FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Advisors Must Warn Clients Of The Risks Of Overspending During The Holidays (The Wall Street Journal)
Telling clients not to overspend, especially when it comes to holiday gifts, is a sensitive subject, but one that must be tackled. Advisors warn that clients needs to watch their savings if they intend to meet their retirement goals.
John Hussman of Hussman Funds writes that investors don’t realise how quickly their recent profits could be erased.
“The stock market is only a few per cent from its 6-month high at present, and even an overextended move to about 1490 would put the S&P 500 at its upper Bollinger band (two standard deviations above the 20-period moving average) on daily, weekly and monthly resolutions. …Overextended moves like that, coupled with other features of an overvalued, overbought, overbullish syndrome, are typically associated with awful outcomes over the following 6-18 months, though not always immediately.
The reality is that the S&P 500 Index is presently within 5% of its level of April 2011 – more than 18 months ago – and even a few weeks ago the index was within about 11% of its April 2010 level. A correction comparable to the ones we observed separately in 2010 and in 2011, and not even qualifying as a bear market, would wipe out the total return of the S&P 500 since early 2010 (the point that our present ensembles would have moved away from a significant and sustained exposure to market risk).”
The Central Bank Trade Of 2013 (Business Insider)
Andrew Wilkinson of Miller Tabak believes he has spotted the central bank trade of 2013. His trade focuses on global interest rate markets, and he thinks that other than fiscal cliff fears there is no reason to be pricing in low interest rates in the U.S. like in the eurozone. Money Game reporter Matthew Boesler explains:
“The chart below captures all of these dynamics. The blue line shows the eurodollar calendar spread, a proxy for U.S. interest rates. The spread is decreasing, which means long-term interest rates are falling closer to the levels of short-term interest rates (the curve is flattening, suggesting weaker growth in the future).
The red line shows the equivalent measure in Europe, the euribor spread. As mentioned above, that spread has decreased much less rapidly than the eurodollar spread in the latter half of this year, causing the two to converge. (The convergence is illustrated by the black line, the spread between spreads, if you will, which is hovering right around zero at the moment.)”
[credit provider=”Miller Tabak + Co”]
UBS Analyst Lists Four Things That Everyone Should Read Over The Holidays (Business Insider)
As people check out for the holidays UBS’ Jonathan Golub put together four great holiday reads for those looking to understand global trends and current monetary policy.
The list includes 1) Global Trends 2030: Alternative Worlds by National Intelligence Council 2) Ultra Easy Monetary Policy And The Law Of Unintended Consequences by William R. White, Dallas Fed 3) Choices for Deficit Reduction by the Congressional Budget Office 4) World Energy Outlook 2012 by IEA.
Mark Cuban held an Ask Me Anything Reddit session in which he was quizzed on his stance on corporate taxes. Cuban said he would raise taxes and set up a metric that would set off a decline in taxes.
“If it were up to me, I would increase taxes and create metrics that triggered declines. If the unemployment rate falls to 6pct nationally and the Deb/t GDP ratio declines to a specified amount, we lower taxes. If it goes the other way, we increase them further on the wealthy. I could go on for days on ideas, but no one is listening to me.”