The Source at AXA-Equitable

Signs of U.S. Expansion Eclipse Euro Woes But Oil May Seep In

DWinter — Fri, 17 Feb 2012 18:06:41 +0000

News Brief from AXA Equitable:
Highlights from recent notable market news reports
Feb. 17, 2012

Better than expected U.S. labor, housing, and manufacturing reports drew attention this week away from concerns over Greece and the euro zone. U.S. unemployment claims fell to their lowest level in nearly four years, mid-Atlantic manufacturing orders expanded at the fastest pace in four months, and January housing starts exceeded expectations, spurring index gains and degrees of optimism on Wall Street.

Chris Rupkey, economist at Bank of Tokyo-Mitsubishi, gushed to Bloomberg that “the economy’s wheels just keep spinning faster and faster,” (Bloomberg: “Drop in Jobless Claims Points to Spending Gains,” by Timothy R. Homan and Bob Willis, February 16, 2012). Less was more for Edward Crotty, of Davidson Investment Advisors, who told the Journal that he’s “not sure there’s enough strength for the market to run away at this point, but stock valuations can go up merely on an alleviation of worries.” (Wall Street Journal: “Dow Closes at Higest Level in Nearly 4 Years,” by Jonathan Cheng, February 17, 2012)

News of domestic growth coincided with glimmers of hope on the Greek debt crisis, or at least evidence of the market’s resiliency in absorbing euro zone shocks. Bill Street of State Street Global Advisors told the Journal that “the market generally has digested the Greek issue and sees it as a nonsystemic issue at this point.” (Wall Street Journal: “As Vector, Greece Loses Its Potency,” by Charles Forelle, February 15, 2012).

Meanwhile, economists cautioned that rising oil prices could emerge as the next threat to the fragile economy (Wall Street Journal: “Oil Rise Imperils Budding Recovery,” by Ben Casselman and Conor Dougherty, February 16, 2012). Oil prices have reportedly climbed sharply in recent weeks, as tensions spill in the Mideast. This “has the power to derail an economic recovery that’s not looking very strong already,” Paul Dales, of Capital Economics, told the Journal.

IMPORTANT — AXA Equitable, AXA Advisors, LLC (member SIPC) and their affiliates do not provide tax/legal advice, or investment or market research. The quotes provided in this News Brief have been excerpted from media reports for general informational purposes only and do not represent the opinions of AXA Equitable, AXA Advisors or their affiliates, associates or employees. AXA Equitable and its affiliates make no representation as to the accuracy or completeness of any statements, statistics, data, opinions, forecasts, or predictions provided herein, nor will this information necessarily be updated or supplemented at any time. Any reference to market or index performance is for informational purposes only. It is not possible to invest directly in an index. This material is not intended, and should not be relied upon, as investment or financial advice and does not constitute an offer or solicitation of any kind.

Officially a Bull Market

DWinter — Fri, 10 Feb 2012 19:57:36 +0000

News Brief from AXA Equitable:
Highlights from recent notable market news reports
Feb. 10, 2012

The stock market has now officially entered a bull phase, after nearly tipping into bear market territory last year, with the MSCI All-Country World Index having risen 20 percent from its October low (“Defensive Stocks Lose for First Time Since 1999 Amid Bull Market,” by Matt Walcoff, Feb. 9, 2012, Bloomberg).

Sudhir Nanda of T. Rowe Price Group told Bloomberg: “Last year, investors tended to hide in things which are stable, paying reasonable dividends … This year, people looked at the U.S. and said, ‘Things are not really that bad.’ If the economy is humming, people tend to buy more of the sectors which will profit from growth, industrials, materials and things like that.”

Laurence D. Fink, CEO of BlackRock, sees a bright enough future in stocks to advise going all in (“BlackRock’s Fink Says Investors Should Be 100% in Equities,” by Bei Hu and Susan Li, Feb. 8, 2012, Bloomberg).

“I don’t have a view that the world is going to fall apart, so you need to take on more risk,” he told Bloomberg. “You need to overcome all this noise. When you look at dividend returns on equities versus bond yields, to me it’s a pretty easy decision to be heavily in equities.”

Warren Buffett, CEO of Berkshire Hathaway, seems to have a similar view taken from the bond-market perspective (“Warren Buffett: Why stocks beat gold and bonds,” by Warren Buffett, Feb. 9, 2012, Fortune). In an adaptation from his upcoming annual letter to shareholders, he writes:

“The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability – the reasoned probability – of that investment causing its owner a loss of purchasing power over his contemplated holding period. Assets can fluctuate greatly in price and not be risky as long as they are reasonably certain to deliver increased purchasing power over their holding period. And as we will see, a nonfluctuating asset can be laden with risk.”

Buffett adds: “High interest rates, of course, can compensate purchasers for the inflation risk they face with currency-based investments – and indeed, rates in the early 1980s did that job nicely. Current rates, however, do not come close to offsetting the purchasing-power risk that investors assume. Right now bonds should come with a warning label.”

IMPORTANT — AXA Equitable, AXA Advisors, LLC (member SIPC) and their affiliates do not provide tax/legal advice, or investment or market research. The quotes provided in this News Brief have been excerpted from media reports for general informational purposes only and do not represent the opinions of AXA Equitable, AXA Advisors or their affiliates, associates or employees. AXA Equitable and its affiliates make no representation as to the accuracy or completeness of any statements, statistics, data, opinions, forecasts, or predictions provided herein, nor will this information necessarily be updated or supplemented at any time. Any reference to market or index performance is for informational purposes only. It is not possible to invest directly in an index. This material is not intended, and should not be relied upon, as investment or financial advice and does not constitute an offer or solicitation of any kind.

Too “Beared Up” at Year-End 2011?

DWinter — Fri, 03 Feb 2012 16:56:06 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
February 3, 2012

An unexpected drop in the U.S. unemployment rate – to 8.3%, according to data released Feb. 3 – is sure to rattle some stock market bears (“Jobs Data Show Sustained Growth,” by Josh Mitchell and Jeffrey Sparshott, Feb. 3, 2012, The Wall Street Journal).

Strategists were already modifying their pessimistic views before the upside surprise on jobs because of rising equity prices on lower market volatility through January (“Global Strategists Abandoning Bearish Views After Missing Rally,” by Michael Patterson and Inyoung Hwang, Feb. 1, 2012, Bloomberg).

“In hindsight, everybody was so beared up at the end of last year,” Mary Ann Bartels of Bank of America told Bloomberg. “There was nowhere for the market to go but up.”

Benoit Anne of Societe Generale told Bloomberg: “I got stuck with my defensive views for too long,” adding that, “If we do get confirmation that the payroll number is a decent number, no shocking surprise to the downside, then presumably all stars will be aligned for another leg of the rally.”

Not all the enthusiasm is unbridled. “I still think the consensus is quite cautious,” Larry Hatheway, the chief economist at UBS, told Bloomberg, despite improving U.S. economic data, among other factors.

The European debt crisis and economic weakness continue to pose risks, though signs of progress have some market participants predicting that interest rates should start edging higher (“Tomczyk: Long-term rates won’t stay low for long,” by Jason Kephart, Feb. 2, 2012, InvestmentNews).

“The uncertainty around Europe is weighing down the yield curve,” Fred Tomczyk, president and chief executive of TD Ameritrade, said at a conference, according to InvestmentNews. “We expect those rates to start to rise as Europe reaches a resolution in six months to a year.”

Stocks: Suspiciously Quiet Out There

DWinter — Fri, 27 Jan 2012 14:15:59 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
January 27, 2012

The new year is off to an eerily quiet start, so Barry Knapp of Barclays Capital fears that the absence of the volatility that characterized much of the 2011 second half is just the “eye of the storm” (“All’s Quiet on the Dow. Too Quiet?” by Jonathan Cheng, Jan. 24, 2012, The Wall Street Journal).

The market’s expectation for volatility to continue hasn’t been fulfilled. As a result, “We are antsy,” Dennis Gartman wrote in his recent newsletter, according to The Journal. The source of his anxiety is similarities to April 2011 when, as is now the case, investors had become optimistic about a U.S. recovery and less worried about the Eurozone. Soon after, volatility surged through the second half.

Not surprisingly, world leaders gathering recently for the annual World Economic Forum in Davos, Switzerland, fretted about Europe (“Shadow Over Growth,” by Stephen Fidler, Jan. 25, 2012, The Wall Street Journal).

“I’d be cautiously optimistic about the world economy if the driver was the U.S. economy,” Simon Johnson, a former chief economist at the International Monetary Fund, told The Journal. “But it’s not. Europe is the big question.”

Barton Biggs of Traxis remains bullish on stocks despite Europe’s debt crisis (“Biggs Cites ‘Strong Rally’ Potential for Stocks,” by Nikolaj Gammeltoft and Deirdre Bolton, Jan. 23, 2012, Bloomberg).

“I’m terrified I’m not long enough if we’re going to have a strong rally here, which we could,” he told Bloomberg, though conceding “I’m terrified I’m too long if the apocalypse is coming in Europe.”

Inflation: “What, Me Worry?”

DWinter — Fri, 20 Jan 2012 15:48:15 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
January 20, 2012

Commentator Michael Kinsley seems to be challenging Mad Magazine icon Alfred E. Neuman (“What, me worry?”) in his latest column, “About Faster Inflation, Please Stay Worried” (Jan. 19, 2012, Bloomberg).

Kinsley has been warning of inflation since the crash of 2008-2009. “My reason was that I couldn’t see how the government could pay off the massive debt it was running up except by inflating at least part of it away,” he wrote in his latest column. “For this, I was widely ridiculed,” he wrote, but he’s not backing down.

“Barring a miracle, there will be a fierce storm of inflation sometime in the next few years and it will wipe out a big chunk of the national debt, along with the debts of individual citizens, and the savings of others,” he wrote.

Despite the warning, worrying about inflation seems to remain out of vogue.

“There are no signs of budding inflationary pressures,” Stuart Hoffman, chief economist at PNC Financial Services Group, told Bloomberg (“Four-Year Low in U.S. Jobless Claims May Bolster Spending in 2012: Economy,” by Bob Willis and Shobhana Chandra, Jan. 19, 2012, Bloomberg). “The core index is going to be pleasing to the Fed.”

“The lack of inflation is helping preserve household buying power,” Bloomberg reported, citing Labor Department data showing hourly earnings adjusted for prices rose 0.2 percent on average in December.

Worrying itself, however, never seems to go completely out of fashion (“As Dow Climbs, Worries Persist,” by Brendan Conway and Tomi Kilgore, Jan. 19, 2012, The Wall Street Journal).

The Journal notes that, despite rising stock indexes since Jan. 3, investors are worried about companies reporting disappointing earnings for the first time in years amid some indicators “sparking worries that overall economic activity may be stalling.”

“It kind of feels like the rally has lost momentum over the last few weeks, whether you look at the transports, the S&P 500 or the industrials,” Brian Lazorishak of Chase Investment Counsel told The Journal. “You’ve got a lot of mixed signals.”

Optimists and Skeptics in a Tug-of-War

admin — Fri, 13 Jan 2012 17:35:27 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
January 13, 2012

On the one hand, Bill Gross of Pimco says global markets and the economy are at risk in 2012, so he has been loading up on U.S. debt (“Pimco’s Gross Says Global Economy, Markets at Risk in 2012,” by Susanne Walker and Trish Regan, Jan. 12, 2012, Bloomberg).

On the other hand, Laszlo Birinyi, who correctly predicted the bull market would survive its 2011 mid-year correction, says the S&P 500 will gain at least 8 percent in 2012 as decent corporate profits force bears to capitulate (“Bull Market Defying Strategists Seen Continuing by Birinyi,” by Whitney Kisling, Jan. 10, 2012, Bloomberg).

“Many concerns are opinions, but not necessarily facts,” Birinyi of Birinyi Associates Inc. told Bloomberg. “Later in the year, things will get a little bit better and sentiment will change, and we end up at the last leg where we’ve got the last-guy-in-the-pool scenario.”

Gross is skeptical. “Banks should be eight-to-one or nine-to-one in terms of leverage,” he told Bloomberg. “Right now, the system is an 18-times to 20-times overleveraged system, and that’s producing the risk in terms of tipping one way or the other.”

“For the moment, the U.S. Treasury is viewed as a safe haven,” Gross said. “Until we see some clear evidence in terms of where the world is going, reflation or deflation, then that’s a decent alternative.”

In the middle of this tug-of-war stands Bob Doll of BlackRock Inc. (“BlackRock strategist Doll sees slow growth in 2012,” by Andrew Osterland, Jan. 10, 2012, InvestmentNews).

Doll is predicting 2.0 to 2.5 percent GDP growth and 1,350 for the S&P 500 by year end (which would be 7.3 percent higher than at year-end 2011), according to InvestmentNews. “Don’t get carried away with the recent good economic news,” he said. “The U.S. economy will muddle through but it won’t grow very rapidly.”

Napa Valley Voted Top Retirement Destination Choice

DWinter — Tue, 10 Jan 2012 22:50:47 +0000

Napa Valley Welcome Sign, Photographed by Stan Shebs, September 2005

Napa Valley, CA is the preferred place to retire, according to the participants of AXA Equitable’s “Destination Retirement Sweepstakes.” AXA Equitable launched the sweepstakes to mark the retirement of its advertising campaign star − “the 800lb gorilla in the room.” The public was invited to enter the sweepstakes featured on Facebook and Twitter (@AXA_Equitable). Sweepstakes entrants chose from four places where the gorilla could retire and entered a contest to win a trip to the destination that received the most votes. Napa Valley was chosen above North Carolina, Puerto Rico and Florida.

Land of Plenty
By all accounts, Napa Valley is indeed a special place. The area’s original Wappa Indian inhabitants used their word “napa” to describe a “Land of Plenty.” Today, the official County of Napa website describes it as “America’s legendary wine, food and wellness destination…. one of the most rare and precious agricultural preserves on earth – a place that moves in perfect synchrony with the seasons.” A website called www.TopRetirements.com describes Napa as “an interesting retirement community for active adults who enjoy wine, a warm climate, and great restaurants.”

Reality Checklist: Retirement Relocation
While sweepstakes are fun and retirement should be too, relocating requires serious consideration, no matter what your life stage, whether you’re moving around the corner, across the country or around the world.

If you’re thinking about retiring to another state or country, there are social, medical, financial, and legal issues to consider. Retirement relocation has become an industry in itself, with many places vying for retirees with tax breaks and other perks. Services abound on the internet advising retirees on relocation. There’s even a magazine called “Where to Retire” self-described as “the authoritative source of useful information for the 700,000 Americans who move to new towns to retire every year.”
Before you load up the truck, do your research. Retirement isn’t a vacation. It takes long-term planning about things like healthcare quality and access, taxes, community, transportation and cultural offerings. To get started, U.S. News offers a checklist.

Once you’re ready, maybe you’ll decide to join the 800lb gorilla in Napa…

Wary Words on Stocks vs. Bonds in 2012

admin — Fri, 06 Jan 2012 14:33:41 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
January 6, 2012

Burton Malkiel, author of “A Random Walk Down Wall Street,” is recommending stocks over bonds for 2012, predicting a 7 percent yield on stocks vs. just 2% on the 10-year Treasury bond (“Where to Put Your Money in 2012,” by Burton G. Malkiel, Jan. 5, 2012, The Wall Street Journal), but not everyone is so sure.

Goldman Sachs’s David Kostin expects U.S. stocks will end 2012 no higher than at year-end 2011, which was no higher than year-end 2010 (“Street Wary on Its Random Walk,” by Steven Russolillo, Jan. 4, 2012, The Wall Street Journal). Morgan Stanley takes it one step further predicting the S&P 500 will end the year down 7%, citing slowing global growth, The Journal reported.

Adam Parker of Morgan Stanley told The Journal that the U.S. dollar’s strength against the euro is a strong signal for weaker earnings, adding, “We think the risk reward is skewed to the negative.”

Uri Landesman of Platinum Partners in Manhattan, told The Journal that while he expects the S&P will end the year higher, “I agree with the assessment that it’s going to be another very volatile year.”

Byron Wien of Blackstone Group sides with the optimists, writing in his annual “10 Surprises” list that oil will fall to $85 a barrel this year, the S&P will rise to 1,400, U.S. GDP will exceed 3 percent, and unemployment will drop below 8 percent (“Wien Sees Oil Falling to $85, S&P 500 Topping 1,400 in 2012,” by Lu Wang, Jan. 3, 2012, Bloomberg).

“The drop in the price of oil and the rise in the stock market improve both consumer confidence and spending patterns,” Wien wrote. “Recession fears and even ‘the new normal’ view of prolonged slow growth are called into question.”

Nevertheless, sentiment will surely play a role, and frustration and skepticism dominate as investors enter the new year (“World’s Woes Leave Lasting Scars,” by Tom Lauricella, Jan. 3, 2012, The Wall Street Journal).

“This dour demeanor comes after a year where many investors learned they had underestimated just how volatile and unpredictable life would be as the world’s major developed economies contend with a mountain of debt,” The Journal reported.

High Volatility, Low Returns: Now What?

DWinter — Fri, 30 Dec 2011 14:46:19 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
December 30, 2011

High volatility in stock prices – double the average over the past five decades – has coincided with the S&P 500 on track to notch its smallest year-end price change, around 1 percent, since 1970 when it inched down 0.1 percent (“S&P Volatility Double Average as Index Moves Least Since ’70,” by Inyoung Hwang and Alexis Xydias, Dec. 27, 2011, Bloomberg).

By a wide margin, the highest-returning stocks have been those of companies in the so-called defensive sectors – consumer staples, for example, that are less sensitive to economic trends – compared to economy-dependent sectors, Bloomberg reported. So is the glass half full or half empty?

“The combination of a very crowded trade and a market that’s very cheap with a lot of doubters suggests to me the place to put funds is in the market overall,” Andrew Slimmon of Morgan Stanley Smith Barney told Bloomberg.

The glass-half-empty crowd argues that the stock market now offers fewer buying opportunities because of the run-up in defensive sectors, Bloomberg notes, but as The Wall Street Journal reports, an economic recovery in the U.S. is hard to ignore as it generates increasingly positive signals (“Data Suggest Recovery Gaining Steam,” by Ben Casselman, Dec. 30, 2011, The Wall Street Journal).

The latest jobs, housing, and manufacturing statistics “suggest that the economic recovery is once again gaining momentum after nearly stalling out earlier this year,” The Journal reported, noting that recession anxiety peaked last summer but now is easing on signs of steady though still slow economic growth.

“We continue to hear people say that the U.S. recovery is fragile, and that’s the wrong word,” Michael Gapen, an economist with Barclays Capital, told The Journal. “It’s durable. It’s just not robust. It’s a moderate expansion.”

IMPORTANT – AXA Equitable, AXA Advisors, LLC (member SIPC) and their affiliates do not provide tax/legal advice, or investment or market research. The quotes provided in this News Brief have been excerpted from media reports for general informational purposes only and do not represent the opinions of AXA Equitable, AXA Advisors or their affiliates, associates or employees. AXA Equitable and its affiliates make no representation as to the accuracy or completeness of any statements, statistics, data, opinions, forecasts, or predictions provided herein, nor will this information necessarily be updated or supplemented at any time. Any reference to market or index performance is for informational purposes only. It is not possible to invest directly in an index. This material is not intended, and should not be relied upon, as investment or financial advice and does not constitute an offer or solicitation of any kind.

Outlook in Four Words: Europe, Housing, Jobs, Politics

DWinter — Fri, 23 Dec 2011 15:23:51 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
December 23, 2011

Economists expect U.S. GDP will grow a modest 2% in 2012, only slightly higher than the 1.7% rate expected for 2011, citing issues related to Europe, housing, jobs, and government spending cuts (“Risks Cloud Outlook for Economy in 2012,” by Conor Dougherty, Dec. 23, 2011, The Wall Street Journal).

The Journal’s survey of economists found that most respondents expect a mild Europe recession to hurt U.S. exports, persistent foreclosures to depress home values, job growth to be too weak, and government spending cuts – and related political wrangling – to further drag down growth.

“We know the global economy is going to slow,” Nariman Behravesh of IHS Global Insight told The Journal. “The question is by how much.”

Mohamed El-Erian of Pimco paints an even gloomier picture (“Pimco’s El-Erian Sees Risk Europe May Spark Lehman-Like Crisis,” by Rich Miller, Dec. 20, 2011, Bloomberg).

El-Erian, head of the world’s biggest bond fund, told Bloomberg the euro zone has a 1 in 3 chance of breaking apart and sparking a 2008-style financial meltdown. “It would be the equivalent of a sudden stop” in which financial markets seized up, El-Erian said, adding that the more likely scenario is that the euro currency union slims down.

El-Erian said he thinks nine of the current 17 countries would remain in the union – Austria, Belgium, Finland, France, Germany, Italy, Luxembourg, the Netherlands and Spain.