News > Financial Services

Institutional clients buy stocks for first time in 9 weeks: BAML
Asset Management
<p>Last week, institutional clients turned net buyers of U.S. stocks for the first time in nine weeks, though private clients sold the rally for the fourth consecutive week, reports BofAML. After tracking BofAML equity client flow trends, Jill Carey Hall and Savita Subramanian of Bank of America Merrill Lynch published their Nov, 4 research report highlighting that small caps continued to witness negative flow trends.<br /> Record inflows into Consumer Staples stocks<br /> Hall and Subramanian point out that last week (10/26 to 10/30), BofAML clients were net buyers of U.S. stocks for the first time in four weeks. Though hedge funds and institutional clients had been net sellers for the last three weeks and last eight weeks respectively, they led the net buying. Even though private clientssold the rally for the fourth consecutive week, they remain the only net buyers of stocks year to date:</p> <p>After analyzing the weekly flows by sector, client and size, the BofAML analysts point out that net buying last week was led by ETFs and record inflows into Consumer Staples stocks. The analysts also said that net buying was chiefly in large caps, while mid-caps also witnessed small inflows but small caps saw net sales:</p> <p>Hall and Subramanian point out that small caps have continued to witness negative flow trends after they noted several weeks ago that flows in this segment looked like they were starting to roll over. The BofAML analysts continue to prefer large caps over small caps, and they anticipate that large caps will fare better in a rising rate environment:</p> <p>Hedge funds – Net sellers on 4-week average basis<br /> After tracking the data based on rolling four-week average basis in terms of sector, Hall and Subramanian point out that Telecom has witnessed net buying since mid-Oct, while Materials has witnessed net selling since late June:</p> <p>Analyzing the flows based on rolling four-week average trends by client type, the BofAML analysts note that hedge funds are net sellers of U.S. stocks on a </p>
Media ETFs look to join discretionary party
Asset Management
<p>The consumer discretionary sector is the best performer in the S&amp;P 500 this year and as measured by the Consumer Discretionary Select Sector SPDR XLY 0.23%, the battle is not even close. XLY, the largest consumer discretionary exchange traded fund by assets, is up 13.9 percent year-to-date, an advantage of 600 basis points over the second-best SPDR, the Technology Select Sector SPDR XLK 0.06%.</p> <p>With the strength of the broader discretionary group in mind, perhaps it is surprising media stocks have been laggards. Although Walt Disney Co DIS 0.42% is one of the best-performing member of the Dow Jones Industrial Average this year, the PowerShares Dynamic Media Portfolio PBS 0.11%, an ETF that allocates 5.1 percent of its weight to Disney, has posted a year-to-date gain of just 4.6 percent.</p> <p>Earnings reports from 21st Century Fox FOXA 2.01% and Time Warner Cable Inc. TWC 0.45% could provide PBS with the spark the ETF needs. Those stocks combine for 9.6 percent of the ETF's weight.</p> <p>Read more at Benzinga.<br /> Photo: Bruce Tuten </p>
Sequoia makes its first foray into Taiwan with AI investment
Venture Capital
<p>Venture capital behemoth Sequoia Capital has made its first incursion into Taiwan, leading a $23 million Series B round investment in Appier, a "smart marketing" company using artificial intelligence. </p> <p>The startup, which announced its investment on Tuesday, uses AI to tracks the browsing habits of web audiences across multiple devices in order to provide better targeted advertising. </p> <p>UOB Venture Management, JAFCO Asia, TransLink Capital, and MediaTek Ventures are among those who also took part in the deal which brings Appier's total funding to $30 million. CEO and co-founder Chih-Han Yu, who has seen his company grow 600% since its Series A round in June 014, said:<br /> “We are living in a post-mobile era: the era of cross screen. Artificial intelligence is the best approach to resolve this complexity and make cross screen easy. In fact, advertising is just the beginning. We believe in the future our AI can help businesses solve a variety of difficult analytical problems.”<br /> Photo: Allan Ajifo</p>
Video: Larry Fink -- Investing for the long term
Asset Management
<p>;feature=player_embedded<br /> In a short-term world driven by quarterly returns, shareholder pressures, endlessly compressed news cycles and election campaigns that start before the last one has ended, how can the public and private sectors develop strategies and invest for the long term?<br /> Laurence D. Fink, chairman and C.E.O., BlackRock, introduced by Andrew Ross Sorkin, columnist, DealBook founder and editor at large, The New York Times.<br /> Photo: tallalex85</p>
Bill Gross says its time for the Fed to turn on 'Operation Switch'
Asset Management
<p>Forget 2012's "Operation Twist," it's time for "Operation Switch," says Bill Gross in his latest investment outlook. Central banks need to raise their inflation targets to benefit the markets, he says. The Fed needs to produce a steeper yield curve to allow businesses and savers to increase their profit margins. Gross explains:<br /> I propose an “Operation Switch”. Instead of 2012’s “Operation Twist”, which sold 2-5 year notes and reinvested the proceeds in longer dated Treasuries now resting in their portfolio, the Fed should do just the reverse. After all, the twist did nothing to improve YOY GDP growth – it may in fact have lowered it as the above argument claims – dropping GDP in the 4th quarter of 2013 to .9% YOY following the “Twist” in 2012. The Fed now holds upwards of $2 trillion longer dated Treasuries and mortgages that can be “switched” into 2-5 year paper, steepening the yield curve and benefiting savers, liability-based businesses, and the economy itself. But they won’t, you know. Yellen and Draghi believe in the Taylor model and the Phillips curve. Gresham’s law will be found in the history books, but his corollary has little chance of making it into future economic textbooks. The result will likely be a continued imbalance between savings and investment, a yield curve too flat to support historic business models, and an anemic 1-2% rate of real economic growth in even the most robust developed countries.<br /> &nbsp;</p>
Square readying IPO prepares to hit the road for Thanksgiving pricing
Venture Capital
<p>Square is ready to hit the road. According to unnamed sources at CNBC, the payment app founded by Twitter CEO Jack Dorsey is revving up to price its shares by Thanksgiving week.</p> <p>In a filing with the SEC, Square has said it hopes to raise $275 million. The company raised money last year at a valuation of $6 billion.</p> <p>Square is a favorite among payments mavens and it is ubiquitous among small merchants. But just how it makes money is unclear. It seemed destined for greatness when Starbucks forged a deal with the fledgling company about three years ago. Turns out, Starbucks is a better negotiator than Square, which never got much customer traction for its wallet.  Investors are also concerned about just how much attention Dorsey will be paying to the payments company, which is in a very crowded space.</p> <p>&nbsp;</p>
Junk Bond ETFs: Old black is the new black again
Asset Management
<p>If exchange trade funds inflows are an accurate gauge, market participants have largely scoffed at interest rate concerns this year while pouring billions of new assets into fixed income ETFs. Year-to-date, two bond funds rank among the top 10 asset-gathering ETFs while no bond funds are found among the year's worst outflow offenders.</p> <p>That statistic du jour being bandied about is that bond ETFs listed around the world now have over $500 billion in combined assets under management. Even in what is a tricky environment for bonds and fixed income funds, high-yield corporate bond ETFs are contributing to that growth.</p> <p>To this point in the fourth quarter, four of the top 10 asset-gathering ETFs are bond funds and the leader of that pack is the SPDR Barclays Capital High Yield Bnd ETF ...</p> <p>Full story available on<br /> Photo: Got Credit</p>
China’s policies, Fed’s taper tantrum – more treats, less tricks
Asset Management
<p>This article is an excerpt from a previously released Sidoxia Capital Management complementary newsletter (November 2, 2015). </p> <p>Have you finished licking the last of your Halloween chocolate-covered fingers and scheduled your next cavity-filled dental appointment? After a few challenging months, the normally spooky month of October produced an abundance of sweet treats rather than scary tricks for stock market investors. In fact, the S&amp;P 500 index finished the month with a whopping +8.3% burst, making October the tastiest performing month since late 2010. This came in stark contrast to the indigestion experienced with the -8.7% decline over the previous two months.</p> <p>What’s behind all these sweet gains? For starters, fears of a Chinese economic sugar-high ending in a crash have abated for now. With that said, “Little Red riding Hood” is not out of the woods quite yet. Like a surprising goblin or ghost popping out to scare you at a Halloween haunted house, China could still rear its ugly head in the future due to its prominent stature as the second largest global economy. We have been forced to deal with similar on-again-off-again concerns associated with Greece.</p> <p>The good news is the Chinese government and central bank are not sitting on their hands. In addition to interest rate cuts and corruption crackdowns, Chinese government officials have even recently halted its decades-long one-child policy. China’s new two-child policy is designed to spur flagging economic growth and also reverse the country’s aging demographic profile.</p> <p>Also contributing to the stock market’s sugary October advances is an increasing comfort level with the Federal Reserve’s eventual interest rate increase. Just last week, the central bank released the statement from its October Federal Open Market Committee meetings stating it will determine whether it will be “appropriate” to increase interest rates at its next meetings, which take place on December 15th and 16th. Interest rate financial markets are now baking in a roughly 50% probability of a Fed Interest Rate hike next month. Initially, the October Fed statement was perceived negatively by investors due to fears that higher rates could potentially choke off economic growth. Within a 30 minute period after the announcement, stock prices reversed course and surged higher. Investors interpreted th</p>
Ken Griffin knows what makes Citadel work
Hedge Funds
<p>After 25 years, Citadel has become a $25 billion hedge fund. The firm took a hard hit during the financial crisis, but has since recovered, writes the New York Times.</p> <p>"In our firm's earliest days, our understanding of the power of great software engineering and quantitative analytics helped Citadel stand out," writes Griffin in a letter to investors. "But history is littered with companies started by entrepreneurs who failed to sustain such early bursts of success...What, then, has driven our longevity and our success? The answer is simple: Our sustainable competitive advantage doesn't just come from our technical prowess; it comes from assembling teams of extraordinary individuals who have the creativity, resourcefulness, ambition and tenacity to take on the world."<br /> Photo: Wikipedia</p>
This emerging markets ETF can deal with the strong dollar
Asset Management
<p>Much has been made of the strong dollar's impact on emerging markets equities and the relevant exchange traded funds. Price action bears out that impact.</p> <p>Over the past year, the Vanguard FTSE Emerging Markets ETF VWO and the iShares MSCI Emerging Markets ETF EEM, the two largest emerging markets ETFs by assets, are both down just over 15 percent while the PowerShares DB US Dollar Index Bullish Fund UUP, the U.S. Dollar Index tracking ETF, is higher by 10.2 percent.</p> <p>The declines of EEM and VWO do not paint the entire picture of the repudiation suffered by emerging markets ETFs at the hands of the strong greenback. From Brazil to South Africa to Turkey, scores of emerging markets funds have been pummeled by the rising dollar and speculation that higher U.S. interest rates could stoke a raft of credit ratings downgrades throughout the developing world.</p> <p>Read more at Benzinga.<br /> Photo: images money</p> <p>&nbsp;</p> <p>&nbsp;</p>