Television appearances and radio interviews
Until June 30, 2013 I appeared regularly in the print and broadcast media on behalf of Cetera Financial Group, and
before 2010 representing my previous employers, ING Investment Management and Citigroup. I am still a member of
Cetera's Investment Committee, but press appearances are no longer part of my responsibilities with them. Henceforth any press
appearances — likely far fewer number — will be primarily in my role as a University of Florida finance professor.
June 19, 4:00PM CNBC Closing Bell with Maria Bartiromo
http://video.cnbc.com/gallery/?video=3000177027&play=1
April 12, 3:00PM CNBC Closing Bell with David Faber and Rick Santelli
http://video.cnbc.com/gallery/?video=3000161062&play=1
March 20, 4:00PM Fox Business Network
March 13: WUFT http://www.wuft.org/?s=gendreau
March 8: WUFT http://www.wuft.org/?s=gendreau
February 21, 4:00PM on After the Close with Liz Clayman and David Asman, Fox Business Network.
February 21, 9:20AM on Wall Street Journal radio.
February 8, 4:00PM CNBC Closing Bell with Maria Bartiromo and Rick Santelli
http://video.cnbc.com/gallery/?video=3000146953&play=1
Print media interviews:
Stocks Back Off Rally
By ALEXANDRA SCAGGS Wall Street Journal.com May 29, 2013
U.S. stocks sold off broadly, with jitters over rising Treasury yields prompting a steep selloff in high-yielding sectors. The Dow Jones Industrial Average declined 120 points, or 0.8%, to 15289 in midday trading. The Dow rose 106 points Tuesday, or 0.7%, to another record high.
"People are concerned about the timing of the ending of [stimulus]," said Brian Gendreau, market strategist for El Segundo, Calif.-based Cetera Financial Group, which manages $20 billion in assets. "People are taking money off the table. We're into a period of volatility which may last for a while."
The utilities, telecommunications, and consumer-staples sectors led declines in the S&P 500. The telecom and utilities sectors both boast a dividend yield above 4%. Telecom shares dipped 2.2%, and utilities shed 1.8%. Consumer-staples shares, which offer a 2.8% yield and have outperformed the S&P 500 this year, lost 1.7%.
For "stocks that look more like bonds than stocks—telecom, utilities—when bonds go down, they go down," said Mr. Gendreau. He previously recommended buying stocks that pay dividends, but the fund is taking a close look at whether it wants to continue adding holdings in the area. Dividend-paying stocks have rallied this year as investors have sought out yield, raising concerns that investors might sell those shares as interest rates rise.
The SPDR S&P Dividend exchange-traded fund, which tracks an index of stocks that have increased dividends every year for at least 25 years, was down 1.4% midday. It has added 17% so far this year, outpacing the S&P 500's gains.
Take Five: Cetera's Brian Gendreau Market strategist is positive both on gold and stocks
By Jeff Benjamin, Investment News
May 21, 2013 @ 12:01 am (Updated 3:41 pm) EST
Brian Gendreau
InvestmentNews: Is the recent volatility of gold prices a sign that the precious metal is poised for a fall?
Mr. Gendreau: Gold is always thought of in two elements: there is the supply-and-demand side, and the speculative side. The structural case for gold is still intact because supply is not getting easier and the underlying demand remains strong.That all argues for a trend toward higher prices, but the trouble is the speculative factor. Because of all the quantitative easing, low interest rates and concerns about inflation, we're still slightly above the trend, pricewise, but I still like gold in the medium- to long term.
InvestmentNews: Are stocks overvalued?
Mr. Gendreau: In valuation terms, it's very hard to argue that they are overvalued. The forward price-to-earnings ratio of the S&P 500 is at 14, which compares to 15.1 in October 2007 and 30 during the Internet bubble. Stock prices have been going up, but they are just playing catch-up with earnings. I'm still a big believer that it's earnings that drive stock prices.
InvestmentNews: How important is housing to the economic recovery?
Mr. Gendreau: I think it's a lot more important that most of us economists realized back in 2008.
What really knocked the daylights out of the economy in 2008 was that housing is really interconnected throughout the economy. There are a lot of ripple effects. And it's linked to the rest of economy through instruments such as derivatives and mortgage-backed securities. The mistakes that most economists made in 2008 is that they were looking at a housing downturn the same way we had been looking at housing during the entire postwar period. We didn't realize the extent to which the housing market had spread throughout the overall economy.
InvestmentNews:Will the recent scandal revealing that the Internal Revenue Service targeted conservative groups have any impact on the implementation of the health care reform law, which will involve the IRS?
Mr. Gendreau: I don't think it will have a big impact. Politically, it will hurt [President Barack] Obama, because it's a big embarrassment.
Whether it's the IRS today or [President Richard] Nixon's enemy's list in the 1970s, that's not something we want to see in a democracy.
And it's clear that Obamacare does face implementation problems, but the IRS is here to stay.
InvestmentNews:In the near term, what are the biggest risks that the U.S. economy faces?
Mr. Gendreau: I think it is still macroeconomic. Europe is in recession. In the emerging markets, Brazil, Russia and China all are having trouble with growth.There is also the combination of fiscal tightening in the U.S. and austerity in Europe, and I don't think the full effects of higher payroll taxes have been fully felt yet.
Standard & Poor's 500 climbs to an all-time high on Wall Street, led by technology stocks
By Steve Rothwell, AP Markets Writer April 10, 2013
http://finance.yahoo.com/news/standard-poors-500-climbs-time-143811264.html
Outlook for 1Q earnings seen weak Higher payroll taxes, sequestration may hit consumer companies in particular By Jeff Benjamin, Investment News
Apr 8, 2013 @ 4:13 pm (Updated 5:11 pm) EST
http://www.investmentnews.com/article/20130408/FREE/130409937?utm_source=indaily-20130408&utm_medium=in-newsletter&utm_campaign=investmentnews&utm_term=text
Keeping stock market milestones in perspective By Jeff Benjamin, Investment News
Mar 29, 2013 @ 1:44 pm (Updated 1:56 pm) EST
http://www.investmentnews.com/article/20130329/BLOG12/130329922
Shares Push Higher as Fed Maintains Stimulus Program Shares Punch Higher as Fed Maintains Stimulus Program
By Dan Wagner, THE ASSOCIATED PRESS/NEW YORK TIMES March 20, 2013
http://www.nytimes.com/2013/03/21/business/daily-stock-market-activity.html?_r=0
Dow rises for 10th day, S&P eyes record Dow rises for 10th day, S&P eyes record
By Leah Schurr, Reuters March 14, 20113
http://finance.yahoo.com/news/dow-record-again-ends-higher-004551362.html
Dow notches ninth gain in a row, longest since '96
Dow Jones industrial average extends winning streak to nine days; longest since 1996
NEW YORK, Steve Rothwell (AP) -- The Dow Jones industrial average notched its ninth gain in a row, giving the index its longest winning streak in more than sixteen years.
Wall street edges up, buoyed by jobs data
By Leah Schnurr
NEW YORK | Thu Mar 7, 2013 10:23am EST
Stocks Creep Toward Record
By Chris Dieterich, Wall Street Journal NEW YORK—The Dow Jones Industrial Average edged closer to an all-time closing high Monday, as investors brushed off steep losses in China's equity markets and pushed major benchmarks higher. The Dow rose 38.16 points, or 0.3%, to 14127.82, ending with its second-highest finish ever. The blue chips now sit just 37 points below the record. The Standard & Poor's 500-stock gained 7.00 points, or 0.5%, to 1525.20 and the Nasdaq Composite Index climbed 12.29 points, or 0.4%, to 3182.03. Utility, consumer discretionary and financial stocks the market higher. Wal-Mart Stores WMT +2.12% and Home Depot HD +1.83% were the Dow's best performers. Only energy and industrial sectors lost ground.
Major indexes started lower following a rout in China's equity markets. The Shanghai Composite slumped 3.7%, the biggest one-day percentage slide since August 2011. Losses came after Chinese government measures to curb rising home prices amid signs that the market is heating up. The new rules include higher down payments and mortgage rates on second homes in some cities.
But losses didn't last. Earlier Monday, Janet Yellen, vice chairwoman of the Federal Reserve's board of governors, made clear in a speech that she supports keeping economic stimulus efforts in place for the foreseeable future. Last month, concerns that the central bank might seek to end its efforts sooner than expected helped trigger a pause in the market. "I don't think it's necessarily anything new, but basically [the speech] is reiterating that the Fed is going to keep rates as low as needed for as long as needed," said Brian Gendreau, market strategist for El Segundo, Calif.'s Cetera Financial Group, which manages $20 billion in assets.
While worries about a budget impasse in Washington lingered, some investors said they were encouraged by the way investors retained their composure last week as the deadline for automatic budget cuts approached. "The spending cuts have come and gone, and it seems like it wasn't the end of the world as some people thought," said Joe Bell, senior equity analyst at Schaeffer's Investment Research. "Overall we're encouraged that the spending cuts have come and gone."
Earnings Drama Grows as Dividend Seekers Put Stock in Payouts
Such drama is a new experience for income-seeking investors who have flooded into dividend stocks
By Richard Satran , US News and World Report
February 20, 2013
Lately, when a company paying a pricey dividend announces earnings, there is drama. And while it usually has a happy ending, there are also a few tragedies and some pure comedies. Such drama is a new experience for the income-seeking investors who have flooded into dividend stocks over the past year. After all, bonds, by comparison, are much more predictable in their coupon payments. But low yields mean investors are flooding into stocks, where inherent risks have not gone away.
Telecom company CenturyLink provided laughs last week (as long as you did not own the stock) by sharply lowering its dividend payout while increasing stock buybacks to $2 billion. The move backfired, and inspired a 26 percent one-day stock collapse. Rival Windstream, which fell 10 percent in reaction, was left to ease investors' fears that it would follow suit amid earnings pressures in the telecom sector that could hurt payouts. "On the earnings call, the [Windstream] CEO said at least 10 times in the first 15 minutes that they were committed to the dividend," says Todd Rethemeier, a longtime telecom analyst with Hudson Square Research, who listened to the call. He found the CenturyLink move a bit baffling. "It's a strange one, a real headscratcher," says Rethemeier. "I've never seen anything like this. It's funny if they thought they were going to get that one past investors."
For investors, the episode also illustrates the risks of a dividend cut even when companies have lots of cash on hand. The market appeared stunned when the cash-generating, profitable telecom made the move, cutting its payout 25 percent but putting much more into the big stock buyback. "They could have afforded to pay the dividend," says Rethemeier. "They have the cash. If they had put $1 billion of it into holding the dividend and $1 billion into buying back stock, their share prices would have gone up." Questionable corporate logic aside, the incident shows it's a tricky road for income investors. That's because not every high-dividend payer like CenturyLink can afford its payout, and investors should probably be wary when payouts rise over 5 percent in the telecom sector at large, analysts say. "It's not a hard rule, but it's just a level where you have to start to wonder why are they paying that much," Rethemeier says. Telecoms are a favorite of high-dividend investors because they are cash-flow-driven companies that are becoming toll-takers on the information highway. Traditionally, the telephone companies made dividends a top priority in a heavily regulated sector that produced profits that were once virtually guaranteed, although big changes—the decline of the landline and the rise of mobile—are remaking a formerly reliable industry which paid dividends as steadily as utilities or tobacco companies.
Also, whatever troubles the telecoms might be having says little about the overall dividend environment, says Howard Silverblatt, senior index analyst at Standard & Poor's. "Last year was the most amazing year ever for dividends, and there will be more growth this year." Even after record payouts, he says, companies pay out an average of just 36 percent of their cash versus the historic average of 52 percent. The number of companies increasing dividends rose 94.5 percent from 2011. Silverblatt says last year's record payout of $280 billion by S&P 500 stocks should rise to another new high in 2013. "There have been very few dividend cuts, companies still have tons of cash, and they are still relatively cheap," says Silverblatt.
Dividend funds were by far the biggest gainers over the past year in the equity space, accounting for most of the gains in inflows to equity funds, says Tom Roseen of Lipper. To be sure, those new investors will be carrying a lot of expectations into the new year, and any slipups in payouts like the one CenturyLink made will be punished. For many, the best choice will be to spread risks across funds that invest in a range of companies and sectors. The WisdomTree Dividend ex-Financials Fund and the Schwab U.S. Dividend Equity ETF have gained 7 percent in net asset value this year and 14 percent over the past 12 months. They're U.S. News's top-rated Best Fit ETFs in the income category.
Still, there's a case to be made for anything offering yield these days, which bonds simply aren't. "Compared to 10-year treasuries paying 2 percent, these yields are attractive," says Brian Gendreau, market strategist for Cetera Financial Group. "You can do a spreadsheet and find thousands paying much more than that. And you can lose principle on bonds if rates go up. Dividend-paying companies increase their dividends when that happens. We are still recommending them."
But the recent rise in stocks and the targeting of dividend payouts has the potential to lower yields in the short term. Investors hoping for more dividend income could be disappointed if increases fail to please, and Roseen says there are signs that investor enthusiasm is already waning. Inflows to equity income funds have leveled off and fund buyers have been moving into more non-income-driven corners of the market. Investors put $60 billion into equity and mixed asset funds in January, Lipper reports, making it the biggest month in seven years. Equity income made up just $2.5 billion of the total. Most of the new money went into growth, value, and international stocks. If that trend continues, some analysts see it as a healthy sign for the market as investors look to get more diversified. "You have seen investors in a desperate search for yield with treasury yields as low as they are, says Hugh Johnson of Hugh Johnson Advisors. "Investors are turning in every direction to try to increase either divided or interest income in their portfolio. I don't want to call it mania quite yet, but it has all the earmarks of mania."
US stocks moving lower after sharp move up
By Matt Craft, The New York Times – February 11, 2013
NEW YORK (AP) -- U.S. stocks drifted lower in Monday trading, pulling the Standard & Poor's 500 index back from its five-year high. The S&P 500 slipped one point to 1,517 shortly after noon. Eight of the 10 industry groups within the S&P 500 dropped. Financial and technology stocks, the exceptions, were barely higher. The broad stock index ended last week at its highest level since November 2007, and has climbed higher for six weeks in a row.Now, with major market indexes nearing record highs, many say the stock market is ready for a pause.
"The consensus seems to be that we're due for a correction," said Brian Gendreau, market strategist at Cetera Financial Group. "If you compound the increase we've had so far, this year would be the best year ever for stocks. And nobody thinks that that's going to happen."
The Dow Jones industrial average dropped 27 points to 13,965. Home Depot led the Dow lower, dropping 73 cents to $66.28. The Nasdaq composite fell five points to 3,188. No economic reports are scheduled to be released Monday. And few big companies are scheduled to report earnings. Loews Corp. said Monday morning that it lost $32 million in its fourth quarter, hurt by insurance losses from Superstorm Sandy and sliding prices for natural gas. The holding company, which has dealings in insurance, oil and gas and hotels, is largely controlled by the Tisch family of New York. Its stock sank 34 cents to $43.51.The stock market raced to a stunning start in January. A last-minute deal in Washington to avoid tax hikes and spending cuts known as the "fiscal cliff" eased fears that the budget cuts could lead the U.S. into a recession. Markets soared in relief.
The Dow and the S&P 500 are up more than 6 percent for the year. The Nasdaq is up more than 5 percent.
Junk-bond sell-off just a blip, managers say
Although the high-yield market might not have changed fundamentally, junk-bond yields have taken a noticeable dive from their peak late last month
By Jeff Benjamin
Investment News, February 10, 2013 12:01 am ET
The recent bumpy stretch for high-yield bonds attracted some market attention and reminded investors of junk bonds' correlation to equities. But as the dust settles, the consensus is that the bond volatility, at least this time around, probably didn't warn of a looming stock market correction.“Nothing has changed in the high-yield market over the past few weeks,” said Jim Sarni, managing principal at Payden & Rygel Investment Management, which handles $83 billion in fixed-income portfolios. “This is just a little bit of a reaction to some of the buyouts that are happening right now.”
Although the high-yield market might not have changed fundamentally, junk-bond yields have taken a noticeable dive from their peak late last month, which looks a lot like a sudden market sell-off.The high-yield exchange-traded fund iShares iBoxx High Yield Corporate Bond (HYG) is up about 34 basis points for the year but down 1.3% since Jan. 22. Likewise, the SPDR Barclays High Yield Bond ETF (JNK) is essentially flat from Jan. 1 but off 1.5% from a Jan. 28 peak.“I think this is just noise,” Mr. Sarni said. “I would be willing to bet that by the end of the month, we will see another positive month for high-income bonds.”
While rising rates should alert holders of investment-grade debt, investors in high-yield debt generally follow a different set of market signals. “High-yield bonds are affected by interest rates, but they also tend to be highly correlated to the equity market,” said Brian Gendreau, a market strategist at Cetera Financial Group Inc. and professor of finance at the University of Florida. Even though yield spreads between the highest- and lowest-quality bonds have narrowed, high-yield bonds still enjoy a buffer that should protect them from sudden rate movements. However, bonds become more ex- posed to credit-related volatility as the debt quality moves further from investment-grade toward distressed. That is where high-yield bonds start to act like stocks and why a jolt in the high-yield market can make equity investors nervous. “What makes high-yield bonds high-yielding is that they're usually issued by companies with a lot of leverage,” Mr. Gendreau said. “So if a company goes under, you, as a bondholder, end up with a claim on the company's assets, which effectively makes you an equity holder.” However, bonds become more ex- posed to credit-related volatility as the debt quality moves further from investment-grade toward distressed. That is where high-yield bonds start to act like stocks and why a jolt in the high-yield market can make equity investors nervous. “What makes high-yield bonds high-yielding is that they're usually issued by companies with a lot of leverage,” Mr. Gendreau said. “So if a company goes under, you, as a bondholder, end up with a claim on the company's assets, which effectively makes you an equity holder.”
Another way to look at it would be to consider high-yield debt as a hybrid that can cut both ways, according to Mr. Gendreau. “Wall Street thinking has usually been that bond investors are smarter than equity investors, but a dip for high yield can be concurrent but probably not a leading indicator for stocks,” he said. “Basically, buyers of high-yield bonds have two reasons to think the stock market run will not last, while equity investors only have one reason.” [email protected] Twitter: @jeff_benjamin
U.S. Stocks Decline as Investors Weight Data Ahead of Jobs Report
2013-01-31 16:35GMT
By Lu Wang and Sarah Pringle
Jan. 31 (Bloomberg) -- U.S. stocks fell, after the best start to a year for the Standard & Poor’s 500 Index since 1997, as investors weighed earnings and economic reports while awaiting tomorrow’s jobs data. United Parcel Service Inc. fell 2 percent after it forecast profit that trailed estimates as a weak global economy weighs on demand for package shipments. Dow Chemical Co. slid 5.5 percent after earnings missed forecasts as sales fell in Europe. Facebook Inc. lost 3 percent as profit dropped on higher spending. Qualcomm Inc. and JDS Uniphase Corp. rallied at least 4.5 percent amid better-than-anticipated earnings.
The S&P 500 fell 0.3 percent to 1,497.25 at 11:33 a.m. in New York. The Dow Jones Industrial Average lost 34.25 points, or 0.3 percent, to 13,876.17. Trading in S&P 500 companies was 2.7 percent above the 30-day average at this time of day. U.S. benchmark indexes fell from five-year highs yesterday as the economy unexpectedly shrank in the fourth quarter.
“The market’s due for a breather, so unless the economic news was significantly above expectations or significantly below, you’re probably going to get a trading down market,” Eric Green, director of research at Penn Capital, which oversees about $7 billion in Philadelphia, said in a phone interview. “The mixed data give some reason to take some profits potentially.”
The outlook is fairly benign right now,” Brian Gendreau, a market strategist at Los Angeles-based Cetera Financial Group Inc., said by phone. The firm has about $20 billion in assets under management. “We are looking at moderate growth. Earnings picture is good. No one is talking about double-dip recession.”
Apple's sales slowdown tugs Nasdaq index lower
By MATTHEW CRAFT, The Associated Press
January 25, 2013
NEW YORK —
A sharp drop in Apple's stock pulled the Nasdaq down with it after the tech giant warned of weaker sales. Other stock-market indexes eked out slight gains.
Apple sank $63.50 to $430.50. With iPhone sales hitting a plateau and no new products to introduce, Apple said sales would likely increase just 7 percent in the current quarter. That's a let-down for a company that has regularly posted growth rates above 50 percent. The Standard & Poor's 500 index edged up 0.01 of a point to 1,494.82. Earlier in the day, the S&P 500 crossed above 1,500 for the first time since December 2007. The broad gauge of the stock market has already gained 4.8 percent this year and climbed seven days in a row.
One reason for the market's recent rise is that some of the biggest obstacles have been pushed aside, said Brian Gendreau, a market strategist at Cetera Financial Group. On Wednesday, the House of Representatives agreed to suspend the federal government's borrowing limit until May 19, allowing the U.S. to keep paying its bills for another four months. "Politics is off the table for now and Europe seems like it's stable. So what's left? It's earnings. And aside from Apple it seems like pretty good news," Gendreau said.
The Dow Jones industrial average gained 46 points to close at 13,825.33. The Nasdaq fell 23.29 points to 3,130.38. The 12 percent drop in Apple, which makes up 10 percent of the index, was enough to pull the Nasdaq lower.
Until June 30, 2013 I appeared regularly in the print and broadcast media on behalf of Cetera Financial Group, and
before 2010 representing my previous employers, ING Investment Management and Citigroup. I am still a member of
Cetera's Investment Committee, but press appearances are no longer part of my responsibilities with them. Henceforth any press
appearances — likely far fewer number — will be primarily in my role as a University of Florida finance professor.
June 19, 4:00PM CNBC Closing Bell with Maria Bartiromo
http://video.cnbc.com/gallery/?video=3000177027&play=1
April 12, 3:00PM CNBC Closing Bell with David Faber and Rick Santelli
http://video.cnbc.com/gallery/?video=3000161062&play=1
March 20, 4:00PM Fox Business Network
March 13: WUFT http://www.wuft.org/?s=gendreau
March 8: WUFT http://www.wuft.org/?s=gendreau
February 21, 4:00PM on After the Close with Liz Clayman and David Asman, Fox Business Network.
February 21, 9:20AM on Wall Street Journal radio.
February 8, 4:00PM CNBC Closing Bell with Maria Bartiromo and Rick Santelli
http://video.cnbc.com/gallery/?video=3000146953&play=1
Print media interviews:
Stocks Back Off Rally
By ALEXANDRA SCAGGS Wall Street Journal.com May 29, 2013
U.S. stocks sold off broadly, with jitters over rising Treasury yields prompting a steep selloff in high-yielding sectors. The Dow Jones Industrial Average declined 120 points, or 0.8%, to 15289 in midday trading. The Dow rose 106 points Tuesday, or 0.7%, to another record high.
"People are concerned about the timing of the ending of [stimulus]," said Brian Gendreau, market strategist for El Segundo, Calif.-based Cetera Financial Group, which manages $20 billion in assets. "People are taking money off the table. We're into a period of volatility which may last for a while."
The utilities, telecommunications, and consumer-staples sectors led declines in the S&P 500. The telecom and utilities sectors both boast a dividend yield above 4%. Telecom shares dipped 2.2%, and utilities shed 1.8%. Consumer-staples shares, which offer a 2.8% yield and have outperformed the S&P 500 this year, lost 1.7%.
For "stocks that look more like bonds than stocks—telecom, utilities—when bonds go down, they go down," said Mr. Gendreau. He previously recommended buying stocks that pay dividends, but the fund is taking a close look at whether it wants to continue adding holdings in the area. Dividend-paying stocks have rallied this year as investors have sought out yield, raising concerns that investors might sell those shares as interest rates rise.
The SPDR S&P Dividend exchange-traded fund, which tracks an index of stocks that have increased dividends every year for at least 25 years, was down 1.4% midday. It has added 17% so far this year, outpacing the S&P 500's gains.
Take Five: Cetera's Brian Gendreau Market strategist is positive both on gold and stocks
By Jeff Benjamin, Investment News
May 21, 2013 @ 12:01 am (Updated 3:41 pm) EST
Brian Gendreau
InvestmentNews: Is the recent volatility of gold prices a sign that the precious metal is poised for a fall?
Mr. Gendreau: Gold is always thought of in two elements: there is the supply-and-demand side, and the speculative side. The structural case for gold is still intact because supply is not getting easier and the underlying demand remains strong.That all argues for a trend toward higher prices, but the trouble is the speculative factor. Because of all the quantitative easing, low interest rates and concerns about inflation, we're still slightly above the trend, pricewise, but I still like gold in the medium- to long term.
InvestmentNews: Are stocks overvalued?
Mr. Gendreau: In valuation terms, it's very hard to argue that they are overvalued. The forward price-to-earnings ratio of the S&P 500 is at 14, which compares to 15.1 in October 2007 and 30 during the Internet bubble. Stock prices have been going up, but they are just playing catch-up with earnings. I'm still a big believer that it's earnings that drive stock prices.
InvestmentNews: How important is housing to the economic recovery?
Mr. Gendreau: I think it's a lot more important that most of us economists realized back in 2008.
What really knocked the daylights out of the economy in 2008 was that housing is really interconnected throughout the economy. There are a lot of ripple effects. And it's linked to the rest of economy through instruments such as derivatives and mortgage-backed securities. The mistakes that most economists made in 2008 is that they were looking at a housing downturn the same way we had been looking at housing during the entire postwar period. We didn't realize the extent to which the housing market had spread throughout the overall economy.
InvestmentNews:Will the recent scandal revealing that the Internal Revenue Service targeted conservative groups have any impact on the implementation of the health care reform law, which will involve the IRS?
Mr. Gendreau: I don't think it will have a big impact. Politically, it will hurt [President Barack] Obama, because it's a big embarrassment.
Whether it's the IRS today or [President Richard] Nixon's enemy's list in the 1970s, that's not something we want to see in a democracy.
And it's clear that Obamacare does face implementation problems, but the IRS is here to stay.
InvestmentNews:In the near term, what are the biggest risks that the U.S. economy faces?
Mr. Gendreau: I think it is still macroeconomic. Europe is in recession. In the emerging markets, Brazil, Russia and China all are having trouble with growth.There is also the combination of fiscal tightening in the U.S. and austerity in Europe, and I don't think the full effects of higher payroll taxes have been fully felt yet.
Standard & Poor's 500 climbs to an all-time high on Wall Street, led by technology stocks
By Steve Rothwell, AP Markets Writer April 10, 2013
http://finance.yahoo.com/news/standard-poors-500-climbs-time-143811264.html
Outlook for 1Q earnings seen weak Higher payroll taxes, sequestration may hit consumer companies in particular By Jeff Benjamin, Investment News
Apr 8, 2013 @ 4:13 pm (Updated 5:11 pm) EST
http://www.investmentnews.com/article/20130408/FREE/130409937?utm_source=indaily-20130408&utm_medium=in-newsletter&utm_campaign=investmentnews&utm_term=text
Keeping stock market milestones in perspective By Jeff Benjamin, Investment News
Mar 29, 2013 @ 1:44 pm (Updated 1:56 pm) EST
http://www.investmentnews.com/article/20130329/BLOG12/130329922
Shares Push Higher as Fed Maintains Stimulus Program Shares Punch Higher as Fed Maintains Stimulus Program
By Dan Wagner, THE ASSOCIATED PRESS/NEW YORK TIMES March 20, 2013
http://www.nytimes.com/2013/03/21/business/daily-stock-market-activity.html?_r=0
Dow rises for 10th day, S&P eyes record Dow rises for 10th day, S&P eyes record
By Leah Schurr, Reuters March 14, 20113
http://finance.yahoo.com/news/dow-record-again-ends-higher-004551362.html
Dow notches ninth gain in a row, longest since '96
Dow Jones industrial average extends winning streak to nine days; longest since 1996
NEW YORK, Steve Rothwell (AP) -- The Dow Jones industrial average notched its ninth gain in a row, giving the index its longest winning streak in more than sixteen years.
Wall street edges up, buoyed by jobs data
By Leah Schnurr
NEW YORK | Thu Mar 7, 2013 10:23am EST
Stocks Creep Toward Record
By Chris Dieterich, Wall Street Journal NEW YORK—The Dow Jones Industrial Average edged closer to an all-time closing high Monday, as investors brushed off steep losses in China's equity markets and pushed major benchmarks higher. The Dow rose 38.16 points, or 0.3%, to 14127.82, ending with its second-highest finish ever. The blue chips now sit just 37 points below the record. The Standard & Poor's 500-stock gained 7.00 points, or 0.5%, to 1525.20 and the Nasdaq Composite Index climbed 12.29 points, or 0.4%, to 3182.03. Utility, consumer discretionary and financial stocks the market higher. Wal-Mart Stores WMT +2.12% and Home Depot HD +1.83% were the Dow's best performers. Only energy and industrial sectors lost ground.
Major indexes started lower following a rout in China's equity markets. The Shanghai Composite slumped 3.7%, the biggest one-day percentage slide since August 2011. Losses came after Chinese government measures to curb rising home prices amid signs that the market is heating up. The new rules include higher down payments and mortgage rates on second homes in some cities.
But losses didn't last. Earlier Monday, Janet Yellen, vice chairwoman of the Federal Reserve's board of governors, made clear in a speech that she supports keeping economic stimulus efforts in place for the foreseeable future. Last month, concerns that the central bank might seek to end its efforts sooner than expected helped trigger a pause in the market. "I don't think it's necessarily anything new, but basically [the speech] is reiterating that the Fed is going to keep rates as low as needed for as long as needed," said Brian Gendreau, market strategist for El Segundo, Calif.'s Cetera Financial Group, which manages $20 billion in assets.
While worries about a budget impasse in Washington lingered, some investors said they were encouraged by the way investors retained their composure last week as the deadline for automatic budget cuts approached. "The spending cuts have come and gone, and it seems like it wasn't the end of the world as some people thought," said Joe Bell, senior equity analyst at Schaeffer's Investment Research. "Overall we're encouraged that the spending cuts have come and gone."
Earnings Drama Grows as Dividend Seekers Put Stock in Payouts
Such drama is a new experience for income-seeking investors who have flooded into dividend stocks
By Richard Satran , US News and World Report
February 20, 2013
Lately, when a company paying a pricey dividend announces earnings, there is drama. And while it usually has a happy ending, there are also a few tragedies and some pure comedies. Such drama is a new experience for the income-seeking investors who have flooded into dividend stocks over the past year. After all, bonds, by comparison, are much more predictable in their coupon payments. But low yields mean investors are flooding into stocks, where inherent risks have not gone away.
Telecom company CenturyLink provided laughs last week (as long as you did not own the stock) by sharply lowering its dividend payout while increasing stock buybacks to $2 billion. The move backfired, and inspired a 26 percent one-day stock collapse. Rival Windstream, which fell 10 percent in reaction, was left to ease investors' fears that it would follow suit amid earnings pressures in the telecom sector that could hurt payouts. "On the earnings call, the [Windstream] CEO said at least 10 times in the first 15 minutes that they were committed to the dividend," says Todd Rethemeier, a longtime telecom analyst with Hudson Square Research, who listened to the call. He found the CenturyLink move a bit baffling. "It's a strange one, a real headscratcher," says Rethemeier. "I've never seen anything like this. It's funny if they thought they were going to get that one past investors."
For investors, the episode also illustrates the risks of a dividend cut even when companies have lots of cash on hand. The market appeared stunned when the cash-generating, profitable telecom made the move, cutting its payout 25 percent but putting much more into the big stock buyback. "They could have afforded to pay the dividend," says Rethemeier. "They have the cash. If they had put $1 billion of it into holding the dividend and $1 billion into buying back stock, their share prices would have gone up." Questionable corporate logic aside, the incident shows it's a tricky road for income investors. That's because not every high-dividend payer like CenturyLink can afford its payout, and investors should probably be wary when payouts rise over 5 percent in the telecom sector at large, analysts say. "It's not a hard rule, but it's just a level where you have to start to wonder why are they paying that much," Rethemeier says. Telecoms are a favorite of high-dividend investors because they are cash-flow-driven companies that are becoming toll-takers on the information highway. Traditionally, the telephone companies made dividends a top priority in a heavily regulated sector that produced profits that were once virtually guaranteed, although big changes—the decline of the landline and the rise of mobile—are remaking a formerly reliable industry which paid dividends as steadily as utilities or tobacco companies.
Also, whatever troubles the telecoms might be having says little about the overall dividend environment, says Howard Silverblatt, senior index analyst at Standard & Poor's. "Last year was the most amazing year ever for dividends, and there will be more growth this year." Even after record payouts, he says, companies pay out an average of just 36 percent of their cash versus the historic average of 52 percent. The number of companies increasing dividends rose 94.5 percent from 2011. Silverblatt says last year's record payout of $280 billion by S&P 500 stocks should rise to another new high in 2013. "There have been very few dividend cuts, companies still have tons of cash, and they are still relatively cheap," says Silverblatt.
Dividend funds were by far the biggest gainers over the past year in the equity space, accounting for most of the gains in inflows to equity funds, says Tom Roseen of Lipper. To be sure, those new investors will be carrying a lot of expectations into the new year, and any slipups in payouts like the one CenturyLink made will be punished. For many, the best choice will be to spread risks across funds that invest in a range of companies and sectors. The WisdomTree Dividend ex-Financials Fund and the Schwab U.S. Dividend Equity ETF have gained 7 percent in net asset value this year and 14 percent over the past 12 months. They're U.S. News's top-rated Best Fit ETFs in the income category.
Still, there's a case to be made for anything offering yield these days, which bonds simply aren't. "Compared to 10-year treasuries paying 2 percent, these yields are attractive," says Brian Gendreau, market strategist for Cetera Financial Group. "You can do a spreadsheet and find thousands paying much more than that. And you can lose principle on bonds if rates go up. Dividend-paying companies increase their dividends when that happens. We are still recommending them."
But the recent rise in stocks and the targeting of dividend payouts has the potential to lower yields in the short term. Investors hoping for more dividend income could be disappointed if increases fail to please, and Roseen says there are signs that investor enthusiasm is already waning. Inflows to equity income funds have leveled off and fund buyers have been moving into more non-income-driven corners of the market. Investors put $60 billion into equity and mixed asset funds in January, Lipper reports, making it the biggest month in seven years. Equity income made up just $2.5 billion of the total. Most of the new money went into growth, value, and international stocks. If that trend continues, some analysts see it as a healthy sign for the market as investors look to get more diversified. "You have seen investors in a desperate search for yield with treasury yields as low as they are, says Hugh Johnson of Hugh Johnson Advisors. "Investors are turning in every direction to try to increase either divided or interest income in their portfolio. I don't want to call it mania quite yet, but it has all the earmarks of mania."
US stocks moving lower after sharp move up
By Matt Craft, The New York Times – February 11, 2013
NEW YORK (AP) -- U.S. stocks drifted lower in Monday trading, pulling the Standard & Poor's 500 index back from its five-year high. The S&P 500 slipped one point to 1,517 shortly after noon. Eight of the 10 industry groups within the S&P 500 dropped. Financial and technology stocks, the exceptions, were barely higher. The broad stock index ended last week at its highest level since November 2007, and has climbed higher for six weeks in a row.Now, with major market indexes nearing record highs, many say the stock market is ready for a pause.
"The consensus seems to be that we're due for a correction," said Brian Gendreau, market strategist at Cetera Financial Group. "If you compound the increase we've had so far, this year would be the best year ever for stocks. And nobody thinks that that's going to happen."
The Dow Jones industrial average dropped 27 points to 13,965. Home Depot led the Dow lower, dropping 73 cents to $66.28. The Nasdaq composite fell five points to 3,188. No economic reports are scheduled to be released Monday. And few big companies are scheduled to report earnings. Loews Corp. said Monday morning that it lost $32 million in its fourth quarter, hurt by insurance losses from Superstorm Sandy and sliding prices for natural gas. The holding company, which has dealings in insurance, oil and gas and hotels, is largely controlled by the Tisch family of New York. Its stock sank 34 cents to $43.51.The stock market raced to a stunning start in January. A last-minute deal in Washington to avoid tax hikes and spending cuts known as the "fiscal cliff" eased fears that the budget cuts could lead the U.S. into a recession. Markets soared in relief.
The Dow and the S&P 500 are up more than 6 percent for the year. The Nasdaq is up more than 5 percent.
Junk-bond sell-off just a blip, managers say
Although the high-yield market might not have changed fundamentally, junk-bond yields have taken a noticeable dive from their peak late last month
By Jeff Benjamin
Investment News, February 10, 2013 12:01 am ET
The recent bumpy stretch for high-yield bonds attracted some market attention and reminded investors of junk bonds' correlation to equities. But as the dust settles, the consensus is that the bond volatility, at least this time around, probably didn't warn of a looming stock market correction.“Nothing has changed in the high-yield market over the past few weeks,” said Jim Sarni, managing principal at Payden & Rygel Investment Management, which handles $83 billion in fixed-income portfolios. “This is just a little bit of a reaction to some of the buyouts that are happening right now.”
Although the high-yield market might not have changed fundamentally, junk-bond yields have taken a noticeable dive from their peak late last month, which looks a lot like a sudden market sell-off.The high-yield exchange-traded fund iShares iBoxx High Yield Corporate Bond (HYG) is up about 34 basis points for the year but down 1.3% since Jan. 22. Likewise, the SPDR Barclays High Yield Bond ETF (JNK) is essentially flat from Jan. 1 but off 1.5% from a Jan. 28 peak.“I think this is just noise,” Mr. Sarni said. “I would be willing to bet that by the end of the month, we will see another positive month for high-income bonds.”
While rising rates should alert holders of investment-grade debt, investors in high-yield debt generally follow a different set of market signals. “High-yield bonds are affected by interest rates, but they also tend to be highly correlated to the equity market,” said Brian Gendreau, a market strategist at Cetera Financial Group Inc. and professor of finance at the University of Florida. Even though yield spreads between the highest- and lowest-quality bonds have narrowed, high-yield bonds still enjoy a buffer that should protect them from sudden rate movements. However, bonds become more ex- posed to credit-related volatility as the debt quality moves further from investment-grade toward distressed. That is where high-yield bonds start to act like stocks and why a jolt in the high-yield market can make equity investors nervous. “What makes high-yield bonds high-yielding is that they're usually issued by companies with a lot of leverage,” Mr. Gendreau said. “So if a company goes under, you, as a bondholder, end up with a claim on the company's assets, which effectively makes you an equity holder.” However, bonds become more ex- posed to credit-related volatility as the debt quality moves further from investment-grade toward distressed. That is where high-yield bonds start to act like stocks and why a jolt in the high-yield market can make equity investors nervous. “What makes high-yield bonds high-yielding is that they're usually issued by companies with a lot of leverage,” Mr. Gendreau said. “So if a company goes under, you, as a bondholder, end up with a claim on the company's assets, which effectively makes you an equity holder.”
Another way to look at it would be to consider high-yield debt as a hybrid that can cut both ways, according to Mr. Gendreau. “Wall Street thinking has usually been that bond investors are smarter than equity investors, but a dip for high yield can be concurrent but probably not a leading indicator for stocks,” he said. “Basically, buyers of high-yield bonds have two reasons to think the stock market run will not last, while equity investors only have one reason.” [email protected] Twitter: @jeff_benjamin
U.S. Stocks Decline as Investors Weight Data Ahead of Jobs Report
2013-01-31 16:35GMT
By Lu Wang and Sarah Pringle
Jan. 31 (Bloomberg) -- U.S. stocks fell, after the best start to a year for the Standard & Poor’s 500 Index since 1997, as investors weighed earnings and economic reports while awaiting tomorrow’s jobs data. United Parcel Service Inc. fell 2 percent after it forecast profit that trailed estimates as a weak global economy weighs on demand for package shipments. Dow Chemical Co. slid 5.5 percent after earnings missed forecasts as sales fell in Europe. Facebook Inc. lost 3 percent as profit dropped on higher spending. Qualcomm Inc. and JDS Uniphase Corp. rallied at least 4.5 percent amid better-than-anticipated earnings.
The S&P 500 fell 0.3 percent to 1,497.25 at 11:33 a.m. in New York. The Dow Jones Industrial Average lost 34.25 points, or 0.3 percent, to 13,876.17. Trading in S&P 500 companies was 2.7 percent above the 30-day average at this time of day. U.S. benchmark indexes fell from five-year highs yesterday as the economy unexpectedly shrank in the fourth quarter.
“The market’s due for a breather, so unless the economic news was significantly above expectations or significantly below, you’re probably going to get a trading down market,” Eric Green, director of research at Penn Capital, which oversees about $7 billion in Philadelphia, said in a phone interview. “The mixed data give some reason to take some profits potentially.”
The outlook is fairly benign right now,” Brian Gendreau, a market strategist at Los Angeles-based Cetera Financial Group Inc., said by phone. The firm has about $20 billion in assets under management. “We are looking at moderate growth. Earnings picture is good. No one is talking about double-dip recession.”
Apple's sales slowdown tugs Nasdaq index lower
By MATTHEW CRAFT, The Associated Press
January 25, 2013
NEW YORK —
A sharp drop in Apple's stock pulled the Nasdaq down with it after the tech giant warned of weaker sales. Other stock-market indexes eked out slight gains.
Apple sank $63.50 to $430.50. With iPhone sales hitting a plateau and no new products to introduce, Apple said sales would likely increase just 7 percent in the current quarter. That's a let-down for a company that has regularly posted growth rates above 50 percent. The Standard & Poor's 500 index edged up 0.01 of a point to 1,494.82. Earlier in the day, the S&P 500 crossed above 1,500 for the first time since December 2007. The broad gauge of the stock market has already gained 4.8 percent this year and climbed seven days in a row.
One reason for the market's recent rise is that some of the biggest obstacles have been pushed aside, said Brian Gendreau, a market strategist at Cetera Financial Group. On Wednesday, the House of Representatives agreed to suspend the federal government's borrowing limit until May 19, allowing the U.S. to keep paying its bills for another four months. "Politics is off the table for now and Europe seems like it's stable. So what's left? It's earnings. And aside from Apple it seems like pretty good news," Gendreau said.
The Dow Jones industrial average gained 46 points to close at 13,825.33. The Nasdaq fell 23.29 points to 3,130.38. The 12 percent drop in Apple, which makes up 10 percent of the index, was enough to pull the Nasdaq lower.
Stocks mixed, with S&P 500 dipping from close to a five-year high: January 14, 2013
By Steve Rothwell, AP Business Writer | Associated Press
NEW YORK (AP) -- Stocks were mixed on Wall Street, with the Standard & Poor's 500 sliding further below a five-year high it reached last week. Apple tumbled on concern that demand for the iPhone 5 is waning.
The Dow Jones industrial average rose 11 points to 13,499 as of midday Monday, having fallen as much as 29 points at the start of the day. The S&P 500 fell 3 points to 1,469. The Nasdaq composite index fell 14 points to 3,111.
The Standard and Poor's 500 closed at a five-year high of 1,472 on Thursday, following a solid start to the fourth-quarter earnings reporting period and amid optimism that the outlook for global growth is brightening.
"The market is definitely in wait and see mode," said Brian Gendreau, a market strategist at Cetera Financial Group.
Investors will be scrutinizing revenues, to assess whether the drawn-out debate over the "fiscal cliff" had an impact on consumer spending. A series of tax hikes and spending cuts, due to come into effect Jan. 1 were only averted by a last-minute deal.
Promising future for U.S. equities
A nail-biting first half of 2013 could give way to better stock performance as economy improves
By Jeff Benjamin, Investment News
January 6, 2013 12:01 am ET
Thanks mostly to non-stop bickering in Washington, the year ahead is likely to represent a tale of two equity markets — one as fiscal cliff and budget negotiations are worked through and a second after decisions are settled. This is essentially how most economists, market watchers and analysts have qualified their equity outlooks for 2013. Financial advisers might do well to take heed of the message, because in moving through the next few months, that first step could be a doozy. Beyond that, however, the outlook for the rest of the year is not all that bad. “If we can see our way to the end of 2013, we believe it can be constructive for equities,” said Janet Engels, director of the portfolio advisory group at RBC Wealth Management USA. The challenge, she added, involves looking beyond what is likely to come in the first part of the year.
SECOND-HALF COMEBACK “In the U.S., we see the seeds of better growth in the second half, but, before that, there is potential for some negative GDP growth in the first quarter,” Ms. Engels said. “We're looking across the valley of the first half, even though we don't know yet how deep it will be because it is being defined largely by Washington.” According to InvestmentNews' 2013 Investment Outlook survey, in which 592 financial advisers took part last month, respondents generally expect U.S. stocks to lead all other major asset classes in the year ahead. When asked to identify the asset class they expect to perform best in 2013, the highest percentage of respondents — 33.9% — ranked U.S. equities ahead of emerging-market stocks (31.1%), international stocks (10.2%), emerging-markets fixed income (9.6%), U.S. fixed income (6.6%), Treasuries (5.6%) and international fixed income (3.0%). This helps explain why 44.8% of the advisers surveyed plan to recommend increases in clients' exposure to U.S. equities in the year ahead.
ATTRACTIVE VALUATIONS Only 11% of the survey respondents expect returns beyond 12% in 2013, but there is some evidence of extreme caution on the other end of the spectrum. About 33% of the advisers surveyed see the S&P finishing the year at 1,399 or lower. The extreme bearish outlooks do not fall in line with most economic forecasts, especially considering how strong the market was throughout the sluggish economy of 2012. “It would be hard to argue that the stock market is overvalued right now,” said Brian Gendreau, market strategist at Cetera Financial Group Inc. and professor of finance at the University of Florida. “You have to consider that the stock market was strong in 2012 despite all the hand-wringing and all the cash sitting on the sidelines,” he added. “I would think it would be a wise move on the part of equity investors to get in now.”
Such perspectives from Mr. Gendreau and others reflect an outlook that goes beyond the heated fiscal cliff debates that dominated much of December. “The first challenge is the fiscal cliff, and the second is some kind of grand bargain that includes a long-term deal on tax reform and curbing spending,” Mr. Gendreau added. “But the main support for the equity markets is that valuations are still attractive.” The S&P's forward price-earnings ratio, which stands at about 12, implies an earnings yield of about 8%. That is typically considered a good indicator of the future real return for stocks.
Even with the looming uncertainty hovering over the U.S. economy and other world events of potential consequence to markets, the advisers surveyed by InvestmentNews generally favored increasing exposure to stocks over most other asset classes.
[email protected] Twitter: @jeff_benjamin
By Steve Rothwell, AP Business Writer | Associated Press
NEW YORK (AP) -- Stocks were mixed on Wall Street, with the Standard & Poor's 500 sliding further below a five-year high it reached last week. Apple tumbled on concern that demand for the iPhone 5 is waning.
The Dow Jones industrial average rose 11 points to 13,499 as of midday Monday, having fallen as much as 29 points at the start of the day. The S&P 500 fell 3 points to 1,469. The Nasdaq composite index fell 14 points to 3,111.
The Standard and Poor's 500 closed at a five-year high of 1,472 on Thursday, following a solid start to the fourth-quarter earnings reporting period and amid optimism that the outlook for global growth is brightening.
"The market is definitely in wait and see mode," said Brian Gendreau, a market strategist at Cetera Financial Group.
Investors will be scrutinizing revenues, to assess whether the drawn-out debate over the "fiscal cliff" had an impact on consumer spending. A series of tax hikes and spending cuts, due to come into effect Jan. 1 were only averted by a last-minute deal.
Promising future for U.S. equities
A nail-biting first half of 2013 could give way to better stock performance as economy improves
By Jeff Benjamin, Investment News
January 6, 2013 12:01 am ET
Thanks mostly to non-stop bickering in Washington, the year ahead is likely to represent a tale of two equity markets — one as fiscal cliff and budget negotiations are worked through and a second after decisions are settled. This is essentially how most economists, market watchers and analysts have qualified their equity outlooks for 2013. Financial advisers might do well to take heed of the message, because in moving through the next few months, that first step could be a doozy. Beyond that, however, the outlook for the rest of the year is not all that bad. “If we can see our way to the end of 2013, we believe it can be constructive for equities,” said Janet Engels, director of the portfolio advisory group at RBC Wealth Management USA. The challenge, she added, involves looking beyond what is likely to come in the first part of the year.
SECOND-HALF COMEBACK “In the U.S., we see the seeds of better growth in the second half, but, before that, there is potential for some negative GDP growth in the first quarter,” Ms. Engels said. “We're looking across the valley of the first half, even though we don't know yet how deep it will be because it is being defined largely by Washington.” According to InvestmentNews' 2013 Investment Outlook survey, in which 592 financial advisers took part last month, respondents generally expect U.S. stocks to lead all other major asset classes in the year ahead. When asked to identify the asset class they expect to perform best in 2013, the highest percentage of respondents — 33.9% — ranked U.S. equities ahead of emerging-market stocks (31.1%), international stocks (10.2%), emerging-markets fixed income (9.6%), U.S. fixed income (6.6%), Treasuries (5.6%) and international fixed income (3.0%). This helps explain why 44.8% of the advisers surveyed plan to recommend increases in clients' exposure to U.S. equities in the year ahead.
ATTRACTIVE VALUATIONS Only 11% of the survey respondents expect returns beyond 12% in 2013, but there is some evidence of extreme caution on the other end of the spectrum. About 33% of the advisers surveyed see the S&P finishing the year at 1,399 or lower. The extreme bearish outlooks do not fall in line with most economic forecasts, especially considering how strong the market was throughout the sluggish economy of 2012. “It would be hard to argue that the stock market is overvalued right now,” said Brian Gendreau, market strategist at Cetera Financial Group Inc. and professor of finance at the University of Florida. “You have to consider that the stock market was strong in 2012 despite all the hand-wringing and all the cash sitting on the sidelines,” he added. “I would think it would be a wise move on the part of equity investors to get in now.”
Such perspectives from Mr. Gendreau and others reflect an outlook that goes beyond the heated fiscal cliff debates that dominated much of December. “The first challenge is the fiscal cliff, and the second is some kind of grand bargain that includes a long-term deal on tax reform and curbing spending,” Mr. Gendreau added. “But the main support for the equity markets is that valuations are still attractive.” The S&P's forward price-earnings ratio, which stands at about 12, implies an earnings yield of about 8%. That is typically considered a good indicator of the future real return for stocks.
Even with the looming uncertainty hovering over the U.S. economy and other world events of potential consequence to markets, the advisers surveyed by InvestmentNews generally favored increasing exposure to stocks over most other asset classes.
[email protected] Twitter: @jeff_benjamin