Bill Gross thinks conditions are ripe for a liquidity crisis, and he points a finger at his old firm for its potential to be at the center of the storm.» Read More
America's fast-moving jobs train is being powered by fast food.
May's big gain in nonfarm payrolls helped allay fears that employment growth was stuck in the same mud bog that has muted growth across other economic sectors this year. The U.S. has been averaging 251,000 net new jobs a month over the past year, with May's 280,000 topping even that number.
Looking over that time, and indeed the past decade or so, tells a less glittery story.
In the past 10 years, the headline unemployment rate is actually higher now—from 5.1 percent in May 2005 to the current 5.5 percent. The number gets even worse when you factor in the labor force participation rate, as the Labor Department does not count in the headline rate those working part time for economic reasons or who have quit looking for work. In that decade span, the labor force participation rate has tumbled from 66.1 percent to 62.9 percent, which is near the lowest level in more than 35 years,.
Factoring in the underemployed and those who have stopped looking for work, the rate has gone from 8.9 percent to 10.8 percent.
The National Employment Labor Project, which advocates for the jobless, pointed out another sobering statistic Friday: Fast food industry jobs have set the pace since 2000, rising 23.3 percent, against a 5.1 percent overall gain in private sector job growth.
In New York City specifically, fast food jobs exploded by 87 percent, or about twice the rate of the previous 15-year period. In New York state, the gain was 57 percent at a time when private jobs increased by just 7 percent.
The Securities and Exchange Commission appears to have its sights on activist investors, but the hedge fund industry isn't concerned about a crippling crackdown.
The SEC is investigating whether some activist investors illegally teamed up to target companies without properly disclosing their alliances, The Wall Street Journal reported late Thursday, citing unnamed sources.
The SEC declined to comment to CNBC.com on the report. But hedge fund managers and their clients contacted Friday didn't react with alarm.
"It doesn't concern me," said one activist hedge fund client, noting that coordination was not a common strategy and any group impacted would be small. "It won't affect their ability to operate."
"It's not scary," added an activist manager about news of SEC investigations. "I wish they would spend their time on more useful things."
Bond giant Pimco remains bruised, but it was not broken following the departure of its high-profile founder in 2014, according to a Morningstar analysis.
The Newport Beach, California-based firm is nearing an important point, however, in that it has seen clients withdraw some $290 billion. That puts it near where Morningstar earlier had identified as a critical point when Pimco's profit margin would shrink in a meaningful way.
"We continue to have a cautiously optimistic outlook for Pimco's future," Morningstar said in a white paper it released Thursday. "We're encouraged at the progress the firm's leaders have made in stabilizing the investment team, fortifying the firm's culture, and continuing to invest in its research effort. Yet, the situation is fluid amid continued outflows and an investment team still in the formative stages of jelling and reforging its identity."
Investors have been watching the firm closely since the high-profile departure early in 2014 of co-CEO Mohamed El-Erian.
That scrutiny intensified when its founder, Bill Gross, jumped ship in September, after 40 years, for Janus Capital, a much smaller firm where he now manages an unconstrained fund. Outflows have plagued Pimco in general, but in particular its Total Return Fund, which until recently was the largest bond fund in the world before seeing its assets under management tumble to $107.3 billion.
The trendiest trade of 2015 has lost some of its mojo lately.
With global central banks in overdrive to devalue and the U.S. heading in the opposite direction, investors had been piling into exchange-traded funds that hedged against big currency moves.
Four of the top 10 ETFs this year in terms of fund inflows are related to currency hedging. That includes the most popular one, the WisdomTree Europe Hedged Equity, which has taken in $13.6 billion, according to ETF.com. The fund is up a gaudy 16.8 percent year to date but is down 2.5 percent over the past week and off 0.4 percent for the month.
The funds often use a balance of dividend-paying and export-based companies to hedge currency exposure.
Softening economic conditions and the derailing of U.S. dollar strength has turned the tide on the currency hedge play.
During May, currency hedged funds saw their slowest pace of inflows since October, with just $3.4 billion coming into those products, reported BlackRock, which is the biggest player in the ETF industry with $822.2 billion in assets under management. Investor interest grew a bit later in the month when the greenback regained some strength, but likely will wane again now that the dollar is headed weaker.
Central bank positioning will be the key.
By day, hedge fund manager Pierre Andurand bets hundreds of millions of dollars on the price of oil and other commodities in a fiercely competitive trading market. By night, Andurand channels his aggressive streak into kickboxing and other martial arts.
Andurand's combative side was on display Wednesday night at "Fight for Education" in New York, which benefited charity Happy Hearts Fund. He beat Michael Tobin of commodities hedge fund firm Taylor Woods Capital Management in kickboxing via a technical knockout.
"I'm happy to support the charity—hopefully no one gets hurt!" Andurand told CNBC.com during cocktails before his match, while still wearing a suit.
Big investors are dismissing talk of a technology market peak given what they call unprecedented advances in the sector.
"There's still a lot more opportunity," Robert Smith, founder and CEO of Vista Equity Partners, said when asked if this was a "market top" for the tech sector.
"Today we are witnessing the greatest era of innovation in our lifetime," Smith, who manages more than $14 billion of private equity investments in tech, explained Tuesday at The Wall Street Journal Private Equity Analyst Conference in New York.
The stock market could learn a lot from Swan, Ajax and the rest of the gang from the 1979 cult favorite "The Warriors."
So goes the thinking from Convergex's chief market strategist, Nick Colas, who sees parallels between the retreat the headline gang from the movie had to beat back to Coney Island, and the pullback stocks need if they are going to remain in a healthy state. "The Warriors" begins with a gang summit in New York during which the leader is murdered and a rival gang wrongly blames the Warriors, who then have to battle their way back home.
In his daily note Tuesday, Colas recalled that "The Warriors" closely mirrored a story from ancient Greece called the "Anabasis," which tells of how 10,000 Greek mercenaries caught in the Persian Empire fought their way to the Black Sea.
With that in mind, he provided both a movie synopsis and a dissection of the market's current condition:
A small gang (of) petty thugs has to make its way from the northernmost bit of the Bronx to Coney Island in south Brooklyn after being wrongly accused of killing a powerful gang leader named Cyrus. On the way, they encounter other gangs, police, and all the mayhem for which 1970s New York was rightly known. They do eventually make it back to the shores of Coney Island, just as the 10,000 made it to the coast of the Black Sea. Yes, "The Warriors" is a direct take-off of the "Anabasis," right down to the shout out for the long dead Persian King Cyrus.
The message is therefore the same in both narratives: a successful retreat in the face of overwhelming odds can be rightly considered a victory.
Colas believes the "retreat" the market needs is a correction, or a 10 percent drop in the S&P 500. That hasn't happened in nearly four years, one of the longest streaks ever.
As a stock market analyst, Janet Yellen makes a pretty good Federal Reserve chair.
Nearly a year ago, on July 16, 2014, Yellen famously warned of "substantially stretched" valuations in some biotech and social media stocks. However, her admonition carried little weight particularly in biotech, where a year of big deals and strong growth has pushed shares in the sector higher and higher.
In the past 12 months, the iShares Nasdaq Biotechnology exchange-traded fund has rallied 52 percent. Over the same period, the S&P 500 has gained just 9.7 percent and the Nasdaq as a whole is up about 20 percent.
While that doesn't necessarily mean biotech isn't overvalued, it does mean that investors who took Yellen's warnings as advice and bailed on the sector missed out in a big way. (Tweet this)
One of the world's leading private market investors still thinks that some bonds and loans are dangerously priced.
"Sub-investment grade corporate credit markets are as frothy as they've been," Joe Baratta, Blackstone Group's global head of private equity, said Tuesday at the Wall Street Journal Private Equity Analyst Conference in New York.
Baratta, noting the single-digit interest rates offered by leveraged loans and high-yield or "junk" bonds, said such prices were "unprecedented" and "not unsustainable."
Companies finally may be getting the message that it's better to invest in the future.
After years of lackluster growth, mergers and acquisitions have taken off in 2015, thanks in good part to a blockbuster May that marked the second best month ever for deals involving U.S. companies, according to S&P Capital IQ. The $234 billion in announcements for the month included several multibillion dollar M&A moves, most notably the $78.4 billion bid by Charter Communications to acquire Time Warner Cable (a deal that likely will face substantial regulatory scrutiny).
Activity has gotten so intense that some on Wall Street are fighting against the notion that a bubble is forming. Total U.S. activity for the year is at $747 billion, a 52 percent increase over the same period in 2014, according to Thomson Reuters.
"Should we be worried that M&A activity is approaching the levels it hit in 2007, just ahead of the financial crisis?" Jeffrey Kleintop, chief global investment strategist at Charles Schwab, asked in a report. "We think not. The composition of deals today is much less concentrated in one hot sector than it was eight years ago, suggesting a more balanced environment less prone to inflating a bubble."
S&P Capital IQ also researched the six previous months when M&A eclipsed $200 billion and found little concrete bubble indications—the S&P 500 advanced and declined three times each in the ensuing 12-month period.
However, not everyone is popping the corks for a robust MA& outlook.
Nobel Prize-winning economist Robert Shiller says that his key valuation indicator is flashing warning signs.
The Fed is in the early stages of an analysis on changes in bond market liquidity, amid signs that liquidity may be less resilient than in past.
Janus Capital acquired a majority interest in Kapstream Capital and said Kapstream's Palghat will support Bill Gross as co-portfolio manager of the Janus Global Unconstrained Bond strategy.