Monday, June 08, 2015

Markets, Trading, and Investment: New Views for the New Week

*  We've seen sectors responding very differently to the recent rise in interest rates.  Banking stocks are at highs ($BKX), while real estate shares are at lows (IYR).  Note the rise in microcap stocks (IWC) since early May.  Large cap shares ($XMI), however, have seen recent weakness and are below those early May lows.  I'm watching the degree to which sectors are moving in unison as a way of gauging broader market moves.  If rising tides aren't lifting all boats (and vice versa), I've found it's worth questioning those moves.

Unusually lucid account of the shift from active to passive investment strategies from Abnormal Returns, with particular mention of The Reformed Broker.  Although I must say I have some concerns about how that total bond fund has now become the largest ETF.  The one scenario I don't hear people talking about is a significantly strengthening domestic and global economy creating rising inflation and rates.  That would not be a good environment for long-term bonds.  Note the recent behavior of TLT, for instance.

*  A good perspective on strong versus weak economic data comes from A Dash of Insight.  Note the very interesting economic indicators linked by Jeff Miller, including ones that reflect low odds of an upcoming recession.  Great macro review.

*  As noted by Jeff, here is an unusually interesting timing model that shifts allocations in stages between fixed income and stocks.

*  The relative absence of female money managers is discussed by Abnormal Returns and is the focus of a recent Forbes piece I contributed, which highlights how six of the ten jobs with the greatest discrepancy between incomes of men and women are in the finance industry.

Have a great start to the week!