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Riding the ETF momentum into 2016
Asset Management
<p>A phenomenon that has caught plenty of market observers by surprise this year is the outperformance of the momentum factor over its value counterpart. Momentum can take on multiple forms and it is not limited to glitzy biotechnology and Internet stocks.</p> <p>However, it is some of those glitzy Internet stocks that have driven the impressive returns accrued by the consumer discretionary group, this year's top-performing S&amp;P 500 sector.<br /> Don't Be Surprised<br /> "The strength of consumer discretionary stocks is not altogether surprising, given the strength of the labor market. Wage and salary growth is up 4.0% since last August, and consumers’ assessment of the job market is also favorable. According to The Conference Board, the spread between those stating that jobs are "plentiful" and those claiming that jobs are "hard to get" was 0.8 in September – the widest chasm in sentiment since the spring of 2008," said PowerShares, the fourth-largest U.S. ETF issuer, in a recent note.</p> <p>Read more at Benzinga. <br /> Photo: B4bees</p>
Picasso ink drawing on auction in NYC expected to bring in $35 million
Lifestyle, 4:01
<p>&nbsp;</p> <p>Works from art greats including Picasso, van Gogh, Calder, Giacometti, Rothko, Degas, and Jackson Pollock will be auctioned in New York next month.</p> <p>Sotheby's is hosting the November 4 event on the Upper East Side in Manhattan, reports the New York Post. The entire collection is worth more than $500 million, and Picasso's "Femme assise sur une chaise" is estimated to sell for up to $35 million. The pieces come from the collection of A. Alfred Taubman, shopping mall magnate and philanthropist.</p> <p>For those who can't afford the pricey pieces, Sotheby's York Avenue galleries display most of the works free to the public between October 24 and 27.<br /> Photo: Nadia</p>
FBI to probe Goldman over 1MDB link
Capital Markets
Goldman Sachs just can’t help but court controversy, after Abacus, Greece, and Libya (just to name a few), the venerable Wall Street firm has once again found itself embroiled in yet another scandal, and this time, it’s with Malaysia. According to the Wall Street Journal, the FBI and the U.S. Justice Department are both looking into the Goldman’s role “in
Video: Warren Buffett on activist investors
Hedge Funds
<p>Speaking at Fortune's Most Powerful Women Summit, former activist investor Warren Buffett had some pretty nice things to say about activism. Activist funds however seem to continue drawing his ire, especially when it comes to the fees they garner. “They’re like sharks, they got to keep swimming.”</p> <p>Photo: Fortune Live Media</p>
Bill Gross calls out Michael Novogratz
Asset Management
<p>With the closure of Michael Novogratz’s Fortress Macro Fund splattered all over the news, Bill Gross, the former bond king and renowned ruminator of all things doo-dooey, had some pretty interesting things to say on his twitter feed:</p> <p>Gross: Story of The Day - Deep out of the money hedge funds shut down if 20% of profits out of reach. Start over later with clean slate!<br /> — Janus Capital (@JanusCapital) October 13, 2015</p> <p>Interestingly, here’s how PIMCO’s Total Return Bond Fund did prior to his jump to Janus.</p> <p>Pot, meet kettle.</p> <p>To be completely fair though Total Return’s performance really wasn’t the disaster people were making it out be, although it definitely was a far, far cry from its former glory.</p> <p>Still, with all the Mills and Boonery following his departure from PIMCO, his new fund's constant outflows, and the lack of uncomfortable, personal musings in his monthly outlook, somebody should really go check on him. These antics of his are starting to get a little out of hand.<br /> Photo: Janus</p>
Daily Scan: Stocks tumble as deflationary pressures rock Asia
Capital Markets
<p>Updated throughout the day</p> <p>October 14</p> <p>Good evening everyone. Asian equities extended their declines today as inflation figures from China, Japan, and India all added to worries that deflation is on the horizon. The Hang Seng Index ended the day down 0.71%, while the Shanghai Composite and the Nikkei 225 finished the session down 0.91% and 1.89% respectively. As for the rest, here’s how they fared:</p> <p> Hang Seng China Enterprises Index: -0.99%<br /> Shenzhen Composite: -1.20%<br /> Straits Times Index: -0.37%</p> <p>Over in Europe, things aren’t looking too hot either. The FTSE 100 – at pixel time down 0.65% – seems to be on the way to its third straight decline, while the DAX and CAC – saying goodbye to what was a decent start to the month – are currently down 0.79% and 0.67% respectively.</p> <p>Here’s what else you need to know:</p> <p>U.K. unemployment falls to seven-year low. Guess it wasn’t all bad news in fair Brittania. The U.K.’s Office of National Statistics has just reported that the region’s unemployment rate has fallen to 5.4% – a level unseen since the March quarter of ’08, while the employment rate – the proportion of people aged from 16 to 64 who were in work – climbed to 73.6%, its highest since recording began in 1971. Inflation was pegged at -0.1% yesterday though, take note of that, Janet. Office of National Statistics</p> <p>Japanese producer prices fall to a near six-year low. Japan’s producer price index fell 3.9% from a year ago in September, punching in its sixth-straight month of price deflation and posting its worst decline since November 2009. That 2% inflation rate target set by the BOJ looks even further away now. MarketWatch</p> <p>China CPI misses estimates. The consumer price index in the world’s second largest economy came in at just 1.6% for September, well below August’s 2% reading and less than the 1.8% analysts were expecting. The producer price index meanwhile fell 5.9% from the year before, in-line with estimates. Barron’s</p> <p>Singapore weakens the SGD. Despite seeing its economy – widely expected to contract – narrowly escape recession, the Monetary Authority of Singapore decided to ease its monetary policy today by weakening the dollar “slightly.” While its GDP figures were better than expected – its June quarter data was also revised higher from -4% to -2.5% – on a year-on-year basis, growth has been measly 1.4% – its weakest showing since 2009. Monetary Authority of Singapore / Ministry of Trade and Industry (pdf)</p> <p>PBOC clips yuan’s eight-day winning streak. The yuan lost most of its hard-earned gains today as the People’s Bank of China fixed its mid-point price down 0.3% to 6.3408 to the dollar. Offshore yuan was trading as high as 6.3487 against the greenback. SCMP (paywall)</p> <p>Vehicle sales climb for first time in six</p>
Daily Scan: Stocks slip; Intel and JP Morgan report earnings
Capital Markets
<p>Updated throughout the day</p> <p>October 13</p> <p>Good evening. U.S. stocks dipped lower as Intel and JPMorgan report their earnings. The Dow fell 0.3%, the S&amp;P 500 dipped 0.7%, and the Nasdaq lost 0.9%. Oil fell slightly, finishing below $47/barrel. Johnson &amp; Johnson reported mixed results as sales on its hepatitis C medicine disappointed and the strong dollar hurt profits.</p> <p>&nbsp;</p> <p>Here’s what else you need to know:</p> <p>Mark your calendar: The first democratic debate kicks off Tuesday at 8:30 p.m. ET. It's Hillary vs. Bernie and those other guys. Broadcast live on CNN.</p> <p>JP Morgan shares fall. JP Morgan Chase kicked off Wall Street's earnings reports slightly below expectations. The bank reported earnings of $1.32 per share and $23.54 billion in revenue, a 6% fall from last year's net revenue. Analysts had expected $1.37 per share on $23.69 billion in revenue. CNBC</p> <p>Intel reports earnings. The California-based tech company reported 64 cents per share on revenue of $14.47 billion, beating expectations. Analysts had been predicted at 59 cents per share on $14.22 billion in revenue. Shares for the company jumped up 1.8%. CNBC</p> <p>&nbsp;</p> <p>CIA psychologists sued. A federal lawsuit was filed on behalf of three men imprisoned and allegedly tortured by the CIA. The two psychologists designed and helped oversee the CIA's interrogation programs. CNN</p> <p>J&amp;J better than expected but not good enough. The company posted 3Q net income of $1.20/share; revenue shrank to $17.1 billion, slightly below $17.41 predicted. The company announced a $10 billion stock buyback and lifted the profit outlook. The stock slipped 21 cents to $95.78. ABC News</p> <p>No phone for you! JPMorgan says it will stop paying for employee Blackberrys (and other devices) in a cost-cutting move. The bank expects to save tens of million of dollars. JPMorgan reports earnings after the close Tuesday. Wall Street Journal (paywall)</p> <p>Exports fall 3.7% and imports collapse in China trade data. China’s trade surplus widened to $60.34 billion from $60.24 billion in August, a massive jump from the $46.79 billion narrowing expected by analysts. The surplus was largely fueled by a 17.7% dive in imports, indicating that China’s shift to a consumer economy isn’t going as planned. And exports slowed Business Insider</p> <p>EM currencies slammed. The post China import bloodbath seemed claimed the Malaysian ringgit and the Indonesian rupiah; both tanked at least 1% against the dollar, while the Philippine peso and the Indian rupee lost at least 0.5%. The aussie meanwhile, right after clocking in a 9-day recovery, plunged nearly 0.9% to AU$0.7296 versus the greenback.</p> <p>Goldman calls EM turmoil 'third wave' of financial crisis. Collapsing commodity prices and the threat of higher rates in the U.S. are hitting emerging markets countries hard. The first wave of the crisis was spurred by the disintegration of the housing market in the U.S.</p>
Video: Twitter laying off 8% of workforce and guess where the internal memo ends up
Lifestyle, 4:01
<p>The letter from newly crowned CEO Jack Dorsey appeared on Twitter, naturally.</p> <p>jack dorsey’s letter to employees.<br /> — ಠ_ಠ (@MikeIsaac) October 13, 2015<br /> This sentence in the letter evoked quite a bit of derision:</p> <p>"This isn't easy. But it is right. The world needs a strong Twitter, and this is another step to get there." -- @Jack</p> <p>— ಠ_ಠ (@MikeIsaac) October 13, 2015</p> <p>On Reddit, a laid off engineer discovered his email no longer worked. What now, he asked? The comments got closed down after they hit 552.<br /> Video: CNBC<br /> Photo: JD Lasica</p>
Chinese asset manager stabbed by angry investor
Lifestyle, 4:01
<p>&nbsp;</p> <p>If you thought being taken hostage from angry employees was the worst thing that could happen to you, welcome to China!</p> <p>Stresses are clearly building as defaults mount in the financial system in China. In one sign of the times, the CEO of Global Wealth Investment (Beijing), a major China-based asset management firm, was stabbed during a meeting on Sunday. Although it was a life-threatening injury, CEO Wang Jie is expected to recover from the assault, according to financial news outlet Caixin.</p> <p>The attacker had apparently invested Rmb300,000 ($47,300) in a wealth management product that failed and led to substantial losses.</p> <p>According to knowledgeable sources, the stabbing of the Chinese asset manager was related to the collapse of Hebei Financing Investment Guarantee Group, a large Chinese government-backed guarantor. Global Wealth and other financial groups packaged and sold a variety investment products backed by loans guaranteed by defunct Hebei Financing.<br /> More on stabbing of Chinese asset manager<br /> Earlier this summer, a group of 11 non-bank lenders wrote a letter to Communist party officials in Hebei province saying there could be “unnecessary social influence” if the government did not quickly bail out Hebei Financing and make it possible for the guarantor to honor its obligations.</p> <p>CEO Wang also wrote his own letter to Hebei officials, pointing out that Hebei Financing had not paid off on guarantees on loan defaults by five companies worth Rmb227m, and that this had impacted 660 investors in Global Wealth products. According to the Caixin report, the amount owed to Global Wealth by the guarantor is now more than Rmb620m.<br /> Keep in mind that high-yielding wealth management products have become extremely popular in China over the last few years as investors were looking for investment options besides real estate, the volatile stock market and bank deposits on which interest rates are capped. Analysts note that these products are frequently used to raise funds for higher-risk borrowers who can’t get bank loans or issue bonds.<br /> Part of the problem is that the great demand for high-yield products and minimal regulation of the sector has led to a good bit of fraud, which has led to widespread protests by investors in China who have been fleeced.<br /> Of note, Global Wealth is not accused of any crimes, however, phone calls and emails to the firm were not answered on Tuesday. Furthermore, the company’s office in Beijing was closed with a note on the door saying a “criminal incident” had occurred on Sunday.</p> <p>This article was originally published by Value Walk. <br /> Photo: David Dennis</p>
How to use leveraged ETFs to beat the Fed
Asset Management
<p>Ten-year Treasury yields have declined 4.1 percent over the past month as market participants have continued adjusting to the Federal Reserve not raising interest rates following its September meeting.</p> <p>Perhaps that explains why inflows to fixed income exchange traded funds have been so strong this month. Heading into Monday, three of October's top four asset-gathering ETFswere bond funds while just one bond fund was found among the month's 10 worst ETFs for outflows.</p> <p>When it comes to how traders are viewing what that decision will be, Fed funds futures recently indicated that fewer than a third of fixed income traders are wagering the Fed will boost borrowing costs. However, there also is not a dearth of market observers that believe it is foregone conclusion the U.S. central bank will pass on raising rates.</p> <p>Read more at Benzinga. <br /> Photo: Brookings Institute </p>