Permanent Value

Week In Review 2/20/15

Bruce Doole
February 20th, 2015

The Cascade Effect of Europe’s QE
QE Begins in Europe
After months of hinting and speculation, the European Central Bank (ECB) finally embarked on a new quantitative easing (QE) program that is massive in both size and scope. QE by itself probably won’t solve Europe’s chronic economic malaise, though it should mitigate the risk of deflation and support European exporters through a weaker euro. The reach of the €1 trillion-plus program, however, extends beyond the continent; the impact will be evident in holding down global bond yields.

Monetary Policy, Two Ways
As we have discussed for some time now, central banks are taking increasingly divergent paths with their monetary policies. On the easing side, China, Denmark, India and others joined Europe and Japan in taking steps to address deflationary threats and bolster slowing economies. On the tightening side, besides Brazil and its three recent rate hikes, the Federal Reserve (Fed) is the only major central bank preparing to raise interest rates this year. As the disparity deepens, we expect markets to remain volatile, especially currency markets. Equity markets with central bank support are well positioned, such as in Europe and Japan, while challenging times could be ahead for those without such backing.

Cheaper Oil Is a Good Thing, for the Most Part
Another major shift to the investment climate has been the plunge in oil prices, which stirred up much market volatility and prompted questions about the strength of the world economy. However, prices seemed to have stabilized in recent weeks on reports of lower output, which could help ease some of the anxiety. Remember: Cheaper oil is a boost to consumer spending and global growth.

Opportunities in International Stocks, Credit
Given the market dynamics, it makes sense to look outside the United States for value, where central bank accommodation is keeping equity markets buoyant and where plenty of bad news is already baked into valuations. While investors continue to favor U.S. Treasury debt, we prefer the credit corners of the bond market that offer the prospect of higher income.

- Russ Koesterich, Black Rock

Week In Review – 1/30/15

Bruce Doole
January 30th, 2015

10 Super Super Bowl Numbers: 2015

Sports and numbers go together, but this year that seems to be more true than ever with the hullabaloo over the deflated footballs used by the New England Patriots in the AFC championship game.

It’s likely that few fans knew the balls were to have air pressure of 11.5 to 13.5 psi, or that putting 2 pounds less in a ball would make much difference to quarterbacks and receivers.

Deflate-gate took over the conversation last week, but as the game gets closer, breakdowns of the Patriots and the Seattle Seahawks and their strengths and weaknesses have received some attention.

This year, we scoured the Web to find 10 Super Super Bowl Numbers. If the game is one-sided, maybe these fun facts can keep the conversation going.

$2.19 billion: Amount of ad revenue generated over the past decade.

That’s the amount of ad revenue generated over the previous decade, The Wall Street Journal reported, and the price of a 30-second commercial is up 75% over that same time period. This year, that amount of time can be had for $4.5 million, up $300,000 from last year.

1.25 million: Expected number of chicken wings that will be consumed.

That’s a lot of chicken wings, but Americans are up to the task of eating every last one of them on Super Sunday. The National Chicken Council says that’s enough to put 572 wings on each seat in all 32 NFL stadiums. The council says Seattle fans are 17% less likely than those in other cities to eat wings and those in Boston are 8% less likely. And don’t forget the 9 million pounds of guacamole and the accompanying chips.

25.3 million: The number of tweets sent during last year’s Super Bowl by 5.6 million people. The game was watched by 112.2 million people in the U.S.

$18.3 million: Profit expected for Las Vegas casinos, as reported by WalletHub, on bets of $115 million. And bettors don’t only focus on who will win or lose the game. Vegas offers more than 350 so-called prop bets, on everything from whether the coin flip will land heads or tails to the length of the National Anthem. For the record, the average time for the anthem is 116 seconds.

3,734,938: That’s the number of people who have attended a Super Bowl game. The largest crowd was 103,985 fans at the 14th game, played at the Rose Bowl in Pasadena, California, the Associated Press reported.

1.5 million: The number of people expected to call in sick on Monday, according to Kronos. Another 4.4 million might show up late. HR professionals beware.

10,000: The number of volunteers enlisted to help make the big game and the events leading up to it go off without a hitch. The volunteers work at Super Bowl Central in downtown Phoenix, manning social media and performing other duties.

253: The percentage increase in online viewership of Super Bowl ads since 2010, according to Inc. The website adds that online viewing increases the reach of an ad by 48%.

50 or is that L? What’s in a number? Quite a bit, evidently. The NFL is making a change next year for the 50th Super Bowl. Say goodbye to Roman numerals, at least for a year. The NFL said a simple L on the game’s logo just didn’t look right. The game will be played in the home stadium of the San Francisco 49ers. The first game was played in Los Angeles but, alas, there is no team in that city to host the 2016 title game.

20: Percentage increase in antacid sales the day after the big game. It’s no wonder, as was noted on the page about chicken wing consumption.

- Dan Berman, Think Advisor

Week In Review – 1/23/15

Bruce Doole
January 23rd, 2015

First Quarter 2015 Global Outlook

  • The euro area and Asia should benefit most from lower oil prices, while the US should benefit but less so than in the past given recent energy investments. The impact on emerging economies should be mixed.
  • We have reduced our US inflation forecast for 2015 as the labor market tightens. The Fed should begin gradual rate hikes in the second half of the year.
  • The euro-area economy should enter a renewed recovery phase in the first half of 2015 thanks to low oil prices, low interest rates, and easing credit conditions.
  • Following the December elections in Japan, structural reforms should continue. The Bank of Japan may have to begin tapering bond purchases in 2015.
  • After several years of out performance by the US equity market, conditions may be in place for improved fundamentals leading to better relative equity performance in both Europe and Japan.
  • Lower oil prices should at least partly offset a tightening of monetary policy in the US, helping to support US equities.
  • Concerns about low developed-world inflation have intensified into worries about disinflation, and even outright deflation, as a result of tumbling oil prices.
  • The Fed appears prepared to initiate rate hikes in 2015, while the European Central Bank and Bank of Japan, more sensitive to the threat of deflation, seem headed for increased policy stimulus.

- Source: Hartford Funds


  • China Merchandise Trade Balance: December unadjusted merchandise trade surplus was $49.6 billion, down from $54.47 billion in November. Exports were up 9.7% on the year after increasing 4.7% in November. Imports slumped 2.4% after increasing 6.7% the month before. For 2014, the trade surplus jumped to $382.5 billion from $259.75 billion in 2013.
  • U.K. CPI: Consumer prices were slightly softer than expected in December. An unchanged level versus November was weak enough to shave fully 0.5% off the annual inflation rate, which now stands at just 0.5%.
  • U.K. Producer Price Index: Manufacturers’ input costs and factory gate prices fell again in December. December followed a shallower revised 0.7% drop in November with a monthly 2.4% decline at year-end. Annual input price inflation now stands at -10.7% and its factory gate equivalent at -0.8%.
  • EMU Industrial Production: Industrial production (ex-construction) eked out a third consecutive monthly rise in November. A marginally firmer than expected 0.2% increase followed an upwardly revised 0.3% gain in October.
  • U.S. Retail Sales: December sales fell 0.9% after posting a 0.4% gain in November and a 0.3% rise in October. Expectations were for a 0.1% decline.
  • U.S. Jobless Claims: Claims jumped sharply the week of January 10, up 19,000 to 316,000.
  • U.S. PPI-FD: Inflation at the producer level continued to decline in December on lower energy costs. The PPI for total final demand fell 0.3%, following a decline of 0.2% in November. The consensus expected a 0.4% decrease.
  • U.S. Consumer Price Index: Inflation fell another 0.4% in December after falling 0.3% in November.
  • U.S. Industrial Production: Slipped 0.1% in December following a jump of 1.3% in November.

- Source: Ivy Funds