41 minutes ago
Don’t throw away the 60/40 portfolio, even if bond yields rise
This week’s rise in Treasury yields and the subsequent sell-off in stocks doesn’t look good for balanced portfolios – but that doesn’t necessarily mean the model is broken.
The iShares Core Growth Allocation ETF (AOR), which is based on an allocation of 60% to stocks and 40% to fixed income, posted a loss of 1.6% this week as both asset classes posted price declines. The episode was reminiscent of last year when stocks and bonds suffered losses and the AOR returned -15.6%.
“It’s hard to conclude that these models aren’t useful based on recent trading activity alone,” said Joe Kalish, chief global macro strategist at Ned Davis Research. “Does that mean these models don’t work? Not necessarily.”
He noted that bonds should provide some diversification benefits in a 60/40 portfolio in an environment where they are closer to fair value over the longer term.
Read more here.
-Darla Mercado
An hour ago
The strikes are unlikely to have a big impact on wages and salaries in September, says Vanguard’s chief global economist
Recent strike activity by the United Auto Workers and the Writers Guild of America is unlikely to have a measurable impact on Friday’s September payroll report, according to Vanguard chief global economist Joe Davis.
Hollywood Writers Union leaders ended the strike on September 27th after a nearly 150-day work stoppage, while the UAW’s strike has been ongoing since September 15th.
Overall, Davis estimates that the economy created 145,000 new jobs in September. Economists surveyed by Dow Jones estimate that around 170,000 new jobs were created during this period.
“Our below-consensus forecast is primarily due to labor supply headwinds,” he said.
He also calls for average earnings growth of 0.3% month-on-month and 4.3% year-on-year.
“We expect the September jobs report to show continued moderation in job growth, but confirm that wage growth is not yet on a safe downward trajectory to the Fed’s ~3% comfort level,” Davis said.
-Darla Mercado
An hour ago
Not to mention a 20% rally in 2023. Japanese stocks “are compelling,” says GMO
The Topix index in Japan is up 20% in 2023, excluding dividends reinvested. The Nikkei 225 has gained more than 19%. However, a report published on Thursday by fund managers Grantham, Mayo and Van Otterloo said stocks there still offer a “compelling” opportunity.
“Improving fundamentals and governance reforms are becoming increasingly evident in the world’s third-largest economy,” said Drew Edwards and Rick Friedman. “EPS growth has been relatively strong in Japan for years, the distribution of excess capital has increased, and policymakers continue to push for more competitive and capital-efficient companies.”
Still, the iShares MSCI Japan ETF, the largest Japanese ETF in the U.S. with more than $13 billion in assets, is underperforming benchmark stock indexes there as the Japanese yen has fallen about 17% against the dollar since mid-January and recently reached the 150 yen mark. The EWY is about 7.5% higher in 2023 but would be supported by a weakening dollar.
See grafic…
Nikkei 225 in 2023.
An hour ago
Levi Strauss shares fall after quarterly sales misses and lackluster guidance
Shares of Levi Strauss & Co. fell about 1% in extended trading after the denim jeans maker on Thursday reported weaker-than-expected third-quarter sales and issued weak guidance.
Levi Strauss reported adjusted profit of 28 cents per share, slightly less than the 27 cents per share expected by analysts surveyed by FactSet. Revenue came in at $1.51 billion, below estimates of $1.54 billion.
For the fiscal year, the apparel company expects earnings per share at the lower end of its previously forecast range of $1.10 to $1.20, compared to analyst consensus estimates of $1.11. The sales forecast remained unchanged at 1%, below the previous forecast of 1.5% to 2.5%.
“We have launched an initiative to review our operating model and cost structure to drive agility and material cost savings starting in 2024,” said Harmit Singh, Chief Financial and Growth Officer of Levi Strauss.
An hour ago
Where the most important average values are from the last week
The Dow Jones Industrial Average is headed for its third straight week of losses, while the S&P 500 is on track for its fifth week. Here are the most important averages for the week so far:
- The Dow is down 1.16%
- The S&P 500 fell 0.7%
- The Nasdaq Composite is roughly flat
—Sarah Min
An hour ago