Spring Rally in Stocks, Bonds, Gold and Bitcoin Unnerves Investors – Ben Eisen June 6, 2017 8:05 p.m. ET


Assets don’t usually rise or fall in unison

Gold has gained following terror attacks in the U.K.

Gold has gained following terror attacks in the U.K. Photo: neil hall/Reuters

Stocks, bonds, gold and bitcoin—assets that rarely move in unison—have all been surging this spring, an everything rally that leaves investors confounded about how to play the plodding U.S. expansion and vulnerable to sharp reversals in fortune.

Major U.S. stock indexes have soared to records this month, reflecting some investors’ confidence in the continued U.S. economic recovery along with expectations that large technology firms will accrue further market-share gains. At the same time prices of bonds, which often decline when stocks are rising, have risen lately, as U.S. inflation readings cooled off alongside a slowdown in some key industries.

Gold has gained following terror attacks in the U.K., and turmoil in U.S. politics centering on the administration’s legislative prospects and a key congressional hearing this week featuring former FBI director James Comey.

The simultaneous gains have begun to concern some investors. Many point to a wave of money that is driving up asset prices, tied in part to lower bond yields and a lower dollar—a confluence of events they say feels good while it lasts but can’t go on forever.

“We do think there are distortions” in the markets, said Iman Brivanlou, who oversees high-income equities at asset manager TCW Group Inc.

The Dow Industrials this month have posted two record closes, their first since March, and the 30-stock index remains just 0.33% below its all-time high despite a decline Tuesday of 47.81 points to 21136.23.

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Asset Bubbles From Stocks to Bonds to Iron Ore Threaten China – By  John Lyons and  Shen Hong Updated Oct. 31, 2016 11:12 p.m. ET


Investment binge fueled by easy credit and fiscal stimulus increases volatility; prices surge, then slide

Workers in Shenzhen, China, move materials at a construction site in August. The city had the world’s largest increase in apartment prices last year, a sign of China’s housing bubble.

Workers in Shenzhen, China, move materials at a construction site in August. The city had the world’s largest increase in apartment prices last year, a sign of China’s housing bubble. Photo: Qilai Shen/Bloomberg News

A succession of asset bubbles has formed in China, caused by a torrent of speculative money sloshing from stocks to bonds to commodities.

The biggest apparent bubble is in housing, but prices have surged for niche assets, too, such as calligraphy, antiques and art. In May, futures prices for soybean meal, used as pig feed, jumped 40%. The trading volume of 600 million tons was nine times higher than China’s annual consumption. The pipe-making material PVC is up 40% so far this year on the Dalian Commodity Exchange.

The world’s second-largest economy is slowing. Easy credit and successive fiscal stimuli, designed to keep China aloft, mean it is awash in money that is chasing an increasingly small number of investment opportunities. China’s money supply has quadrupled since 2007, and the new cash is largely trapped inside the country by government capital controls.

“There are very few places left to invest in the real economy, so the money goes into the so-called virtual economy,” said Yang Delong, chief economist at First Seafront Fund Management Co., which manages $6 billion and is based in the manufacturing hub of Shenzhen. First Seafront has sharply cut its stockholdings in the past year and shifted toward bonds and commodities.

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Africa Bruised by Investor Exodus – By MATINA STEVIS Feb. 21, 2016 5:30 a.m. ET


A toxic confluence of factors frightens away frontier-market investors

Zambian stocks have taken a beating over the past year as copper exports softened on weaker Chinese demand. The Zambian capital Lusaka is seen here.

Zambian stocks have taken a beating over the past year as copper exports softened on weaker Chinese demand. The Zambian capital Lusaka is seen here. — PHOTO: WALDO SWIEGERS/BLOOMBERG NEWS

ENLARGE

Zambian stocks have taken a beating over the past year as copper exports softened on weaker Chinese demand. The Zambian capital Lusaka is seen here. Photo: Waldo Swiegers/Bloomberg News

NAIROBI, Kenya—Investors are yanking their cash from African assets, until recently a popular play for the adventurous, as a toxic confluence of factors overhangs the continent.

Crashing commodity prices, a Chinese slowdown and a string of policy failures are forcing investors to reassess the risk of investing in Africa after years of optimism about its growth prospects.

Stock markets and currencies have been selling off across the continent, especially in commodity-dependent economies. Nigeria, the continent’s largest economy and longtime investor darling, has one of the world’s worst-performing stock indexes this year, down by 14% since the start of 2016. The S&P Nigeria BMI index lost more than one-quarter of its value last year as measured in dollars, 10 percentage points more than the average frontier-market index the company tracks.

The S&P Zambia Index has fared even worse over the past year, plunging 45% as the country’s copper exports tumbled on softening Chinese demand. President Edgar Lungu last September called for a day of national prayer to petition God to shore up Zambia’s currency, the kwacha. At the time, the kwacha had lost 45% of its value against the dollar in 2015.

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Most Asian Shares Rise, but Shanghai’s Main Benchmark Falls – By CHAO DENG Updated Feb. 1, 2016 2:34 a.m. ET


China’s stocks take a tumble amid fresh signs of weakening in the Chinese economy

An investor looks at an electronic board showing stock information at a brokerage house in Huaibei, Anhui province, in China on Jan. 29.

An investor looks at an electronic board showing stock information at a brokerage house in Huaibei, Anhui province, in China on Jan. 29. –ILLUSTRATION: REUTERS

 

China shares fell Monday amid more signs of weakening in the Chinese economy, but markets in the rest of the Asia region rallied a second straight trading day.

The Shanghai Composite Index finished down 1.8% at 2688.85, after Chinese officials reported that the country’s manufacturing purchasing managers index fell to 49.4 in January, marking the sixth-consecutive month of contraction and its lowest level since August 2012. The Hang Seng Index was last down 0.6%.

Still, Japan’s Nikkei Stock Average powered ahead by nearly 2%, adding to its 2.8% surge on Friday when the Bank of Japan surprised investors by cutting interest rates to negative territory. The market also rose amid several solid earnings results.

Its gains helped lead Australia’s S&P/ASX up 0.8% and South Korea’s Kospi up 0.7%. Hong Kong’s Hang Seng Index closed down 0.5%.

A mixed performance in the region comes as investors weigh the potential for more quantitative easing from central banks around the world and the latest moves by Japan, against an environment of persistently lower oil prices and slowing in China.

“Financial markets are now watching how Beijing will respond to Tokyo’s decision,” Niv Dagan, executive director at Peak Asset Management, wrote in a note. The firm doesn’t believe China will embark on a “major currency devaluation” although “pressure is mounting from record capital outflows and fears the economy is slowing faster than expected.”

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http://www.wsj.com/articles/most-asian-shares-rise-but-shanghais-main-benchmark-is-lower-1454294821

Dow, S&P close at record highs – By Jesse Solomon 1 May 12, 2014: 4:37 PM ET


dow 430

NEW YORK (CNNMoney)

With the weather finally warming up, investors were feeling some spring in their step.

The Dow and S&P 500 closed at record highs Monday. The jumped over 112 points to close at 16,695.47, and the S&P 500 ended the day about a percent higher at 1,896.65. Even the Nasdaq, which has been volatile amidst a pullback in tech stocks, got a nice bounce of roughly 1.8%.

Investors poured money into the perceived safety of blue chip companies and seem to believe the economy is improving, albeit slowly. There’s still concern about tech stocks though as investors fret about sky-high valuations and, in the case of some tech companies, unproven business models.

CNNMoney’s Fear and Greed Index has been languishing in fear mode for the last month, mainly dragged down by tech stocks, but the index finally moved into neutral mode on Monday.

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Stocks’ growth may hinge on much better earnings, economy – By Andrew Tangel January 18, 2014, 5:00 a.m.


Stocks’ rally in 2013 came without solid improvements for corporate earnings or the economy. That will have to change this year for shares to maintain their gains, market observers say.Stocks’ growth may hinge on much better earnings, economy

The stock market shined last year with an epic rally. Now it’s time for corporate America — and the economy — to catch up.

Stocks ballooned 30% last year, as measured by the Standard & Poor’s 500 index. But the average company in the broad index only increased annual earnings — the key driver of stock values — an estimated 5.2% as the economy grew sluggishly.

For stocks to maintain their gains, market observers say, American companies will need to eke out solid, if not better, earnings growth this year. That’s no easy task with corporate profit margins already at record highs after executives slashed expenses to please Wall Street.

“It’s a squeeze,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. “Nobody’s happy about the growth, but the bottom line is these companies are finding a way to do it. Now it’s getting harder. How do you squeeze it more?”

The stock market hasn’t seemed too impressed this year.

The Dow Jones industrial average is down 0.7% since Jan. 1, while the S&P 500 index is off 0.5%. The technology-focused Nasdaq composite index, however, has gained 0.5%.

Wall Street, meanwhile, is losing one major fuel source starting this month: TheFederal Reserve is scaling back its massive stimulus program that’s credited with helping juice the rally by luring investors out of perceived havens such as bonds. By keeping interest rates low, the Fed has encouraged investors to chase returns in riskier assets such as stocks.

While few analysts have sounded alarms about a possible stock market bubble, there have been increasing signs that equities are becoming a bit overheated.

“We need 2014 to justify the run-up that we saw last year,” said Stephen Wood, chief market strategist at Russell Investments in New York.

So far, the results aren’t so great.

Company earnings reports for the final quarter of 2013 began trickling in this week, and they’ve been mixed.

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http://www.latimes.com/business/la-fi-0118-us-stocks-20140118,0,1469224.story#ixzz2qkuosdwa