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U.S. Advisors Are Paying Attention To The Stock Market Rally In Japan (The Wall Street Journal)
Advisors in the U.S. are closely watching the Japanese stock market rally. The Nikkei is up 20.7 per cent year-to-date. With prime minister Shinzo Abe’s government promising looser fiscal and monetary policy, stocks are expected to go higher.
Some say money moving into stock funds centered on Japan is a short-term trade for some quick potential gains. Others like Paul Winter at Five Seasons Financial Planning LLC told the WSJ that they are buying Japanese stocks to diversify into assets with low correlation to the U.S.
Investors chasing yield have loaded up on American real estate investment trusts (REITs), but some are saying they should look at global REITs. Global real estate ETFs also offer better returns than those focused on the U.S.
While Europe’s housing market has some way to go before it recovers, Jeremy Schwartz at WisdomTree says emerging markets might be a better place to look. Some global real estate ETFs include SPDR Dow Jones International Real Estate (RWX), iShares FTSE EPRA/NAREIT Developed Real Estate ex-US (IFGL), and Vanguard Global ex-US Real Estate ETF (VNQI).
Global Financial Stress Is Rising And This Doesn’t Bode Well For Stocks (Bank of America)
Global financial stress is rising because of the situation in Cyprus. Bank of America’s Global Financial Stress Index has been turned inverted to show how it correlates with global equities.
“The Cyprus bailout story caused most measures to increase last week. In fact, only 5 measures registered a decrease in stress. Unsurprisingly, 4 of these were non-European,” write BAML analysts in a note to clients.
10 Indicators To Watch For A Spring Stock Market Slide (LPL Financial)
There are 10 indicators that Jeff Kleintop watches to see if we can expect a stock market slide in spring.
These signs include 1. Fed stimulus which isn’t expected to wind down till the end of the year. 2. Economic surprises, via the Citigroup Economic Surprise Index. 3. Consumer confidence, which is beginning to fall from highs. 4. Earnings estimates haven’t risen as much as in the past. 5. Yield curve – ” we will be watching to see if the yield curve flattens further after peaking in mid-March.” 6. Energy prices. 7. The LPL Financial Current Conditions Index which hasn’t shown signs of weakening. 8. The VIX which suggests that investors have become complacent. 9. Initial jobless claims which should increase in April. 10. Inflation expectations haven’t increased.
Kleintop expects a smaller decline of 5 per cent or so, compared with a 10 – 19 per cent slide in previous years.
Europe’s Banking Sector, Not Cyprus, Is The Really Worry (iShares Blog)
Cyprus isn’t the biggest cause of concern in Europe, writes Blackrock’s Russ Koesterich. While Cyprus and the EU have agreed to a bailout of the island nation’s banking sector, the problems in Europe’s banking sector are ongoing.
“Cyprus itself still faces a significant recession and Europe’s banking system as a whole remains under-capitalised and vulnerable to shocks. While the EU has technically agreed on tighter banking integration, implementation has been slow. Unfortunately, with German elections pending in September, we are unlikely to see much compromise on this politically contentious topic until late this year or early next.
“In the meantime, Cyprus will probably muddle through. But European banks will probably remain a source of systematic risk for the rest of the year.”
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