, frankincense and myrrh that make it true.

Xpert Insights: Market outlook from Dodd Kittsley
Dec. 12, 2014 - Deutsche Asset & Wealth Managment -  The consequences of currency exposure
One of the biggest investment stories of 2014 has been the broad-based strength of the U.S. dollar. Over the past year, the U.S. dollar has risen significantly relative to the euro and yen due to divergence: divergence in economic growth rates, and resultant divergence in monetary policy. Investors should be aware of the magnitude of currency’s negative return on international equities over the past 12 months, as well as the longer three- and five-year periods.

November Retail Sales
Dec. 11, 2014 - First Trust -  Retail sales increased 0.7% in November, and including revisions to prior months were up 1.1%, coming in above the consensus expected gain of 0.4%. Sales are up 5.1% versus a year ago.

Fixed-Rate Bond Total Returns Are Trending Lower
Dec. 11, 2014 - First Trust -  View from the Observation Deck
1. The purpose of today’s blog post is simply to show investors how traditional fixed-rate bonds have performed over the past 1-, 3-
and 5-years.
2. We believe that the information in the chart can help investors establish realistic expectations with respect to fixed-rate bond
yields and performance potential moving forward.

The Myth of QE: Why Rates Are Headed Higher 

Dec. 08, 2014 - First Trust -  It’s a myth; an abused narrative. Those who disagree are called economic heretics. What are we talking about? The idea that Quantitative Easing (QE) drives interest rates down. This myth has a fervent following even though virtually no evidence supports it.

Snapshot of U.S. Equity Styles/Market Caps
Dec. 04, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is intended to expose potential opportunities within the growth and value styles of investing, as well as by
market capitalization (market cap). It updates the one we did on 8/7/14.
2. At any given time,the equities markets are likely being led up or down by one of the three market cap classifications.Often this
leadership role can be held for a multi-year period.

Oil – Just Another Price 
Dec. 01, 2014 - First Trust -  Don’t take this the wrong way: energy is important. Oil prices are important. But, we believeth those involved in economic punditry often bloweth them out of proportioneth.

S&P 500 Top-Line Growth Estimates (Updated)
Nov. 25, 2014 - First Trust -  View from the Observation Deck
1. When the stock market is setting new all-time highs, as it did yesterday (S&P 500 at 2069.41), investors are naturally going to
wonder what catalysts are potentially capable of pushing equity prices higher.
2. We believe that corporate earnings determine the direction of the stock market over time.

Let’s Finally Fix The CBO
Nov. 24, 2014 - First Trust -  If they came back today, the Founders of the United States wouldn’t recognize the government they created 225 years ago. They put safeguards in place – separation of powers, a bicameral legislature and reserved powers for the states – to prevent it from growing so large.

Deflation Fears Are A Distraction
Nov. 17, 2014 - First Trust -  No matter what happens these days, deep fears, driven by breathless newscasters, take things to the extreme. As a result, slight gains in inflation create forecasts of “hyper-inflation,” while slowing or low inflation leads to fears of “deflation.”

Xpert Spotlight: The UK: A Country not to be ignored

Nov. 16, 2014 - Deutsche Asset & Wealth Managment -  Europe’s largest country by market cap, the United Kingdom (UK), has continued its robust economic recovery even as uncertainty and opportunity in the Eurozone grab headlines. We believe the UK equity market offers attractive growth prospects and valuation relative to broader Europe and the U.S.

Bond Investors Still Facing The Prospects For Higher Interest Rates

Nov. 13, 2014 - First Trust -  View from the Observation Deck
1. From 5/27/14-11/12/14 (see chart dates),the yield on the benchmark 10-Year Treasury Note dipped from 2.52% to 2.37%.The yield
rose from 1.76% to 3.03% in 2013.

When Oil Prices Dip, Unexpected Winners Emerge
Nov. 10, 2014 - BlackRock Blog -  A stronger dollar is one of the reasons that oil prices are low, which serves many energy-importing economies in Asia while weighing on large oil-producing nations.

Change Is In The Air
Nov. 10, 2014 - First Trust -  While many flail away, trying to figure out the meaning of last week’s GOP wave election, it seems simple. The government has tried for more than five years to turn a Plow Horse economy into a Race Horse, and failed. Yes, the economy is growing and creating jobs, but living standards are growing slowly, or not at all, for many.

Fed Ends QE, Rate Hikes Now on Radar
Oct. 29, 2014 - First Trust -  We count five key takeaways from today’s policy statement from the Federal Reserve.

First, the Fed clearly raised its assessment of the economy. Most notably, it deleted its long-standing reference to “significant underutilization” in the labor market, changing it to say that the underutilization in the labor market is “gradually diminishing.”

Equity Investors Still Have The Fundamentals On Their Side

Oct. 28, 2014 - First Trust -  View from the Observation Deck
1. Equity investors endured another pullback in the stock market recently and it was accompanied by the usual dose of scary headlines and dire predictions.

U.S. Equities’ Share Of Total Global Market Capitalization Is Growing

Oct. 21, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 2/28/13.The chart provides investors with a snapshot of where capital is invested in equities around the globe.

Q3 Real GDP Still Looks Solid 
Oct. 20, 2014 - First Trust -  The current recovery started in mid-2009. Since then, real GDP has grown at a 2.2% annual rate (what we have called a Plow Horse Economy). Now, despite a negative first quarter (caused by weather and inventories), the economy is picking up some speed. It’s not a race horse, yet, but we expect 2.5% to 3% real GDP growth, on average, in the year ahead.

What the 10-Year Treasury’s Dip Means for Bond Portfolios
Oct. 16, 2014 - BlackRock Blog -  It was hard to miss the headlines earlier this week about the 10-year Treasury yield dipping below 2% Wednesday, hitting its lowest level in over a year. Rick Rieder explains what was behind the drop and what it means for bond portfolios going forward.

Senior Loan & High Yield Review – 3rd Quarter 2014

Oct. 13, 2014 - First Trust -  Market Review
For the first time in quite a while, a healthy dose of volatility was introduced into various markets of risk assets, including equities, senior loans and high-yield bonds. The volatility was driven largely by geopolitical headlines, including Russia/Ukraine, Gaza, Banco Espirito Santo bailout, Argentine default, etc. As a result, risk sentiment reversed course, and investors became more defensive in the quarter.

Timing The Market Doesn’t Work
Oct. 13, 2014 - First Trust -  The stock market doesn’t owe anything to anyone. If you missed the bottom in 2009, no one owes you another chance to get in when stocks are that cheap. We may never see such historic lows again.

5% Corrections Have Been Normal in this Bull Market
Oct. 10, 2014 - Calamos Investments -  Yesterday’s S&P 500 close of 1928 marked a 4% correction since the index peaked at 2011 on September 18, 2014.

A Unique Way to Invest in the Eurozone
Oct. 10, 2014 - Morningstar, Inc. -  Despite the risks they face, eurozone stocks may offer good diversification benefits to U.S. investors. However, currency risk is a very real threat. Low to negative interest rates across the eurozone, coupled with lackluster growth, could cause the euro to weaken relative to the U.S. dollar. WisdomTree Europe Hedged Equity ETF (HEDJ) offers investors a way to gain exposure to European stocks, while hedging this currency risk.

Trouble With the (Yield) Curve
Oct. 08, 2014 - Morningstar, Inc. -  For more than a year, the term "interest rate" has struck fear among bond investors. These fears intensified recently after Federal Reserve comments sparked speculation that the Fed will begin to increase the federal-funds rate early next year. After all, as interest rates rise, most bond prices decline.

A Snapshot of Growth vs.Value Investing
Oct. 07, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 12/19/13. In that post,the S&P 500 Pure Value Index outperformed its growth counterpart over the 1-, 3-, 5-, 10- and 15-year periods.

Inflation: What Inflation?
Oct. 06, 2014 - First Trust -  Who hasn’t heard forecasts of “Hyperinflation?” They’ve been all over the web and TV ever since the Federal Reserve started a huge expansion in its balance sheet, called Quantitative Easing, back in 2008. Among other things, these forecasts called for a dollar collapse, dire problems for the banking system and 1970s, or Weimar Republic-like, inflation.

Strong Material for a Volatile Sector
Oct. 03, 2014 - Morningstar, Inc. -  The materials sector represents a very thin sliver of the U.S. stock market--just over 3% of the S&P 500. In contrast, this sector soaks up a meatier 9% of the FTSE All World ex-US Index. That’s partially because many of the leaders in the metals and mining industry are based outside the United States. Investors looking for greater exposure to this sector without delving into foreign stocks might consider  Vanguard Materials ETF (VAW). But this is appropriate only for investors with a high risk-tolerance.

Why We Believe the Market Will Go to New Highs
Oct. 03, 2014 - Calamos Investments -  Today’s +248K jobs growth number and the August revision to +181K suggest recent worries that the U.S. economy was falling backward were misplaced. Over the past two weeks, the 10-year Treasury yield had fallen from 2.6% to 2.4% and the S&P 500 Index lost roughly 3% on fears about slowing global growth. But the combination of today’s strong U.S. employment data, indications of dissipating Hong Kong unrest, and no new Ebola cases put many of those no-growth fears to rest.

September ISM Manufacturing Index
Oct. 01, 2014 - First Trust -  The ISM manufacturing index declined to 56.6 in September from 59.0 in August, coming in below the consensus expected level of 58.5. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

Performance Evaluation Tool Kit
Oct. 01, 2014 - Morningstar, Inc. -  Most investors pay lip service to the idea that past performance is not indicative of future results. But it's tempting to use past performance to gauge manager skill and form expectations for the future. Unfortunately, raw performance doesn't say much about skill. An unskilled manager can outperform if he is lucky (or vice versa) or takes more risk to boost returns, which may not continue to pay off in the future. While raw performance does not tell the whole story, it is possible to uncover useful information from past performance with the appropriate tools.

2014 & 2015 Earnings Snapshot
Sep. 30, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 7/31/14 (click here to view).We intend to update earnings forecasts every couple of months.

Is Your EM Allocation Vulnerable to Index Vagaries?
Sep. 29, 2014 - First Trust -  Recently, global index provider FTSE announced it has reclassified Morocco from “emerging market” to “frontier market” and Argentina from “frontier market” to “unclassified.”* These changes will impact the composition of FTSE’s emerging market and frontier market indexes in mid-2015.

Investors With Exposure To Dividend-Paying Stocks Should Check This Out

Sep. 25, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 3/27/14.We intend to continue monitoring the direction of S&P 500 stock dividend distributions over the coming quarters.

Two Sides to Every Coin
Sep. 22, 2014 - First Trust -  Every coin, like every historical (or even not so historical) event, has two sides. You can choose which side to focus on – the positive or the negative. For example, some choose to view the Initial Public Offering (IPO) of Alibaba – a Chinese company described as eBay, Amazon and PayPal, combined, which serves more than a quarter billion customers – as a negative.

S&P 500 Top-Line Growth Estimates
Sep. 18, 2014 - First Trust -  View from the Observation Deck
1. When the stock market is setting new all-time highs, as it did on 9/5/14 (S&P 500 at 2007.71), investors are naturally going to
wonder what catalysts are potentially capable of pushing equity prices higher.

August Housing Starts
Sep. 18, 2014 - First Trust -  Housing starts declined 14.4% in August to a 0.956 million annual rate, coming in below the consensus expected 1.037 million annual rate. Starts are up 8.0% versus a year ago.

A Global Growth Slowdown?
Sep. 10, 2014 - BlackRock Blog -  As 2014 is shaping up to be another year of below-trend economic growth, many investors are wondering: Is economic growth once again slowing? Russ explains why his answer is no.

Does the August Jobs Report Mean U.S. Growth is Softening?
Sep. 09, 2014 - BlackRock Blog -  After last week’s weaker-than-expected August jobs report, many investors are wondering whether the U.S. economy is softening. Russ explains why he still expects a strong U.S. economy in 2014, noting three takeaways for investors.

Why Growth Stocks Now?
Sep. 09, 2014 - Calamos Investments -  After five years of a strong bull market, I believe there’s still room for stocks to advance. Growth stocks look especially attractive. At 1.23, the premium for growth over value remains lower than the historical average of 1.44. Even when we omit the tech bubble from the long-term average, the 1.23 premium for growth is lower than that 1.37 average.

September Swoon Ahead?
Sep. 02, 2014 - BlackRock Blog -  Despite stocks’ strong recent performance, investors may want to exercise a bit of caution going into the fall. Russ gives two reasons why.

How to Position Your Portfolio as Rates Start to Rise

Aug. 26, 2014 - BlackRock Blog -  With the Fed likely to begin raising rates in the first half of 2015, you may be wondering how to position your portfolio for the coming period of rate normalization. Russ shares his take.

The Consumer Price Index Increased 0.1% in July
Aug. 20, 2014 - First Trust -  The Consumer Price Index (CPI) increased 0.1% in July, matching consensus expectations. The CPI is up 2.0% versus a year ago.

“Cash” inflation (which excludes the government’s estimate of what homeowners would charge themselves for rent) was unchanged in July and is up 1.8% in the past year.

Europe…A Distinction With A Bit Of A Difference

Aug. 20, 2014 - First Trust -  View from the Observation Deck

European equities have experienced a pullback of late. The sell-off has been more pronounced in the European Union (EU or Eurozone), which is comprised of 18 countries. Broader Europe spans 28 countries.

“Bad News is Good” – A Hard Habit for Investors to Kick
Aug. 18, 2014 - BlackRock Blog -  Last week’s market performance proved that investors are having a hard time kicking a certain habit: treating “bad news as good.” Russ explains, suggesting that investors continue to focus on relative value.

What Middle East Tensions Mean for Oil Prices & Equity Portfolios
Aug. 15, 2014 - BlackRock Blog -  With turmoil in the Middle East dominating headlines, many investors are wondering what the recent and growing unrest in the region means for oil prices and for equity portfolios. Russ explains why oil prices are likely to remain elevated for the foreseeable future and why there’s a strong case for sticking with energy stocks even if oil prices don’t spike.

Tight Money, Still A Long Way Off
Aug. 12, 2014 - First Trust -  Going into last month’s Fed meeting, most analysts thought that if anyone dissented it would be Dallas Fed President Richard Fisher, the Federal Reserve’s most outspoken hawk. After all, Fisher had publicly called out the dovish Fed majority only days before the meeting (in an unusually aggressive Wall Street Journal Op-ed), pointing to the risk of “staying too loose, too long” given a “rapidly improving employment picture.”

Why Relative Value is Trumping Risk Aversion
Aug. 12, 2014 - BlackRock Blog -  Despite recent rising geopolitical tensions, stocks haven’t completely followed the typical “risk-off” script and a number of high-risk segments have performed relatively well. The simple reason: Investors have found a newfound interest in relative value. Russ explains and shares which market segments potentially offer this value.

What Investors Need to Know about Money Market Fund Reform
Aug. 11, 2014 - BlackRock Blog -  The SEC’s new rules on money market funds carry specific implications for some investors, and for the broader financial system as a whole. Matt Tucker explains.

The “Great Deleveraging” that Never Happened: Why the US Still Has a Debt Problem
Aug. 08, 2014 - BlackRock Blog -  For several years, media headlines have been filled with references to a mythical “deleveraging,” or a reduction in the level of U.S. debt. In reality, U.S. non-financial debt has increased, and this has real long-term consequences for the economy. Russ explains.

Events vs. Data
Aug. 04, 2014 - First Trust -  
If you’re an investor looking for a reason to be worried, there are plenty of headlines to light the fuse. Widening war in the Middle East, turmoil in eastern Ukraine (or is that western Russia?), a debt default by Argentina…problems with some Portuguese bank…Ebola…tapering. 


Where to Seek Equity Income
Jul. 31, 2014 - BlackRock Blog -  While Russ would be wary of seeking income at all costs and ignoring valuations, there’s one “bond-like” equity market segment that he believes is worth pursuing: International and global dividend stocks.

Investor Fatigue Setting In?
Jul. 29, 2014 - BlackRock Blog -  Despite a generally positive tone to earnings season, investors may be finally showing signs of fatigue, as seen by aggressive selling of risky assets, namely high yield and U.S. equities. Russ K explains the implications.

The Energy Trade Is Still Working For Investors

Jul. 24, 2014 - First Trust -  

View from the Observation Deck 

  1. Today's blog post is an update of one we did last December. The areas shaded in orange represent activity since 9/30/13. The price of a barrel of crude oil stood at $103.12, as of 7/23.


It Looks Like Gold & Silver Miners May Finally Be Joining The Bull
Jul. 22, 2014 - First Trust -  

View from the Observation Deck 

  1. Precious metals miners have not participated in the bull market that began on 3/9/09 (see chart). The Philadelphia Gold & Silver Index was actually down 4.78% (cumulative total return) from 3/9/09 through 7/18/14. 
  2. The miners, however, are off to a great start so far in 2014, with a total return of 22.04%, as of 7/18 (see chart). Gold bullion and silver were up 8.91% and 7.30%, respectively, over that period.


Plow Horse GDP Rebound in Q2
Jul. 21, 2014 - First Trust -  The 2.9% drop in real GDP during the first quarter was a fluke caused by a brutal winter and some one-off events. With much of the monthly data in for Q2, it looks like the US will see that drop almost completely reversed. 

Trying to “Fed Proof” Your Portfolio? Beware of the Risks
Jul. 10, 2014 - BlackRock -  We’ve come a long way since the Fed first hinted at tapering its easy money program a year ago. But, as Del Stafford explains, investors are still a bit unsure of how to position their fixed income portfolios. Here are a few risks to consider before reworking your strategy.

The Philippine Growth Story Looks Set to Continue
Jul. 09, 2014 - Calamos Investments -  As the Philippine equity market has appreciated more than 20% in the first half of 2014, our team has continually analyzed valuations and the degree to which we include Philippine equities within our portfolios. While the recent appreciation in equity prices makes valuations less compelling than last year, we are still finding attractive opportunities.

Time to Jump on the Silver Bandwagon? Not so Fast
Jul. 07, 2014 - BlackRock Blog -  After rising nearly 12% from its June lows, silver has been garnering some attention lately, leaving many investors wondering whether they should raise their allocations to the precious metal. Russ explains why now probably isn’t the best time to allocate more to either silver or gold.

US Stocks Week Ended July 3, 2014
Jul. 07, 2014 - First Trust -  In last week’s holiday-shortened trading session, the Dow Jones Industrial Average skyrocketed to close at an all-time high of 17,068.26. In addition, the S&P 500 also celebrated the holiday by completing Thursday at a record high of 1,985.44. Through last week, the S&P 500 trades at a multiple of 18 times trailing earnings with a dividend yield of 1.89%. Since the March 9th, 2009 low of 676.53, the S&P 500 has returned more than 200% including dividends reinvested.

Frontier Stocks: Three Reasons They’re Now a Strategic Asset Class
Jul. 03, 2014 - BlackRock Blog -  Frontier markets have had a strong showing so far this year. However, many investors may be approaching the frontier too narrowly, viewing it as a subset of the broader emerging market world. Russ explains three reasons why frontier stocks deserve their own strategic allocation.

Frontier markets have been gaining attention from market watchers and investors alike in recent months.

Personal Income Increased 0.4% in May

Jun. 26, 2014 - First Trust -  Implications: Don’t let anyone tell you that workers aren’t earning enough to keep increasing their spending. Private-sector wages & salaries increased 0.5% in May and are up 4.3% from a year ago. Total income – which also includes rents, small business income, dividends, interest, and government transfer payments – increased 0.4% in May and is up 3.5% from a year ago. Yes, government transfer payments – like Medicare, Medicaid, Social Security, disability, unemployment compensation – are still an unusually large share of income. 

Feeling Anxious about your Golden Years? “The Truth About Retirement Plans and IRAs” May Help
Jun. 24, 2014 - BlackRock Blog -  Like many Americans, Sue feels anxious about her retirement. Whenever she feels uncertain about a topic, her first instinct is to read about it, so she recently turned to Ric Edelman’s new book, “The Truth About Retirement Plans and IRAs.” Here’s her review of the book.

Existing Home Sales Increased 4.9% in May
Jun. 23, 2014 - First Trust -  Implications: Existing home sales increased 4.9% in May to a 4.89 million annual rate, well above consensus expectations. Sales are still hovering just below the average level of the past two years, but we think the gains of the past couple of months are the start of a new upward trend. The best news in today's report is that a lack of inventory, which has been a major culprit behind slow sales, seems to be changing.

Why Millennials Should Try Their Luck in Mexico

Jun. 18, 2014 - BlackRock Blog -  BlackRock Chairman and CEO Larry Fink explains why, if he were starting his career today, he would try his luck in Mexico.

A couple of weeks ago, I visited Mexico City—one of my favorite cities in the world. It’s a remarkable place, not least because of the food, the museums, and the culture, but also because of the incredible economic changes taking place in Mexico right now—both in the capital and all around the country.


This REIT ETF Remains Prettiest on the Block
Jun. 18, 2014 - Morningstar, Inc. -  REITs have traditionally been viewed as a liquid way to buy commercial real estate and improve a portfolio's diversification, but the sector's investor base has expanded in recent years to include income- and growth-seekers.  Vanguard REIT Index ETF(VNQ) is a well-constructed and cheap way to gain access to the REIT space. Vanguard often offers the same fund in mutual fund and ETF share classes, and this fund's mutual fund share class,  Vanguard REIT Index (VGSIX), receives a Morningstar Analyst Rating of Gold.

Supply, Demand and Interest Rates: Why One thing Leads to Another
Jun. 16, 2014 - BlackRock Blog -  As we approach the mid-point of the year many casual investors are surprised to look in on the market and find that bond yields remain stubbornly low. In fact, aswe have discussed in this space before, they have actually fallen during the year with the 10 year US Treasury declining from 3.03% at the end of December to 2.63% as of June 9th. And it turns out that this overall decline in yields has occurred across global bond markets. There are a lot of drivers of lower yields, including the continued accommodative policies of central banks and the continued slow growth in GDP and inflation in most developed economies.

A Snapshot From The Best Bull Market Ever
Jun. 12, 2014 - First Trust -  View from the Observation Deck  
  1. The current bull market in stocks has lasted 1,920 days. It now ranks as the fifth longest in U.S. history, according to data from Bespoke Investment Group.
  2. Since 1928, the longest U.S. bull market lasted 4,494 days (12/4/87-3/24/00). On a price-only basis, the S&P 500 posted a cumulative return of 582.15% over that period - the highest ever for a U.S. bull market, according to Bespoke.


The Great Rotation Out Of Bond Funds On Hold
Jun. 10, 2014 - First Trust -  View from the Observation Deck  
  1. From 2008 (financial crisis) through 2012, investors liquidated a net $537.33 billion from equity mutual funds, compared to net cash inflows totaling $1.05 trillion for bond mutual funds, according to the ICI.
  2. In 2013, the yield on the benchmark 10-Year Treasury note rose from a calendar year low of 1.63% on 5/2 to 3.03% on 12/31, or a gain of 140 basis points.


The ECB Wants a Free Toaster
Jun. 09, 2014 - First Trust -  Banks used to give toasters away to customers who opened checking or savings accounts, but the world is changing. Soon, customers may need to give toasters to the bank.

Last week, the European Central Bank (ECB) created a “negative” interest rate of 0.1% annually on bank reserves. In other words, banks must pay the ECB to hold excess reserves.

US Stocks Week Ended June 6, 2014
Jun. 09, 2014 - First Trust -  Equities gained to yet another record high as the S&P 500 reached new heights in four out of five trading days for the week. The continued momentum was led by ECB’s further stimulus measures to fight disinflation and weak projected growth. The ECB’s moves included a negative rate for deposits, the first ever negative rate for a major central bank, a decrease in the benchmark rate to 0.15 percent from 0.25 percent, a 400-billion-euro liquidity channel to spur bank lending and a pledge to do more if needed.

Housing Recovery Still on Track
Jun. 02, 2014 - First Trust -  Just a couple of months ago the pessimists were saying the housing recovery was on the ropes. Home sales were down and housing starts had dropped. 

But barely more than a month later this looks like just another head-fake. Existing home sales grew 1.3% in April and, given data on pending home sales, look like they rose another 2% in May. (Existing home sales are counted at closing; pending sales are contracts on existing homes.) Meanwhile, new home sales bounced back in April as well.

Personal Income Increased 0.3% in April
May. 30, 2014 - First Trust -  Implications: After March, when consumers increased spending at the fastest pace in almost five years, consumers took a breather in April, with spending slipping 0.1%. This is not a big deal. Despite the slight decline in April, spending is up at a 6.1% annual rate in the past three months and a 4.7% rate in the past six months. These are faster than the 4.3% gain in the past year, so the underlying trend appears to be accelerating. Personal income matched expectations, rising 0.3% in April and is up 3.6% from a year ago. 

The Fed Provides The Real Juice For Utilities
May. 20, 2014 - First Trust -  View from the Observation Deck  
  1. The S&P 500 Utilities Index is the top performing major sector so far in 2014. Year-to-date through 5/19, the index posted a total return of 10.21%, compared to 2.80% for the S&P 500.
  2. We believe that some investors have shifted capital to utilities in an effort to get a bit more defensive in the current climate, due in large part to the 0.1% GDP growth rate posted in the U.S. in Q1’14. 


Can a "Perma-Bull" Turn Bearish?
May. 19, 2014 - First Trust -  During the past five years, stock market forecasts have fallen into three different camps.
  • It’s a Dead Cat Bounce, Sugar High, Artificial, QE-Induced Bubble Stock Market. It will crash any day.
  • It’s a Real Bounce, from Artificial Undervalued Lows, With Technology and Productivity Driving Real Profits. The market is still cheap and will go higher.
  • It was too low in 2009, but, as it moved higher, it became fairly, or over-valued. The risks of the world have risen and a correction or sideways market is due.


America The Youthful? Yes, On a Relative Basis
May. 16, 2014 - BlackRock Blog -  While the United States is aging at a much slower pace than much of the rest of the world, the U.S. population will almost certainly continue to age. As Russ explains, this has three implications for the U.S. economy.

Federal Reserve Gone Wild
May. 12, 2014 - First Trust -  The Fed has massively increased the size of its balance sheet, from roughly $850 billion in 2008 to its current $3.96 trillion. Quantitative Easing was accomplished by having the Fed buy bonds and pay for them by “creating” excess bank reserves – reserves above and beyond those that are required.

US Economy and Credit Markets Week Ended May 9, 2014

May. 12, 2014 - First Trust -  Treasury movements were mixed this week as the yield curve steepened the most since September amid mixed economic data and a speech by Janet Yellen affirming a commitment to gradual increases in interest rates. On Monday, yields spiked when reports showed that service industries expanded at their fastest pace in eight months.

2014 Earnings Snapshot

May. 08, 2014 - First Trust -  

View from the Observation Deck

  1. Today’s blog post is an updated version of one we did on 2/11/14. Earnings estimates are monitored and adjusted often throughout the calendar year.
  2. The biggest difference between today’s earnings growth rate estimates for 2014 and this past February’s is that there are currently 8 equity indices (see chart) with double-digit projections, compared to 11 on 2/11/14.


Nonfarm Productivity Declined at a 1.7% Annual Rate in the First Quarter
May. 07, 2014 - First Trust -  Implications: After three consecutive quarterly increases, nonfarm productivity fell at a 1.7% annual rate in Q1. This was not due to falling production; output increased at a 0.3% rate. Instead, productivity declined because the number of hours worked increased much faster than output, which means output per hour declined. In spite of the decline in Q1, productivity is still up 1.4% from a year ago. More importantly, we think government statistics underestimate actual productivity growth. There are many examples, in every area of the economy, but the service sector is particularly hard to measure. 

Field Notes: India
May. 06, 2014 - Calamos Investments -  I recently spent a week in Delhi and Mumbai meeting with corporate management teams and local investors to gain insights into the Indian economy and the outlook for upcoming elections. Meetings like these enhance our team’s understanding of how company management teams are thinking about their businesses and the potential impact they believe future macro events (e.g., elections) may have on how they deploy capital and pursue growth initiatives.

US Economy and Credit Markets Week Ended May 2, 2014

May. 05, 2014 - First Trust -  Yields fell this week as the geo-political situation in Ukraine continues to benefit safe assets. President Obama and Chancellor Merkel of Germany met on Friday to weigh additional economic sanctions on Russia, which cloud global growth prospects. In this uncertain environment, gold rose along with bond prices. Positive economic reports were released this week but failed to overcome the concerns surrounding Russia and Ukraine.

April Employment Report
May. 02, 2014 - First Trust -  Implications: Great headlines about the direction of the labor market, but the details of today’s employment report were not as strong. Nonfarm payrolls increased 288,000 in April, the largest gain in more than two years. However, we think some of the gain is payback for harsh winter weather and unusually slow job gains back in December/January. Nonfarm payrolls are up 197,000 per month in the past year and we think the underlying trend is a little faster than that pace. The other piece of good news was that the unemployment rate dropped to 6.3%, well below where even the most optimistic forecasters were predicting. The jobless rate among college grads is only 3.3%. But the drop in the jobless rate was mostly due to an 806,000 drop in the labor force, which pushed the participation rate down to 62.8%, tying the lowest level since 1978.

Millennials: Let’s Grab a Beer, Burger and a Movie. In 2064
May. 02, 2014 - BlackRock Blog -  Asking a 25-year old to save money for his 75-year old future self is like asking him to give money to a stranger. But if you put the future in more relatable terms – like the price of beer, burger and movies – saving may start to make sense.

April ISM Manufacturing Index
May. 01, 2014 - First Trust -  Implications: Following temperatures, the ISM index, a measure of manufacturing sentiment around the country, continued to move higher in April. The index now shows manufacturing activity expanding at the fastest pace since the end of 2013, with seventeen of the eighteen manufacturing industries surveyed reporting growth in April. While not quite back to the levels we saw in mid-to-late 2013, the index has stood in expansion territory for eleven consecutive months, and we expect the index to continue to show strength as companies ramp up production and make up for time lost to bad weather. 

Clearing up 3 Single-Country ETF Misconceptions
Apr. 30, 2014 - BlackRock Blog -  If you have a view about the prospects of a certain country’s market, it’s easier than ever to express it using an exchange traded fund (ETF). The number of so-called single-country ETFs – ETFs focusing on companies based in one particular country—on the market has exploded in recent years.

Commodities Off To A Good Start Relative To Stocks In 2014

Apr. 29, 2014 - First Trust -  

View from the Observation Deck 

  1. For the three-year period ended December 2013, the S&P 500 posted a cumulative total return of 56.82%, compared to a cumulative loss of 22.40% for the Dow Jones-UBS Commodity Index.
  2. Phil Flynn, senior market analyst at the Price Futures Group, noted in a MarketWatch.com article in December 2013 that the “biggest story” in 2014 would be the direction of commodity prices relative to stock prices.


The Price Of Crude Oil Doubled Over The Past Five Years
Apr. 24, 2014 - First Trust -  

View from the Observation Deck 

  1. For the five-year period ended March 2014, which captures all of the economic recovery that began in July 2009, the price of a barrel of crude oil increased by 104.6% to $101.58.
  2. The cumulative total return on the S&P 500 Energy Index was 114.1% over that same five-year period. At first glance, energy stocks essentially kept pace with the rise in the price of crude oil.


Plow Horse Gets De-Iced
Apr. 07, 2014 - First Trust -  For the last couple of months it’s been an open question whether US economic growth was slower because of brutal winter weather or if something more serious and worrisome was going on. 

We have consistently sided with the “weather theory.” The winter of 2014 was one of the coldest and snowiest in the past 30 years, at least in the population centers in the East and Midwest. It was likely enough to slow real GDP growth from the 2.6% pace of the past year to under 1% annualized growth in the first quarter.

March Employment Report 

Apr. 04, 2014 - First Trust -  Implications:  The March employment report was more Plow Horse, with some signs of underlying improvement as weather-related problems eased. The unemployment rate held at 6.7% instead of ticking back down to 6.6%, as we expected, but the details of the report were much better than the headlines. Payrolls increased 192,000 in March, or a total of 229,000 after including upward revisions for prior months.  Including revisions, private payrolls gained 239,000.  What kept the unemployment rate from falling was a 503,000 gain in the labor force, which counteracted the robust 476,000 gain in civilian employment in March– an alternative measure of jobs that includes small business start-ups.  

Job & Economic Growth Could Drive Auto Sales Higher
Apr. 03, 2014 - First Trust -  View from the Observation Deck  
  1. March’s U.S. nonfarm payroll number will be released tomorrow. Bloomberg’s survey of top economists produced a consensus estimate of 200,000 new hires. 
  2. That target is slightly above the 187,540 monthly average posted over the past 12 months, but still below the 250,000-plus economists believe is needed to make a serious dent in unemployment.


Biotechnology Ranked 2nd In Funding From Venture Capitalists For 3rd Year In A Row in 2013
Apr. 01, 2014 - First Trust -  View from the Observation Deck  
  1. From 2011-2013, of the 16 major categories tracked, the only one that raised more money from the venture capital (VC) industry than Biotechnology was Software.


Repudiating Milton Friedman
Mar. 31, 2014 - First Trust -  Milton Friedman taught the world that the “transmission mechanism” for central bank policy worked through the quantity of money – the amount of money injected into, or subtracted from, the economy.

The V-Shaped Recovery In Stock Dividends Is Now A Check Mark
Mar. 27, 2014 - First Trust -  View from the Observation Deck  
  1. Today’s blog post is an update of one we did on 1/7/14. We intend to continue monitoring the direction of stock dividend distributions over the coming quarters.  
  2. S&P 500 companies paid out $84.98 billion in dividends in Q4’13, up 6.5% from the $79.83 billion distributed in Q4’12.


4th Quarter GDP (Final)
Mar. 27, 2014 - First Trust -  Implications: The biggest news this morning was that initial claims for unemployment insurance declined 10,000 last week to 311,000 and continuing claims dropped 53,000 to 2.82 million. Plugging these figures into our payroll models suggests a solid March gain of 203,000 nonfarm and 205,000 for the private sector. We will be adjusting this forecast to reflect incoming data over the next week, but it looks like the pace of job growth is bouncing back from weather-related problems this winter. 

February Durable Goods  
Mar. 26, 2014 - First Trust -  Implications: A pleasant upside surprise in the headline for new durable goods orders in February after declines in December and January. But don’t get too excited that durables goods avoided a weather impact. The strength in orders was mostly due to the volatile transportation sector (aircraft and autos); orders excluding transportation increased only 0.2% in February. 

It’s Back To The Future With Dividend-Paying Stocks

Mar. 25, 2014 - First Trust -  View from the Observation Deck  
  1. Dividend-paying stocks have held their own against the broader market over the past decade.  
  2. From 2/04-2/14, the Dow Jones U.S. Select Dividend Index (DJDVY), a commonly used benchmark for dividend-paying stocks, posted a cumulative total return of 94.9%, compared to 99.8% for the S&P 500.
  3. The strong showing has prompted some in the financial media to argue that valuations on dividend-paying stocks have reached levels too rich to justify the potential risks to investors’ capital.


February New Home Sales  
Mar. 25, 2014 - First Trust -  Implications: On February 2nd, Punxsutawney Phil woke up and predicted six more weeks of winter. Boy was he right! Terrible weather has been suppressing both home construction and sales, and today's report appears to be another victim as new home sales fell 3.3% in February to a five month low. Some people may blame the recent slowdown in new home sales on higher interest rates but the US had a bubble in housing during 2003-05, when 30-year mortgage rates averaged 5.8%. Today the rate is 4.3%. The months’ supply of new homes – how long it would take to sell all the new homes in inventory – rose to 5.2 in February, but is still below the average of 5.7 over the past twenty years.

S&P 500 Top-Line Growth Estimates
Mar. 18, 2014 - First Trust -  View from the Observation Deck  
  1. Today’s blog post is intended to supplement our post from 2/20/14 (“S&P 500 Earnings Beat Rate On The Mark For Q4’13”).
  2. In that post we noted that 66.5% of S&P 500 companies, on average, had beaten their quarterly earnings estimates since Q3’11.
  3. Nearly two out of every three S&P 500 companies has managed to top analysts’ quarterly forecasts, in part, by cutting costs, such as labor, and boosting productivity via the implementation of cutting-edge technology. 


The Consumer Price Index Increased 0.1% in February
Mar. 18, 2014 - First Trust -  Implications: Consumer prices continued to move higher in February, though at the same tepid 0.1% pace we saw in January. In the past year, consumer prices are up 1.1%. “Core” prices, which exclude food and energy, also rose 0.1% in February and are up 1.6% in the past year. So, for the time being, neither overall inflation nor core inflation is setting off alarm bells. Instead, they suggest the Fed’s preferred measure of inflation, the PCE deflator (which usually runs a ¼ point below the overall CPI) will remain well below the Fed’s target of 2%. 

No Extension Needed

Mar. 17, 2014 - First Trust -  No one can know with absolute certainty exactly how much the brutal winter weather affected jobs. But, the 162,000 increase in February private sector payrolls was a positive shock to the consensus. January, at 145,000, was surprising, too. 

Ukraine Fears Temporary
Mar. 03, 2014 - First Trust -  It’s a huge week for economic data, and US stock indices just made new highs, but who cares – Vladimir Putin sent troops into the Ukraine and this was blessed by a vote in the Duma. Previously, Ukraine’s elected president, an ally of Russia, was forced from office for ordering troops to fire on protestors. That departure was ratified by Ukraine’s parliament.

A Tough Spring Ahead for Stocks?
Mar. 03, 2014 - BlackRock Blog -  Despite last week’s disappointing economic data, stocks rallied to record highs. Russ explains what’s behind this disconnect and why stocks may be vulnerable come the spring.

Treading Water: Four Economic & Market Trends Likely to Continue in 2014
Feb. 25, 2014 - BlackRock Blog -  Like stocks last week, economic fundamentals are treading water. Russ explains the economic and market trends that are likely to continue in coming months.

Three Reasons Frontier & EM Equities Are Not Created Equal
Feb. 21, 2014 - BlackRock Blog -  With all the turmoil in emerging markets recently, some investors may be especially wary of investing in so-called frontier markets. Russ explains why frontier and emerging markets are separate asset classes, each deserving of a strategic allocation.

The Recovery Is Not A Sugar High
Feb. 10, 2014 - First Trust -  What happened to stocks in January and early February is nothing new. It’s happened quite a few times in the past four years and eleven months. Ever since mark-to-market accounting was fixed in March/April 2009, these corrections have been short-lived and relatively mild. And once they were over the market went higher. It’s been a very strong bull market.

3 Things to Know about Currency Hedging
Feb. 10, 2014 - BlackRock Blog -  As investors seek international equity exposure as a means of enhancing portfolio diversification to reduce risk, Dodd Kittsley explains why it’s important to take note of the impact of currency on total returns.

Nonfarm Payrolls Increased 113,000 in January

Feb. 07, 2014 - First Trust -  Implications: Something for everyone in today’s report. Nonfarm payrolls increased a tepid 113,000 in January, the second straight month with payroll gains noticeably under consensus expectations. Private-sector gains were a healthier 142,000, but that’s still below the average of 191,000 in the past year. Although the weather appeared to have held down payrolls in December, Labor Department data say the number of people who couldn’t work due to weather was smaller than usual in January. However, the household survey that generates that weather effect also shows an overall gain of 638,000 in civilian employment for the month. As a result, despite the labor force increasing by 523,000

What Puerto Rico’s Downgrade Means for Investors
Feb. 05, 2014 - BlackRock Blog -  After much speculation and anticipation, the island of Puerto Rico has been downgraded to junk. Peter Hayes discusses the implications (or lack thereof) for the municipal market.

Puerto Rico has been making headlines for months. Yesterday, the clincher finally appeared: 
US Economy and Credit Markets Week Ended Jan. 31, 2014

Feb. 03, 2014 - First Trust -  Treasury prices rose significantly over the course of the week on a volatile and poor equity market. On Wednesday, the Federal Reserve announced that it would continue to taper bond purchases by another $10 billion, which caused equities to drop significantly and gold to drop 1.9%. This actually caused Treasury prices to rise as investors were seeking the safety of Treasuries. On Monday, Treasury prices dropped on a poor housing report but rebounded Tuesday on a solid 2-year auction and a poor durable goods report. 

After Last Week’s Sell-off: More Volatility Ahead
Jan. 27, 2014 - BlackRock Blog -  Russ explains the two major factors behind last week’s U.S. equity market sell-off as well as why investors should expect more volatility ahead and consider international stocks.

After a rocky first few weeks of the year, U.S. equity markets fell sharply last week. The media blamed much of the decline on market turmoil in emerging markets.  China reported some surprisingly weak economic data, and financial turmoil in Argentina and Turkey led to a sell-off in EM currencies.



Gold ETF Flows Reveal Speculators Have Had Enough
Jan. 26, 2014 - ETF Trends -  

Gold exchange traded fund outflows are slowing down as speculators and short-term traders exit their position after a dismal year for precious metals.

Physically backed gold ETFs saw record outflows of $19.6 billion in the second quarter but the bleed slowed to $4.2 billion in the third quarter, reports Myra P. Saefong for MarketWatch.



How the Safe Havens Stack Up
Jan. 24, 2014 - BlackRock Blog -  For investors who are worried about a correction, Russ provides a look at which traditional safe-haven assets tend to perform best during times of uncertainty.

Given stocks’ stellar rise over the last year, investors worried about a correction are asking me where they can park their money.


Low Volatility Abroad
Jan. 24, 2014 - Morningstar, Inc. -  In the context of investing, volatility usually isn't a good thing. Sure, in theory, the market should compensate investors with higher expected returns for accepting greater risk that cannot be diversified, but it hasn't always turned out that way in practice. Historically, the most volatile stocks and bonds have offered the lowest risk-adjusted returns, according to a study by AQR principals Andrea Frazzini and Lasse Pedersen. In other words, incremental increases in risk have not been matched with commensurate improvements in return. More problematically, volatility tends to encourage the perverse tendency that investors have to buy high and sell low. It may also deter investors from adequately diversifying into international stocks.

2013 - A Strong Year for ETFs
Jan. 24, 2014 - First Trust -  
Strong ETF Net Inflows for 2013
US-listed ETF1 net inflows totaled $185.5 billion in 2013, setting a new record.2 While the largest percentage of net inflows remained
concentrated among a relatively small group of the 1521 US-listed ETFs, investors broadened their horizons more in 2013 than in previous years, as 312 ETFs had net inflows exceeding $100 million.


Q4 GDP - Stronger than Keynes Predicted

Jan. 21, 2014 - First Trust -  
Please don’t accuse us of ignoring “everything” John Maynard Keynes said. The truth is we ignore just 99%. What most people are taught about Keynes is that government spending is the equivalent of, or through the spending multiplier, more powerful than, private spending. 

Very few ever try to argue with this idea, especially after teachers pull out the officious, yet full of hocus-pocus, IS-LM curves. Politicians want to believe the idea of the Keynesian multiplier because they really actually do believe they themselves are bigger than real life. As a result, politicians around the world have elevated Keynes to legendary status even though big government spending has left economic mayhem and poverty strewn everywhere.


US Economy and Credit Markets Week Ended Jan. 17, 2014
Jan. 21, 2014 - First Trust -  Treasuries gained this week as housing starts declined in December, industrial production came in as expected and consumer confidence unexpectedly fell. This is the third consecutive week of gains for Treasuries following the 10 year yield peaking at 3.05% on January 2nd. On Tuesday, the December Retail Sales Report showed a 0.2% increase in December and sales up 4.1% versus a year ago.

What You Need to Know about “Strategic Beta”
Jan. 15, 2014 - BlackRock Blog -  Strategic beta captured nearly a third of total ETF industry flows in 2013. Dodd Kittsley defines strategic beta and explains why this trend is here to stay.

In my final post of 2013, I highlighted several trends within the ETF industry that caught our attention last year. One major development that really stood out to me, more so than the others, was the considerable growth we saw in strategic beta – an investing strategy that we believe will continue to be a significant contributor to ETF flows in 2014 and for years to come.


How Hegemons Fall
Jan. 14, 2014 - Morningstar, Inc. -  Warren Buffett once said, "It's never paid to bet against America." The same could have been said for the United Kingdom before World War I or Rome before Commodus' reign. While extrapolating the historical trend line is actually a pretty good prediction strategy, it's not the way to make money. Fortunes are made (or preserved) anticipating big economic shifts, and successful prediction requires good theory. Buffett admits his expertise is not in timing macroeconomic shifts. Ray Dalio's is. And he thinks the United States is an empire in relative decline.

Pessimists Get Desperate

Dec. 09, 2013 - First Trust -  Payrolls keep growing. Economic data stays positive. The stock market makes new highs. It’s been consistent for nearly five years. And so has the pessimism. In fact, the pouting pundits of pessimism get more determined each month, trying to prove that things are really bad out there.

We really do tip our hats to those who dive deeply into the details of job reports – even though they don’t really understand the data – to find that one nugget of negative information that will boost hits on their webpages and get them retweeted. 

October Personal Income and Consumption 
Dec. 06, 2013 - First Trust -  Implications: Another Plow Horse report on income and spending in October shows the consumer is doing just fine. This report is one more nail in the coffin for the supposed concerns about the partial government shutdown in October affecting consumer spending for the month. Spending rose 0.3% overall, absolutely unaffected from the drama out of Washington. Although income fell 0.1% in October, this comes after eight consecutive months of gains, and most of the decline was due to farm income which has been very volatile. Wages and salaries continued to grow and are up 3.2% from a year ago. Income growth has accelerated over the past three months, growing at a 3.7% annual rate versus a 3.4% gain the past year. 

The ISM Manufacturing Index Increased to 57.3 in November
Dec. 02, 2013 - First Trust -  Implications: The ISM index, a measure of manufacturing sentiment around the country boomed in November coming in at the highest level since April 2011, easily beating consensus expectations, and rising for the sixth consecutive month. According to the Institute for Supply Management, an overall index level of 57.3 is consistent with real GDP growth of 4.7% annually. We don’t expect real GDP to grow anywhere near that pace in Q4, but we do expect much faster growth in 2014. 

Consumers Doing Fine
Dec. 02, 2013 - First Trust -  According to the National Retail Federation, Thursday to Sunday holiday sales dropped 3% versus last year. No doubt, this will wake up some dozing bears. And, we are sure that when we say it’s not as bad as you think, many will argue we are perma-bulls, naïve, or downright stubborn. You can think what you want, but we don’t believe sales are falling.

First, other reports conflict with the NRF data. ShopperTrak, a Chicago-based firm that monitors sales traffic at 40,000 retail outlets and malls around the country, reported a 2.3% gain in sales for Thanksgiving and Black Friday.



US Economy and Credit Markets Week Ended Nov. 29, 2013
Dec. 02, 2013 - First Trust -  Treasuries ended the holiday-shorted week flat with a slight yield curve twist as the Federal Reserve tried to shift attention away from the bond buying program and toward keeping short-term policy rates low. This is because long-term yields rose much faster short-term yields in November. Monday and Tuesday saw very good demand for Treasury auctions on poor economic data. On Monday, sales of previously sold homes were lower than expected, while Tuesday showed the Confidence Board consumer confidence index fell again to its lowest point since April. 

ALPS Draws Up Plans for Emerging-Markets 'Dividend Dogs' ETF
Dec. 02, 2013 - Morningstar, Inc. -  On Nov. 22, ALPS filed with U.S. regulators seeking permission to create a passively managed exchange-traded fund that would hold high-dividend-paying stocks from emerging-markets countries.

The proposed ALPS Emerging Sector Dividend Dogs ETFEDOG would be the latest in ALPS' suite of funds that follow the so-called "Dogs of the Dow" theory, which holds that a high dividend yield may indicate that a firm's share price has bottomed out and a rebound is imminent.


10 Great Diversified Europe ETFs
Nov. 28, 2013 - ETF Trends -  

The Eurozone’s sovereign debt crisis is still fresh on investors’ minds , but 2013 has been kind to Europe exchange traded funds.

That applies to single-country and diversified ETFs and the outlook for 2014 is rosy, too. Although risks remain in the Eurozone, Goldman Sachs forecast a 12% rise next year for the Stoxx Europe 600 Index.  [Goldman Forecast Bullish for Europe, Japan ETFs]



New Orders for Durable Goods Declined 2.0% in October

Nov. 27, 2013 - First Trust -  Implications: New orders for durables declined 2.0% in October. However, almost all the decline was in the transportation sector – particularly civilian aircraft – which is extremely volatile month to month. Orders were down 0.1% excluding transportation. The best news in today’s report was that unfilled orders for core capital goods rose 0.3% in October, hitting a new record high. The news on unfilled orders supports our optimism about business investment. In addition, the recovery in home building should generate more demand for big-ticket consumer items, such as appliances. Expect more plow horse growth in the months ahead. In other manufacturing news, the Richmond Fed index, which measures mid-Atlantic factory sentiment, increased to +13 in November from +1 in October. The Chicago PMI, which measures factory sentiment in that region, declined to 63.0 in November from 65.9 in October.

December Taper or Not: 2 Reasons Easy Money Will Likely Continue
Nov. 25, 2013 - BlackRock Blog -  Many market watchers are obsessed with when the Fed will begin tapering. However, those who expect the start of tapering to mean the end of easy money, and possibly of related market gains, are missing an important nuance. Russ explains.

As the Federal Reserve (Fed)’s December policy meeting approaches, many market watchers are obsessed with when the Fed will announce that it’s starting to scale back, or “taper,” its asset purchase program.

QE: Not That Big of a Deal
Nov. 25, 2013 - First Trust -  The most frequent question we get lately is “what happens to long-term interest rates when quantitative easing ends?” Many analysts argue that the Federal Reserve is buying and holding a huge share of Treasury debt and once QE ends other buyers will suddenly have to absorb more. This will cause interest rates to soar, bust the housing market, undermine stocks, and possibly cause a recession.

US Economy and Credit Markets Week Ended Nov. 22, 2013

Nov. 25, 2013 - First Trust -  Near-term Treasury yields declined slightly amid mixed economic data and the Federal Reserve’s continued commitment to very low short-term interest rates. Longer-term bond yields continued increasing during the week and the yield curve continues steepening as investors prefer shorter duration bonds in anticipation of an eventual roll-back of Fed asset purchases. Higher interest rates may encourage banks to extend more loans, as they will collect more on higher yielding loans. On Wednesday, there were major reports offering the latest information on the health of the consumer. MBA Mortgage applications disappointed for the third straight week as refinancing activity stretched to a two week low.

Is Europe Making a Comeback?
Nov. 14, 2013 - BlackRock Blog -  

A move by the European Central Bank to cut interest rates to a record low of 0.25% has specific implications for improving investor confidence. Dodd Kittsley explains.

A battered Eurozone seems to be on a slow road to recovery. Spain finally emerged from its two-year recession in the third quarter, and this summer marked the first time in three years that the Eurozone didn’t suffer from a financial crisis. Last week, the European Central Bank lowered interest rates to 0.25%. These signs of life highlight improving economic signals and investor confidence in the region – a sentiment echoed by our own Russ K – and are sparking a surge in select European ETF flows.

 



Taper Talk
Nov. 11, 2013 - First Trust -  Tapering…please bring it on. We wanted it yesterday, or last month, or even years ago. We never thought QE helped the economy and certainly don’t think keeping it around is a good idea. It’s created uncertainty at an unprecedented level. 

But, we aren’t holding our breath waiting for the Fed to change course. Despite better data on the economy, the Fed will take its sweet time, possibly waiting until March before slowing the pace of “quantitative easing,” the monthly purchase of $85 billion in long-term securities. With Vice-Chair Janet Yellen on tap for the top spot at the Fed and more potential budget fights looming in January/February, it’s hard to imagine the Fed rushing to do something that might spook the markets.  

More #PlowHorse in Q3 

Nov. 04, 2013 - First Trust -  Despite the shutdown, the sequester, talk of tapering, and meteors in the night sky, the US economy just keeps plowing along. Reported later this week, we expect Q3 real GDP grew right on trend at a 1.9% rate – another, #PlowHorse report. 

It’s somewhat slower than we expected at the start of the year, but we still expect an acceleration in 2014-15 given loose monetary policy, a downward trend in government spending (relative to GDP), explosive new technology, record high corporate profits, and a forceful housing recovery. 

Here’s our “add-em-up” calculation of real GDP growth in Q3, component by component.

US Economy and Credit Markets Week Ended Nov. 1, 2013

Nov. 04, 2013 - First Trust -  Treasury debt fell this week as manufacturing and consumer spending grew faster than expected. Spending and inflation reports are carefully reviewed for any potential impact they may possibly have on the Federal Reserve’s decision to taper or not and strong spending and production growth are seen as increasing the probability of asset purchase tapering by the Fed. On Monday, MoM Industrial Production increased at .6% vs an expected .4%. Tuesday revealed wholesale prices fell in October with an unexpected decrease in the producer price index mostly due to decreased food costs.

US Stocks Week Ended Nov. 1, 2013

Nov. 04, 2013 - First Trust -  Last week, stocks were mixed with large cap stocks outperforming small caps. The Dow Jones rose for the fourth consecutive week. This performance comes amid signs the Chinese economy has been strengthening. China’s official Purchasing Manager’s Index rose more than expected last month and is now at an 18 month high. The Wall Street Journal reported that Barclays and Royal Bank of Scotland have suspended traders in possible connection to rigging interbank lending rates. 

Beyond U.S. Borders: 3 International Investment Trends Happening Now
Oct. 30, 2013 - BlackRock Blog -  Despite the potential benefits of international investing, the typical U.S. investor’s portfolio is disproportionately weighted toward domestic securities. Dodd Kittsley digs into ETF flows to highlight three investment ideas outside the U.S. that are trending now.

Does your portfolio suffer from home country bias?  If so, you’re not alone.  Despite the fact that almost 80% of global economic output and about two-thirds of the world’s equity market capitalization come from countries outside of the United States, the typical U.S. investment portfolio is disproportionately weighted toward domestic securities.


September CPI  
Oct. 30, 2013 - First Trust -  Implications: The Federal Reserve is comfortable with today’s inflation report. Consumer prices rose a consensus expected 0.2% overall and only 0.1% excluding food and energy. Energy and rent led the gains. Compared to a year ago, overall consumer prices are up 1.2% while core prices are up 1.7%. Neither of these figures sets off alarm bells. Instead, they suggest the Fed’s preferred measure of inflation, the PCE deflator (which usually runs a ¼ point below the overall CPI) will remain below the Fed’s target of 2%. We don’t expect this to last. Inflation bottomed in April when it was up only 1.1% from the prior year, and we expect it will be noticeably higher a year from now. Recent figures underscore a slight acceleration in inflation, with the overall CPI up at a 1.7% annual rate in the past three months. However, for the Fed, the key measure of inflation is its own forecast of future inflation. So, even if inflation moves higher, as long as the Fed projects the rise to be temporary it will not react to that inflation alone by raising short-term interest rates.

September PPI
Oct. 29, 2013 - First Trust -  Implications: We’ve been waiting a while for an acceleration in inflation and now it looks like we’re going to have to wait at least a bit longer. Overall producer prices declined a slight 0.1% in September, led by a 1% drop in food costs more than offsetting a 0.5% rise in energy and slight increases elsewhere. Producer prices are up only 0.3% in the past year, but up at a 1.6% annual rate in the past six months, which we think is closer to the underlying trend. “Core” producer prices, which exclude food and energy, are up 1.2% from a year ago. As a result, some analysts still say the Federal Reserve has room to continue quantitative easing at a pace of $85 billion per month. We think this would be a mistake but the Fed is likely to continue QE full throttle anyhow until about March, when we expect it to finally start tapering its purchases.

Why Stocks Advance Despite Mediocre Economic Data
Oct. 28, 2013 - BlackRock Blog -  The basic takeaway from last week’s economic data seems to be that we’re still in a world of 2% US economic growth with little evidence of a pickup. Yet stock markets have advanced and can move higher over the next six to 12 months? Russ explains why.

With the shutdown finally a thing of the past, the bottleneck on economic data was lifted last week and investors started to receive some important clues on where the U.S. economy is heading as the year ends.


How Real Estate Impacts the US Economy
Oct. 25, 2013 - BlackRock Blog -  Despite appreciating more than 10% over the past year, home prices still look reasonable and housing affordable. However, while there is little risk of another housing bubble, a significant pickup in interest rates could dampen housing activity and by extension, the recovery.

Be careful what you wish for. With home prices rebounding strongly, many investors are now starting to wonder whether we’re back in another housing bubble. Fortunately, I think the answer is no, although housing still poses a risk to the economy and markets, albeit for different reasons.

Washington Woes Drive ETF Flows
Oct. 16, 2013 - BlackRock Blog -  With recent headlines dominated by news of the Fed and the debt ceiling debacle, it’s not surprising that policy decisions continue to drive investment behavior this year. Dodd Kittsley examines the “new normal” of a policy-driven market, and explains how investors can cope.

With the constant barrage of news reports discussing the Fed’s actions, thegovernment shutdown and the debt ceiling debacle, it’s little wonder what’s preoccupying the minds of investors these days.  A quick look at ETF flows over the past few months paints a picture of an increasingly uncertain investor population reacting – almost real-time – to each new development out of Washington.


Two More Reasons to Like Equities: Growth & Inflation
Oct. 15, 2013 - BlackRock Blog -  I’ve long been advocating that investors should overweight equities relative to bonds, and while equity valuations are no longer at their cheapest and there are risks inherent in stocks, I still hold this view. In fact, all the factors I look at, including the economic backdrop, inflation trends, monetary policy and corporate fundamentals, suggest that investors should still consider overweighting equities.

3 Investing Implications of Washington Drama
Oct. 14, 2013 - BlackRock Blog -  

While a potential debt ceiling deal failed to gain much traction over the weekend, I’m still reasonably optimistic that some sort of patchwork and limited deal to, at least temporarily, extend the debt ceiling will be reached around this Thursday’s deadline.

But while I believe a US default will be avoided, the continuing political drama does have implications for investors. As I write in my latest weekly commentary, there are three:

1.    Economic growth will be slower than it otherwise would be.Were it not for all of the political turmoil and uncertainty, I would expect fourth-quarter US economic growth somewhere between 2.5% and 3%. Given the drama in Washington, 2% gross domestic product (GDP) growth is a more likely number.



Energy Distribution Tops Energy Production Over Past 5 Years
Oct. 01, 2013 - First Trust -  

View from the Observation Deck

  1. As high as crude oil prices are today, they were nearly as high five years ago. The price of a barrel of oil stood at $102.33 on 9/30/13, up 1.68% from $100.64 on 9/30/08, according to Bloomberg.
  2. The price of natural gas, however, was cut in half over the past five years. It stood at $3.56 per million British thermal units on 9/30/13, down 52.15% from $7.44 on 9/30/08, according to Bloomberg.
  3. Even with the absence of any significant supply constraints for oil or gas in the past five years, investors favored energy master limited partnerships (MLPs/pipelines and storage) over energy production.


SeptemberISM Manufacturing Index
Oct. 01, 2013 - First Trust -  Implications: While Washington offers us more drama, the private sector keeps moving forward. Despite supposed fears about a government shutdown, a very strong report today for the ISM index, a measure of manufacturing sentiment around the country. The ISM came in at the highest level since April 2011, easily beating consensus expectations. According to the Institute for Supply Management, an overall index level of 56.2 is consistent with real GDP growth of 4.4% annually.

Shutdown: A Good Thing?
Sep. 30, 2013 - First Trust -  It looks like House and Senate won’t come to a budget agreement by midnight and, as a result, the federal government is going to partially shut down starting Tuesday morning.

Run for the hills? Armageddon: right? Nope!

As we said a few weeks ago, a shutdown is not as scary as it seems. Money still flows into the Treasury Department and money still flows out, for Social Security or to make interest payments on the debt, for example.

Loose and Looser

Sep. 23, 2013 - First Trust -  Larry Summers took his name out of the hat and won’t be considered for the top spot at the Federal Reserve. And while nothing is a slam dunk, it looks very much like current Vice Chair Janet Yellen is going to get the call from President Obama to step up and replace Bernanke.

US Economy and Credit Markets Week Ended September 20, 2013
Sep. 23, 2013 - First Trust -  Treasuries prices rallied as the Federal Reserve decided against tapering its 85 billion monthly bond buying program. Yields fell sharply as they move inversely to prices. The continued weakness in treasury yields is seen as a boon for REIT, Utility and other high yielding sectors. Friday, however, yields on the 10-year fell slightly as concern over the federal budget debate began weighing on gains from the Federal Reserve’s tapering decision.

4 Reasons To Have EM Exposure Now
Sep. 20, 2013 - BlackRock Blog -  Russ explains the four reasons why investors underweight or not exposed to emerging markets (EM) should consider gaining some exposure to this asset class despite EM stocks’ underperformance year-to-date.

August Existing Home Sales
Sep. 19, 2013 - First Trust -  Implications: Despite all the fear-mongers saying higher mortgage rates would kill the housing recovery, today we got our second look at sales that would be affected by higher rates, and boy were they wrong, again! Existing home sales were up 1.7% in August, up a very strong 13.2% versus a year ago, and hit the highest level since February 2007. It sure doesn’t look like higher rates are having any negative effects and there are a few reasons for this. First, higher rates reflect expectations of faster economic growth. 

5 Years Later: The Crisis We Haven’t Tackled Yet
Sep. 19, 2013 - BlackRock Blog -  Five years after the Lehman bankruptcy, the proximate causes of the 2008 crash are no longer threats. But while the risk of another imminent financial system crisis has abated, there are two major issues that foretell a coming retirement funding crisis.

The New Dow Jones Industrial Average
Sep. 13, 2013 - Morningstar, Inc. -  Since its inception in 1896, the Dow Jones Industrial Average has served as a barometer of the U.S. stock market by tracking a select group of the country's industrial leaders. Earlier this week, S&P Dow Jones Indices announced that  Visa (V),  Nike (NKE,) and  Goldman Sachs (GS) will replace  Hewlett-Packard (HPQ),  Alcoa (AA), and  Bank of America (BAC) in this iconic index, effective Monday, Sept. 23. Because the index weights its constituents by their share price, rather than by market capitalization, these changes will have a significant impact.

Emerging Market Equities Fit The GARP (Growth At A Reasonable Price) Profile
Sep. 03, 2013 - First Trust -  

View from the Observation Deck

While U.S. stocks have set multiple all-time highs in 2013, emerging market equities stood 30.6% below their all-time high (10/29/07) at the close of August, as measured by the MSCI Emerging Markets Index.

After having posted a cumulative total return of 392.12% (USD) from 12/01-10/07 (all-time high on 10/29/07), the MSCI Emerging Markets Index declined 18.25%, on a cumulative basis, from 10/07-8/13.

The combination of commodity-fueled inflationary pressures in 2010 and 2011, tempering of growth in China, the world’s biggest consumer of raw materials, and Europe’s recession induced profit taking, in our opinion.



4 Signposts To Watch for an Emerging Markets Turnaround
Sep. 03, 2013 - BlackRock Blog -  

Since the Federal Reserve (Fed) first hinted at the possibility of a taper in May, anxiety has roiled emerging markets (EM).

Over the last three months, EM stocks have fallen 12% in dollar terms, underperforming developed markets by 10%, and EM currencies on average have tumbled by 7% versus the dollar[1]. And as numerous market watchers have pointed out, the EM rout has only intensified this week amid concerns about an escalating conflict in Syria and rising oil prices.



The Bond Bear is Waking Up

Sep. 03, 2013 - First Trust -  We’ve been bond bears for quite some time, and we still are. The good news is that the violent part of the bear market has passed. We expect a slower, but still painful and consistent, move higher in interest rates during the quarters ahead. The 30-year bull market in bonds is over.

AugustISM Manufacturing Index
Sep. 03, 2013 - First Trust -  Implications: A surprisingly strong report today for the ISM index, a measure of manufacturing sentiment around the country. The ISM came in at the highest level since June 2011, easily beating consensus expectations. In particular, the new orders index boomed in August, coming in at 63.2, the highest since April 2011. According to the Institute for Supply Management, an overall index level of 55.7 is consistent with real GDP growth of 4.2% annually. We don’t expect real GDP will grow anywhere near that pace in Q3, probably more like a 1% to 1.5% rate instead, but we do expect that by late this year growth will pick up noticeably from the roughly 2% trend over the past few years. 

US Economy and Credit Markets Week Ended August 30, 2013
Sep. 03, 2013 - First Trust -  Selling of Treasuries cooled during the week as tensions surrounding potential conflict in the Syria increased demand for safe assets. However, for August, U.S. Treasury bonds slid for a fourth consecutive month and since the start of May the 10-Year Treasury is up over a full point from continued concerns over the Federal Reserve potentially unwinding its bond buying program. Oil rose during the week as Middle East turmoil gives rise to supply concerns. 

July Personal Income and Consumption
Aug. 30, 2013 - First Trust -  Implications: Another month, another Plow Horse report on income and spending. Income grew a tepid 0.1% in July, with dividends, rents, and farm income offsetting a drop in wages & salaries. At this point we don’t read much into a one-month drop in wages & salaries. We notice the same thing happened last July, so it could be difficulties making seasonal adjustments. Or it could just be normal statistical noise that might later be revised away. However, we will be following the data closely to see if any weakness becomes persistent, which might be attributable to the roll-out of Obamcare. In the meantime, overall personal income is up 3.3% from a year ago while wages & salaries are up 3.4% and private-sector wages & salaries are up 4.2%. Adjusting for inflation, real income is up 1.9% from a year ago, private wages & salaries are up 2.8%. Despite what some pundits are saying, there is still no evidence that the end of the payroll tax cut or federal spending sequester is hurting consumers. 

Hidden Value in Small-Cap Dividends
Aug. 30, 2013 - Morningstar, Inc. -  Holdings can say a lot about a fund's investment style, but they don't always tell you everything. Take  WisdomTree SmallCap Dividend (DES) for example. It invests in dividend-paying small-cap companies that meet certain liquidity requirements. It then weights them by the dollar value of dividends they are expected to pay out over the next year. While its holdings skew toward the small-value side of the Morningstar Style Box, on average they trade at richer valuations than the holdings of its peers, which explicitly target small-value stocks (see the Portfolio Characteristics table below). Yet, since its inception in July 2006, DES has behaved like a deeper value fund than nearly all of its peers.

For Those Who May Not Subscribe To A Buy And Hold Investment Strategy
Aug. 29, 2013 - First Trust -  

View from the Observation Deck

While we subscribe to a buy and hold investment strategy, we do acknowledge that many investors may seek to potentially exploit opportunities within days, weeks or months. 

Seasonal investing is one such approach and it has been documented through the years in the Stock Trader’s Almanac. The chart features five areas that have demonstrated a seasonality effect beginning in October.



Middle East Tensions, Oil Prices and the US Economy
Aug. 28, 2013 - BlackRock Blog -  A further escalation of violence in the Middle East will not only have a terrible human toll, it could also lead to rising oil prices, which in turn could hurt consumers and the global recovery. Russ explains the situation and shares how investors can prepare.

Retail Investors Still Somewhat Leery Of Stocks
Aug. 27, 2013 - First Trust -  
View from the Observation Deck
1.  The S&P 500 posted a total return of 17.79% from 12/31/12 through 8/26/13. It posted a cumulative total return of 43.31% (7.46% annualized) in the 5-year span depicted in the chart.
 
2.  Despite these positive returns, there remains a huge distinction in the sentiments towards equities between institutional investors (top chart/block trades) and retail investors (bottom chart/non-block trades).


Why Rising Mortgage Rates Matter for the US Recovery
Aug. 27, 2013 - BlackRock Blog -  As long-term Treasury rates have increased in recent months, mortgage rates have followed suit. Russ K explains why investors should pay close attention, since rising rates could hurt the US recovery through their impact on the housing market.

July Durable Goods
Aug. 26, 2013 - First Trust -  

New orders for durable goods dropped 7.3% in July (-7.2% including revisions to June), coming in well below the consensus expected decline of 4.0%. Orders excluding transportation slipped 0.6% (-0.4% including revisions to June). The consensus expected a gain of 0.5%. Overall new orders are down 0.3% from a year ago, while orders excluding transportation are up 5.9%. 



US Economy and Credit Markets Week Ended August 23, 2013
Aug. 26, 2013 - First Trust -  Amid mixed economic reports and debate over the status of the Federal Reserve’s Quantitative Easing program longer dated Treasuries rose this week while those with duration between 1 and 7 years fell. On Monday, in the absence of major economic data, Treasury yields approached their highest levels since 2011 as speculation grew that the Fed would trim bond purchases as early as next month. On Tuesday, Treasuries rallied as value oriented investors scooped up the securities. 

US Economy and Credit Markets Week Ended August 23, 2013
Aug. 26, 2013 - First Trust -  Amid mixed economic reports and debate over the status of the Federal Reserve’s Quantitative Easing program longer dated Treasuries rose this week while those with duration between 1 and 7 years fell. On Monday, in the absence of major economic data, Treasury yields approached their highest levels since 2011 as speculation grew that the Fed would trim bond purchases as early as next month. On Tuesday, Treasuries rallied as value oriented investors scooped up the securities. 

The Key Economic Report to Watch Now
Aug. 20, 2013 - BlackRock Blog -  Stocks and bonds came under pressure last week as investors reacted to a stronger-than-expected initial jobless claims report. Russ explains why the selloff was unnecessarily extreme – and reveals the number investors should be paying attention to instead.

Nonfarm Productivity Increased at a 0.9% Annual Rate in the Second Quarter
Aug. 16, 2013 - First Trust -  Implications: Nonfarm productivity increased at a Plow Horse-like 0.9% annual rate in Q2, as hours increased at a healthy clip, but output climbed even faster. After surging rapidly in 2009, productivity grew at a moderate pace in 2010 and has since slowed down even further. In fact, productivity is now unchanged from a year ago. One possibility is that the government is having a hard time measuring production in the increasingly important service sector, which means both output growth and productivity growth are higher than the official data show. 

Housing Starts Increased 5.9% in July to 896,000 Units at an Annual Rate
Aug. 16, 2013 - First Trust -  Implications: The good news is that housing starts rebounded sharply in July after being depressed by unusually wet weather in many states in June. Like blizzards in the winter, heavy rains in the summer sometimes make it tough to break ground for foundations, adding volatility to the starts data. The so-so news is that the rebound in July was all due to multi-family homes, which are always volatile; single-family starts declined 2.2% in July. 

class="portal_thumbnail" > Morningstar's Guide to Investing in Chinese Stocks via ETFs
Aug. 16, 2013 - Morningstar, Inc. -  The Chinese economy and equity market continue to demonstrate their importance and impact on the global economy and markets. Our global exchange-traded fund research team has just published "Morningstar's Guide to Investing in Chinese Equities via ETFs" to help investors better understand the nuances of investing in Chinese stocks. The report also gives a comprehensive overview of the global menu of ETFs offering exposure to Chinese equities and highlights key considerations that investors should take into account before making an investment decision.

The Clock Is Ticking And Returns Are Diminishing
Aug. 15, 2013 - First Trust -  

View from the Observation Deck

  1. While today’s message is intended for those investors who still own packaged products with a high exposure to Treasuries, it may also be applicable to some degree to other investment-grade debt securities. 
  2. We believe that many investors felt compelled to seek refuge in Treasuries during the financial crisis in 2008. Trading up in credit quality while in the midst of an economic contraction is understandable, in our opinion


Pairs of A Kind
Aug. 13, 2013 - First Trust -  

View from the Observation Deck

  1. On page two of our Quarterly Newsletter from July 2012 (click here to view), we featured four 50/50 split-ticket investment ideas for investors to ponder. They are featured in the chart.
  2. Our goal was to show how investors can combine two investment vehicles targeting the same theme or sector in an effort to diversify risk, increase the potential for capturing appreciation, or both. 


“Shiller P-E” No Reason to Sell
Aug. 12, 2013 - First Trust -  In terms of market calls, few academics or economists can match Yale University economics professor Robert Shiller. In his 2000 book, “Irrational Exuberance,” he argued that 10-year averages of corporate earnings smoothed out the ups and downs of the business cycle. Then, using this “cyclically-adjusted” level of earnings and comparing it to current stock prices he claimed to generate a better version of the P-E ratio. 

July ISM Non‐Manufacturing Index
Aug. 05, 2013 - First Trust -  Implications: Just like its manufacturing sister report, the ISM service report boomed in July easily beating not only consensus expectations but the predictions from all of the 84 economics groups that made a forecast. Both reports signal a pickup in economic growth in Q3. The ISM service report expanded at the fastest pace in five months. The business activity index, – which has a stronger correlation with economic growth than the overall index – boomed to 60.4, while the new orders index also showed notable growth to 57.7.

US Economy and Credit Markets Week Ended August 2, 2013
Aug. 05, 2013 - First Trust -  Treasuries had a mixed week as yields on 1, 2, 3, and 5 year Treasuries dropped while yields on 10 and 30 year Treasuries rose. This yield curve twist occurred as comments from the Federal Reserve on Wednesday suggested that the bond purchase program would continue as it has for the foreseeable future. The Federal Reserve downgraded the outlook for U.S. economic growth from “moderate” to “modest,” which led to speculation that tapering of bond purchases will not occur as soon as expected.