A rising market between Aug. 1 and Oct. 31 would favor Hillary Clinton, while a decline would point to victory for Donald Trump. » Read More
In an otherwise dismal year for professional stock pickers, July offered some hope.
Large-cap mutual fund managers put in a strong performance, with 58 percent beating their Russell 1000 index benchmark, according to data from Bank of America Merrill Lynch. The average manager in the category saw a 4 percent return for the month, against the Russell's gain of 3.8 percent.
The returns came against the backdrop of a market that snapped back after the post-Brexit selloff. Sectors that had been punished during the panic over Britain leaving the European Union showed strong returns as market sentiment improved and the major averages moved into solidly positive territory for the year.
The outperformance happened even as correlations, or the tendency of stocks to move up and down together, remained elevated at 34 percent and the dispersion of sector returns also was low.
"Part of it was a pretty decent earnings season, and just general sentiment in the market was better," said Aaron Jett, vice president of global equity research at Bel Air Investment Advisors. "But more importantly, there was totally different leadership in the market vs. the first half of the year."
Goldman Sachs has been ordered to pay a $36.3 million penalty relating to a case in which a former employee allegedly used confidential regulatory information to win clients.
In an order issued Wednesday, the U.S. Federal Reserve ordered the bank to pay the fine in regard to a case involving Joseph Jiampietro, an investment banker who regulators say used a Fed contact later hired by Goldman to obtain the information.
The offenses happened between Feb. 15, 2012 and Oct. 3, 2014 and came as Jiampietro was under fire at Goldman and told to find ways to generate more revenue, a complaint states. Jiampietro then allegedly developed a scheme where he "repeatedly obtained, used and disseminated" confidential information to lure prospective clients.
Regulators allege that Jiampietro worked with Rohit Bansal, a former Fed employee who was hired by Goldman to work on the firm's fixed income desk. Jiampietro coached Bansal on how to land a job, then used him to get confidential "enterprise-wide risk management" (ERM) information through a contact Bansal had at the Fed, according to the complaint.
"In August and September, Bansal and Jiampietro used the non-public ERM framework in at least five pitches to potential and existing clients," the Fed charged.
Using the information "gave Jiampietro and Goldman Sachs a competitive advantage in providing regulatory advisory services and provided a personal benefit to Jiampietro."
The matter came to a head on Sept. 26, 2014, when Bansal allegedly sent an email to a Goldman partner containing what the partner knew to be ill-gotten confidential documents, according to the Fed complaint. The partner then notified Goldman's compliance department. The firm ultimately fired both workers.
""We're pleased to have resolved this matter. Upon discovering that Rohit Bansal had improperly obtained information from his former employer, the Federal Reserve Bank of New York, we immediately notified regulators, including the Federal Reserve," Goldman said in a statement. "We previously reviewed and strengthened our policies and procedures after Bansal was terminated. We have no tolerance for the improper handling of confidential supervisory information."
However, the Fed said Goldman was partially to blame.
In a news release, the central bank said Goldman "did not have sufficient policies, procedures, or adequate employee training in place to ensure compliance with current laws prohibiting the unauthorized use or disclosure of confidential supervisory information."
The Fed said it will be monitoring Goldman to make sure it has the proper procedures in place.
Bansal had previously pleaded guilty to one count of misappropriating government property and has been barred from the banking industry. The Fed wants Jiampietro to pay a $337,500 penalty. Contact information for both Bansal and Jiampietro was not immediately available.
Bill Gross' latest advice to investors is not comforting, with the fixed income guru down on all the conventional choices.
"I don't like bonds; I don't like most stocks; I don't like private equity," the Janus Capital portfolio manager said Wednesday in his latest letter to investors.
The reason Gross is so down on the two conventional asset classes is that central banks have created an atmosphere where economic growth and the high-yielding returns that should accompany it are difficult to find.
There's "too much risk for too little return" for banks to lend in the current climate, while the low-interest atmosphere helps asset prices but crimps savings and business investment.
"Banks, insurance companies, pension funds and Mom and Pop on Main Street are stripped of their ability to pay for future debts and retirement benefits," Gross wrote. "Central banks seem oblivious to this dark side of low interest rates. If maintained for too long, the real economy itself is affected as expected income fails to materialize and investment spending stagnates."
Japan's failure to stimulate much with its latest stimulus serves as a reminder of how few tools global policymakers have left to drive growth.
Fiscal and monetary authorities announced more plans over the past few days to spur inflation in hopes of driving broader economic hopes. The government on Tuesday announced fiscal stimulus amounting to $274 billion, while the Bank of Japan late last week said it would nearly double its exchanged-traded fund purchases to nearly $60 billion.
They were rewarded with a stronger currency, a sea of red in both global equity prices and bond yields, and a market that generally was disappointed that Japanese leaders were not willing to do more to jump-start the long-moribund economy.
Japan has tried this literally dozens of times over the past quarter century, most often with the same results — perhaps a momentary bounce in activity that ultimately leads back to the same dreary growth pace. Despite all the stimulus, the economy has grown by barely 1 percent a year.
"In short, the dual monetary and fiscal stimulus plans out of Japan over the past few days have chalked up to a disappointment," said Christopher Vecchio, currency analyst at DailyFX, a currency trading firm. "The fault lies with fiscal policymakers, not with the BOJ, though. Whatever the BOJ did/does will have little impact unless the measures are amplified by a concurrent fiscal policy response; we now know the hefty fiscal policy response isn't coming."
Yet even the largest of bazookas seems to do little.
As CEO of the biggest bank in the U.S., a vibrant economy is in Jamie Dimon's best interests. His expectations, though, look a little misplaced.
In a wide-ranging interview Monday with CNBC, the JPMorgan Chase chief contended that growth is faster than the data indicate, based on his observation of conditions. He said America's future is bright, and he estimated that with the proper measures, gross domestic product could expand by 4 percent under the next president.
"What we see is a strong consumer," Dimon said. "Asset prices are up, 13 million more people are working, wages are going up, household spending is up." It all means, he said, that things are improving after years of lackluster growth.
Cold numbers, though, indicate there's a lot of work to be done first.
Economists got a jolt Friday when they found out that their sanguine expectations for second-quarter growth were off — by a lot. GDP rose just 1.2 percent in the quarter, compared with Wall Street estimates of 2.6 percent, while growth for the previous three months got knocked down to 0.8 percent.
Well, one economist who had broken ranks with his brethren on the Street and actually expected the poor second-quarter numbers said they were actually worse than they looked. In fact, Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said one measure shows the economy teetering on recession.
Moody's Analytics likes Hillary Clinton's economic plan much more than it did Donald Trump's.
A little more than a month after Moody's said Trump's proposals would cause a "lengthy recession," the firm took a look under the hood at the Democratic nominee's plans and said the prospects were more encouraging.
"Secretary Clinton's economic proposals will result in a somewhat stronger U.S. economy," Mark Zandi, Moody's chief economist, and two others wrote in the report. "Near-term growth is supported by the stimulus provided by her spending plans in combination with much stronger foreign immigration."
Indeed, Clinton's proposals call for $2.2 trillion in new spending over a 10-year period, with plans that would allow in about a million more immigrants a year. She's looking to boost spending on infrastructure and education, as well as providing paid family and medical leave, increasing the minimum wage, and investing in economic development and research.
To pay for her proposals, she's calling for a near-equal amount of taxation, with the burden placed primarily on the shoulders of corporations and those making more than $300,000 a year. Clinton's plans rely primarily on Keynesian demand-side solutions, while Trumps' are more focused on supply-side tax cuts.
"Evident from her proposals is the belief that the country needs to invest more in education, infrastructure and workers, and that the well-to-do, and to a lesser degree financial institutions and businesses, should pay for it," Moody's wrote. "While her budget arithmetic does not completely add up, it is pretty close, and the nation's debt load under her plan is no different than under current law."
The speculation comes amid a fresh round of criticism the outspoken New York businessman has lobbed at the Fed.
The commodity's prices could quickly dive to $40 or lower if OPEC members leave Algeria on Wednesday without any promise of a deal.
Many on Wall Street agree with Donald Trump's criticism that the Fed waited too long to raise rates.