Some of the recent speculation about where rates are going seems to have gotten at least a bit overdone.» Read More
China's stock market selloff is unlikely to slow the Fed's path to rate hikes, unless it creates an economic slowdown or deflationary spiral that slams the global economy.
The Fed begins its two-day meeting Tuesday, but economists mostly expect little news from the U.S. central bank when it releases its statement Wednesday afternoon. The majority of economists forecast the Fed will raise rates for the first time in September, unless the economic data soften significantly or there is some other shock to the system—and China could potentially create a shock.
"Financial stability matters. If there's a huge mess and fallout from China that's destabilizing when they go to raise rates, they'll have to postpone it," said Mesirow Financial's chief economist, Diane Swonk.
The active versus passive debate just got a new wrinkle, and one analyst thinks he knows why.
Exchange-traded funds, which are the primary vehicle for passive management, now have assets under management greater than hedge funds, according to a count from research firm ETFGI. ETFs primarily follow market indexes, while hedge funds use a mix of strategies to beat those same benchmarks.
Tim Edwards, senior director of index investment strategy at S&P Dow Jones Indices, set up an experiment that put a blend of low-cost ETFs against their more expensive hedge fund brethren.
What he found essentially was that his effort to mimic hedge fund strategy using indexes—half focused on international stocks, the other half on bonds—easily beat out a popular gauge of hedge industry overall performance, the HFRI Fund Weighted Composite Index. However, the results changed when he factored in the fees.
A near 42-year low in an economic reading as essential as weekly jobless claims is always going to get lots of investor attention.
This time, though, it should probably get a little less.
While the Department of Labor said there were "no special factors" causing the number to fall to its lowest level since Nov. 24, 1973, Wall Street experts disputed that notion. Economists believe multiple factors converged to provide such an unusually low reading.
"In July auto companies typically shut down facilities as they do some maintenance, and seasonal adjustments usually take this into account," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note. "But if there is any shift by the auto companies in what they do, it can mess around with the seasonals. Thus, I don't want to read too much into the data."
Americans are not spending much of the money they're saving at the pump.
Some benefit in home prices and employment have come to areas with long commutes, but effects on retail spending have been "more ambiguous," according to an analysis from Goldman Sachs economists.
"Our view has been that the boost to real incomes from lower energy prices—and its positive impact on consumer spending—would offset the drag from energy-related investment, resulting in gains for US GDP growth on net," Hui Shan and Zach Pandl said in their report. "While consumer spending has picked up since Q1, results for the year so far have fallen short of our expectations."
Indeed, retail spending has been disappointing despite expectations for a rejuvenated U.S. economy boosted by the decline in oil prices. Crude tumbled 55 percent and gasoline dropped 42 percent from June 2014 to January 2015. The decline in both has abated since then, but prices at the pump are still 30 percent lower than they were a year ago, according to AAA.
Big banks are a lot bigger but probably safer since the Dodd-Frank law implementation five years ago.
Consumers have more information about credit but less access to it as well.
Meanwhile, bond pros worry that restrictions on trading activities will create a liquidity problem that could make the financial crisis look like the warmup to something far bigger and more ominous.
In all, the anniversary of the landmark banking legislation brings as many questions as answers. Banks have higher levels of capital reserves but those too-big-to-fail Wall Street supermarkets have only surged in size over the years.
Take all your Flash Crashes and "Knightmares" and trading "glitches" and, well, chill out. Wall Street pros say market structure is pretty much better than ever.
Fresh off the computer issue—or "glitch"—that shut down floor trading on July 8 at the New York Stock Exchange comes a survey from the Tabb Group showing confidence in how the market operates is at its highest level in at least five years.
The survey of 266 market professionals saw 64 percent of respondents say their level of confidence in market structure was either "very high" or "high."
That's something considering the run of bad publicity during that period.
There was the "Flash Crash" of 2010 that saw the Dow industrials lose more than 600 points in a few minutes. Then in 2012 there was the major fail during the Facebook initial public offering that saw the company's debut delayed, as well as the Knight Capital "Knightmare" fiasco that caused violent price swings for about 150 publicly traded companies.
And, of course, there was the impassioned public debate triggered in 2014 when Michael Lewis published "Flash Boys," a book that skewered the high-frequency trading industry and saw the author famously call the stock market "rigged."
Every time it looks like the economic field of vision is clearing, something seems to happen to blur it up again.
As the Federal Reserve looks for a clear-cut sign to rise rates, Friday's inflation report brought a little something to both sides of the debate: Signs of upward pressure in the headline numbers, but no persistent wage pressures in the underlying mix.
The 0.3 percent rise in the consumer price index was in line with market expectations and got a big boost from housing, with owner's equivalent rent registering its biggest gain in nearly nine years and food prices soaring due largely to the avian flu outbreak in chickens.
That's all well and good for the Fed, which is looking for annualized inflation to hit somewhere in the 2.5 percent range before it starts moving off the zero-bound rates it has implemented since late 2008.
However, what Chair Janet Yellen and her fellow policymakers also would like to see is inflation being pushed by positive wage pressures as well.
On that account, the news isn't good.
Carl Icahn was his usual irascible self, badgering BlackRock's Larry Fink in a battle over activist investing.
And one or two new stars were born as well, as the fifth annual Delivering Alpha conference, presented by CNBC and Institutional Investor, delivered another day of valuable insight as well as an eclectic blend of perspectives across the Wall Street spectrum.
There was Ted Cruz, the Republican presidential candidate, trying to walk a thin line between painting Democratic front-runner Hillary Clinton as a candidate for the 1 percenters and himself as the more business-friendly.
Leda Braga, a heretofore low-key but well respected member of the investing community, had something of a coming out party as she established herself as the reigning queen of the hedge fund world.
If all that wasn't enough, Blackstone'S Jonathan Gray delivered a dizzying rundown on the global real estate market that established himself as a star within the sector.
If you missed any or all of the action, the accompanying video provides a fast-paced rundown, all in less than two minutes.
Active fund managers may be having their best year performance-wise since the financial crisis, but investors don't seem to care.
Mutual funds that rely on active strategies, i.e., picking stocks and moving in and out of positions, suffered their worst 12-month period ever in terms of money flows, according to Morningstar. U.S.-focused funds in that category surrendered $156 billion during the period.
That marks a huge contrast with passive funds that track various indexes such as the Russell 1000, S&P 500 and the Nasdaq. That family of funds took in more than $150 billion during the period, Morningstar reported Thursday.
The difference in total assets remains heavily weighted toward active U.S. equity funds, which have $3.8 trillion under management compared to $2.4 trillion for passive in the $17 trillion mutual fund industry.
But the trend toward passive is clearly picking up.
The consistently inconsistent consumer is the gift that keeps on giving for doves at the Federal Reserve.
As the U.S. central bank prepares liftoff after nearly seven years of anchoring its key interest rate near zero, there's still plenty of hesitance and in some quarters downright resistance to normalizing policy. The more rate hike-resistant members, such as Chicago's Charles Evans, are wary of tightening before the Fed sees clearer evidence that its economic targets, particularly inflation, are closer to being met.
That dovish view got a significant push Tuesday from less-than-inspiring retail sales for June, which declined 0.3 percent from May.
A month after the data point hit a multi-year high came results indicating that consumers remain hesitant to part with their cash and spur the kind of recovery the Fed is looking for. ( Tweet This )
"The consumer 'resurgence' has been called into question with a decisively weaker-than-expected spending report at the end of Q2," Lindsey M. Piezga, chief economist at Stifel Fixed Income, said in a note. "Not only did June spending drop back into negative territory, but much of the strength in previous months was lessened, re-establishing the clear declining trend in consumption."
Indeed, retail sales present a post-financial crisis economic microcosm—enough strength to dismiss fears that another recession may take hold, but with an inability to sustain momentum.
O'Leary's ETF invests in quality stocks that pay dividends
New Barclays Chairman John McFarlane will wield the axe even more quickly at the bank, it emerged Wednesday.
The Fed is expected to point to a growing U.S. economy and stronger job market as it sets the stage for a possible interest rate hike in September.