FOFViewForm Object
(
    [form:protected] => FOFForm Object
        (
            [model:protected] => LegacyinterfaceModelCommentaries Object
                (
                    [default_behaviors:protected] => Array
                        (
                            [0] => filters
                            [1] => access
                        )

                    [__state_set:protected] => 1
                    [_db:protected] => JDatabaseDriverMysqli Object
                        (
                            [name] => mysqli
                            [nameQuote:protected] => `
                            [nullDate:protected] => 0000-00-00 00:00:00
                            [_database:JDatabaseDriver:private] => joomla
                            [connection:protected] => mysqli Object
                                (
                                    [affected_rows] => 1
                                    [client_info] => mysqlnd 5.0.11-dev - 20120503 - $Id: 15d5c781cfcad91193dceae1d2cdd127674ddb3e $
                                    [client_version] => 50011
                                    [connect_errno] => 0
                                    [connect_error] => 
                                    [errno] => 0
                                    [error] => 
                                    [error_list] => Array
                                        (
                                        )

                                    [field_count] => 1
                                    [host_info] => Localhost via UNIX socket
                                    [info] => 
                                    [insert_id] => 0
                                    [server_info] => 5.5.46
                                    [server_version] => 50546
                                    [stat] => Uptime: 10320984  Threads: 1  Questions: 5278744  Slow queries: 9  Opens: 167  Flush tables: 1  Open tables: 160  Queries per second avg: 0.511
                                    [sqlstate] => 00000
                                    [protocol_version] => 10
                                    [thread_id] => 428329
                                    [warning_count] => 0
                                )

                            [count:protected] => 17
                            [cursor:protected] => 
                            [debug:protected] => 
                            [limit:protected] => 0
                            [log:protected] => Array
                                (
                                )

                            [timings:protected] => Array
                                (
                                )

                            [callStacks:protected] => Array
                                (
                                )

                            [offset:protected] => 0
                            [options:protected] => Array
                                (
                                    [driver] => mysqli
                                    [host] => localhost
                                    [user] => joomlauser
                                    [password] => default
                                    [database] => joomla
                                    [prefix] => ap_
                                    [select] => 1
                                    [port] => 3306
                                    [socket] => 
                                )

                            [sql:protected] => 
SELECT COUNT(*)
FROM (
SELECT `#__legacyinterface_commentaries`.*
FROM `#__legacyinterface_commentaries`
WHERE (`access` IN ('1','1'))) AS a
                            [tablePrefix:protected] => ap_
                            [utf:protected] => 1
                            [errorNum:protected] => 0
                            [errorMsg:protected] => 
                            [transactionDepth:protected] => 0
                            [disconnectHandlers:protected] => Array
                                (
                                )

                        )

                    [event_after_delete:protected] => onContentAfterDelete
                    [event_after_save:protected] => onContentAfterSave
                    [event_before_delete:protected] => onContentBeforeDelete
                    [event_before_save:protected] => onContentBeforeSave
                    [event_change_state:protected] => onContentChangeState
                    [event_clean_cache:protected] => 
                    [id_list:protected] => Array
                        (
                            [0] => 0
                        )

                    [id:protected] => 0
                    [input:protected] => FOFInput Object
                        (
                            [options:protected] => Array
                                (
                                )

                            [filter:protected] => JFilterInput Object
                                (
                                    [tagsArray] => Array
                                        (
                                        )

                                    [attrArray] => Array
                                        (
                                        )

                                    [tagsMethod] => 0
                                    [attrMethod] => 0
                                    [xssAuto] => 1
                                    [tagBlacklist] => Array
                                        (
                                            [0] => applet
                                            [1] => body
                                            [2] => bgsound
                                            [3] => base
                                            [4] => basefont
                                            [5] => embed
                                            [6] => frame
                                            [7] => frameset
                                            [8] => head
                                            [9] => html
                                            [10] => id
                                            [11] => iframe
                                            [12] => ilayer
                                            [13] => layer
                                            [14] => link
                                            [15] => meta
                                            [16] => name
                                            [17] => object
                                            [18] => script
                                            [19] => style
                                            [20] => title
                                            [21] => xml
                                        )

                                    [attrBlacklist] => Array
                                        (
                                            [0] => action
                                            [1] => background
                                            [2] => codebase
                                            [3] => dynsrc
                                            [4] => lowsrc
                                        )

                                )

                            [data:protected] => Array
                                (
                                    [start] => 2260
                                    [limitstart] => 2260
                                    [option] => com_legacyinterface
                                    [view] => commentaries
                                    [Itemid] => 616
                                    [layout] => 
                                    [task] => browse
                                    [directionTable] => asc
                                    [sortTable] => published_on
                                    [filter_order] => published_on
                                    [filter_order_Dir] => desc
                                    [savestate] => 1
                                    [base_path] => /var/www/html/apcms/components/com_legacyinterface
                                )

                            [inputs:protected] => Array
                                (
                                    [get] => JInput Object
                                        (
                                            [options:protected] => Array
                                                (
                                                )

                                            [filter:protected] => JFilterInput Object
                                                (
                                                    [tagsArray] => Array
                                                        (
                                                        )

                                                    [attrArray] => Array
                                                        (
                                                        )

                                                    [tagsMethod] => 0
                                                    [attrMethod] => 0
                                                    [xssAuto] => 1
                                                    [tagBlacklist] => Array
                                                        (
                                                            [0] => applet
                                                            [1] => body
                                                            [2] => bgsound
                                                            [3] => base
                                                            [4] => basefont
                                                            [5] => embed
                                                            [6] => frame
                                                            [7] => frameset
                                                            [8] => head
                                                            [9] => html
                                                            [10] => id
                                                            [11] => iframe
                                                            [12] => ilayer
                                                            [13] => layer
                                                            [14] => link
                                                            [15] => meta
                                                            [16] => name
                                                            [17] => object
                                                            [18] => script
                                                            [19] => style
                                                            [20] => title
                                                            [21] => xml
                                                        )

                                                    [attrBlacklist] => Array
                                                        (
                                                            [0] => action
                                                            [1] => background
                                                            [2] => codebase
                                                            [3] => dynsrc
                                                            [4] => lowsrc
                                                        )

                                                )

                                            [data:protected] => Array
                                                (
                                                    [start] => 2260
                                                )

                                            [inputs:protected] => Array
                                                (
                                                    [get] => JInput Object
                                                        (
                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                    [start] => 2260
                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                )

                                                        )

                                                    [post] => JInput Object
                                                        (
                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                )

                                                        )

                                                    [cookie] => JInputCookie Object
                                                        (
                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                    [get] => JInput Object
                                                                        (
                                                                            [options:protected] => Array
                                                                                (
                                                                                )

                                                                            [filter:protected] => JFilterInput Object
                                                                                (
                                                                                    [tagsArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [attrArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [tagsMethod] => 0
                                                                                    [attrMethod] => 0
                                                                                    [xssAuto] => 1
                                                                                    [tagBlacklist] => Array
                                                                                        (
                                                                                            [0] => applet
                                                                                            [1] => body
                                                                                            [2] => bgsound
                                                                                            [3] => base
                                                                                            [4] => basefont
                                                                                            [5] => embed
                                                                                            [6] => frame
                                                                                            [7] => frameset
                                                                                            [8] => head
                                                                                            [9] => html
                                                                                            [10] => id
                                                                                            [11] => iframe
                                                                                            [12] => ilayer
                                                                                            [13] => layer
                                                                                            [14] => link
                                                                                            [15] => meta
                                                                                            [16] => name
                                                                                            [17] => object
                                                                                            [18] => script
                                                                                            [19] => style
                                                                                            [20] => title
                                                                                            [21] => xml
                                                                                        )

                                                                                    [attrBlacklist] => Array
                                                                                        (
                                                                                            [0] => action
                                                                                            [1] => background
                                                                                            [2] => codebase
                                                                                            [3] => dynsrc
                                                                                            [4] => lowsrc
                                                                                        )

                                                                                )

                                                                            [data:protected] => Array
                                                                                (
                                                                                    [start] => 2260
                                                                                )

                                                                            [inputs:protected] => Array
                                                                                (
                                                                                )

                                                                        )

                                                                    [post] => JInput Object
                                                                        (
                                                                            [options:protected] => Array
                                                                                (
                                                                                )

                                                                            [filter:protected] => JFilterInput Object
                                                                                (
                                                                                    [tagsArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [attrArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [tagsMethod] => 0
                                                                                    [attrMethod] => 0
                                                                                    [xssAuto] => 1
                                                                                    [tagBlacklist] => Array
                                                                                        (
                                                                                            [0] => applet
                                                                                            [1] => body
                                                                                            [2] => bgsound
                                                                                            [3] => base
                                                                                            [4] => basefont
                                                                                            [5] => embed
                                                                                            [6] => frame
                                                                                            [7] => frameset
                                                                                            [8] => head
                                                                                            [9] => html
                                                                                            [10] => id
                                                                                            [11] => iframe
                                                                                            [12] => ilayer
                                                                                            [13] => layer
                                                                                            [14] => link
                                                                                            [15] => meta
                                                                                            [16] => name
                                                                                            [17] => object
                                                                                            [18] => script
                                                                                            [19] => style
                                                                                            [20] => title
                                                                                            [21] => xml
                                                                                        )

                                                                                    [attrBlacklist] => Array
                                                                                        (
                                                                                            [0] => action
                                                                                            [1] => background
                                                                                            [2] => codebase
                                                                                            [3] => dynsrc
                                                                                            [4] => lowsrc
                                                                                        )

                                                                                )

                                                                            [data:protected] => Array
                                                                                (
                                                                                )

                                                                            [inputs:protected] => Array
                                                                                (
                                                                                )

                                                                        )

                                                                    [cookie] => JInputCookie Object
                                                                        (
                                                                            [options:protected] => Array
                                                                                (
                                                                                )

                                                                            [filter:protected] => JFilterInput Object
                                                                                (
                                                                                    [tagsArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [attrArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [tagsMethod] => 0
                                                                                    [attrMethod] => 0
                                                                                    [xssAuto] => 1
                                                                                    [tagBlacklist] => Array
                                                                                        (
                                                                                            [0] => applet
                                                                                            [1] => body
                                                                                            [2] => bgsound
                                                                                            [3] => base
                                                                                            [4] => basefont
                                                                                            [5] => embed
                                                                                            [6] => frame
                                                                                            [7] => frameset
                                                                                            [8] => head
                                                                                            [9] => html
                                                                                            [10] => id
                                                                                            [11] => iframe
                                                                                            [12] => ilayer
                                                                                            [13] => layer
                                                                                            [14] => link
                                                                                            [15] => meta
                                                                                            [16] => name
                                                                                            [17] => object
                                                                                            [18] => script
                                                                                            [19] => style
                                                                                            [20] => title
                                                                                            [21] => xml
                                                                                        )

                                                                                    [attrBlacklist] => Array
                                                                                        (
                                                                                            [0] => action
                                                                                            [1] => background
                                                                                            [2] => codebase
                                                                                            [3] => dynsrc
                                                                                            [4] => lowsrc
                                                                                        )

                                                                                )

                                                                            [data:protected] => Array
                                                                                (
                                                                                )

                                                                            [inputs:protected] => Array
                                                                                (
                                                                                )

                                                                        )

                                                                    [files] => JInputFiles Object
                                                                        (
                                                                            [decodedData:protected] => Array
                                                                                (
                                                                                )

                                                                            [options:protected] => Array
                                                                                (
                                                                                )

                                                                            [filter:protected] => JFilterInput Object
                                                                                (
                                                                                    [tagsArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [attrArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [tagsMethod] => 0
                                                                                    [attrMethod] => 0
                                                                                    [xssAuto] => 1
                                                                                    [tagBlacklist] => Array
                                                                                        (
                                                                                            [0] => applet
                                                                                            [1] => body
                                                                                            [2] => bgsound
                                                                                            [3] => base
                                                                                            [4] => basefont
                                                                                            [5] => embed
                                                                                            [6] => frame
                                                                                            [7] => frameset
                                                                                            [8] => head
                                                                                            [9] => html
                                                                                            [10] => id
                                                                                            [11] => iframe
                                                                                            [12] => ilayer
                                                                                            [13] => layer
                                                                                            [14] => link
                                                                                            [15] => meta
                                                                                            [16] => name
                                                                                            [17] => object
                                                                                            [18] => script
                                                                                            [19] => style
                                                                                            [20] => title
                                                                                            [21] => xml
                                                                                        )

                                                                                    [attrBlacklist] => Array
                                                                                        (
                                                                                            [0] => action
                                                                                            [1] => background
                                                                                            [2] => codebase
                                                                                            [3] => dynsrc
                                                                                            [4] => lowsrc
                                                                                        )

                                                                                )

                                                                            [data:protected] => Array
                                                                                (
                                                                                )

                                                                            [inputs:protected] => Array
                                                                                (
                                                                                    [get] => JInput Object
                                                                                        (
                                                                                            [options:protected] => Array
                                                                                                (
                                                                                                )

                                                                                            [filter:protected] => JFilterInput Object
                                                                                                (
                                                                                                    [tagsArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [attrArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [tagsMethod] => 0
                                                                                                    [attrMethod] => 0
                                                                                                    [xssAuto] => 1
                                                                                                    [tagBlacklist] => Array
                                                                                                        (
                                                                                                            [0] => applet
                                                                                                            [1] => body
                                                                                                            [2] => bgsound
                                                                                                            [3] => base
                                                                                                            [4] => basefont
                                                                                                            [5] => embed
                                                                                                            [6] => frame
                                                                                                            [7] => frameset
                                                                                                            [8] => head
                                                                                                            [9] => html
                                                                                                            [10] => id
                                                                                                            [11] => iframe
                                                                                                            [12] => ilayer
                                                                                                            [13] => layer
                                                                                                            [14] => link
                                                                                                            [15] => meta
                                                                                                            [16] => name
                                                                                                            [17] => object
                                                                                                            [18] => script
                                                                                                            [19] => style
                                                                                                            [20] => title
                                                                                                            [21] => xml
                                                                                                        )

                                                                                                    [attrBlacklist] => Array
                                                                                                        (
                                                                                                            [0] => action
                                                                                                            [1] => background
                                                                                                            [2] => codebase
                                                                                                            [3] => dynsrc
                                                                                                            [4] => lowsrc
                                                                                                        )

                                                                                                )

                                                                                            [data:protected] => Array
                                                                                                (
                                                                                                    [start] => 2260
                                                                                                )

                                                                                            [inputs:protected] => Array
                                                                                                (
                                                                                                )

                                                                                        )

                                                                                    [post] => JInput Object
                                                                                        (
                                                                                            [options:protected] => Array
                                                                                                (
                                                                                                )

                                                                                            [filter:protected] => JFilterInput Object
                                                                                                (
                                                                                                    [tagsArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [attrArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [tagsMethod] => 0
                                                                                                    [attrMethod] => 0
                                                                                                    [xssAuto] => 1
                                                                                                    [tagBlacklist] => Array
                                                                                                        (
                                                                                                            [0] => applet
                                                                                                            [1] => body
                                                                                                            [2] => bgsound
                                                                                                            [3] => base
                                                                                                            [4] => basefont
                                                                                                            [5] => embed
                                                                                                            [6] => frame
                                                                                                            [7] => frameset
                                                                                                            [8] => head
                                                                                                            [9] => html
                                                                                                            [10] => id
                                                                                                            [11] => iframe
                                                                                                            [12] => ilayer
                                                                                                            [13] => layer
                                                                                                            [14] => link
                                                                                                            [15] => meta
                                                                                                            [16] => name
                                                                                                            [17] => object
                                                                                                            [18] => script
                                                                                                            [19] => style
                                                                                                            [20] => title
                                                                                                            [21] => xml
                                                                                                        )

                                                                                                    [attrBlacklist] => Array
                                                                                                        (
                                                                                                            [0] => action
                                                                                                            [1] => background
                                                                                                            [2] => codebase
                                                                                                            [3] => dynsrc
                                                                                                            [4] => lowsrc
                                                                                                        )

                                                                                                )

                                                                                            [data:protected] => Array
                                                                                                (
                                                                                                )

                                                                                            [inputs:protected] => Array
                                                                                                (
                                                                                                )

                                                                                        )

                                                                                    [cookie] => JInputCookie Object
                                                                                        (
                                                                                            [options:protected] => Array
                                                                                                (
                                                                                                )

                                                                                            [filter:protected] => JFilterInput Object
                                                                                                (
                                                                                                    [tagsArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [attrArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [tagsMethod] => 0
                                                                                                    [attrMethod] => 0
                                                                                                    [xssAuto] => 1
                                                                                                    [tagBlacklist] => Array
                                                                                                        (
                                                                                                            [0] => applet
                                                                                                            [1] => body
                                                                                                            [2] => bgsound
                                                                                                            [3] => base
                                                                                                            [4] => basefont
                                                                                                            [5] => embed
                                                                                                            [6] => frame
                                                                                                            [7] => frameset
                                                                                                            [8] => head
                                                                                                            [9] => html
                                                                                                            [10] => id
                                                                                                            [11] => iframe
                                                                                                            [12] => ilayer
                                                                                                            [13] => layer
                                                                                                            [14] => link
                                                                                                            [15] => meta
                                                                                                            [16] => name
                                                                                                            [17] => object
                                                                                                            [18] => script
                                                                                                            [19] => style
                                                                                                            [20] => title
                                                                                                            [21] => xml
                                                                                                        )

                                                                                                    [attrBlacklist] => Array
                                                                                                        (
                                                                                                            [0] => action
                                                                                                            [1] => background
                                                                                                            [2] => codebase
                                                                                                            [3] => dynsrc
                                                                                                            [4] => lowsrc
                                                                                                        )

                                                                                                )

                                                                                            [data:protected] => Array
                                                                                                (
                                                                                                )

                                                                                            [inputs:protected] => Array
                                                                                                (
                                                                                                )

                                                                                        )

                                                                                    [files] => JInputFiles Object
                                                                                        (
                                                                                            [decodedData:protected] => Array
                                                                                                (
                                                                                                )

                                                                                            [options:protected] => Array
                                                                                                (
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                                                                                            [filter:protected] => JFilterInput Object
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                                                                                                    [attrArray] => Array
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                                                                                            [data:protected] => Array
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                                                                                            [inputs:protected] => Array
                                                                                                (
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                                                                                    [env] => JInput Object
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                                                                                            [options:protected] => Array
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                                                                                            [filter:protected] => JFilterInput Object
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                                                                                            [data:protected] => Array
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                                                                                            [inputs:protected] => Array
                                                                                                (
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                                                                                    [request] => JInput Object
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                                                                                            [options:protected] => Array
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                                                                                            [filter:protected] => JFilterInput Object
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                                                                                            [data:protected] => Array
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                                                                                                    [limitstart] => 2260
                                                                                                    [option] => com_legacyinterface
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                                                                                            [inputs:protected] => Array
                                                                                                (
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                                                                                        )

                                                                                    [server] => JInput Object
                                                                                        (
                                                                                            [options:protected] => Array
                                                                                                (
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                                                                                            [filter:protected] => JFilterInput Object
                                                                                                (
                                                                                                    [tagsArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [attrArray] => Array
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                                                                                                    [attrBlacklist] => Array
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                                                                                                )

                                                                                            [data:protected] => Array
                                                                                                (
                                                                                                    [HTTP_AUTHORIZATION] => 
                                                                                                    [HTTP_CACHE_CONTROL] => no-cache
                                                                                                    [HTTP_CONNECTION] => Keep-Alive
                                                                                                    [HTTP_PRAGMA] => no-cache
                                                                                                    [HTTP_ACCEPT] => */*
                                                                                                    [HTTP_ACCEPT_ENCODING] => gzip, deflate
                                                                                                    [HTTP_FROM] => bingbot(at)microsoft.com
                                                                                                    [HTTP_HOST] => apcms.hubtech.tv
                                                                                                    [HTTP_IF_MODIFIED_SINCE] => Wed, 23 May 2018 07:38:02 GMT
                                                                                                    [HTTP_USER_AGENT] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm)
                                                                                                    [PATH] => /sbin:/usr/sbin:/bin:/usr/bin
                                                                                                    [SERVER_SIGNATURE] => 
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                                                                                                    [SERVER_NAME] => apcms.hubtech.tv
                                                                                                    [SERVER_ADDR] => 10.28.13.29
                                                                                                    [SERVER_PORT] => 80
                                                                                                    [REMOTE_ADDR] => 207.46.13.149
                                                                                                    [DOCUMENT_ROOT] => /var/www/html/apcms
                                                                                                    [REQUEST_SCHEME] => http
                                                                                                    [CONTEXT_PREFIX] => 
                                                                                                    [CONTEXT_DOCUMENT_ROOT] => /var/www/html/apcms
                                                                                                    [SERVER_ADMIN] => ben@hubtech.tv
                                                                                                    [SCRIPT_FILENAME] => /var/www/html/apcms/index.php
                                                                                                    [REMOTE_PORT] => 9909
                                                                                                    [GATEWAY_INTERFACE] => CGI/1.1
                                                                                                    [SERVER_PROTOCOL] => HTTP/1.1
                                                                                                    [REQUEST_METHOD] => GET
                                                                                                    [QUERY_STRING] => start=2260
                                                                                                    [REQUEST_URI] => /?start=2260
                                                                                                    [SCRIPT_NAME] => /index.php
                                                                                                    [PHP_SELF] => /index.php
                                                                                                    [REQUEST_TIME_FLOAT] => 1529449466.648
                                                                                                    [REQUEST_TIME] => 1529449466
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                                                                                            [inputs:protected] => Array
                                                                                                (
                                                                                                )

                                                                                        )

                                                                                    [session] => JInput Object
                                                                                        (
                                                                                            [options:protected] => Array
                                                                                                (
                                                                                                )

                                                                                            [filter:protected] => JFilterInput Object
                                                                                                (
                                                                                                    [tagsArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [attrArray] => Array
                                                                                                        (
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                                                                                                    [tagsMethod] => 0
                                                                                                    [attrMethod] => 0
                                                                                                    [xssAuto] => 1
                                                                                                    [tagBlacklist] => Array
                                                                                                        (
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                                                                                                            [4] => basefont
                                                                                                            [5] => embed
                                                                                                            [6] => frame
                                                                                                            [7] => frameset
                                                                                                            [8] => head
                                                                                                            [9] => html
                                                                                                            [10] => id
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                                                                                                            [12] => ilayer
                                                                                                            [13] => layer
                                                                                                            [14] => link
                                                                                                            [15] => meta
                                                                                                            [16] => name
                                                                                                            [17] => object
                                                                                                            [18] => script
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                                                                                                            [21] => xml
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                                                                                                    [attrBlacklist] => Array
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                                                                                                )

                                                                                            [data:protected] => Array
                                                                                                (
                                                                                                    [__default] => Array
                                                                                                        (
                                                                                                            [session.counter] => 1
                                                                                                            [session.timer.start] => 1529449467
                                                                                                            [session.timer.last] => 1529449467
                                                                                                            [session.timer.now] => 1529449467
                                                                                                            [session.client.browser] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm)
                                                                                                            [registry] => Joomla\Registry\Registry Object
                                                                                                                (
                                                                                                                    [data:protected] => stdClass Object
                                                                                                                        (
                                                                                                                            [com_legacyinterface] => stdClass Object
                                                                                                                                (
                                                                                                                                    [commentaries] => stdClass Object
                                                                                                                                        (
                                                                                                                                            [limitstart] => 2260
                                                                                                                                            [filter_order] => published_on
                                                                                                                                            [filter_order_Dir] => desc
                                                                                                                                        )

                                                                                                                                )

                                                                                                                        )

                                                                                                                )

                                                                                                            [user] => JUser Object
                                                                                                                (
                                                                                                                    [isRoot:protected] => 
                                                                                                                    [id] => 0
                                                                                                                    [name] => 
                                                                                                                    [username] => 
                                                                                                                    [email] => 
                                                                                                                    [password] => 
                                                                                                                    [password_clear] => 
                                                                                                                    [block] => 
                                                                                                                    [sendEmail] => 0
                                                                                                                    [registerDate] => 
                                                                                                                    [lastvisitDate] => 
                                                                                                                    [activation] => 
                                                                                                                    [params] => 
                                                                                                                    [groups] => Array
                                                                                                                        (
                                                                                                                            [0] => 9
                                                                                                                        )

                                                                                                                    [guest] => 1
                                                                                                                    [lastResetTime] => 
                                                                                                                    [resetCount] => 
                                                                                                                    [requireReset] => 
                                                                                                                    [_params:protected] => Joomla\Registry\Registry Object
                                                                                                                        (
                                                                                                                            [data:protected] => stdClass Object
                                                                                                                                (
                                                                                                                                )

                                                                                                                        )

                                                                                                                    [_authGroups:protected] => Array
                                                                                                                        (
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                                                                                                                        )

                                                                                                                    [_authLevels:protected] => Array
                                                                                                                        (
                                                                                                                            [0] => 1
                                                                                                                            [1] => 1
                                                                                                                        )

                                                                                                                    [_authActions:protected] => 
                                                                                                                    [_errorMsg:protected] => 
                                                                                                                    [_errors:protected] => Array
                                                                                                                        (
                                                                                                                        )

                                                                                                                    [aid] => 0
                                                                                                                )

                                                                                                        )

                                                                                                )

                                                                                            [inputs:protected] => Array
                                                                                                (
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                                                                                        )

                                                                                    [jrequest] => JInput Object
                                                                                        (
                                                                                            [options:protected] => Array
                                                                                                (
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                                                                                            [filter:protected] => JFilterInput Object
                                                                                                (
                                                                                                    [tagsArray] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [attrArray] => Array
                                                                                                        (
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                                                                                                            [4] => basefont
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                                                                                                            [18] => script
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                                                                                                    [attrBlacklist] => Array
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                                                                                                )

                                                                                            [data:protected] => Array
                                                                                                (
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                                                                                            [inputs:protected] => Array
                                                                                                (
                                                                                                )

                                                                                        )

                                                                                )

                                                                        )

                                                                    [env] => JInput Object
                                                                        (
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                                                                                (
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                                                                            [filter:protected] => JFilterInput Object
                                                                                (
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                                                                                        (
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                                                                                    [attrArray] => Array
                                                                                        (
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                                                                                )

                                                                            [data:protected] => Array
                                                                                (
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                                                                            [inputs:protected] => Array
                                                                                (
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                                                                        )

                                                                    [request] => JInput Object
                                                                        (
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                                                                                (
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                                                                            [filter:protected] => JFilterInput Object
                                                                                (
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                                                                                        (
                                                                                        )

                                                                                    [attrArray] => Array
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                                                                                )

                                                                            [data:protected] => Array
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                                                                                    [limitstart] => 2260
                                                                                    [option] => com_legacyinterface
                                                                                    [view] => commentaries
                                                                                    [Itemid] => 616
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                                                                            [inputs:protected] => Array
                                                                                (
                                                                                )

                                                                        )

                                                                    [server] => JInput Object
                                                                        (
                                                                            [options:protected] => Array
                                                                                (
                                                                                )

                                                                            [filter:protected] => JFilterInput Object
                                                                                (
                                                                                    [tagsArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [attrArray] => Array
                                                                                        (
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                                                                                    [tagsMethod] => 0
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                                                                                        (
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                                                                                    [attrBlacklist] => Array
                                                                                        (
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                                                                                )

                                                                            [data:protected] => Array
                                                                                (
                                                                                    [HTTP_AUTHORIZATION] => 
                                                                                    [HTTP_CACHE_CONTROL] => no-cache
                                                                                    [HTTP_CONNECTION] => Keep-Alive
                                                                                    [HTTP_PRAGMA] => no-cache
                                                                                    [HTTP_ACCEPT] => */*
                                                                                    [HTTP_ACCEPT_ENCODING] => gzip, deflate
                                                                                    [HTTP_FROM] => bingbot(at)microsoft.com
                                                                                    [HTTP_HOST] => apcms.hubtech.tv
                                                                                    [HTTP_IF_MODIFIED_SINCE] => Wed, 23 May 2018 07:38:02 GMT
                                                                                    [HTTP_USER_AGENT] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm)
                                                                                    [PATH] => /sbin:/usr/sbin:/bin:/usr/bin
                                                                                    [SERVER_SIGNATURE] => 
                                                                                    [SERVER_SOFTWARE] => Apache/2.4.16 (Amazon) PHP/5.5.31
                                                                                    [SERVER_NAME] => apcms.hubtech.tv
                                                                                    [SERVER_ADDR] => 10.28.13.29
                                                                                    [SERVER_PORT] => 80
                                                                                    [REMOTE_ADDR] => 207.46.13.149
                                                                                    [DOCUMENT_ROOT] => /var/www/html/apcms
                                                                                    [REQUEST_SCHEME] => http
                                                                                    [CONTEXT_PREFIX] => 
                                                                                    [CONTEXT_DOCUMENT_ROOT] => /var/www/html/apcms
                                                                                    [SERVER_ADMIN] => ben@hubtech.tv
                                                                                    [SCRIPT_FILENAME] => /var/www/html/apcms/index.php
                                                                                    [REMOTE_PORT] => 9909
                                                                                    [GATEWAY_INTERFACE] => CGI/1.1
                                                                                    [SERVER_PROTOCOL] => HTTP/1.1
                                                                                    [REQUEST_METHOD] => GET
                                                                                    [QUERY_STRING] => start=2260
                                                                                    [REQUEST_URI] => /?start=2260
                                                                                    [SCRIPT_NAME] => /index.php
                                                                                    [PHP_SELF] => /index.php
                                                                                    [REQUEST_TIME_FLOAT] => 1529449466.648
                                                                                    [REQUEST_TIME] => 1529449466
                                                                                )

                                                                            [inputs:protected] => Array
                                                                                (
                                                                                )

                                                                        )

                                                                    [session] => JInput Object
                                                                        (
                                                                            [options:protected] => Array
                                                                                (
                                                                                )

                                                                            [filter:protected] => JFilterInput Object
                                                                                (
                                                                                    [tagsArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [attrArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [tagsMethod] => 0
                                                                                    [attrMethod] => 0
                                                                                    [xssAuto] => 1
                                                                                    [tagBlacklist] => Array
                                                                                        (
                                                                                            [0] => applet
                                                                                            [1] => body
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                                                                                            [3] => base
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                                                                                            [6] => frame
                                                                                            [7] => frameset
                                                                                            [8] => head
                                                                                            [9] => html
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                                                                                            [11] => iframe
                                                                                            [12] => ilayer
                                                                                            [13] => layer
                                                                                            [14] => link
                                                                                            [15] => meta
                                                                                            [16] => name
                                                                                            [17] => object
                                                                                            [18] => script
                                                                                            [19] => style
                                                                                            [20] => title
                                                                                            [21] => xml
                                                                                        )

                                                                                    [attrBlacklist] => Array
                                                                                        (
                                                                                            [0] => action
                                                                                            [1] => background
                                                                                            [2] => codebase
                                                                                            [3] => dynsrc
                                                                                            [4] => lowsrc
                                                                                        )

                                                                                )

                                                                            [data:protected] => Array
                                                                                (
                                                                                    [__default] => Array
                                                                                        (
                                                                                            [session.counter] => 1
                                                                                            [session.timer.start] => 1529449467
                                                                                            [session.timer.last] => 1529449467
                                                                                            [session.timer.now] => 1529449467
                                                                                            [session.client.browser] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm)
                                                                                            [registry] => Joomla\Registry\Registry Object
                                                                                                (
                                                                                                    [data:protected] => stdClass Object
                                                                                                        (
                                                                                                            [com_legacyinterface] => stdClass Object
                                                                                                                (
                                                                                                                    [commentaries] => stdClass Object
                                                                                                                        (
                                                                                                                            [limitstart] => 2260
                                                                                                                            [filter_order] => published_on
                                                                                                                            [filter_order_Dir] => desc
                                                                                                                        )

                                                                                                                )

                                                                                                        )

                                                                                                )

                                                                                            [user] => JUser Object
                                                                                                (
                                                                                                    [isRoot:protected] => 
                                                                                                    [id] => 0
                                                                                                    [name] => 
                                                                                                    [username] => 
                                                                                                    [email] => 
                                                                                                    [password] => 
                                                                                                    [password_clear] => 
                                                                                                    [block] => 
                                                                                                    [sendEmail] => 0
                                                                                                    [registerDate] => 
                                                                                                    [lastvisitDate] => 
                                                                                                    [activation] => 
                                                                                                    [params] => 
                                                                                                    [groups] => Array
                                                                                                        (
                                                                                                            [0] => 9
                                                                                                        )

                                                                                                    [guest] => 1
                                                                                                    [lastResetTime] => 
                                                                                                    [resetCount] => 
                                                                                                    [requireReset] => 
                                                                                                    [_params:protected] => Joomla\Registry\Registry Object
                                                                                                        (
                                                                                                            [data:protected] => stdClass Object
                                                                                                                (
                                                                                                                )

                                                                                                        )

                                                                                                    [_authGroups:protected] => Array
                                                                                                        (
                                                                                                            [0] => 1
                                                                                                        )

                                                                                                    [_authLevels:protected] => Array
                                                                                                        (
                                                                                                            [0] => 1
                                                                                                            [1] => 1
                                                                                                        )

                                                                                                    [_authActions:protected] => 
                                                                                                    [_errorMsg:protected] => 
                                                                                                    [_errors:protected] => Array
                                                                                                        (
                                                                                                        )

                                                                                                    [aid] => 0
                                                                                                )

                                                                                        )

                                                                                )

                                                                            [inputs:protected] => Array
                                                                                (
                                                                                )

                                                                        )

                                                                    [jrequest] => JInput Object
                                                                        (
                                                                            [options:protected] => Array
                                                                                (
                                                                                )

                                                                            [filter:protected] => JFilterInput Object
                                                                                (
                                                                                    [tagsArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [attrArray] => Array
                                                                                        (
                                                                                        )

                                                                                    [tagsMethod] => 0
                                                                                    [attrMethod] => 0
                                                                                    [xssAuto] => 1
                                                                                    [tagBlacklist] => Array
                                                                                        (
                                                                                            [0] => applet
                                                                                            [1] => body
                                                                                            [2] => bgsound
                                                                                            [3] => base
                                                                                            [4] => basefont
                                                                                            [5] => embed
                                                                                            [6] => frame
                                                                                            [7] => frameset
                                                                                            [8] => head
                                                                                            [9] => html
                                                                                            [10] => id
                                                                                            [11] => iframe
                                                                                            [12] => ilayer
                                                                                            [13] => layer
                                                                                            [14] => link
                                                                                            [15] => meta
                                                                                            [16] => name
                                                                                            [17] => object
                                                                                            [18] => script
                                                                                            [19] => style
                                                                                            [20] => title
                                                                                            [21] => xml
                                                                                        )

                                                                                    [attrBlacklist] => Array
                                                                                        (
                                                                                            [0] => action
                                                                                            [1] => background
                                                                                            [2] => codebase
                                                                                            [3] => dynsrc
                                                                                            [4] => lowsrc
                                                                                        )

                                                                                )

                                                                            [data:protected] => Array
                                                                                (
                                                                                )

                                                                            [inputs:protected] => Array
                                                                                (
                                                                                )

                                                                        )

                                                                )

                                                        )

                                                    [files] => JInputFiles Object
                                                        (
                                                            [decodedData:protected] => Array
                                                                (
                                                                )

                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                )

                                                        )

                                                    [env] => JInput Object
                                                        (
                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                )

                                                        )

                                                    [request] => JInput Object
                                                        (
                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                    [start] => 2260
                                                                    [limitstart] => 2260
                                                                    [option] => com_legacyinterface
                                                                    [view] => commentaries
                                                                    [Itemid] => 616
                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                )

                                                        )

                                                    [server] => JInput Object
                                                        (
                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                    [HTTP_AUTHORIZATION] => 
                                                                    [HTTP_CACHE_CONTROL] => no-cache
                                                                    [HTTP_CONNECTION] => Keep-Alive
                                                                    [HTTP_PRAGMA] => no-cache
                                                                    [HTTP_ACCEPT] => */*
                                                                    [HTTP_ACCEPT_ENCODING] => gzip, deflate
                                                                    [HTTP_FROM] => bingbot(at)microsoft.com
                                                                    [HTTP_HOST] => apcms.hubtech.tv
                                                                    [HTTP_IF_MODIFIED_SINCE] => Wed, 23 May 2018 07:38:02 GMT
                                                                    [HTTP_USER_AGENT] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm)
                                                                    [PATH] => /sbin:/usr/sbin:/bin:/usr/bin
                                                                    [SERVER_SIGNATURE] => 
                                                                    [SERVER_SOFTWARE] => Apache/2.4.16 (Amazon) PHP/5.5.31
                                                                    [SERVER_NAME] => apcms.hubtech.tv
                                                                    [SERVER_ADDR] => 10.28.13.29
                                                                    [SERVER_PORT] => 80
                                                                    [REMOTE_ADDR] => 207.46.13.149
                                                                    [DOCUMENT_ROOT] => /var/www/html/apcms
                                                                    [REQUEST_SCHEME] => http
                                                                    [CONTEXT_PREFIX] => 
                                                                    [CONTEXT_DOCUMENT_ROOT] => /var/www/html/apcms
                                                                    [SERVER_ADMIN] => ben@hubtech.tv
                                                                    [SCRIPT_FILENAME] => /var/www/html/apcms/index.php
                                                                    [REMOTE_PORT] => 9909
                                                                    [GATEWAY_INTERFACE] => CGI/1.1
                                                                    [SERVER_PROTOCOL] => HTTP/1.1
                                                                    [REQUEST_METHOD] => GET
                                                                    [QUERY_STRING] => start=2260
                                                                    [REQUEST_URI] => /?start=2260
                                                                    [SCRIPT_NAME] => /index.php
                                                                    [PHP_SELF] => /index.php
                                                                    [REQUEST_TIME_FLOAT] => 1529449466.648
                                                                    [REQUEST_TIME] => 1529449466
                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                )

                                                        )

                                                    [session] => JInput Object
                                                        (
                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                    [__default] => Array
                                                                        (
                                                                            [session.counter] => 1
                                                                            [session.timer.start] => 1529449467
                                                                            [session.timer.last] => 1529449467
                                                                            [session.timer.now] => 1529449467
                                                                            [session.client.browser] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm)
                                                                            [registry] => Joomla\Registry\Registry Object
                                                                                (
                                                                                    [data:protected] => stdClass Object
                                                                                        (
                                                                                            [com_legacyinterface] => stdClass Object
                                                                                                (
                                                                                                    [commentaries] => stdClass Object
                                                                                                        (
                                                                                                            [limitstart] => 2260
                                                                                                            [filter_order] => published_on
                                                                                                            [filter_order_Dir] => desc
                                                                                                        )

                                                                                                )

                                                                                        )

                                                                                )

                                                                            [user] => JUser Object
                                                                                (
                                                                                    [isRoot:protected] => 
                                                                                    [id] => 0
                                                                                    [name] => 
                                                                                    [username] => 
                                                                                    [email] => 
                                                                                    [password] => 
                                                                                    [password_clear] => 
                                                                                    [block] => 
                                                                                    [sendEmail] => 0
                                                                                    [registerDate] => 
                                                                                    [lastvisitDate] => 
                                                                                    [activation] => 
                                                                                    [params] => 
                                                                                    [groups] => Array
                                                                                        (
                                                                                            [0] => 9
                                                                                        )

                                                                                    [guest] => 1
                                                                                    [lastResetTime] => 
                                                                                    [resetCount] => 
                                                                                    [requireReset] => 
                                                                                    [_params:protected] => Joomla\Registry\Registry Object
                                                                                        (
                                                                                            [data:protected] => stdClass Object
                                                                                                (
                                                                                                )

                                                                                        )

                                                                                    [_authGroups:protected] => Array
                                                                                        (
                                                                                            [0] => 1
                                                                                        )

                                                                                    [_authLevels:protected] => Array
                                                                                        (
                                                                                            [0] => 1
                                                                                            [1] => 1
                                                                                        )

                                                                                    [_authActions:protected] => 
                                                                                    [_errorMsg:protected] => 
                                                                                    [_errors:protected] => Array
                                                                                        (
                                                                                        )

                                                                                    [aid] => 0
                                                                                )

                                                                        )

                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                )

                                                        )

                                                    [jrequest] => JInput Object
                                                        (
                                                            [options:protected] => Array
                                                                (
                                                                )

                                                            [filter:protected] => JFilterInput Object
                                                                (
                                                                    [tagsArray] => Array
                                                                        (
                                                                        )

                                                                    [attrArray] => Array
                                                                        (
                                                                        )

                                                                    [tagsMethod] => 0
                                                                    [attrMethod] => 0
                                                                    [xssAuto] => 1
                                                                    [tagBlacklist] => Array
                                                                        (
                                                                            [0] => applet
                                                                            [1] => body
                                                                            [2] => bgsound
                                                                            [3] => base
                                                                            [4] => basefont
                                                                            [5] => embed
                                                                            [6] => frame
                                                                            [7] => frameset
                                                                            [8] => head
                                                                            [9] => html
                                                                            [10] => id
                                                                            [11] => iframe
                                                                            [12] => ilayer
                                                                            [13] => layer
                                                                            [14] => link
                                                                            [15] => meta
                                                                            [16] => name
                                                                            [17] => object
                                                                            [18] => script
                                                                            [19] => style
                                                                            [20] => title
                                                                            [21] => xml
                                                                        )

                                                                    [attrBlacklist] => Array
                                                                        (
                                                                            [0] => action
                                                                            [1] => background
                                                                            [2] => codebase
                                                                            [3] => dynsrc
                                                                            [4] => lowsrc
                                                                        )

                                                                )

                                                            [data:protected] => Array
                                                                (
                                                                )

                                                            [inputs:protected] => Array
                                                                (
                                                                )

                                                        )

                                                )

                                        )

                                    [post] => JInput Object
                                        (
                                            [options:protected] => Array
                                                (
                                                )

                                            [filter:protected] => JFilterInput Object
                                                (
                                                    [tagsArray] => Array
                                                        (
                                                        )

                                                    [attrArray] => Array
                                                        (
                                                        )

                                                    [tagsMethod] => 0
                                                    [attrMethod] => 0
                                                    [xssAuto] => 1
                                                    [tagBlacklist] => Array
                                                        (
                                                            [0] => applet
                                                            [1] => body
                                                            [2] => bgsound
                                                            [3] => base
                                                            [4] => basefont
                                                            [5] => embed
                                                            [6] => frame
                                                            [7] => frameset
                                                            [8] => head
                                                            [9] => html
                                                            [10] => id
                                                            [11] => iframe
                                                            [12] => ilayer
                                                            [13] => layer
                                                            [14] => link
                                                            [15] => meta
                                                            [16] => name
                                                            [17] => object
                                                            [18] => script
                                                            [19] => style
                                                            [20] => title
                                                            [21] => xml
                                                        )

                                                    [attrBlacklist] => Array
                                                        (
                                                            [0] => action
                                                            [1] => background
                                                            [2] => codebase
                                                            [3] => dynsrc
                                                            [4] => lowsrc
                                                        )

                                                )

                                            [data:protected] => Array
                                                (
                                                )

                                            [inputs:protected] => Array
                                                (
                                                )

                                        )

                                    [cookie] => JInputCookie Object
                                        (
                                            [options:protected] => Array
                                                (
                                                )

                                            [filter:protected] => JFilterInput Object
                                                (
                                                    [tagsArray] => Array
                                                        (
                                                        )

                                                    [attrArray] => Array
                                                        (
                                                        )

                                                    [tagsMethod] => 0
                                                    [attrMethod] => 0
                                                    [xssAuto] => 1
                                                    [tagBlacklist] => Array
                                                        (
                                                            [0] => applet
                                                            [1] => body
                                                            [2] => bgsound
                                                            [3] => base
                                                            [4] => basefont
                                                            [5] => embed
                                                            [6] => frame
                                                            [7] => frameset
                                                            [8] => head
                                                            [9] => html
                                                            [10] => id
                                                            [11] => iframe
                                                            [12] => ilayer
                                                            [13] => layer
                                                            [14] => link
                                                            [15] => meta
                                                            [16] => name
                                                            [17] => object
                                                            [18] => script
                                                            [19] => style
                                                            [20] => title
                                                            [21] => xml
                                                        )

                                                    [attrBlacklist] => Array
                                                        (
                                                            [0] => action
                                                            [1] => background
                                                            [2] => codebase
                                                            [3] => dynsrc
                                                            [4] => lowsrc
                                                        )

                                                )

                                            [data:protected] => Array
                                                (
                                                )

                                            [inputs:protected] => Array
                                                (
                                                )

                                        )

                                    [files] => JInputFiles Object
                                        (
                                            [decodedData:protected] => Array
                                                (
                                                )

                                            [options:protected] => Array
                                                (
                                                )

                                            [filter:protected] => JFilterInput Object
                                                (
                                                    [tagsArray] => Array
                                                        (
                                                        )

                                                    [attrArray] => Array
                                                        (
                                                        )

                                                    [tagsMethod] => 0
                                                    [attrMethod] => 0
                                                    [xssAuto] => 1
                                                    [tagBlacklist] => Array
                                                        (
                                                            [0] => applet
                                                            [1] => body
                                                            [2] => bgsound
                                                            [3] => base
                                                            [4] => basefont
                                                            [5] => embed
                                                            [6] => frame
                                                            [7] => frameset
                                                            [8] => head
                                                            [9] => html
                                                            [10] => id
                                                            [11] => iframe
                                                            [12] => ilayer
                                                            [13] => layer
                                                            [14] => link
                                                            [15] => meta
                                                            [16] => name
                                                            [17] => object
                                                            [18] => script
                                                            [19] => style
                                                            [20] => title
                                                            [21] => xml
                                                        )

                                                    [attrBlacklist] => Array
                                                        (
                                                            [0] => action
                                                            [1] => background
                                                            [2] => codebase
                                                            [3] => dynsrc
                                                            [4] => lowsrc
                                                        )

                                                )

                                            [data:protected] => Array
                                                (
                                                )

                                            [inputs:protected] => Array
                                                (
                                                )

                                        )

                                    [env] => JInput Object
                                        (
                                            [options:protected] => Array
                                                (
                                                )

                                            [filter:protected] => JFilterInput Object
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                                    [content_type] => market-commentary
                                    [title] => IPOs: Hot Again
                                    [slug] => advisorshares_031214
                                    [fulltext] => 

Last week the Wall Street Journal gave a rundown of what has been a very hot IPO market. The Journal reported that there were 42 listings in the first two months of 2014 compared to 20 from the same timeframe in 2013 and keep in mind 2013 was a very good year for IPOs. 

Data was cited from Renaissance Capital LLC that as good as things are for IPOs they are nowhere near 2000-era levels for listings or filings. 

Of course there are several investment products that target the IPO market including the longstanding First Trust US IPO Index Fund (NYSE ARCA:FPX) which has been a successful fund in terms of assets raised and performance (obviously future results are unknowable). 

The impact of IPOs is an important dynamic to understand. 

One part of the equation is that IPOs represent the creation of new supply; supply of shares available for investment or speculation. During the buildup of the internet bubble which arguably started with Netscape in 1995 the supply of (internet) equities increased at a remarkable pace but demand increased at an even faster pace for almost five years. 

As long as demand exceeds supply then prices should be able to keep going up. Of course eventually there comes a point where demand wanes for whatever reason which by itself is a drag on prices and if more supply continues to be issued, like in the early 2000’s, then prices are likely to fall meaningfully. 

Another building block of understanding of the IPO market is that companies prefer to sell at a high valuation not a low valuation. According to Seeking Alpha, there were 32 IPOs in 2008 and 63 in 2009 compared the 42 that listed in the first two months of this year. 

The IPO bubble of 2000 happened in 2000, the next time there is a huge market decline it won’t be the same as the tech wreck or the financial crisis of 2008 it will be something else but assessing IPO enthusiasm can be useful nonetheless. 

At any given moment there is a list of bullish factors supporting the market and a list of bearish factors confronting the market. When the IPO market is subdued it serves as a bullish factor whereas a hot IPO market serves as a bearish factor. There are no absolutes but enthusiasm for IPOs comes closer to the end than to the beginning of a bull market.

(c) AdvisorShares

[description] => Last week the Wall Street Journal gave a rundown of what has been a very hot IPO market. The Journal reported that there were 42 listings in the first two months of 2014 compared to 20 from the same timeframe in 2013 and keep in mind 2013 was a very good year for IPOs. [author] => Roger Nusbaum [legacyinterface_firm_id] => 14 [published_on] => 2014-03-12 [digest_date] => 2014-03-12 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-12 15:50:14 [created_by] => 948 [modified_on] => 2014-03-12 15:50:24 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 244 [hits] => 0 ) [1] => stdClass Object ( [legacyinterface_commentary_id] => 163 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13426 [apv_conversation_id] => [content_type] => market-commentary [title] => 10 Tax-Management Strategies to Consider in a Rising Tax Environment [slug] => eaton_031114 [fulltext] =>

When it comes to investing, we believe the most important thing is determining not what you make, but what you keep. The goal of tax management in an investment program is to maximize after-tax returns. We believe this strategy is even more critical, with investors now waking up to the fact that tax rates have risen considerably.

Surveys conducted over the past 10 years have conveyed that investors realize the importance of taxes in their investment programs, but few are able to quantify the effect. The bottom line? Taxable investors may be unnecessarily giving up a portion of every dollar of their investment returns to Uncle Sam. We believe there isn’t a silver bullet to solve the tax problem; instead, a combination of helpful tax-management techniques may help investors reduce the tax burden and protect their wealth.

10 Helpful Tax-Management Techniques to Consider

  1. Buy and hold
    Using a long-term perspective when investing can delay capital gains recognition. This can also help keep unnecessary turnover low, potentially minimizing short-term gains and transactions costs.
  2. Tax loss harvesting
    Not all turnover in a portfolio should be considered bad. Use tax-loss turnover in a disciplined fashion to harvest losses that can help
    offset gains taken elsewhere in the portfolio.
  3. Tax lot selling
    Use specific lot accounting to help minimize capital gains realizations. By selling shares with the highest basis first, investors may minimize capital gains.
  4. Qualified dividend income
    Follow holding period rules to have any dividends qualify to be taxed at the lower qualified dividend income (QDI) rate.
  5. Rebalance with new money
    Rebalancing any portfolio can help investors maintain their desired asset allocation, but this move also creates a taxable event. Using new funds to add to underweight holdings may help avoid costly transactions.
  6. Buy and hedge
    Use tax-advantaged hedging techniques as alternatives to taxable sales in order to manage gains and losses, potentially maximizing
    after-tax returns.
  7. Asset location
    By allocating certain investments in the right type of account — such as an IRA, 401(k) or taxable account — investors may be able to minimize their tax burden.
  8. Tax exempt municipal bonds
    Bonds issued by local governments may have interest income that is exempt from federal income tax and may also be exempt from many state and local taxes.
  9. Laddered municipal bond approach
    A professionally managed laddered portfolio can offer meaningful advantages over self-managed portfolios. In addition to seeking tax-free income, investors may be able to minimize the impact of rising interest rates.
  10. Charitable gifts
    High-income earners frequently donate to charity in order to lower taxes. Rather than investors may want to consider, consider using appreciated shares as a charitable gift.

These tax management suggestions may help investors find a path with which they are comfortable, but we think it is critical to discuss these ideas with a tax advisor. We believe that investors would be best served if their financial advisor met directly with a Certified Public Accountant (CPA) to create an integrated plan. Managing for tax efficiency is controllable and predictable, and so-called “tax alpha” can be a sustainable competitive advantage.

About Eaton Vance
Eaton Vance Corp. (NYSE: EV) is one of the oldest investment management firms in the United States, with a history dating to 1924. Eaton Vance and its affiliates offer individuals and institutions a broad array of investment strategies and wealth management solutions. The Company’s long record of exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today’s most discerning investors. For more information, visit eatonvance.com.

This material has been provided for educational, informational and illustrative use only and should not be considered investment advice, a recommendation to buy or sell any particular security or to adopt any particular investment strategy. The information in this material, including the sector/securities mentioned are not representative of all sectors/securities purchased, sold or recommended for advisory clients. Not all of Eaton Vance’s recommendations have been or will be profitable. The information and opinions herein are not necessarily those of the Eaton Vance organization as a whole and may change at any time without notice. While every effort has been made to verify the information contained in the publication, Eaton Vance makes no representation as to its accuracy. Any investment views and opinions/analyses expressed constitute judgments as of the date of this publication and are subject to change at any time without notice. Different views may be expressed based on different investment styles, objectives, views or philosophies. This material may contain statements that are not historical facts, referred to as forward-looking statements. Future results may differ significantly from those stated in forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions. Actual portfolio holdings will vary for each client. Investing entails risks and there can be no assurance that Eaton Vance (or its affiliates) will achieve profits or avoid incurring losses. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

Eaton Vance does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision.

Before investing, investors should consider carefully the investment objectives, risks, charges and expenses of a mutual fund. This and other important information is contained in the prospectus and summary prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

©2014 Eaton Vance Distributors, Inc.
Member FINRA/SIPC
Two International Place, Boston, MA 02110 800.836.2414 eatonvance.com

 

 

[description] => When it comes to investing, we believe the most important thing is determining not what you make, but what you keep. The goal of tax management in an investment program is to maximize after-tax returns. We believe this strategy is even more critical, with investors now waking up to the fact that tax rates have risen considerably. [author] => [legacyinterface_firm_id] => 124 [published_on] => 2014-03-11 [digest_date] => 2014-03-11 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-11 14:44:32 [created_by] => 948 [modified_on] => 2014-03-12 03:50:38 [modified_by] => 944 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 228 [hits] => 0 ) [2] => stdClass Object ( [legacyinterface_commentary_id] => 164 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 0 [apv_conversation_id] => [content_type] => market-commentary [title] => Putin Plays for Keeps in Crimea [slug] => euro_031114 [fulltext] =>

For those investors who have grown used to the relatively minor geo-political crises of the past few years, the developing situation in the Ukraine and the Crimea must come as an unexpected communiqué from the early 20th Century.There can be little doubt that the drama will impact financial markets. 

 

While President Obama is doing his best to invert Teddy Roosevelt's "speak softly and carry a big stick" approach to foreign policy, the real issue is how Crimea's proposed secession from Ukraine will lay bare the opacity of international law with respect to issues of sovereignty.  Recently, President Obama said, "Under international law, force can only be used in self-defense or by a decision of the U.N. Security Council. ..." But Obama considered using preemptive force in Syria without U.N. approval. Laying aside U.S. adventurism in the Middle East over the past 20 years, in 1998 President Clinton intervened militarily when Kosovo attempted to separate from Serbia. 

 

Although the stakes are far lower, in many ways the current situation on the Black Sea parallels the Cuban Missile Crisis of 1962. Only this time, the roles of each player are reversed. 

 

The threat posed by Russian missiles in Cuba was acute and targeted at America's vital interests. President Kennedy simply could not accept a Russian victory, even at the cost of all-out war. Popular and military support for a tough line against the Soviets, both at home and abroad, allowed Kennedy to go "all-in" to force the Russians to ultimately back down. 

 

This time, it is Russia that has by far the most at stake. The threat to Russia's key warm water naval base in the Crimea, and the potential for an expansion of NATO into its traditional sphere of influence is acute. President Putin cannot accept defeat, even at the risk of war. And like Kennedy, he enjoys the support of his military and his people. Despite the relatively weaker economic hand being played by Mr. Putin, do not expect him to fold.  

 

From my perspective, Putin may see six major geo-political weaknesses in the U.S. position. First, he recognizes that the U.S. military and the U.S. public have grown weary of ill-advised foreign interventions. Second, Russia's close trade and energy connections to Western Europe are causing dissension among NATO allies at the prospect of a Continental conflict. The potential for Putin to drive a wedge between the U.S. and wavering EU allies is a risk that Washington must consider. 

 

Third, Putin is acutely aware that a "victory" of Ukranian interests at the expense of Moscow will further weaken Russia's ability to maintain the allegiance of the remaining scraps of its old Soviet empire. 

 

Fourth, Putin knows that Obama needs Russian support over key U.S. initiatives in Iran, Syria and North Korea. Further confrontation of the Crimea may come at a very high price to other interests that are much more vital to Washington. 

 

Fifth, Putin knows that the United States does not wish to see Russia revert to a closer relationship with China, just as China expands her maritime and territorial interests in the Pacific. It is no accident that Beijing has been eerily silent with respect to Russian policy in Europe. Putin knows that oil rich Middle Eastern rulers feel deserted by the U.S. over its proposed nuclear deal with Iran and are looking for new 'protective' allies. It is a power vacuum that China and Russia would be glad to fill. 

 

For its part, Washington must be conscious of the possibility of Russia striking back at the U.S. economically through disruptive sales of its $138 billion war chest of Treasury bonds. Such a move could trigger a financial panic in the West, especially if the moves could be coordinated with Russian allies. 

 

It has been suggested that President Obama and Secretary of State John Kerry are looking to offer Putin a 'face-saving off-ramp' similar to the one that Kennedy made to Kruschev in 1962 (cancelling a planned deployment of medium range NATO missiles in Turkey in return for a Russian stand down in Cuba). However, for the reasons outlined above, Putin must have a strong instinct that Obama will not go to the mat over Crimea. As a result, he may not accept anything that fails to keep the Crimea firmly under Russian control. 

 

However, the bigger issue involves the stand-off between Russia and western Ukraine. With armed soldiers and civilians facing each other, the local situation remains tense. Given the lack of discipline in newly formed units, the possibility of accidental aggression in the heart of central Europe is real. 

Risk-taking investors may be wise to gear their portfolios towards a continuing risk premium in energy and precious metals, while maintaining a well-diversified portfolio. More prudent investors anxious for capital preservation may wish to hold back and heed Nathan Rothschild's advice to "buy on the sound of gunfire".

 

(c) Euro Pacific Capital

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Recently a family member visited the doctor to determine if she needed her gall bladder removed.  Since she’d been having some pain, we assumed the answer would be “yes.”  But, of course, we wanted an expert opinion, so we went to a surgeon that has done more than 6,000 removals.

Why is an expert good for this situation but, as I have written before, may not be best for long-range stock market forecasts?

Turns out this issue has been the subject of much research and, not surprisingly, of much debate.

On the one side are the Behaviorists, who believe that human nature causes all kinds of biases that result in our intuition about future actions being faulty.  On the other side of the seeming divide are those who respect experts and believe in Naturalist Decision Making (NDM).

The NDM believers base their beliefs on studies of experts, such as surgeons, nurses, and firefighters.  Each of these professions is often called upon to make split-second decisions that save lives when correct.

In contrast, Behaviorists have focused their research on people who make a living forecasting and predicting, such as economists, market gurus, stock pickers and political consultants.  You know… the same people who populate the “expert” panels so commonly assembled and quoted by the media.

I’ve cited many of the Behaviorist studies in the past.  A couple of new ones that have come to my attention: 

1) Nobel laureate, Daniel Kahneman, in his 2011 book, Thinking Fast and Slow, reports on a study made with fellow Behaviorist, Richard Thaler, of 25 wealth managers that were employed by a financial firm that provided financial advice and other services to very wealthy clients. The study found that based on eight years of results in choosing investments there was no relationship between an advisor’s performance one year versus the next – none.

2) Phillip Tetlock, in his 2005 book, Expert Political Judgments, reports on his University of Pennsylvania study of over 80,000 predictions made by 284 people who made their living “commenting or offering advice on political and economic trends.” Kahneman summarized the results of the Tetlock study in his own book:  “The results were devastating.  The experts performed worse than they would have if they had simply assigned equal probabilities to each of the three potential outcomes.  In other words, people who spend their whole time, and earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys…”

How does one reconcile these results from the near opposite outcomes found in the NDM studies?  And what can we learn from that reconciliation in managing investment portfolios?

Turns out the two leaders of the opposing factions, Kahneman for the Behaviorists and Gary Klein for the students of NDM, co-authored an article titled “Conditions for Intuitive Expertise: A failure to Disagree,” published in the September 2009 issue of American Psychologist.  They agreed that experts can be trusted when they act within an orderly environment. Firefighters, surgeons, nurse practitioners, and even poker players all act within an orderly environment, that is, one with definable rules that can be learned from sufficient practice consistent with a statistically sufficient number of occasions.  In other words, they have to be in an environment where there are limited options with feedback of definable outcomes and there has to be the opportunity to learn from a very large number of situations. 

Long-term predictions of a company’s fortunes or the stock market are not done within such an environment.  Because of the necessity for feedback on the outcome from a large number of events, long-term forecasts usually fail because there are not enough examples to statistically base a prediction. 

A psychologist can get plenty of practice interpreting clues to immediate patient behavior from his or her many client sessions, but has little ability to forecast the future life experience of those same limited number of patients.  Similarly, though, a market forecaster may have little experience to draw on to predict another depression, while having considerable experience knowing what to expect over the near term in the face of often repeated patterns of investor behavior. 

What is your financial advisor trying to do – create a portfolio for a distant future or respond to the present market environment?  These studies from both camps – Behaviorists and NDM adherents – suggest that focusing on the latter may be the activity for which the advisor can be most trusted.

A second finding of the collaborative effort between the Behaviorists and the NDM school was that when faced with an irregular environment, like the financial markets, relying on quantitative algorithms will usually outperform human judgment.  They both acknowledged, however, that the effort to get people to use mechanical methodologies instead of human judgment was likely to evoke substantial resistance.  How true!

What does this mean you should do when looking for a financial expert to trust for your investments?  Here’s my list culled from these studies of what’s necessary (in addition to the usual suspects always talked about – fiduciary integrity, sound financials, a clean regulatory history, efficient operations, and clear reporting):

1.     Have a great deal of experience – a chess master, and most other sophisticated endeavors, requires 10,000 hours of practice.  That’s about 5 years at 40 hours a week with no time off for vacations. 

2.     Because the financial markets are not “regular,” the expert should be focusing on methodologies that happen often enough that a statistically significant result can be obtained.  Rolling 20-year studies are often used by buy-and-hold advisors to justify their approach.  Even if you go back to the turn of the last century, these 20-year studies can only roll forward 103 times.  And in your investment lifetime, how many have occurred?  In contrast, dynamic risk management relies upon testing of short-term phenomena that occur with a regularity and frequency that allows for statistically significant results.  It does not guarantee positive results, but it puts the probabilities on your side.

 3.     Rather than relying on investment committees to make day-to-day buy and sell decisions, as do most mutual funds, or a hot stock picker in the latest bull market, investors would be better off, in the very irregular financial markets, to rely on asset managers that trust statistically sound, quantitative (mathematical, computerized) models.

“Experts are a dime a dozen,” some people say. And it is certainly true that every day we are buried under an avalanche of opinions from people assembled by a voracious media.  Often, these are opinions generated by people with impressive credentials that are polar opposites. 

What’s an investor to do?  Hopefully, the simple test outlined above – find one experienced with handling a large number of replicable events or, if in an irregular environment, reliant on short-term, statistically significant algorithms – will prove helpful in finding an expert upon whose decisions you can trust.

Flexible Plan has been in business for 33 years.  Throughout that long history it has managed exclusively based upon rigorously tested, quantitative, dynamic risk management strategies.  We believe we are the asset management “expert” for our clients and their advisors, putting the probabilities of investing on your side.

Hopefully, we’ll do as well with the doctor and the gall bladder…

All the best,


Jerry

P.S. The stock market rally marked its fifth anniversary (sixth longest and fourth largest of all time) with a very different economic and technical environment than existed at its start back in 2009. As the headlines listed below make amply clear, it was a very dire time for our nation’s economy and markets. Studies show that the average investor had lost about 34%, and General Motors was still $16 billion short of the money needed to meet its obligations. On the charts, we were way below the 50-day and 200-day moving averages and it would be difficult for either technicians or fundamentalists to get a buy signal until some signs of life appeared. 



Source: Bespoke Investment Group 

As is usually the case, the trend-following signals were alerted to the buying opportunity before most investors, although even the venerable 200-day moving average did not see a positive cross over until the summer time that year.  Of course, stock investors did not cross over to equities over bonds until just a few months ago – what a difference!

While interest rates were in a down trend like they are now, economic reports were uniformly negative.  Now they are generally positive (two-thirds of last week’s 21 reports were better than expected).  Investor sentiment was negative, today it is moderately positive.  Earnings were down considerably and still falling.  Now they are rising.  One consistency – gold is up this year, just like it was in 2009 at this point in time.

Most of our portfolios, reflecting their underlying strategies, remain substantially committed to equities, largely ignoring, like the market, the Ukrainian crisis, and while I expect volatility to remain at higher levels than last year, we let our quantitative strategies be our guide not our “expert” opinion.

 


Disclosures

(c) Flexible Plan Investments

[description] => Recently a family member visited the doctor to determine if she needed her gall bladder removed. Since she’d been having some pain, we assumed the answer would be “yes.” But, of course, we wanted an expert opinion, so we went to a surgeon that has done more than 6,000 removals. [author] => Jerry Wagner [legacyinterface_firm_id] => 156 [published_on] => 2014-03-11 [digest_date] => 2014-03-11 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-11 14:52:28 [created_by] => 948 [modified_on] => 2014-03-11 14:52:44 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 230 [hits] => 0 ) [4] => stdClass Object ( [legacyinterface_commentary_id] => 166 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13428 [apv_conversation_id] => [content_type] => market-commentary [title] => Making Green from Gold, Palladium and Pollution [slug] => global_031114 [fulltext] =>

Gold is coming back with a vengeance, experiencing a clear recovery and grabbing the attention of market cynics. Analysts from Noruma Securities even upgraded its outlook for gold, expecting bullion to climb over the next three years, according to Barron’s.

Nomura analysts attribute their increased gold forecast to real interest rates that “don’t seem to be heading anywhere at the moment.” In addition, there appears to be “long-term demand support from Asian nominal income growth, an evolving post-QE macroeconomic environment and lower disinvestment potential.”

Gold is also gleaming a little brighter in Japan, as its central bank announced that monetary policies will remain very accommodative. With a weakening yen, gold will likely be seen as a store of value for Japanese investors.

Palladium Near Its Highest Level in Almost a Year
Two global events recently colluded that dramatically affected the palladium and platinum market. The situation in Ukraine and Russia along with six-week-long strikes in South Africa began raising concerns that these palladium-rich countries may not be able to continue supplying the commodity at normal levels.

Currently South Africa supplies around 37 percent of the world’s palladium; Russia supplies close to 40 percent of the world’s palladium.

What does this all mean for the palladium and its sister platinum? It seems that fear surrounding the international political landscape is helping to push the precious metals prices higher and higher.

You can see the effect the political landscape is having on palladium. Over the past year, the metal has mainly traded sideways, but this week hit its highest level in almost a year. The precious metal reached $775 per ounce while its sister, platinum, climbed to nearly $1,500 an ounce.

Gold Jewelry, Bar and Coin Demand Resilient in 2013
click to enlarge

In January, I indicated that platinum and palladium looked extremely compelling. There were supply and demand drivers I felt would drive the metals higher.

Just last week, the U.S. Mint is “ending a four-year exit from the market” by selling one-ounce American Eagle platinum bullion coins, writes Frank Tang from Reuters. According to a wholesaler last week, initial demand is strong, as 1,000 coins have already been scooped up.

Like I discussed with Resource Investing News at the Vancouver Resource Investment Conference, industrial demand has been gaining strength. Take rising automobile sales in the U.S. that I talked about a few months ago. With interest rates on car loans so low, Americans have been replacing their clunkers with more fuel efficient cars, which is positive for platinum and palladium.

It’s a similar story in emerging markets. In Africa, the GDP without a leveraged economy is still growing at 5 percent, and you definitely need platinum and palladium for their vehicles, even if they are diesel.

In China, vehicle sales last year rose faster than expected, climbing nearly 14 percent compared to a year earlier, according to the China Association of Automobile Manufacturers. The country is already the biggest automobile market in the world and millions of new cars on the roads add up fast.

We’re pleased that our technical models signaled initial bullish signs, as our palladium- and platinum-related holdings helped boost the returns of the Gold and Precious Metals Fund (USERX) and the World Precious Minerals Fund (UNWPX).

Renewable Energy Could Get You More Green

In BP’s latest Energy Outlook 2035, you can see the incredible long-term growth anticipated in the renewable energy industry. In terms of volume growth, China is expected to surpass the European Union countries by 2035. Based on this secular transformation, the local clean energy sector should continue to benefit. 

China's Commitment to Combatting Pollution Should Benefit Renewable Energy Industry
click to enlarge

Specifically, wind power and solar look especially attractive, especially given the excessive pollution in the Asian giant. Take a look at CLSA data: In 2009, the country had about 0.2 percent of the global market. By 2014, it’s estimated to grow to one third of the global market.

China isn’t the only country with a growing renewable energy market. After the massive earthquake hit Japan in 2011, the solar market is taking off there too.

Gold Jewelry, Bar and Coin Demand Resilient in 2013
click to enlarge

If you were too busy to tune into our webcast last week, you missed a good discussion among Brian Hicks, John Derrick and me. It was an hour chock-filled with investing ideas in the U.S. market, emerging countries, resources and gold. However, it’s not too late to watch the replay at your leisure this weekend.

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

Past performance does not guarantee future results.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.

Because the Global Resources Fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

(c) U.S. Global Investors

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The great economist John Maynard Keynes wisely noted that no economic stimulus could work unless it inspired the "animal spirits" of business. With this two-word phrase, he tried to sum up the optimism, the drive for expansion, the outright greed that prompts business managers, despite myriad unknowns, to hire, spend on new equipment and facilities, and engage in a host of expansion activities. Only when this happens can government stimulus spending or monetary ease prompt a generalized, self-sustaining expansion.

Cleary, the present recovery lacks for such "spirits." Hiring remains less than lackluster by historical or just about any other standard. Spending on new structures by business has followed an uneven path at best. Spending on new equipment and systems offers a modestly brighter picture, but nothing like past recoveries. The word spirited hardly applies. What exactly has dampened the appetite for risk will, no doubt, offer much material for economic historians for many years to come. Surely part of the problem lies with the legacy of the financial crisis and the great recession. If anything can instill an excess of caution, an experience like that one can. Massive pieces of sweeping legislation, such as the Affordable Care Act and Dodd-Frank, whether good, bad, or indifferent as law, cannot help but engender uncertainty and further inspire excessive caution. Surely other, less prominent, influences have come into play.

This discussion leaves the post mortem to the historians. It aims instead to examine capital spending data in an effort to ascertain how this failure of spirit has manifested itself and whether there are signs of change. It arrives at two broad conclusions: 1) The contours of capital spending are generally much like other recoveries, just much more muted, a condition that looks likely to persist and 2) the industry-by-industry detail shows significant change in who is spending and on what—something that may require more of a policy response to remedy than Washington is capable of at the moment.

The Thirty Thousand-Foot View

In this recovery, the broad aggregates have proceeded with much the same contours as in past recoveries. Typically, capital spending surges in the initial quarters of a cyclical rebound. Such surges have nothing to do with a need for new capacity. Coming off an economic trough, business and industry usually have ample spare capacity. Rather, these initial surges stem from the jump in profits that always accompanies the initial stages of recovery and that allows business to gratify the pent-up demand it postponed during the recession, usually for modernization, upgrading, and efficiency-enhancing equipment. Once this pent-up demand is gratified, such surges typically give away to a slower pace of expansion, as the pace of profits growth typically also slows from its own initial recovery surge. That period of slower expansion usually persists until later in the cycle, when increases in activity have finally employed existing productive capacities, at which time business again ramps up spending, this time on a broader basis to add to productive capacity generally

This recovery has so far followed these general contours. In 2010 (the first full year of growth), for example, overall capital spending grew 8.1% in real terms, a little slower than the 9.0% average in comparable times in the previous five recoveries. The mix was true to historical form, too. Spending on equipment, innovation, and systems—what the Commerce Department refers to in part as "intellectual property products"—drove the bulk of this growth, expanding at almost a 9% rate in real terms. Spending on structures, not surprisingly after a generalized real estate collapse, continued to decline, by 2.9%, in real terms. In 2011–12, the declines in spending on structures turned into a modest expansion, but true to past cyclical patterns, spending on equipment and intellectual property slowed, growing at a much lower 6.3% annual pace, also slower than in past recoveries.1

The pattern in 2013 also held true to this form. With business utilizing a still low 78.5% of existing capacity, the growth in outlays for capital equipment, intellectual products, and new structures continued to slow. Spending on structures grew barely over 1.0% in real terms, while spending on equipment and intellectual products expanded only 3.0% in real terms.2 And because of the spirit-dampening weight on this recovery, this continued slowdown, though true to the general contours of past cyclical patterns, was considerably slower than the averages from those past cycles.

This pace will not likely pick up anytime soon. Perhaps distance from the pain of 2008–09 will allow the "animal spirits" of business to rise a bit, but otherwise all that has dampened that appetite for risk and expansion to date remains in place. More significantly, perhaps, rates of capacity utilization across industry will remain too low to spur a desire to increase productive capacity. Typically, this rate needs to climb above 82–83% to spur the second, later-cycle phase of rapid capital spending growth, and at likely rates of overall expansion, that point is still a long way off. Even in the unlikely event that the overall annual pace of real economic growth were to remain above 3.0% a year,3 it would take until 2016 before capacity utilization would reach a point sufficient to prompt an acceleration in capital spending, and that is pushing the likelihoods on growth.

A Littler Closer to the Deck

Taking the analysis down to a slightly lower elevation that can reveal greater detail, a marked difference from the past emerges, not only from past cycles but, pointedly, also from the trends that existed just before the financial crisis and the change in administrations in Washington. (Given common usage these days, the metaphor here should talk about "drilling down" instead of less elevation; but having started with an airplane metaphor, it seems only right to stick with it. Besides, the introduction of the word "drilling" immediately focuses minds on fracking, but that is only a part of this picture.)

The only industries that have accelerated their spending on structures from before the crisis are restaurants and bars, air transportation, special care medical facilities, and petroleum and gas drilling. The last, of course, reflects the fracking revolution, and will likely persist for some time. Spending by air transportation, no doubt, reflects the long neglected need to upgrade airport facilities and will run its course. The sudden spending on restaurants and bars inspires the imagination as to the whys, but without evidence, such speculation has no place here. The spending on special medical facilities, such as nursing homes, is no doubt an aspect of the well-established aging trend in the population and will likely also persist for some time. More interesting, and perhaps troubling, are the sectors that have shown dramatic spending decelerations. These include building for hospitals and most aspects of manufacturing. The former almost surely reflects a response to the constraints and uncertainties imposed by the Affordable Care Act. The latter reflects the caution implicit throughout this recovery. Neither looks likely to change anytime soon.

Where equipment and intellectual products are concerned, the picture hardly speaks to "animal spirits" either, and is even more problematic for the future. There, almost everything has slowed from before the crisis, even though this area has seen the fastest pace of growth so far in this recovery. The only exceptions are spending on cars, trucks of all kinds, and railroad equipment. The spending on railroad equipment may well have a connection to the fracking revolution, especially since regulatory considerations have impeded pipeline construction. For the rest, the problem is that much of this spending reflects a catch-up in areas long neglected. It will run its course, probably quite soon, and then no area of size will exhibit an acceleration from pre-crisis rates of expansion. It is particularly disappointing in this detail, especially in the quest for "animal spirits," that real spending on custom software, research and development, and scientific effort in general have all shown a particularly marked slowdown, growing at a 5.8% annual rate so far in this recovery, compared with a 9.2% annual rate of advance during the three years prior to the crisis.4

Prospects

Combined, the picture suggests continued growth, but at a comparatively slow pace, as it has shown throughout this recovery. Especially from the configuration of detailed spending, it seems that the cautions and concerns that have weighed on this recovery will continue to do so. Sluggish hiring and restrained spending across the board indicate continued lingering fears from the financial crisis and great recession, while policy in Washington is hardly poised to lift the uncertainties that have dampened the verve of business for some time now. In the meantime, capacity utilization remains low enough to allow business to postpone any need for capacity expansion for a year more or longer. The "animal spirits" that Mr. Keynes identified as essential should remain subdued for the foreseeable future.

* I would like to thank Steve Lipper, Lord Abbett Investment Strategist, for suggesting this line of analysis

1 All data from the Department of Commerce.

2 Ibid.

3 Ibid. 

4 Ibid.

The opinions in the preceding economic commentary are as of the date of publication, are subject to change based on subsequent developments, and may not reflect the views of the firm as a whole. This material is not intended to be relied upon as a forecast, research, or investment advice regarding a particular investment or the markets in general. Nor is it intended to predict or depict performance of any investment. This document is prepared based on information Lord Abbett deems reliable; however, Lord Abbett does not warrant the accuracy and completeness of the information. Consult a financial advisor on the strategy best for you.

(c) Lord Abbett

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Chasing yield has become a challenging mission for investors in recent years. As yields collapsed in fixed income, investors flocked to bond-like substitutes such as high dividend-yielding stocks. Now that these stocks have become a bit pricey, we think companies with strong dividend-growth potential offer a better way to source equity income.

There are many ways to look at dividends. A good starting point is the payout ratio, which measures the proportion of net income that a company pays out to shareholders. At the end of 2013, US companies were only paying out one third of their earnings as dividends, well below the average of the past 60 years (Display).

Payout ratios matter. When they’re low, the ratios tell us that many companies have lots of room to raise dividends. And since US companies have record cash positions and solid balance sheets today, we think it’s easy to envision how payouts can increase.

Dividend Growth Is Outpacing Earnings
This also helps explain why dividends have been growing faster than profits. For US nonfinancial companies, earnings growth remained sluggish in 2013. Yet because payout ratios were so low, dividend growth outpaced earnings growth by a wide margin (Display). And since companies with strong dividend growth haven’t typically been on investors’ radar screens, they’re trading at especially cheap valuations compared with high dividend-yield stocks.

 

Examples can be found across sectors. Boeing increased its annualized dividend by 50% at its last board meeting in December. Meanwhile, during 2013, UnitedHealthcare raised its dividend by 32%, while CVS Caremark, a consumer staples group, lifted its dividend by 30%. And even in financials, Wells Fargo boosted its dividend by 31%. What do all of these companies have in common? Low dividend-payout ratios.

So how can we identify companies with strong dividend-growth potential? It all starts with the payout ratio. When a company has a high payout ratio, it often means that management doesn’t see compelling opportunities to invest in growing the business. We believe that companies with lower payout ratios have more control over their destiny than peers with weaker cash dynamics, which gives them capital flexibility to invest in future growth projects and/or to return excess capital to shareholders by increasing dividends or share buybacks.

Playbook for Investing in Dividend Growth
But even companies with low payout ratios need to be scrutinized. It’s especially important to look beneath reported earnings, which can be misleading. By focusing on the cash economics of a business, investors can get a better grip on the company’s capital needs and commitment to investing in growth opportunities.

For example, a close look at the balance sheet can help gauge a company’s capacity to finance expansion and to evaluate the percentage of normal cash flow being paid out as dividend. The goal is to identify healthy companies that are capable of sustaining macro-economic shocks and withstanding competitive threats.

Finding income is still high on the agenda of many investors. Yet traditional sources of yield in fixed- income and equity markets have simply become overpriced, in our view. It’s definitely possible to find stocks with higher dividend yields today. But we believe that companies with low payout ratios and high dividend-growth potential can provide investors with a better way to quench their thirst for income over the long term.

This blog was originally published on InstitutionalInvestor.com

 

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AllianceBernstein portfolio-management teams.

(c) AllianceBernstein

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Markets waited all week for the jobs report for February. After its release the data continued to be mixed at best. 

As the charts above illustrate, markets didn’t do much last week as the events in Ukraine and concern over the global economy weighed down sentiment. For the week, both the Dow Jones Industrial Average as well as the NASDAQ Composite racked up modest gains of less than one percent. 

The Markets & Economy 

The good news from last week’s jobs report (see chart next page) was that weather oddly didn’t play a role in the data as 175,000 non-farm payroll jobs were created. This resulted in the unemployment rate RISING to 6.7%.

 

The bad news is just about everything else contained in the report. Average weekly earnings showed their slowest growth rate in 5 years. Over the past year, earnings are higher by just 1.3%. Given higher taxes and expenses for fuel etc., this will hardly cut it for the economy as we head into the spring. Hours worked are actually dropping due to the jump in part-time work due to Obamacare etc… 

What this means quite simply is that the difficulty you are reading about in the consumer sector, whether it be retail sales or consumer sentiment in general, is based upon this background and it is not likely to change suddenly should this winter weather ever end. 

Additionally, events around the world starting with the Ukraine and its impact on Europe, or China, which is so concerned about its growth rate (and perhaps terrorism at home) that it has been causing the value of its currency to fall over the past month, are adding to concerns. This is putting a damper on economies which export to China as well as increasing concern that China is once again manipulating (it never stopped) its currency. It appears that China has now joined Japan in devaluing their currency as a way of combating economic weakness at home. 

All of this is more proof that 2014 will be another year of 2% growth, give or take. This will result in more calls for the government to do something, but people must come to realize that “something” is in many cases the reason the global economy cannot get going. Time to lessen the role of government spending, taxing and regulation and allow incentives to create the organic growth needed to truly change the direction of the economy. Under the current circumstances, accelerating the efforts to develop and export our natural gas to Europe would help so many problems but the Obama administration, at present, just doesn’t see it this way. 

What to Expect This Week 

Few earnings reports will rattle the markets, and the economic calendar calls for an update on retail sales towards the end of the week. Don’t expect much positive news there. 

As a result, the day-to-day trading will hinge upon news coming out of Europe and perhaps the growing concern that terrorism was involved in the loss of the Malaysian airliner. Don’t expect anything positive to come out of either of these issues. 

Finally, the “better” than expected payroll report has given renewed hope to the bulls on the economy, but as one can see from the weekly report from the Economic Cycle Research Institute, there is little to get optimistic about. The lackluster trend, implying a slow growth economy, remains intact. I suspect that what you see is what you will get for some time. 

 

As you know, investors should cheer that this economy is neither collapsing nor approaching anything resembling a breakout year. Higher dividends & earnings per share (through buy backs) remain the foundation for this bull market. 

 

It has been reported that Vodafone has increased its takeover offer for the Spanish cable operator Ono, in an attempt to acquire the Company before its planned IPO.  Ono is holding its annual meeting on March 13th, at which management plans to present its intention to sell shares in an IPO.  Vodafone has been meeting with large shareholders and has offered to buy the company for $9.7 billion, although no final agreement has been reached. 

This caused a sell-off in the shares of Vodafone on Friday and again this morning as some feel the Company will have to over pay for Ono.  Some investors think it might make Vodafone less attractive to potential buyers itself, most notably AT&T.  This story is going to stay in the forefront this week especially until Ono’s annual meeting on Thursday. 

 

We believe this weakness offers an excellent buying opportunity and are adding to our position at these levels.  Vodafone has been buying up European cable assets so that they are able to bundle phone, internet and television services to all of their customers and Ono is one of the few assets still available.  The landscape in the European telecommunication/media arena is changing quickly, but we believe the value of Vodafone assets are worth significantly more than they are currently trading for. 

We did receive the cash portion of the Verizon Wireless deal in our accounts last week, which completes the transaction.  We believe that buying more shares of Vodafone is an excellent use of the cash given the weakness of the past couple of days.  We expect the shares of Vodafone will be trading for more than $50 by the end of this year.

(c) McIntyre, Freedman & Flynn

[description] => Markets waited all week for the jobs report for February. After its release the data continued to be mixed at best. [author] => Tom McIntyre [legacyinterface_firm_id] => 289 [published_on] => 2014-03-11 [digest_date] => 2014-03-11 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 0 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-11 17:12:08 [created_by] => 948 [modified_on] => 2014-03-11 17:12:22 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 234 [hits] => 0 ) [8] => stdClass Object ( [legacyinterface_commentary_id] => 170 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13432 [apv_conversation_id] => [content_type] => market-commentary [title] => Michael Cirami on the Ukraine Crisis [slug] => eaton_031114a [fulltext] =>

Investors tend to ignore events that do not demand immediate attention. Unfortunately, this approach is no longer an option following the recent events taking place in Ukraine. Michael Cirami, co-director of Eaton Vance’s Global Income Group, was in Kiev the week before President Yanukovych was ousted. In the following interview, he shares his views on the crisis in this emerging market and its implications for investors.

What is happening in Ukraine?

Former Ukraine President Viktor Yanukovych was forced from power following large-scale protests over corruption and the former government’s failure to sign an Association Agreement with the European Union (EU).

The situation has morphed into something much more dangerous and uncertain as Russia asserted itself. A combination of Russian troops and pro-Russian forces has occupied official buildings within the Crimean Peninsula – a largely ethnic-Russian region in the south of the Ukraine that is also home to an important Russian naval base on the Black Sea.

Geopolitically, we are headed into unfamiliar waters. The U.S. and other western powers have condemned Russia’s move as an act of aggression, and imposition of economic sanctions is a real possibility.

You’ve avoided Ukraine for some time now. Why?

All of the portfolios managed by the Global Income Group had zero exposure to Ukraine, as of the most recent public disclosure of portfolio holdings. From an economic standpoint, Ukraine’s economy has been deteriorating for several years, mired in large fiscal and current account deficits. The government is in dire need of foreign money to keep the country running. Prior to this crisis, that money was expected to come from Russia – that now appears unlikely. The International Monetary Fund (IMF) and Ukraine are expected to start negotiations over a new economic program this week, but in recent years the country has shown little regard for this type of a program, so it could take some time to come to an agreement.

Do you see the crisis being resolved anytime soon?

These events can continue to escalate with a broad array of potential outcomes, ranging from outright war with Russia or civil war to peaceful negotiations. We hope cooler heads will prevail, but the situation is extremely fluid, making it impossible to predict how or if the situation will be resolved. But with that in mind, the worst-case outcomes continue to be the least probable ones – at least for now.

Why should investors care?

Three reasons why investors should care:

1.Ukraine is operating under severe economic stress with a real possibility of default. At 40% of GDP (according to IMF statistics), Ukraine’s debt level is not extreme, but it is a source of concern, given that the country already has a recent default on its books from 2000.

2.Both Ukrainian and Russian asset values are likely to experience increased volatility. Russian banks, too, are likely to be stressed, given their large exposure to Ukrainian assets. Further, a possible Ukrainian default might also spark contagion that could spread to some banks in Western Europe.

3.Sanctions on Russia would likely be economically destabilizing globally.

What’s your view of emerging markets?

Ukraine’s turmoil underscores the fact that geopolitical uncertainty is never pleasant, but it doesn’t overturn the longer-term case for emerging markets – investors who discount these countries altogether may miss some of the strongest growth potential in the world. That said, we believe that emerging-market risk is currently growing, as tempers and political instability in select countries appear to be increasing while, at the same time, the U.S. Federal Reserve reduces the amount of liquidity it provides to global markets.

What should investors do?

Flexibility is key in fluid situations like these. We believe there remain exciting opportunities within emerging markets. To best capitalize on these opportunities, we feel investors should consider strategies that have the ability to:

1.Invest in long and short positions, to take advantage of both improving and deteriorating situations.

2.Include countries that are outside of common emerging-market benchmarks. Such a benchmark-agnostic approach widens the opportunity set and can help improve portfolio diversification - important tool to help navigate geopolitical uncertainty.

About Risk

Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical or other conditions. In emerging countries, these risks may be more significant. Derivative instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can magnify losses), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. Diversification does not guarantee profit or eliminate the risk of loss.

About Eaton Vance

Eaton Vance Corp. (NYSE: EV) is one of the oldest investment management firms in the United States, with a history dating to 1924. Eaton Vance and its affiliates offer individuals and institutions a broad array of investment strategies and wealth management solutions. The Company’s long record of exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today’s most discerning investors. For more information, visit eatonvance.com.

The views expressed in this Portfolio Manager Viewpoints are those of the author and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and the author disclaim any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund.

This Portfolio Manager Viewpoints may contain statements that are not historical facts, referred to as forward-looking statements. A Fund’s actual future results may differ significantly from those stated in forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund’s filings with the Securities and Exchange Commission.

Before investing, investors should consider carefully the investment objectives, risks, charges and expenses of a mutual fund. This and other important information is contained in the prospectus and summary prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

©2014 Eaton Vance Distributors, Inc.

Member FINRA/SIPC

Two International Place, Boston, MA 02110 800.836.2414 

[description] => Investors tend to ignore events that do not demand immediate attention. Unfortunately, this approach is no longer an option following the recent events taking place in Ukraine. Michael Cirami, co-director of Eaton Vance’s Global Income Group, was in Kiev the week before President Yanukovych was ousted. In the following interview, he shares his views on the crisis in this emerging market and its implications for investors. [author] => Michael Cirami [legacyinterface_firm_id] => 124 [published_on] => 2014-03-11 [digest_date] => 2014-03-11 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-11 17:18:43 [created_by] => 948 [modified_on] => 2014-03-11 17:18:54 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 235 [hits] => 0 ) [9] => stdClass Object ( [legacyinterface_commentary_id] => 153 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13415 [apv_conversation_id] => [content_type] => market-commentary [title] => Market Outlook [slug] => alexander_031014 [fulltext] =>

Yo-yo

Do we have your attention yet?

The irascible, and sometimes irrational, actions of the major indices this year should confirm for all observers that there's something at work in the financial markets that goes way beyond "traditional" fundamental analysis and good stock picking.

In back-to-back fashion, the market last week traversed consecutive near-200 point days (on the Dow Jones), first down, then up.  Is there anything in that type of behavior other than a manic response to current events (Ukraine, unemployment, GDP) or an indication of fear which underlies the actors' mindset itself?  The inmates truly are running the asylum.

Look, I'm not going to cast aspersions on my peers or lay heavy psychoanalysis upon others.  I'm neither qualified to do so nor inclined.  But suffice it to say that the catalysts for equity momentum and trading are changing, and trending more towards behavioral  science than economic  science.  The mere appearance  of conflict abroad, or disappointing data, provides enough impetus to recalibrate market calculus.  And in the process, our mental state, our confidence  in the financial markets to reflect our hopes and aspirations, becomes shredded at the periphery.

The subtext of all this volatility is that despite what appears to be improvements in economic statistics, fewer people feel comfortable putting their assets to work in a game that appears not to be played in their best interest.  "Luck" is not the kind of engine anyone would like to see propelling their retirement funds.  Conversely, I think the fear factor is significantly higher today, and rightfully so.  Retail and sophisticated institutional investors are left scratching their heads over the frequency and magnitude of inter-day volatility.

As I have previously written, my analytics indicate that this year should be a continuation of a bull market cycle now in its fifth year.  But I remain cautious about the sustainability of peaks at these levels  where new highs in the averages have become commonplace, but potentially risky.  If there is any bias in my work at present, it might be for a downside response in the averages, and not necessarily a clean or tidy process.

Spare the Pollyanna

In fact, it is more likely that we have downward revisions in earnings forecasts because year-over-year comparisons to the early years of the recovery are impossible to sustain.  Coming from the depths at which we were in 2008, any  improvement in productivity or economic activity was bound to create a groundswell of buying that would have moved valuations strongly and consistently.  Faced with the truisms of our current plight, however, one has to ask "for how much longer, and how much farther?"

If my projections are correct, the loss of earnings momentum from inflation and pricing power in natural resources, low employment, depleted consumer savings, and corporate inventory reductions should be reflected by mid single-digit returns in stocks this year.  Right now,  there are only "anecdotal" inferences about inflation, with no Federal data to corroborate.  In fact, however, in our daily lives we experience price increases throughout a host of activities, from necessities to extravagances.   While some are quick to blame the Winter weather for negative data spillover, I lay the blame upon unrealistic expectations, irrational trading behavior, and unsustainable cyclic stochastic integers.

"Optimism" is always relative, but to expect a repeat of last year's equity performance would be beyond the ken.

In the short term, "doing nothing" is not an option, but neither is trying to "time" the irrational gyrations of a market following the herd.  The best strategy is to have a discipline for equity selection and to stick with it.  In my case, I look for consistent, but not artificially manufactured, earnings acceleration...growth engendered by what we call the "better mousetrap" business model.  Create a product the public wants, and they'll not only beat a path to your door, but pay a premium to own it.  This would be true whether you were a neighborhood pizzeria, a global biotech firm, a local manufacturing company, or a motion picture conglomerate.

The trouble with last week was that macro themes and demographics got caught up in the foolishness of the game-players, themselves, who ruined it for everyone else.

 

Arlington Econometrics is a quantitative market tool.  Utilizing proprietary algorithmic equations, AE offers solutions for market-timing, asset allocation, and macro economic analysis.  Using historical time-series measurements, Arlington Econometrics optimizes the analytical process and forecasting coefficients to make economic forecasting more objective.  

 

The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed.  This report is not to be construed as an offer to sell or solicitation to buy any security.  It is intended for private information purposes only.  Any opinions expressed are subject to change without notice.  Alexander Capital and its affiliated companies and/or individuals may from time to time own or have positions in the securities or contrary to the recommendations discussed herein.  Neither Alexander Capital, LP nor any of its affiliates (collectively, “Alexander Capital, LP”) is responsible for any recommendation, solicitation, offer or agreement or any information about any transaction, security, customer account, or account activity in this communication.

(c) Alexander Capital

[description] => The irascible, and sometimes irrational, actions of the major indices this year should confirm for all observers that there's something at work in the financial markets that goes way beyond "traditional" fundamental analysis and good stock picking. [author] => Scotty George [legacyinterface_firm_id] => 19 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 15:07:51 [created_by] => 948 [modified_on] => 2014-03-10 18:01:06 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 218 [hits] => 0 ) [10] => stdClass Object ( [legacyinterface_commentary_id] => 154 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13416 [apv_conversation_id] => [content_type] => market-commentary [title] => M&A: A New Rx for Specialty Pharma [slug] => janus_031014 [fulltext] =>

Merger and acquisition (M&A) activity is heating up among specialty pharmaceutical companies and potentially creating a once-in-a-generation investment opportunity in an industry that is quickly consolidating. We believe a convergence of factors will drive further M&A activity and value creation for investors in 2014.

While M&A activity has long been a tool driving growth among pharmaceutical companies, the uptick in 2013 was considerable, with more acquisition activity (in terms of deal value) than the two previous years combined. The average deal size and total value of deals also reached highs in 2013.

In several cases, both the acquirer and acquired company have seen a jump in stock price after announcing deals. Yet as a group, the market multiple for specialty pharmaceutical companies is in line with the rest of the index, suggesting room for further stock appreciation as more companies announce deals. And there are plenty of reasons more deals will follow.

A few important secular trends are encouraging consolidation in the industry. The pharmaceutical industry has been incredibly fragmented globally, with the largest five companies owning less than 10% of market share. But the supply chain of companies buying drugs has consolidated and now has only four major buyers. Those four large buyers have considerable clout and are pushing down prices throughout the industry. By consolidating, the pharmaceutical companies have a chance to gain some scale of their own and push back on prices.

The potential of drugs in many specialty pharmaceutical companies’ pipelines is another factor driving acquisition activity. In an environment focused on lowering health care costs, innovative therapies that significantly improve patient outcomes are the only treatments that can command pricing power. Innovative therapies also have a much easier time getting FDA approval than “me-too” drugs that offer only an incremental benefit over existing treatments. Many of these innovative therapies lie with specialty pharmaceutical companies, and large-cap pharmaceutical companies are finding it is often more profitable to acquire those companies than research and develop their own drugs.

Savvy management teams are also driving M&A activity. In the late 2000s, many specialty pharmaceutical stocks underperformed, driving management changes at many companies. Now, the quality of management teams within the industry has never been higher, in our view. This new generation of managers is more aggressive, more global in scope and more willing to access accommodative debt markets to make deals.

The interests of new management teams are often well-aligned with shareholders. At Forest Laboratories, for example, the new CEO put $5 million of his own money into the company’s stock. Similarly, Endo Health Solutions’ new CEO invested $7 million into the company’s stock. New CEOs also have incentive structures that are generally more aligned with stock performance, which has resulted in management teams looking for deals that drive value.

While secular trends and aggressive management teams are the main drivers of consolidation, there is also a tax benefit to many acquisitions. By acquiring a company overseas, U.S.-based pharmaceutical companies have an opportunity to re-domicile and convert to a lower overseas tax rate. Conversely, the tax-advantaged status of a non-U.S. pharmaceutical company allows that company to come into the U.S. market and pay a premium for an acquisition target in a deal that is still accretive to the acquiring company because they are moving the U.S. company into a lower tax structure. 

The inherent tax advantage is a quick boost to the earnings power of companies, and the market has responded favorably when such acquisitions are announced. For example, Endo Health Solutions is up 78% since its November announcement it would acquire Paladin Labs and re-domicile in Ireland. Likewise, Actavis and Forest Laboratories were up 17% and 39%, respectively, after Actavis announced in mid-February it would acquire Forest Laboratories.

The secular trends favoring industry consolidation, aggressive management teams, accommodative debt markets and the tax advantages of many acquisitions, should keep M&A activity heated among specialty pharmaceutical companies. Given the inherent benefits of many of these acquisitions, and with valuations at a reasonable starting point, we would also expect the market to continue to respond favorably as more deals are made. 

Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus or, if available, a summary prospectus containing this and other information, please call Janus at 877.33JANUS (52687) or download the file from janus.com/info. Read it carefully before you invest or send money.

Investing involves market risk. Investment return and value will fluctuate, and it is possible to lose money by investing.

The health care industries are subject to government regulation and reimbursement rates, as well as government approval of products and services, which could have a significant effect on price and availability, and can be significantly affected by rapid obsolescence and patent expirations.

The views expressed are those of Janus research analysts as of March 2014. They do not necessarily reflect the views of Janus portfolio managers or other persons in Janus’ organization. These views are subject to change at any time based on market and other conditions, and Janus disclaims any responsibility to update such views. No forecasts can be guaranteed. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any Janus fund.

In preparing this document, Janus has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources.

Statements in this piece that reflect projections or expectations of future financial or economic performance of the markets in general are forward-looking statements. Actual results or events may differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include general economic conditions such as inflation, recession and interest rates.

Investment products offered are: NOT FDIC-INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.

Janus Distributors LLC

FOR MORE INFORMATION CONTACT JANUS
151 Detroit Street, Denver, CO 80206   I   800.668.0434   I   www.janus.com

C-0214-57846 03-30-15                                                                                                                 

188-15-27501 03-14     

 

 

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U.S. equities increased 1.1% last week after somewhat volatile trading due to heightened tension in Ukraine.1  Although the crisis dominated headlines, the market relegated the major geopolitical issue to the back burner. The broader macro narrative did not change, as concerns about dampened growth momentum continued to be pacified by the distortion from adverse weather. Several dynamics seem to support ongoing recovery, including better-than- expected February labor market data, some upbeat corporate and industry commentary and the outperformance of key cyclical market segments.

The Economy: Not Too Hot or Too Cold

The economy added 175,000 jobs in February and the prior two months were revised upward to add 25,000 new jobs.2 The unemployment rate moved up slightly to 6.7% from 6.6%, but this reflects labor force expansion in professional positions and wholesale trade.2 Presumably job growth would have been stronger under normal weather conditions, suggesting healthy underlying economic momentum. We have reached the mid-point of the business cycle, as indicated by lower volatility and a fading memory of the recession. Thus far, signs of overheating do not exist to entice major central banks to remove liquidity. We believe the best outcome for risk markets is for the world economy to continue to grow just above potential, neither too hot nor too cold. A much stronger economy could bring a faster end to easy money and pose questions about the amount of damage such a reversal would cause. A much softer economy would signal weakness in monetary policy and raise concerns about the downside. The result is that value dominates, forcing investors out of cash.

Weekly Top Themes

1.February Non-Manufacturing ISM® was well below expectations, falling to 51.6, the lowest reading since 2010.3 The disappointment sends a cautionary signal about momentum in the economy.

2.We foresee U.S. capital goods spending accelerating. Industrial capacity utilization is rising closer to historical inflection points for accelerating domestic capital goods purchases. We believe projected higher interest rates will stay below investment hurdle rates and not impact capital spending.

3.It appears that lower interest expense, control of labor costs and share buy- backs have impacted on per share profit growth. The bad news is it may be difficult to grow profit margins going forward. The good news is stronger top line growth could result in greater bottom line gains.

4.The European Central Bank (ECB) suggested the economic tide in the Eurozone may be turning fast enough to avoid additional easing. Mario Draghi indicated that the present policy could become more accommodative if the economy strengthens and inflation moves higher. We are not confident that inflation expectations will remain stable, and persistent ultra-low inflation could threaten rebalancing and debt sustainability.

5.The U.S. is relatively insulated from the Ukrainian turmoil. Trade between the United States and Ukraine is minimal, and Russia accounts for about 1% of overall U.S. trade. The peripheral impacts of geopolitical tensions are difficult to assess, however, and uncertainty affects equities.

The Big Picture

Stocks broke out to new highs after stumbling in late January. The conditions for sustained increases do not appear to be in place yet. Decisive global economic acceleration will be required to attract enough cash from the sidelines back into equities so that demand exceeds profit-taking. Global growth should gradually accelerate this year, led by the U.S. and developed economies. Recent soft U.S. economic data appear primarily weather-related and should normalize in the months ahead. Hiring plans and consumer confidence have hit new cyclical highs.

China is a forecasting challenge, but the best bet is stable growth. Europe is a swing factor for the global economy and is moving in a positive direction that should gradually strengthen. We do not expect the increase in the consumption tax in Japan to derail the recovery, in light of ongoing monetary policy support. G7 central banks and the Fed are strongly committed to reflation, which benefits risk assets. Investors should gradually rotate out of safe haven assets and into select risk assets, as confidence in the economic recovery solidifies. The process will be slow, and this is a tailwind for stocks and a headwind for bonds. 

1 Source: Morningstar Direct, as of 3/7/14.  2 Source: Bureau of Labor Statistics, “The Employment Situation – February 2014,” March 7, 2014, http://www.bls.gov/news.release/empsit.nr0. htm. 3 Source: February 2014 Non-Manufacturing ISM® Report On Business,® March 5, 2014, http://www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad domestic economy. Euro STOXX 50 Index is Europe’s leading Blue-chip     index for the Eurozone and covers 50 stocks from 12 Eurozone countries. FTSE 100 Index is a capitalization-weighted index of the 100 most highly capitalized companies traded on the London Stock

Exchange. Deutsche Borse AG German Stock Index (DAX Index) is a total return index of 30 selected German blue chip stocks traded on the Frankfurt Stock Exchange. FTSE MIB Index is an index of the 40 most liquid and capitalized stocks listed on the Borsa Italiana. Nikkei 225 Index is a price-weighted average of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange. Hong Kong Hang Seng Index is a free-float capitalization-weighted index of selection of companies from the Stock Exchange of Hong Kong. Shanghai Stock Exchange Composite is a capitalization-weighted index that tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The MSCI World Index ex-U.S. is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets minus the United States. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

RISKS AND OTHER IMPORTANT CONSIDERATIONS

The views and opinions expressed are for informational and educational purposes only as of the date of writing and may change at any time based on market or other conditions and  may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific  legal, investment or tax advice. The information provided does not take into account the specific  objectives, financial situation, or particular needs of any specific person. All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Equity investments are subject to market risk or the risk that stocks will decline in response to such factors as adverse company news or industry developments or a general economic decline. Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, tax risk, political and economic risk, and income risk. As interest rates rise, bond prices fall. Non- investment-grade bonds involve heightened credit risk, liquidity risk, and potential for default. Foreign investing involves additional risks, including currency fluctuation political and economic instability, lack of liquidity and differing legal and accounting standards. These risks are magnified in emerging markets. Past performance is no guarantee of future results.

Nuveen Asset Management, LLC is a registered investment adviser and an affiliate of Nuveen Investments, Inc.

GPE-BDCOMM2-0314P

(c) Nuveen Asset Management

[description] => U.S. equities increased 1.1% last week after somewhat volatile trading due to heightened tension in Ukraine. Although the crisis dominated headlines, the market relegated the major geopolitical issue to the back burner. The broader macro narrative did not change, as concerns about dampened growth momentum continued to be pacified by the distortion from adverse weather. [author] => Bob Doll [legacyinterface_firm_id] => 320 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 17:04:08 [created_by] => 948 [modified_on] => 2014-03-10 18:00:19 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 220 [hits] => 0 ) [12] => stdClass Object ( [legacyinterface_commentary_id] => 156 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13418 [apv_conversation_id] => [content_type] => market-commentary [title] => Happy Birthday, Bull Market [slug] => blackrock_031014 [fulltext] =>
  • March 10, 2014, could be considered the fifth birthday of the current equity bull market.
  • Investors looked beyond mixed economic data and turmoil in the Ukraine to push stocks to further gains last week.
  • Stocks still remain a more attractive option relative to traditional bonds and cash.

Markets Look Past Geopolitics to Post Gains

It was March 9, 2009, when the stock market bottomed amid the throes of the financial crisis. The next day marked the start of an upturn, meaning today could be considered the fifth birthday of the current bull market. And, in true celebratory fashion, investors looked beyond the turmoil in the Ukraine to push stocks to further gains. The Dow Jones Industrial Average advanced 0.80% last week to 16,453, while the S&P 500 Index rose 1% to 1,878 and the Nasdaq Composite added 0.65% to close at 4,336. Meanwhile, in fixed income markets, the yield on the 10-year Treasury rose from 2.65% to 2.79%, as prices correspondingly fell.

Investors Shrug Off Ukraine Concerns

After a negative reaction early last week, the markets quickly got over their jitters about Russia, Ukraine and Crimea. Monday saw a brief selloff and spike in volatility, but the effect was modest. The VIX Index (a widely cited volatility index) crept up to the upper teens, which is still well below its long-term average. By Tuesday, markets recovered and again reached new highs. At the same time, investors began moving out of "safe haven" assets such as Treasuries, which explains why Treasury yields rose (and prices fell) last week.

Part of the turnaround in sentiment can be attributed to some easing of tensions in the region. Russian President Vladimir Putin disavowed any broader territorial ambitions, which caused a collective sigh of relief. Clearly, though, this is a situation that bears close watching. Crimea has scheduled a March 16 referendum that would determine whether the region splits from the Ukraine and joins Russia, a potential move that is being hotly debated among world leaders. As that date approaches, we may see markets paying more attention to this region of the world.

Economic Data Remain Mixed

Financial markets also benefited from some better-than-expected economic data, including improvements in manufacturing as well as a rebound in the jobs market. The February labor market report showed that 177,000 new jobs were created last month. This represented a significant improvement over December and January, and suggests part of the earlier weakness may, in fact, have been related to the poor weather.

Overall, however, economic data continue to be mixed. Despite last month's uptick in jobs growth, the pace of labor market improvements remains subpar compared to previous economic recoveries. The labor market participation rate remains low and long-term unemployment high, reaffirming that the U.S. jobs market is still troubled. Outside of the labor report, the Institute for Supply Management's non-manufacturing survey (a key gauge of the service sector) also sank to a four-year low in February.

Happy Birthday! And Many More?

In any case, it does seem that investors are looking past weak economic data and that momentum, low interest rates and "good enough" economic and earnings figures have been enough to keep stock prices moving higher. But now that the bull market is entering its sixth year, where does that leave investors?

To start, we would say equities are no longer cheap and that stronger economic growth will be needed to drive earnings and prices higher. But we do believe stock prices are more likely to head higher rather than lower from here. Equities still look like a more attractive option than cash or bonds. Cash investments are effectively paying nothing, and traditional areas of the bond market offer little return after factoring in the effects of inflation and taxes.

As such, we would encourage investors to maintain their emphasis on stocks. Even after a five-year bull market, and prospects for more volatility ahead, both the macro environment (low inflation, low rates and a gradually improving economy) and relative valuations offer sound arguments for overweighting stocks.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of March 10, 2014, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

©2014 BlackRock, Inc. All Rights Reserved. BLACKROCK, BLACKROCK SOLUTIONS, iSHARES, and SO WHAT DO I DO WITH MY MONEY are registered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

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(c) BlackRock Investment Management

[description] => March 10, 2014, could be considered the fifth birthday of the current equity bull market. Investors looked beyond mixed economic data and turmoil in the Ukraine to push stocks to further gains last week. Stocks still remain a more attractive option relative to traditional bonds and cash. [author] => Russ Koesterich [legacyinterface_firm_id] => 50 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 17:11:50 [created_by] => 948 [modified_on] => 2014-03-10 17:59:36 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 221 [hits] => 0 ) [13] => stdClass Object ( [legacyinterface_commentary_id] => 157 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13419 [apv_conversation_id] => [content_type] => market-commentary [title] => Earning Estimates Plunging Around The World [slug] => gavekal_031014 [fulltext] =>

Earnings estimates (and sales estimates to an extent) have taken a beating over the past three months. On average, EPS growth estimates are down 5.3% for the next fiscal year during this time. Not a single industry group out of the 24 MSCI classifications have seen their earning estimates rise and only four industries have seen their sales growth estimate increase. Europe has seen the worst of it. On average, FY1 EPS estimates have dropped by 8%. That number for Asia-Pacific and North America are -4.7% and -4%, respectively.

MSCI World
imageimage

Only 40% of stocks have seen a positive EPS revision in the past three months, with no individual industry having more than 59% of their stocks seeing positive revisions. Household and Personal Products have had the worse revision ratio with only 17% of the stocks having a positive revision in the past three months. Somewhat amazingly stocks are up nearly 5% during this time.

imageimage

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(c) GaveKal Capital

[description] => Earnings estimates (and sales estimates to an extent) have taken a beating over the past three months. On average, EPS growth estimates are down 5.3% for the next fiscal year during this time. Not a single industry group out of the 24 MSCI classifications have seen their earning estimates rise and only four industries have seen their sales growth estimate increase. [author] => [legacyinterface_firm_id] => 173 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 17:13:37 [created_by] => 948 [modified_on] => 2014-03-10 17:13:46 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 222 [hits] => 0 ) [14] => stdClass Object ( [legacyinterface_commentary_id] => 158 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13422 [apv_conversation_id] => [content_type] => market-commentary [title] => Four Reasons to Consider Emerging Markets for the Long Term [slug] => invesco_031014 [fulltext] =>

Emerging markets are at that peculiar place where everyone likes them over the long term, but very few like them in the short term. Many well-publicized headwinds from 2013 remain going into 2014, accompanied by election uncertainty in Brazil, India, Indonesia, South Africa and Turkey. And political uncertainty keeps surfacing in such places as Thailand, Turkey and the Ukraine.

Interest rates are rising, and the commodities complex has softened, which, although beneficial for commodities importers such as Turkey, India and China, is clearly negative for the region as a whole.  Revised earnings expectations continue to be a headwind, although the pace of earnings downgrades has slowed considerably since the middle of 2013. In addition, weakening currencies aggravate inflation, which complicates the scenario for the central banks of these countries.

Given the dominance of negative headlines these days, I think it is important to remind ourselves of the positive elements — and opportunities — in emerging markets.

  • Emerging markets are experiencing far greater policy uncertainty than developed markets at this time. But it’s important to remember that stocks were weakest during times of significant policy uncertainty in developed markets — for example, the US in 2009 and Europe in 2011, which, in hindsight, were clearly great buying opportunities.
  • Returns on equity (ROE), a good indicator of quality, remain higher in emerging markets than they are in developed markets (although emerging markets ROE is currently trending down).
  • Earnings expectations appear to be stabilizing and valuation levels look far more attractive for long-term investors.
  • With emerging markets awash in negatives, investors may have lost sight of this opportunity: 90% of the world’s middle class will be in emerging markets by 2030, according to the World Bank. It is simply too large a piece of the global economic pie to simplistically avoid.  Most of the reasons the investor community got excited about emerging markets a decade ago still hold today.

Over the long term, we believe the best predictor of future equity returns is the valuation paid today, as investors tend to make more money when they buy low and sell high. Emerging markets currently offer very low valuations, and we believe long-term investors should not forget this positive indicator among the negative headlines.

Important information

Return on equity (ROE) is the amount of net income returned as a percentage of shareholder equity.

In general, stock and other equity securities values fluctuate in response to activities specific to the company as well as general market, economic and political conditions.

The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues. An investment in emerging market countries carries greater risks compared to more developed economies.

Commodities may subject an investor to greater volatility than traditional securities such as stocks and bonds and can fluctuate significantly based on weather, political, tax, and other regulatory and market developments.

Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa.

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All data provided by Invesco unless otherwise noted.

Invesco Distributors, Inc. is a US distributor for retail mutual funds, exchange-traded funds, institutional money market funds and unit investment trusts. 

Invesco unit investment trusts are distributed by the sponsor, Invesco Capital Markets, Inc. and broker dealers including Invesco Distributors, Inc. These Invesco entities are indirect, wholly owned subsidiaries of Invesco Ltd.

©2014 Invesco Ltd. All rights reserved.

blog.invesco.us.com

 

[description] => Emerging markets are at that peculiar place where everyone likes them over the long term, but very few like them in the short term. Many well-publicized headwinds from 2013 remain going into 2014, accompanied by election uncertainty in Brazil, India, Indonesia, South Africa and Turkey. And political uncertainty keeps surfacing in such places as Thailand, Turkey and the Ukraine. [author] => Borge Endresen [legacyinterface_firm_id] => 225 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 18:53:18 [created_by] => 948 [modified_on] => 2014-03-10 19:05:25 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 223 [hits] => 0 ) [15] => stdClass Object ( [legacyinterface_commentary_id] => 159 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13420 [apv_conversation_id] => [content_type] => market-commentary [title] => It Is Informed Optimism To Wait For The Rain [slug] => hussman_031014 [fulltext] =>

Based on valuation metrics that have demonstrated a near-90% correlation with subsequent 10-year S&P 500 total returns, not only historically but also in recent decades, we estimate that U.S. equities are more than 100% above the level that would be associated with historically normal future returns. We presently estimate 10-year nominal total returns for the S&P 500 averaging just 2.2% annually over the coming decade, with zero or negative nominal total returns on every horizon of less than 7 years. Regardless of very short-term market direction, it is urgent for investors to understand where the equity markets are positioned in the context of the full cycle.

Importantly, this expectation fully embeds projected nominal GDP growth averaging over 6% annually over the coming decade. To the extent that nominal economic growth persistently falls short of that level, we would expect U.S. stock market returns to fall short of 2.2% nominal total returns (including dividends) over this period. These are not welcome views, but they are evidence-based, and the associated metrics have dramatically higher historical correlation with actual subsequent returns than a variety of alternative approaches such as the “Fed Model” or various “equity risk premium” models. We implore investors (as well as FOMC officials) to examine and compare these historical relationships. It is not difficult – only uncomfortable.

The depressed level of short-term interest rates does not change the arithmetic here. It simply offers investors additional discomfort – the choice of accepting risk in equities that are already intolerably overvalued, or to instead accept the certain prospect of near-zero near-term returns. For our part, we expect dramatically better investment opportunities to emerge over the completion of the present market cycle. It is optimism, not pessimism, about those future opportunities that leads us to avoid reaching for low-return, high-risk equity exposure here. Investors should only expect meaningful total returns to the extent that they wish to speculate that long-term prospective returns will be driven even lower than 2.2% annually (on a 10-year horizon).

Of course, that’s really the story of the past few years – a persistent willingness of investors to drive long-term prospective returns lower, as they feel both encouraged and forced to do so by Federal Reserve policies. Just as the willingness of investors to accept lower long-term interest rates implies that a willingness to pay higher bond prices (and vice versa), the willingness of investors to accept lower long-term stock market returns implies a willingness to pay higher stock prices (and vice versa).

Objectively, there is no specific level at which investors can be told “no, stop, don’t” once the speculative bit is in their teeth. Historically, however, such periods have typically reached their extremes when a syndrome of overvalued, overbought, overbullish, rising-yield conditions emerges. By the time one observes extreme conditions simultaneously – rich valuations, overbought market conditions, lopsided bullish sentiment, and rising 10-year yields – equity markets have generally been at precarious and climactic highs. Prior to the current market cycle, these points singularly include 1929, 1972, 1987, 2000, and 2007 (slightly broader criteria also would include 1937). In the uncompleted half-cycle since 2009, however, we’ve seen these conditions at the 2011 market peak (followed by a near 20% decline that was truncated by investor enthusiasm about fresh quantitative easing), and several instances over the past year – specifically, February 2013, May 2013, December 2013, and today.

It is the series of extreme instances over the past year that give investors the hope and delusion that historically reckless market conditions will lead only to further gains and greater highs. This is a mistake born of complacency in the face of a nearly uninterrupted, Fed-enabled 5-year market advance, and is the same mistake that was made in 2000 and again in 2007. By the time the present market cycle is completed, we expect the S&P 500 to be at least 40% lower than present levels. Only the reliance on historically unreliable valuation metrics, and what Galbraith called the “extreme brevity of financial memory” makes that assertion seem the least bit controversial.

Investors and policy-makers that focus attention on some alternative valuation measure (usually because it seems pleasantly benign) would be well-advised to examine the data, and compare the historical relationship between competing measures and actual subsequent market returns. Remember also that outliers are instructive. For example, the actual total return on equities in the decade following 1964 was much weaker than one would have projected, because stock valuations collapsed at the 1974 market low. Conversely, the actual total return on equities in the decade following 1990 was much stronger than valuations would have projected, because valuations became so extreme by the 2000 bubble peak. To the extent that stocks have done a few percent better in the most recent 10-year period than valuations would have projected, it is because stocks have become so profoundly elevated at present. Such outliers are the first thing to be wiped out over the completion of the market cycle.

Again, regardless of very short-term market direction, it is urgent for investors to understand where the equity markets are positioned in the context of the full market cycle. While the most extreme overvalued, overbought, overbullish, rising-yield syndrome we define has generally appeared only at the most wicked market peaks in history, investors have ignored those conditions over the past year. We can’t be certain when the deferred consequences will emerge. But a century of market history provides strong reason to believe that any intervening gains will be wiped out in spades.

It’s instructive that the 2000-2002 decline wiped out the entire total return of the S&P 500 – in excess of Treasury bills – all the way back to May 1996, while the 2007-2009 decline wiped out the entire excess return of the S&P 500 all the way back to June 1995.  Overconfidence and overvaluation always extract a terrible payback.

It may also be helpful to remember that market peaks are a process, not an event. In the presence of a broad range of reliable valuation metrics uniformly at more than twice their historical norms, coupled with the most severe overvalued, overbought, overbullish, rising-yield syndrome we define, it is instructive how shorter-term action has evolved near those points. Outside of today and 1929, the other two instances are, not surprisingly, 2000 and 2007. The chart below provides a more granular reminder that market peaks are often a broad process and can involve hard initial downturns and swift recoveries. The ultimate follow-through provides some insight regarding the full scale of our concerns.

A final note – in my view, it is incorrect to believe that the 2008-2009 market plunge and financial crisis were caused by the housing bubble. The housing bubble was merely the expression of a very specific underlying dynamic. The true cause of that episode can be found earlier, in Federal Reserve policies that suppressed short-term interest rates following the 2000-2002 recession, and provoked a multi-year speculative “reach for yield” into mortgage securities. Wall Street was quite happy to supply the desired “product” to investors who – observing that the housing market had never experienced major losses – misinvested trillions of dollars of savings, chasing mortgage securities and financing a speculative bubble. Of course, the only way to generate enough “product” was to make mortgage loans of progressively lower quality to anyone with a pulse. To believe that the housing bubble caused the crash was is to ignore its origin in Federal Reserve policies that forced investors to reach for yield.

Tragically, the Federal Reserve has done the same thing again – starving investors of safe returns, and promoting a reach for yield into increasingly elevated and speculative assets. Thinking about the crisis only from the perspective of housing, investors and policy-makers have allowed the same process to play out more broadly in the equity market. On a quantitative basis, the overvaluation of the equity market is greater percentage-wise, and greater dollar-wise, than the overvaluation of housing in 2006-2007. We fully expect that from present valuations, U.S. stocks will produce zero or negative returns on every horizon shorter than 7 years. There is no antidote or alchemy that will allow a buy-and-hold approach to squeeze water from this stone. There is no painless monetary fix that will shift the allocation of capital toward productive investment and away from distortive speculation. Instead, one must wait for the rain. Impatient, crowd-following investors are all too willing to wastefully scatter seeds onto this parched desert, thinking that this is their only chance to sow. To wait patiently in the expectation of fertile soil and rain is not an act of pessimism, but an act of optimism and informed experience.

Past performance does not ensure future results, and there is no assurance that the Hussman Funds will achieve their investment objectives. An investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted above. More current performance data through the most recent month-end is available at www.hussmanfunds.com. Investors should consider the investment objectives, risks, and charges and expenses of the Funds carefully before investing. For this and other information, please obtain a Prospectus and read it carefully.

(c) Hussman Funds

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Today marks the fifth anniversary of the stock market’s bull run in the wake of the financial crisis. Yet despite the strong performance posted by equities—or perhaps because of it—investor sentiment remains cynical and fearful. 

Maybe a five-year bull market hasn’t made believers out of a lot of investors because 2008 cut them too deep. Or maybe it’s because the recent exuberance doesn’t quite match up with the improvement in fundamentals. Either way, there’s still a lot of money on the sidelines—far too much for a rally of this size and length. 

Looser for Longer

But investor anxiety over the stock market is shortsighted for two very important reasons. First, we expect the Federal Reserve to remain very accommodative. Just look at Friday’s release of the February employment report.And the subsequent reassuring comments from New York Fed President and FOMC Vice Chair William Dudley, who told the Wall Street Journal that the “economy should do better” this year and the bar is “pretty high” for changes to the pace of tapering.

“With monetary policy likely to remain supportive, or ‘looser for longer,’ stocks should continue to benefit. ”

Even though the jobs data was surprisingly positive, it doesn’t mean the Fed will change its taper timeline or when it starts to raise the federal funds rate. Second, monetary policy, while used to maximize employment and maintain price stability according to the Fed’s mandate, is most effective in inflating prices of stocks and homes. With monetary policy likely to remain supportive, or “looser for longer,” stocks should continue to benefit. 

So while investor sentiment remains tepid, it’s likely to improve. Investors’ reluctance to move out on the risk curve may ease as they recognize the Fed’s accommodative policy stance and an economy that continues to recover, albeit unevenly. And that not only bolsters the case for stocks, but also breeds higher confidence. 

High on a Feeling

Interestingly, the Fed last week released the most recent balance sheet of US households and nonprofit organizations, a measure of Americans’ net worth. For the purposes of this survey, net worth includes homes, stocks and other assets minus their debts and other liabilities. Not surprisingly, household net worth increased by 14% in 2013 to its highest level ever: $80.7 trillion. 

If the “wealth effect” theory holds, then this increase in net worth should help boost consumer confidence. Why? When the value of net worth rises due to higher stock and home prices, people feel more secure about their wealth, which leads them to spend more money. With home prices and stock prices up significantly in the past few years, it’s reasonable to assume that consumer sentiment and spending will also rise.

However, with both retail sales and consumer sentiment data scheduled to be released later this week, it’s not clear whether the increase in household net worth will actually translate into higher confidence and more spending. That’s because the improvement in net worth has been concentrated among more affluent households and older Americans.

A recent paper released by the Weidenbaum Center at Washington University entitled “Inequality, the Great Recession, and Slow Recovery” argues that the bottom 95% of American households, in terms of income, have experienced rising income inequality since the 1980s. That trend has “contributed in an important way to the unsustainable increase in household leverage that triggered the collapse in consumer demand and the Great Recession,” according to the paper. 

Further, the authors argue that rising income inequality has negatively impacted demand growth since the Great Recession, dampening the recovery. Whether it continues to hamstring the recovery remains a big question mark that’s predicated on the extent to which the “bottom 95%” own stocks and homes.

“With fewer stockowners and homeowners post-2008, will the “wealth effect” still translate into higher investor and consumer confidence?”

Wages: More Than a Feeling

But it’s not net worth that may make the biggest difference for the bottom 95% of Americans. It’s an improving labor market. The February jobs report showed that shorter-term unemployment—the number of people who have been jobless for 26 weeks or less as a percentage of the overall labor force—has finally reached its long-term average, which is the point when we’ve historically seen upward pressure on wages begin to materialize. Perhaps not coincidentally, the February jobs report also showed a solid 0.4% monthly increase in hourly earnings.

Fittingly, the wealth effect and pay increases set the stage for this week’s retail sales and consumer sentiment data. Hopefully, even if most Americans haven’t participated in the stock-market rally or the recovery in home prices, enough are experiencing an improved job market—especially higher pay—to make a difference. That could translate into better consumer moods and higher spending soon—if it hasn’t already.

Kristina Hooper, CFP, CAIA, CIMA, ChFC, is US head of investment and client strategies for Allianz Global Investors. She has a B.A. from Wellesley College, a J.D. from Pace Law and an M.B.A. in finance from NYU, where she was a teaching fellow in macroeconomics.

Purchasing Managers’ Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies. The Chicago-PMI survey registers manufacturing and non-manufacturing activity in the Chicago region. Investors care about this indicator because the Chicago region somewhat mirrors the nation in its distribution of manufacturing and non-manufacturing activity. 

Thomson Reuters/University of Michigan Surveys of Consumers is a consumer confidence index published monthly by the University of Michigan and Thomson Reuters. The index is normalized to have a value of 100 in December 1964. At least 500 telephone interviews are conducted each month of a continental United States sample (Alaska and Hawaii are excluded). Five core questions are asked.

The material contains the current opinions of the author, which are subject to change without notice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Forecasts and estimates have certain inherent limitations, and are not intended to be relied upon as advice or interpreted as a recommendation.

Past performance of the markets is no guarantee of future results. This is not an offer or solicitation for the purchase or sale of any financial instrument. It is presented only to provide information on investment strategies and opportunities. 

A Word About Risk: Equities have tended to be volatile, involve risk to principal and, unlike bonds, do not offer a fixed rate of return. Foreign markets may be more volatile, less liquid, less transparent and subject to less oversight, and values may fluctuate with currency exchange rates; these risks may be greater in emerging markets.

Allianz Global Investors Distributors LLC, 1633 Broadway, New York NY, 10019-7585, 1-800-926-4456.

AGI-2014-03-10-9121

(c) Allianz Global Investors

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EASING TENSIONS BOLSTER MARKETS 

An easing of geopolitical risk led to positive performance for equity markets, pushing the DJIA up 0.8% and leading to a 1.0% increase in the S&P 500.  

A wide range of data in the U.S. offered positive support for the economy, despite concerns that weather-related slowness would continue to impact economic releases. 

Manufacturing was an encouraging bright spot last week.  The ISM Manufacturing Index rose to 53.2 in February following a sharp deceleration in January.  Readings above 50 indicate expansion in the manufacturing sector.  Positive momentum was apparent in new orders, which suggests that manufacturing should have some forward momentum entering the spring season.  

The service sector took a divergent path in February after it was announced that the U.S. nonmanufacturing ISM Index dropped to 51.6 in the month from 54.0 the month prior.  It turned out to be the weakest reading since early 2010 due to a pronounced slowdown in the employment component.  Winter weather was widely attributed as the cause for the slowdown and economists took solace from the fact that new orders actually rose slightly, suggesting that the weakness would be fleeting.  

Data on consumer income and spending painted a mixed picture for January.  Personal income jumped 0.3% and personal consumption rose 0.4%.  Spending data was less robust than first glance, with the goods component falling 0.6% and services increasing 0.9%.  The strong rise in service spending was largely a result of a 1.6% jump in health care spending, which was directly correlated to recent signups for the Affordable Care Act.   

Markets closed out the week with the closely watched nonfarm payrolls report on Friday.  Despite the weather-related crutch that many economists are citing, job growth proved stronger than expected in February.  A total of 175,000 jobs were added to the economy, with the private sector contributing 162,000 jobs and government employees regaining 13,000 positions.

Weather did have at least a marginal impact on labor markets in February with average weekly hours moving lower by 0.1 to 34.2 in the month.  Counteracting that mild disappointment was a 0.4% bump in average hourly earnings for the private sector.  

As an interesting aside, payroll employment is gradually nearing its January 2008 peak of 138.365 million jobs.  In the latest month, there were 137.699 million people employed.  Calculated Risk Blog estimates that a new employment peak will be established by June 2014.  

 

TECH BUBBLE 2.0? 

The $19 billion acquisition of WhatsApp by Facebook in late February put an exclamation point on several high profile takeovers in the technology space in recent months.  Sizeable deals such as Google’s $3 billion acquisition of Nest and Facebook’s $3 billion offer for SnapChat have fueled the idea that an indiscriminate buying spree in the technology space a la 1999 could set up financial markets for another valuation bubble.  

As noted by UK-newspaper Telegraph, Facebook’s WhatsApp acquisition was the fourth largest technology acquisition in history.  Furthermore, the $42.4bn in technology M&A through the first six weeks of the year is the highest transaction dollar amount observed worldwide in 14 years.

Despite the concerns, a first glance at the technology sector performance in 2014 shows the component index up just 2.5% through last Friday – slightly ahead of the headline S&P 500, but tied for fourth among the major GICS sectors.  Nor do valuations look relatively expensive, with the S&P 500 technology sector trading at an 18.0x P/E multiple – squarely in the middle of the sector pack.

What an analysis of the S&P 500 masks, however, is the clear bifurcation between old and new technology in the US equity market.  A more holistic look at the Russell 3000 index – which includes large, mid, and small cap securities – reveals a clear division between the largest, bellwether names in technology (think the Cisco’s and Intel’s of the world) and newer up-and-coming companies. 

The nine members of the Russell 3000 technology index that are larger than $100 billion in market cap posted an average return of 3.7% through last Friday.  After excluding Facebook, however – the relative newcomer to the space – the average of that group falls to just 0.6%.  Furthermore, the median price-to-earnings multiple for that group is just 13.3x.  At more than 56% of the index, these eight bellwether names tend to skew the headline level statistics.

A look at the bottom 400 or so companies in the sector tells a different story.  The average return of that group is 6.6% thus far in 2014, while the median P/E multiple stands at 34.0x times.  While one could attribute this discrepancy to a small cap effect, recent trends bear out the thesis that smaller cap names have been bid up in the technology sector.  Since late 2011/early 2012, when both the bellwether tech names and the rest of the Russell 3000 technology index traded below 20x earnings, there has been a clear divergence in valuations: mega caps trended down below 15x, while the median multiple of non-mega cap names more than doubled.

The strong outperformance of many securities in 2013 lacking on fundamentals was well documented, as many of the most highly shorted companies rallied sharply.  This was a headwind for many hedge funds last year and has contributed to lighter short books generally in 2014.  However, as investors become more discriminate with regards to stock selection, a normalization effect could impact many of these securities.

Thus, the implication for investors is to invest wisely within the technology space in 2014.  In a world where ETF usage is increasingly common, market participants may want to be more selective in a space that has clearly become bifurcated.  Indeed, many of the “old” tech bellwethers have found their way into value investors’ portfolios – a once unthinkable development.  While the word “bubble” probably does not apply to today’s technology market yet, greater discretion certainly does. 

THE WEEK AHEAD 

Economic releases will quiet down this week, but central bank meetings will pick up the slack. 

Releases that bear monitoring in the U.S. include February retail sales, the producer price index, and consumer sentiment.  

On the central banking side, meetings to watch are those in Japan, New Zealand, Korea, Thailand, Peru, Chile, and Russia.   

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[description] => The $19 billion acquisition of WhatsApp by Facebook in late February put an exclamation point on several high profile takeovers in the technology space in recent months. Sizeable deals such as Google’s $3 billion acquisition of Nest and Facebook’s $3 billion offer for SnapChat have fueled the idea that an indiscriminate buying spree in the technology space a la 1999 could set up financial markets for another valuation bubble. [author] => Chris Maxey, Ryan Davis [legacyinterface_firm_id] => 159 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 20:30:45 [created_by] => 948 [modified_on] => 2014-03-10 20:31:52 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 226 [hits] => 0 ) [18] => stdClass Object ( [legacyinterface_commentary_id] => 162 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13425 [apv_conversation_id] => [content_type] => market-commentary [title] => How Much Slack Is in the U.S. Economy? The Inflation Jury Should Decide [slug] => pimco_031014 [fulltext] =>
  • The unemployment rate may not be a reliable indicator of output slack in the U.S. economy.
  • We’ll know (with a lag) if the economy has reached the end of the cyclical downturn when inflation picks up.
  • The Fed will have to choose between risking a hawkish mistake or being behind the curve, waiting to see inflation actually increase. We expect it will choose the latter.
This article originally appeared on institutionalinvestor.com on 5 March 2014.

In order to fulfill its dual mandate of price stability and full employment, the Federal Reserve has been guided by the Taylor rule since the 1990s. The Taylor rule goes something like this: The appropriate short-term interest rate (set by the central bank) is a function of the slack in the labor market and the difference between actual inflation and the inflation target. Until the Great Recession of 2008, the unemployment rate was a good enough indicator of the labor slack. Hence, the Fed could set interest rates simply based on core inflation and the unemployment rate. Thanks to this framework, the Fed managed to be successful on the employment front but even more so on the price stability front. 

But the situation has changed recently. On one hand, inflation was painfully low in 2013, and on the other, the unemployment rate has dropped sharply. Which part of the dual mandate should the Fed favor?

Gordon versus Yellen 
Some observers are arguing that the drop in the unemployment rate should result in earlier rate hikes. Writers of a few Fed blogs are citing a recent study from Robert Gordon of Northwestern University. They claim that short-duration unemployment (less than 26 weeks) is the best indicator of labor slack, and that since it has already fallen below pre-recession averages (Figure 1), the economy is at risk of overheating.

 

Meanwhile, in her testimony to U.S. Congress, freshly appointed Fed Chair Janet Yellen went in the opposite direction, saying there was probably more slack in the economy than what a naïve look at the unemployment rate would indicate: “Those out of a job for more than six months continue to make up an unusually large fraction of the unemployed, and the number of people who are working part time but would prefer a full-time job remains very high. These observations underscore the importance of considering more than the unemployment rate when evaluating the condition of the U.S. labor market.”

Both sides have a legitimate point of view, but “Gordon versus Yellen” is a bit like “Ali versus Frazier.” They’re both seasoned heavyweights. That the two can have such a stark difference of opinion about the unemployment rate underscores its questionable nature as an indicator. Most likely Yellen will have the last word, but she might also have her own agenda. Would she really be concerned by a bit too much inflation due to a tighter labor market?

Based on PIMCO’s bottom-up analysis, our outlook for 2014 inflation has core personal consumption expenditures (PCE) moving up to 1.6% year-over-year at the end of 2014, compared with the current 1.2% rate. Longer term, it really depends on what the Fed does.

The Fed’s choice 
Since the unemployment rate may or may not be the right measure of output slack, it is not a reliable indicator for conducting monetary policy. We’ll know (with a lag) if the economy has reached the end of the cyclical downturn when inflation picks up. Hence the Fed will have to choose between being behind the curve, waiting to see inflation actually pick up, and risking a hawkish mistake. The last time it chose to ignore weak inflation prints and started to discuss monetary policy tightening, Mihir Worah and I warned that the Fed would end up doing more quantitative easing to compensate for its hawkish mistake (Viewpoint, “Promise to Be Irresponsible,” June 2013). That same month, Chairman Bernanke announced that when “asset purchases ultimately come to an end, the unemployment rate would likely be in the vicinity of 7 percent.” Now, the Fed is still expanding its balance sheet while the unemployment rate is well below 7%.

PIMCO expects that, balancing the risks between a hawkish mistake and some inflation overshoot, Yellen will choose the latter, especially since inflation has undershot the Fed’s mandate by so much in recent years. Since 2009, inflation as measured by PCE has averaged 1.4%. Given a medium-term inflation target of 2.0%, inflation could average 2.6% for the next five years to catch up. Basically, we believe Yellen could wait for core PCE to move back to a solid 2% before she hikes the rate. Since the unemployment rate is an unreliable measure, we believe inflation should guide monetary policy. But it’s up to the inflation jury to decide.

In the meantime, investors can position their portfolios to benefit from this monetary policy framework. Shorter duration assets should be “safer” than longer duration assets because they benefit from the low-for-longer policy rate stance, while longer duration will likely suffer from inflation uncertainties. We expect that strategies seeking carry from curve steepeners will perform well. The inflation premium should rise and, importantly, inflation uncertainties mean real assets should be less volatile than nominal ones.

All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed.

This material contains the opinions of the author but not necessarily those of PIMCO and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO and YOUR GLOBAL INVESTMENT AUTHORITY are trademarks or registered trademarks of Allianz Asset Management of America L.P. and Pacific Investment Management Company LLC, respectively, in the United States and throughout the world.

©2014, PIMCO.

[description] => The unemployment rate may not be a reliable indicator of output slack in the U.S. economy. We’ll know (with a lag) if the economy has reached the end of the cyclical downturn when inflation picks up. The Fed will have to choose between risking a hawkish mistake or being behind the curve, waiting to see inflation actually increase. We expect it will choose the latter. [author] => Jeremie Banet [legacyinterface_firm_id] => 335 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 20:34:44 [created_by] => 948 [modified_on] => 2014-03-10 20:35:11 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 227 [hits] => 0 ) [19] => stdClass Object ( [legacyinterface_commentary_id] => 143 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13405 [apv_conversation_id] => [content_type] => market-commentary [title] => Cold War: Thoughts on Ukraine Based on a Month Spent in Latvia [slug] => broadleaf_030714 [fulltext] =>

Note: This Economic Update is a bit different than most both in subject and writing style.  However, we still thought we had some personal insights and perspectives that were worth sharing.  We’d enjoy hearing your feedback – good, bad or indifferent.   

I have been intensely more interested in the situation developing in Ukraine over the past few months than those that circled Greece, a country of similar size, or Libya and the Arab Spring a few years ago.  For the most part, I’ve taken geopolitical flare-ups in stride in terms of their potential impact to the stock market and the economy.  In general, this approach has been the right one.  (View a printable version of this Economic Update: Cold War: Thoughts on Ukraine Based on a Month Spent in Latvia)

Anticipating geopolitical events is nearly impossible, but it is equally as true that once concerns start to surface in the mainstream media, financial markets usually become far more skittish.  At the same time, ever since the Gulf War, the markets have invariably enjoyed counterintuitive rallies once events progress from fear to reality.

On Monday, fears of Russian troops occupying Ukraine spooked global markets but, almost in a clockwork fashion, they rallied the next day when Vladimir Putin staged a press conference to explain his yet questionable intentions.   While I think the overall strategy regarding the current geopolitical flair-up – standing pat – remains sound investment advice for the long term investor, I will also admit that it has worried me a bit more than most.  The key difference may likely be familiarity.

I grew up during the Cold War and remember having real, childhood nightmares over the possibility of a nuclear war with Russia.  At one point in high school, I had had a Russian friend whose parents had managed to escape the country with cartons of cigarettes lined with $100 dollar bills.  They were extremely scared that anyone knocking on the door of their American home could be a KGB agent coming to deport them or even worse, eliminate them.  A few years ago, when trying to locate “Eugene” for our 20th reunion, I called his parents, who repeatedly and suspiciously questioned me on who I was and why I was calling, even though the Cold War had long since ended.

I remember watching the Olympics during the seventies and my dad commenting about how “hot” the East German swimmers were, their muscles bulging in comparison to those in the outer lanes and who, in spite of the extra drag, chose not to shave their armpits.  As a former college swimmer, I thought my dad might actually be serious about his declarations of love for the East German swim team, but also wondered why he would then marry my mother, who was so very feminine and frankly, very well groomed.  Those who lived behind the Iron Curtain were only seen and heard from once every four years by the West, and when we did see them, it felt like we were observing humans from the “other” zoo.

The Sochi Olympics were a highly different affair than those I had watched growing up.  We were far less concerned about nukes and roided up female swimmers and far more concerned about Bob Costas’ eye malady, how much Putin had spent on the games, and if Pussy Riot – the formerly jailed Russian punk band – would be allowed to lead a rainbow colored gay parade in Olympic Village.  Instead of an ushanka-wearing Leonid Brezhnev, there was Vladimir Putin garbed in the Russian equivalent of Under Armour sportswear, dripping with the logos of what I would guess were Russian sponsors.   Rumor has it that Putin socialized on multiple occasions with the Canadian Olympic team which, in hindsight, proved to be ineffective scouting efforts for the Russian hockey team.

In addition to living through the Cold War, perhaps I’ve not been doing myself any favors, having just read The Proud Tower and Guns of August, two highly regarded World War I related books by Barbara Tuchman.  Some say that those who don’t learn from history are doomed to repeat it, but it could also be said that those who learn history might see parallels to events today that quite simply don’t exist.  In this sense, ignorance can also be bliss.

My heightened sensitivity could also relate to the fact that I spent four weeks in Latvia a few months ago with my wife and youngest son.  Latvia, for those that don’t know, is another former Soviet bloc country which, similar to Ukraine, regained its independence when the Soviet Union fell in the early 1990’s.  While I might have hoped to cross a trip to Hawaii off my bucket list before taking a trip to Latvia, sometimes things just work out that way.  The alternative option for us at the time had been Kiev, Ukraine, so at least on that front, the choice was a solid one.

While spending a month in Latvia certainly doesn’t make me  an expert in Eastern European and Russian foreign affairs, I did pick up a few, first hand perspectives that haven’t necessarily been aired in recent media coverage of Ukraine.  In a situation that could be similar to the consequences America faces today in supporting slavery early in its history, Russia may similarly be experiencing the consequences of seizing and occupying territory that at one time was not their own.

Following the end of World War II, Russia forced the migration of native peoples from Latvia and other annexed territories like Estonia and Ukraine to Siberia, replacing them with Russian nationals.  This migration policy was a calculated one, meant to ensure cultural interbreeding and a generational shift of allegiance to Mother Russia over time.  When the Soviet Union fell fifty years later, for the most part these large ethnic Russian minority groups stayed in the newly independent countries, having established lives and families of their own.

These ethnic Russian minority groups likely face considerable prejudice for what prior generations had done physically, spiritually and emotionally to the native populations throughout the former Soviet territories, similar to the real prejudice Israel may feel today or may be made to feel today in occupying the West Bank with the explicit support of America.  If Native American Indian populations had a more powerful minority voice, I suspect we’d be hearing more of their story as well, but as is almost always the case, history is usually recorded by the winners of world events, not its losers.

Regardless of whether or not I agree with Putin’s justification that entering Crimea was for the purpose of protecting his Naval fleet on the Black Sea and the large ethnic Russian population in this autonomous area of Ukraine, I am also quite certain that our leaders would have done the same thing for Americans had we been in similar shoes.  At the same time, Putin’s justification for entering Crimea sets a dangerous precedent if gone unopposed as he could then feel free to enter any former territory, including Latvia, if he felt native Russians were in danger due to political instability.

Returning to the subject of Latvia, I will say that the people of Riga, Latvia’s capital city where we stayed, weren’t – to put it bluntly – all that friendly.  You could say the same thing about New Yorkers though and at least in New York, the people don’t have the excuse that English isn’t their native language or that they had at one time been occupied by a foreign country whose leaders threw them in jail for saying the wrong things.  Not say anything at all may have been something young Latvians quickly learned.

In spite of their lack of Midwestern, American smiles and nods of acknowledgement on city sidewalks, Latvian’s were an otherwise normal people, trying to make a living and enjoy the ups and downs of daily life.  The people, particularly the women, were much taller than I had expected and they definitely had a liking for high fashion.  The city itself was beautiful as well, a cobblestoned cross between Washington DC and Charleston, South Carolina.

A few days into our trip, a supermarket in Riga collapsed, killing 54 people and making international news.   Several friends reached out to me through Facebook to make sure we were okay, recognizing the name of a city, Riga, which they normally would have glossed right over had I not been there.  (Apparently, I’m not the only one whose sense of concern is heightened by familiarity.)  In a  strange turn of events, the popular Prime Minister of Latvia who had helped the country join the European Union and recover from the worldwide recession, suddenly  resigned, taking the blame for the supermarket disaster.  I say strange only because I couldn’t imagine, from an American point of view, Barrack Obama or any other President resigning over similar issues.

Given the disaster and the resulting resignation of the prime minister, there were several protests in the streets of Riga in front of the Mayor’s headquarters.  The protests were smaller than those that had just started in Ukraine, but they were nevertheless very real.   A coalition government would have to fill the vacuum for a time, which unsettled many, to say the least.  Much to my wife’s chagrin, I walked among the protestors, each side hurling unknown verbal assaults at one another.  Claiming to be a stupid American, I snapped a few shots with my camera and asked the police why they were protesting.

According to the police, some of the protesters were angry with the mayor’s office for the handling of the supermarket disaster.  Later conversations with others suggested that some didn’t like the mayor of Riga, believing him to be a “puppet of Russia” and far too liberal in buying votes through costly social programs that benefited the few at the expense of many.  While some in the United States have voiced similar opinions to the first point, the comment about the Mayor being a puppet of the Russians seemed strange to me, implying some type of corruption.  Wasn’t this Latvia, after all?

While it may indeed be the country of Latvia, the large ethnic Russian populations here and in other former Russian territories like the Ukraine, maintain a powerful political influence just as some minority groups are collectively and independently very powerful in the United States’ democracy.  Ethnic Russians may not, in fact, be corrupt in their ties to Russia, but like the entire State of Texas, just a lot more patriotic about their original Motherland.

Heck, it could be that “Crimean Peninsula” in English means “Texas Panhandle.”  No wonder George Bush and Vladimir Putin were so tight many years ago!

 

Kindest Regards,

Doug MacKay, CEO & CIO

[description] => I have been intensely more interested in the situation developing in Ukraine over the past few months than those that circled Greece, a country of similar size, or Libya and the Arab Spring a few years ago. For the most part, I've taken geopolitical flare-ups in stride in terms of their potential impact to the stock market and the economy. In general, this approach has been the right one. 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=> [task] => browse [directionTable] => asc [sortTable] => published_on [filter_order] => published_on [filter_order_Dir] => desc [savestate] => 1 [base_path] => /var/www/html/apcms/components/com_legacyinterface ) [inputs:protected] => Array ( [get] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 ) [inputs:protected] => Array ( [get] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 ) [inputs:protected] => Array ( ) ) [post] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [cookie] => JInputCookie Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( [get] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 ) [inputs:protected] => Array ( ) ) [post] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [cookie] => JInputCookie Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [files] => JInputFiles Object ( [decodedData:protected] => Array ( ) [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( [get] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 ) [inputs:protected] => Array ( ) ) [post] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [cookie] => JInputCookie Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [files] => JInputFiles Object ( [decodedData:protected] => Array ( ) [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [env] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [request] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 [limitstart] => 2260 [option] => com_legacyinterface [view] => commentaries [Itemid] => 616 ) [inputs:protected] => Array ( ) ) [server] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [HTTP_AUTHORIZATION] => [HTTP_CACHE_CONTROL] => no-cache [HTTP_CONNECTION] => Keep-Alive [HTTP_PRAGMA] => no-cache [HTTP_ACCEPT] => */* [HTTP_ACCEPT_ENCODING] => gzip, deflate [HTTP_FROM] => bingbot(at)microsoft.com [HTTP_HOST] => apcms.hubtech.tv [HTTP_IF_MODIFIED_SINCE] => Wed, 23 May 2018 07:38:02 GMT [HTTP_USER_AGENT] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm) [PATH] => /sbin:/usr/sbin:/bin:/usr/bin [SERVER_SIGNATURE] => [SERVER_SOFTWARE] => Apache/2.4.16 (Amazon) PHP/5.5.31 [SERVER_NAME] => apcms.hubtech.tv [SERVER_ADDR] => 10.28.13.29 [SERVER_PORT] => 80 [REMOTE_ADDR] => 207.46.13.149 [DOCUMENT_ROOT] => /var/www/html/apcms [REQUEST_SCHEME] => http [CONTEXT_PREFIX] => [CONTEXT_DOCUMENT_ROOT] => /var/www/html/apcms [SERVER_ADMIN] => ben@hubtech.tv [SCRIPT_FILENAME] => /var/www/html/apcms/index.php [REMOTE_PORT] => 9909 [GATEWAY_INTERFACE] => CGI/1.1 [SERVER_PROTOCOL] => HTTP/1.1 [REQUEST_METHOD] => GET [QUERY_STRING] => start=2260 [REQUEST_URI] => /?start=2260 [SCRIPT_NAME] => /index.php [PHP_SELF] => /index.php [REQUEST_TIME_FLOAT] => 1529449466.648 [REQUEST_TIME] => 1529449466 ) [inputs:protected] => Array ( ) ) [session] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [__default] => Array ( [session.counter] => 1 [session.timer.start] => 1529449467 [session.timer.last] => 1529449467 [session.timer.now] => 1529449467 [session.client.browser] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm) [registry] => Joomla\Registry\Registry Object ( [data:protected] => stdClass Object ( [com_legacyinterface] => stdClass Object ( [commentaries] => stdClass Object ( [limitstart] => 2260 [filter_order] => published_on [filter_order_Dir] => desc ) ) ) ) [user] => JUser Object ( [isRoot:protected] => [id] => 0 [name] => [username] => [email] => [password] => [password_clear] => [block] => [sendEmail] => 0 [registerDate] => [lastvisitDate] => [activation] => [params] => [groups] => Array ( [0] => 9 ) [guest] => 1 [lastResetTime] => [resetCount] => [requireReset] => [_params:protected] => Joomla\Registry\Registry Object ( [data:protected] => stdClass Object ( ) ) [_authGroups:protected] => Array ( [0] => 1 ) [_authLevels:protected] => Array ( [0] => 1 [1] => 1 ) [_authActions:protected] => [_errorMsg:protected] => [_errors:protected] => Array ( ) [aid] => 0 ) ) ) [inputs:protected] => Array ( ) ) [jrequest] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) ) ) [env] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [request] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 [limitstart] => 2260 [option] => com_legacyinterface [view] => commentaries [Itemid] => 616 ) [inputs:protected] => Array ( ) ) [server] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [HTTP_AUTHORIZATION] => [HTTP_CACHE_CONTROL] => no-cache [HTTP_CONNECTION] => Keep-Alive [HTTP_PRAGMA] => no-cache [HTTP_ACCEPT] => */* [HTTP_ACCEPT_ENCODING] => gzip, deflate [HTTP_FROM] => bingbot(at)microsoft.com [HTTP_HOST] => apcms.hubtech.tv [HTTP_IF_MODIFIED_SINCE] => Wed, 23 May 2018 07:38:02 GMT [HTTP_USER_AGENT] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm) [PATH] => /sbin:/usr/sbin:/bin:/usr/bin [SERVER_SIGNATURE] => [SERVER_SOFTWARE] => Apache/2.4.16 (Amazon) PHP/5.5.31 [SERVER_NAME] => apcms.hubtech.tv [SERVER_ADDR] => 10.28.13.29 [SERVER_PORT] => 80 [REMOTE_ADDR] => 207.46.13.149 [DOCUMENT_ROOT] => /var/www/html/apcms [REQUEST_SCHEME] => http [CONTEXT_PREFIX] => [CONTEXT_DOCUMENT_ROOT] => /var/www/html/apcms [SERVER_ADMIN] => ben@hubtech.tv [SCRIPT_FILENAME] => /var/www/html/apcms/index.php [REMOTE_PORT] => 9909 [GATEWAY_INTERFACE] => CGI/1.1 [SERVER_PROTOCOL] => HTTP/1.1 [REQUEST_METHOD] => GET [QUERY_STRING] => start=2260 [REQUEST_URI] => /?start=2260 [SCRIPT_NAME] => /index.php [PHP_SELF] => /index.php [REQUEST_TIME_FLOAT] => 1529449466.648 [REQUEST_TIME] => 1529449466 ) [inputs:protected] => Array ( ) ) [session] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [__default] => Array ( [session.counter] => 1 [session.timer.start] => 1529449467 [session.timer.last] => 1529449467 [session.timer.now] => 1529449467 [session.client.browser] => Mozilla/5.0 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Last week the Wall Street Journal gave a rundown of what has been a very hot IPO market. The Journal reported that there were 42 listings in the first two months of 2014 compared to 20 from the same timeframe in 2013 and keep in mind 2013 was a very good year for IPOs. 

Data was cited from Renaissance Capital LLC that as good as things are for IPOs they are nowhere near 2000-era levels for listings or filings. 

Of course there are several investment products that target the IPO market including the longstanding First Trust US IPO Index Fund (NYSE ARCA:FPX) which has been a successful fund in terms of assets raised and performance (obviously future results are unknowable). 

The impact of IPOs is an important dynamic to understand. 

One part of the equation is that IPOs represent the creation of new supply; supply of shares available for investment or speculation. During the buildup of the internet bubble which arguably started with Netscape in 1995 the supply of (internet) equities increased at a remarkable pace but demand increased at an even faster pace for almost five years. 

As long as demand exceeds supply then prices should be able to keep going up. Of course eventually there comes a point where demand wanes for whatever reason which by itself is a drag on prices and if more supply continues to be issued, like in the early 2000’s, then prices are likely to fall meaningfully. 

Another building block of understanding of the IPO market is that companies prefer to sell at a high valuation not a low valuation. According to Seeking Alpha, there were 32 IPOs in 2008 and 63 in 2009 compared the 42 that listed in the first two months of this year. 

The IPO bubble of 2000 happened in 2000, the next time there is a huge market decline it won’t be the same as the tech wreck or the financial crisis of 2008 it will be something else but assessing IPO enthusiasm can be useful nonetheless. 

At any given moment there is a list of bullish factors supporting the market and a list of bearish factors confronting the market. When the IPO market is subdued it serves as a bullish factor whereas a hot IPO market serves as a bearish factor. There are no absolutes but enthusiasm for IPOs comes closer to the end than to the beginning of a bull market.

(c) AdvisorShares

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When it comes to investing, we believe the most important thing is determining not what you make, but what you keep. The goal of tax management in an investment program is to maximize after-tax returns. We believe this strategy is even more critical, with investors now waking up to the fact that tax rates have risen considerably.

Surveys conducted over the past 10 years have conveyed that investors realize the importance of taxes in their investment programs, but few are able to quantify the effect. The bottom line? Taxable investors may be unnecessarily giving up a portion of every dollar of their investment returns to Uncle Sam. We believe there isn’t a silver bullet to solve the tax problem; instead, a combination of helpful tax-management techniques may help investors reduce the tax burden and protect their wealth.

10 Helpful Tax-Management Techniques to Consider

  1. Buy and hold
    Using a long-term perspective when investing can delay capital gains recognition. This can also help keep unnecessary turnover low, potentially minimizing short-term gains and transactions costs.
  2. Tax loss harvesting
    Not all turnover in a portfolio should be considered bad. Use tax-loss turnover in a disciplined fashion to harvest losses that can help
    offset gains taken elsewhere in the portfolio.
  3. Tax lot selling
    Use specific lot accounting to help minimize capital gains realizations. By selling shares with the highest basis first, investors may minimize capital gains.
  4. Qualified dividend income
    Follow holding period rules to have any dividends qualify to be taxed at the lower qualified dividend income (QDI) rate.
  5. Rebalance with new money
    Rebalancing any portfolio can help investors maintain their desired asset allocation, but this move also creates a taxable event. Using new funds to add to underweight holdings may help avoid costly transactions.
  6. Buy and hedge
    Use tax-advantaged hedging techniques as alternatives to taxable sales in order to manage gains and losses, potentially maximizing
    after-tax returns.
  7. Asset location
    By allocating certain investments in the right type of account — such as an IRA, 401(k) or taxable account — investors may be able to minimize their tax burden.
  8. Tax exempt municipal bonds
    Bonds issued by local governments may have interest income that is exempt from federal income tax and may also be exempt from many state and local taxes.
  9. Laddered municipal bond approach
    A professionally managed laddered portfolio can offer meaningful advantages over self-managed portfolios. In addition to seeking tax-free income, investors may be able to minimize the impact of rising interest rates.
  10. Charitable gifts
    High-income earners frequently donate to charity in order to lower taxes. Rather than investors may want to consider, consider using appreciated shares as a charitable gift.

These tax management suggestions may help investors find a path with which they are comfortable, but we think it is critical to discuss these ideas with a tax advisor. We believe that investors would be best served if their financial advisor met directly with a Certified Public Accountant (CPA) to create an integrated plan. Managing for tax efficiency is controllable and predictable, and so-called “tax alpha” can be a sustainable competitive advantage.

About Eaton Vance
Eaton Vance Corp. (NYSE: EV) is one of the oldest investment management firms in the United States, with a history dating to 1924. Eaton Vance and its affiliates offer individuals and institutions a broad array of investment strategies and wealth management solutions. The Company’s long record of exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today’s most discerning investors. For more information, visit eatonvance.com.

This material has been provided for educational, informational and illustrative use only and should not be considered investment advice, a recommendation to buy or sell any particular security or to adopt any particular investment strategy. The information in this material, including the sector/securities mentioned are not representative of all sectors/securities purchased, sold or recommended for advisory clients. Not all of Eaton Vance’s recommendations have been or will be profitable. The information and opinions herein are not necessarily those of the Eaton Vance organization as a whole and may change at any time without notice. While every effort has been made to verify the information contained in the publication, Eaton Vance makes no representation as to its accuracy. Any investment views and opinions/analyses expressed constitute judgments as of the date of this publication and are subject to change at any time without notice. Different views may be expressed based on different investment styles, objectives, views or philosophies. This material may contain statements that are not historical facts, referred to as forward-looking statements. Future results may differ significantly from those stated in forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions. Actual portfolio holdings will vary for each client. Investing entails risks and there can be no assurance that Eaton Vance (or its affiliates) will achieve profits or avoid incurring losses. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

Eaton Vance does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision.

Before investing, investors should consider carefully the investment objectives, risks, charges and expenses of a mutual fund. This and other important information is contained in the prospectus and summary prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing.

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©2014 Eaton Vance Distributors, Inc.
Member FINRA/SIPC
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[description] => When it comes to investing, we believe the most important thing is determining not what you make, but what you keep. The goal of tax management in an investment program is to maximize after-tax returns. We believe this strategy is even more critical, with investors now waking up to the fact that tax rates have risen considerably. [author] => [legacyinterface_firm_id] => 124 [published_on] => 2014-03-11 [digest_date] => 2014-03-11 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-11 14:44:32 [created_by] => 948 [modified_on] => 2014-03-12 03:50:38 [modified_by] => 944 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 228 [hits] => 0 ) [2] => stdClass Object ( [legacyinterface_commentary_id] => 164 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 0 [apv_conversation_id] => [content_type] => market-commentary [title] => Putin Plays for Keeps in Crimea [slug] => euro_031114 [fulltext] =>

For those investors who have grown used to the relatively minor geo-political crises of the past few years, the developing situation in the Ukraine and the Crimea must come as an unexpected communiqué from the early 20th Century.There can be little doubt that the drama will impact financial markets. 

 

While President Obama is doing his best to invert Teddy Roosevelt's "speak softly and carry a big stick" approach to foreign policy, the real issue is how Crimea's proposed secession from Ukraine will lay bare the opacity of international law with respect to issues of sovereignty.  Recently, President Obama said, "Under international law, force can only be used in self-defense or by a decision of the U.N. Security Council. ..." But Obama considered using preemptive force in Syria without U.N. approval. Laying aside U.S. adventurism in the Middle East over the past 20 years, in 1998 President Clinton intervened militarily when Kosovo attempted to separate from Serbia. 

 

Although the stakes are far lower, in many ways the current situation on the Black Sea parallels the Cuban Missile Crisis of 1962. Only this time, the roles of each player are reversed. 

 

The threat posed by Russian missiles in Cuba was acute and targeted at America's vital interests. President Kennedy simply could not accept a Russian victory, even at the cost of all-out war. Popular and military support for a tough line against the Soviets, both at home and abroad, allowed Kennedy to go "all-in" to force the Russians to ultimately back down. 

 

This time, it is Russia that has by far the most at stake. The threat to Russia's key warm water naval base in the Crimea, and the potential for an expansion of NATO into its traditional sphere of influence is acute. President Putin cannot accept defeat, even at the risk of war. And like Kennedy, he enjoys the support of his military and his people. Despite the relatively weaker economic hand being played by Mr. Putin, do not expect him to fold.  

 

From my perspective, Putin may see six major geo-political weaknesses in the U.S. position. First, he recognizes that the U.S. military and the U.S. public have grown weary of ill-advised foreign interventions. Second, Russia's close trade and energy connections to Western Europe are causing dissension among NATO allies at the prospect of a Continental conflict. The potential for Putin to drive a wedge between the U.S. and wavering EU allies is a risk that Washington must consider. 

 

Third, Putin is acutely aware that a "victory" of Ukranian interests at the expense of Moscow will further weaken Russia's ability to maintain the allegiance of the remaining scraps of its old Soviet empire. 

 

Fourth, Putin knows that Obama needs Russian support over key U.S. initiatives in Iran, Syria and North Korea. Further confrontation of the Crimea may come at a very high price to other interests that are much more vital to Washington. 

 

Fifth, Putin knows that the United States does not wish to see Russia revert to a closer relationship with China, just as China expands her maritime and territorial interests in the Pacific. It is no accident that Beijing has been eerily silent with respect to Russian policy in Europe. Putin knows that oil rich Middle Eastern rulers feel deserted by the U.S. over its proposed nuclear deal with Iran and are looking for new 'protective' allies. It is a power vacuum that China and Russia would be glad to fill. 

 

For its part, Washington must be conscious of the possibility of Russia striking back at the U.S. economically through disruptive sales of its $138 billion war chest of Treasury bonds. Such a move could trigger a financial panic in the West, especially if the moves could be coordinated with Russian allies. 

 

It has been suggested that President Obama and Secretary of State John Kerry are looking to offer Putin a 'face-saving off-ramp' similar to the one that Kennedy made to Kruschev in 1962 (cancelling a planned deployment of medium range NATO missiles in Turkey in return for a Russian stand down in Cuba). However, for the reasons outlined above, Putin must have a strong instinct that Obama will not go to the mat over Crimea. As a result, he may not accept anything that fails to keep the Crimea firmly under Russian control. 

 

However, the bigger issue involves the stand-off between Russia and western Ukraine. With armed soldiers and civilians facing each other, the local situation remains tense. Given the lack of discipline in newly formed units, the possibility of accidental aggression in the heart of central Europe is real. 

Risk-taking investors may be wise to gear their portfolios towards a continuing risk premium in energy and precious metals, while maintaining a well-diversified portfolio. More prudent investors anxious for capital preservation may wish to hold back and heed Nathan Rothschild's advice to "buy on the sound of gunfire".

 

(c) Euro Pacific Capital

[description] => For those investors who have grown used to the relatively minor geo-political crises of the past few years, the developing situation in the Ukraine and the Crimea must come as an unexpected communiqué from the early 20th Century.There can be little doubt that the drama will impact financial markets. [author] => John Browne [legacyinterface_firm_id] => 137 [published_on] => 2014-03-11 [digest_date] => 2014-03-11 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-11 14:46:41 [created_by] => 948 [modified_on] => 2014-03-11 14:48:00 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 229 [hits] => 0 ) [3] => stdClass Object ( [legacyinterface_commentary_id] => 165 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13427 [apv_conversation_id] => [content_type] => market-commentary [title] => How Can You Find an Expert Whose Decisions You Can Trust? [slug] => fpi_031114 [fulltext] =>

Recently a family member visited the doctor to determine if she needed her gall bladder removed.  Since she’d been having some pain, we assumed the answer would be “yes.”  But, of course, we wanted an expert opinion, so we went to a surgeon that has done more than 6,000 removals.

Why is an expert good for this situation but, as I have written before, may not be best for long-range stock market forecasts?

Turns out this issue has been the subject of much research and, not surprisingly, of much debate.

On the one side are the Behaviorists, who believe that human nature causes all kinds of biases that result in our intuition about future actions being faulty.  On the other side of the seeming divide are those who respect experts and believe in Naturalist Decision Making (NDM).

The NDM believers base their beliefs on studies of experts, such as surgeons, nurses, and firefighters.  Each of these professions is often called upon to make split-second decisions that save lives when correct.

In contrast, Behaviorists have focused their research on people who make a living forecasting and predicting, such as economists, market gurus, stock pickers and political consultants.  You know… the same people who populate the “expert” panels so commonly assembled and quoted by the media.

I’ve cited many of the Behaviorist studies in the past.  A couple of new ones that have come to my attention: 

1) Nobel laureate, Daniel Kahneman, in his 2011 book, Thinking Fast and Slow, reports on a study made with fellow Behaviorist, Richard Thaler, of 25 wealth managers that were employed by a financial firm that provided financial advice and other services to very wealthy clients. The study found that based on eight years of results in choosing investments there was no relationship between an advisor’s performance one year versus the next – none.

2) Phillip Tetlock, in his 2005 book, Expert Political Judgments, reports on his University of Pennsylvania study of over 80,000 predictions made by 284 people who made their living “commenting or offering advice on political and economic trends.” Kahneman summarized the results of the Tetlock study in his own book:  “The results were devastating.  The experts performed worse than they would have if they had simply assigned equal probabilities to each of the three potential outcomes.  In other words, people who spend their whole time, and earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys…”

How does one reconcile these results from the near opposite outcomes found in the NDM studies?  And what can we learn from that reconciliation in managing investment portfolios?

Turns out the two leaders of the opposing factions, Kahneman for the Behaviorists and Gary Klein for the students of NDM, co-authored an article titled “Conditions for Intuitive Expertise: A failure to Disagree,” published in the September 2009 issue of American Psychologist.  They agreed that experts can be trusted when they act within an orderly environment. Firefighters, surgeons, nurse practitioners, and even poker players all act within an orderly environment, that is, one with definable rules that can be learned from sufficient practice consistent with a statistically sufficient number of occasions.  In other words, they have to be in an environment where there are limited options with feedback of definable outcomes and there has to be the opportunity to learn from a very large number of situations. 

Long-term predictions of a company’s fortunes or the stock market are not done within such an environment.  Because of the necessity for feedback on the outcome from a large number of events, long-term forecasts usually fail because there are not enough examples to statistically base a prediction. 

A psychologist can get plenty of practice interpreting clues to immediate patient behavior from his or her many client sessions, but has little ability to forecast the future life experience of those same limited number of patients.  Similarly, though, a market forecaster may have little experience to draw on to predict another depression, while having considerable experience knowing what to expect over the near term in the face of often repeated patterns of investor behavior. 

What is your financial advisor trying to do – create a portfolio for a distant future or respond to the present market environment?  These studies from both camps – Behaviorists and NDM adherents – suggest that focusing on the latter may be the activity for which the advisor can be most trusted.

A second finding of the collaborative effort between the Behaviorists and the NDM school was that when faced with an irregular environment, like the financial markets, relying on quantitative algorithms will usually outperform human judgment.  They both acknowledged, however, that the effort to get people to use mechanical methodologies instead of human judgment was likely to evoke substantial resistance.  How true!

What does this mean you should do when looking for a financial expert to trust for your investments?  Here’s my list culled from these studies of what’s necessary (in addition to the usual suspects always talked about – fiduciary integrity, sound financials, a clean regulatory history, efficient operations, and clear reporting):

1.     Have a great deal of experience – a chess master, and most other sophisticated endeavors, requires 10,000 hours of practice.  That’s about 5 years at 40 hours a week with no time off for vacations. 

2.     Because the financial markets are not “regular,” the expert should be focusing on methodologies that happen often enough that a statistically significant result can be obtained.  Rolling 20-year studies are often used by buy-and-hold advisors to justify their approach.  Even if you go back to the turn of the last century, these 20-year studies can only roll forward 103 times.  And in your investment lifetime, how many have occurred?  In contrast, dynamic risk management relies upon testing of short-term phenomena that occur with a regularity and frequency that allows for statistically significant results.  It does not guarantee positive results, but it puts the probabilities on your side.

 3.     Rather than relying on investment committees to make day-to-day buy and sell decisions, as do most mutual funds, or a hot stock picker in the latest bull market, investors would be better off, in the very irregular financial markets, to rely on asset managers that trust statistically sound, quantitative (mathematical, computerized) models.

“Experts are a dime a dozen,” some people say. And it is certainly true that every day we are buried under an avalanche of opinions from people assembled by a voracious media.  Often, these are opinions generated by people with impressive credentials that are polar opposites. 

What’s an investor to do?  Hopefully, the simple test outlined above – find one experienced with handling a large number of replicable events or, if in an irregular environment, reliant on short-term, statistically significant algorithms – will prove helpful in finding an expert upon whose decisions you can trust.

Flexible Plan has been in business for 33 years.  Throughout that long history it has managed exclusively based upon rigorously tested, quantitative, dynamic risk management strategies.  We believe we are the asset management “expert” for our clients and their advisors, putting the probabilities of investing on your side.

Hopefully, we’ll do as well with the doctor and the gall bladder…

All the best,


Jerry

P.S. The stock market rally marked its fifth anniversary (sixth longest and fourth largest of all time) with a very different economic and technical environment than existed at its start back in 2009. As the headlines listed below make amply clear, it was a very dire time for our nation’s economy and markets. Studies show that the average investor had lost about 34%, and General Motors was still $16 billion short of the money needed to meet its obligations. On the charts, we were way below the 50-day and 200-day moving averages and it would be difficult for either technicians or fundamentalists to get a buy signal until some signs of life appeared. 



Source: Bespoke Investment Group 

As is usually the case, the trend-following signals were alerted to the buying opportunity before most investors, although even the venerable 200-day moving average did not see a positive cross over until the summer time that year.  Of course, stock investors did not cross over to equities over bonds until just a few months ago – what a difference!

While interest rates were in a down trend like they are now, economic reports were uniformly negative.  Now they are generally positive (two-thirds of last week’s 21 reports were better than expected).  Investor sentiment was negative, today it is moderately positive.  Earnings were down considerably and still falling.  Now they are rising.  One consistency – gold is up this year, just like it was in 2009 at this point in time.

Most of our portfolios, reflecting their underlying strategies, remain substantially committed to equities, largely ignoring, like the market, the Ukrainian crisis, and while I expect volatility to remain at higher levels than last year, we let our quantitative strategies be our guide not our “expert” opinion.

 


Disclosures

(c) Flexible Plan Investments

[description] => Recently a family member visited the doctor to determine if she needed her gall bladder removed. Since she’d been having some pain, we assumed the answer would be “yes.” But, of course, we wanted an expert opinion, so we went to a surgeon that has done more than 6,000 removals. [author] => Jerry Wagner [legacyinterface_firm_id] => 156 [published_on] => 2014-03-11 [digest_date] => 2014-03-11 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-11 14:52:28 [created_by] => 948 [modified_on] => 2014-03-11 14:52:44 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 230 [hits] => 0 ) [4] => stdClass Object ( [legacyinterface_commentary_id] => 166 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13428 [apv_conversation_id] => [content_type] => market-commentary [title] => Making Green from Gold, Palladium and Pollution [slug] => global_031114 [fulltext] =>

Gold is coming back with a vengeance, experiencing a clear recovery and grabbing the attention of market cynics. Analysts from Noruma Securities even upgraded its outlook for gold, expecting bullion to climb over the next three years, according to Barron’s.

Nomura analysts attribute their increased gold forecast to real interest rates that “don’t seem to be heading anywhere at the moment.” In addition, there appears to be “long-term demand support from Asian nominal income growth, an evolving post-QE macroeconomic environment and lower disinvestment potential.”

Gold is also gleaming a little brighter in Japan, as its central bank announced that monetary policies will remain very accommodative. With a weakening yen, gold will likely be seen as a store of value for Japanese investors.

Palladium Near Its Highest Level in Almost a Year
Two global events recently colluded that dramatically affected the palladium and platinum market. The situation in Ukraine and Russia along with six-week-long strikes in South Africa began raising concerns that these palladium-rich countries may not be able to continue supplying the commodity at normal levels.

Currently South Africa supplies around 37 percent of the world’s palladium; Russia supplies close to 40 percent of the world’s palladium.

What does this all mean for the palladium and its sister platinum? It seems that fear surrounding the international political landscape is helping to push the precious metals prices higher and higher.

You can see the effect the political landscape is having on palladium. Over the past year, the metal has mainly traded sideways, but this week hit its highest level in almost a year. The precious metal reached $775 per ounce while its sister, platinum, climbed to nearly $1,500 an ounce.

Gold Jewelry, Bar and Coin Demand Resilient in 2013
click to enlarge

In January, I indicated that platinum and palladium looked extremely compelling. There were supply and demand drivers I felt would drive the metals higher.

Just last week, the U.S. Mint is “ending a four-year exit from the market” by selling one-ounce American Eagle platinum bullion coins, writes Frank Tang from Reuters. According to a wholesaler last week, initial demand is strong, as 1,000 coins have already been scooped up.

Like I discussed with Resource Investing News at the Vancouver Resource Investment Conference, industrial demand has been gaining strength. Take rising automobile sales in the U.S. that I talked about a few months ago. With interest rates on car loans so low, Americans have been replacing their clunkers with more fuel efficient cars, which is positive for platinum and palladium.

It’s a similar story in emerging markets. In Africa, the GDP without a leveraged economy is still growing at 5 percent, and you definitely need platinum and palladium for their vehicles, even if they are diesel.

In China, vehicle sales last year rose faster than expected, climbing nearly 14 percent compared to a year earlier, according to the China Association of Automobile Manufacturers. The country is already the biggest automobile market in the world and millions of new cars on the roads add up fast.

We’re pleased that our technical models signaled initial bullish signs, as our palladium- and platinum-related holdings helped boost the returns of the Gold and Precious Metals Fund (USERX) and the World Precious Minerals Fund (UNWPX).

Renewable Energy Could Get You More Green

In BP’s latest Energy Outlook 2035, you can see the incredible long-term growth anticipated in the renewable energy industry. In terms of volume growth, China is expected to surpass the European Union countries by 2035. Based on this secular transformation, the local clean energy sector should continue to benefit. 

China's Commitment to Combatting Pollution Should Benefit Renewable Energy Industry
click to enlarge

Specifically, wind power and solar look especially attractive, especially given the excessive pollution in the Asian giant. Take a look at CLSA data: In 2009, the country had about 0.2 percent of the global market. By 2014, it’s estimated to grow to one third of the global market.

China isn’t the only country with a growing renewable energy market. After the massive earthquake hit Japan in 2011, the solar market is taking off there too.

Gold Jewelry, Bar and Coin Demand Resilient in 2013
click to enlarge

If you were too busy to tune into our webcast last week, you missed a good discussion among Brian Hicks, John Derrick and me. It was an hour chock-filled with investing ideas in the U.S. market, emerging countries, resources and gold. However, it’s not too late to watch the replay at your leisure this weekend.

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

Past performance does not guarantee future results.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.

Because the Global Resources Fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

(c) U.S. Global Investors

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The great economist John Maynard Keynes wisely noted that no economic stimulus could work unless it inspired the "animal spirits" of business. With this two-word phrase, he tried to sum up the optimism, the drive for expansion, the outright greed that prompts business managers, despite myriad unknowns, to hire, spend on new equipment and facilities, and engage in a host of expansion activities. Only when this happens can government stimulus spending or monetary ease prompt a generalized, self-sustaining expansion.

Cleary, the present recovery lacks for such "spirits." Hiring remains less than lackluster by historical or just about any other standard. Spending on new structures by business has followed an uneven path at best. Spending on new equipment and systems offers a modestly brighter picture, but nothing like past recoveries. The word spirited hardly applies. What exactly has dampened the appetite for risk will, no doubt, offer much material for economic historians for many years to come. Surely part of the problem lies with the legacy of the financial crisis and the great recession. If anything can instill an excess of caution, an experience like that one can. Massive pieces of sweeping legislation, such as the Affordable Care Act and Dodd-Frank, whether good, bad, or indifferent as law, cannot help but engender uncertainty and further inspire excessive caution. Surely other, less prominent, influences have come into play.

This discussion leaves the post mortem to the historians. It aims instead to examine capital spending data in an effort to ascertain how this failure of spirit has manifested itself and whether there are signs of change. It arrives at two broad conclusions: 1) The contours of capital spending are generally much like other recoveries, just much more muted, a condition that looks likely to persist and 2) the industry-by-industry detail shows significant change in who is spending and on what—something that may require more of a policy response to remedy than Washington is capable of at the moment.

The Thirty Thousand-Foot View

In this recovery, the broad aggregates have proceeded with much the same contours as in past recoveries. Typically, capital spending surges in the initial quarters of a cyclical rebound. Such surges have nothing to do with a need for new capacity. Coming off an economic trough, business and industry usually have ample spare capacity. Rather, these initial surges stem from the jump in profits that always accompanies the initial stages of recovery and that allows business to gratify the pent-up demand it postponed during the recession, usually for modernization, upgrading, and efficiency-enhancing equipment. Once this pent-up demand is gratified, such surges typically give away to a slower pace of expansion, as the pace of profits growth typically also slows from its own initial recovery surge. That period of slower expansion usually persists until later in the cycle, when increases in activity have finally employed existing productive capacities, at which time business again ramps up spending, this time on a broader basis to add to productive capacity generally

This recovery has so far followed these general contours. In 2010 (the first full year of growth), for example, overall capital spending grew 8.1% in real terms, a little slower than the 9.0% average in comparable times in the previous five recoveries. The mix was true to historical form, too. Spending on equipment, innovation, and systems—what the Commerce Department refers to in part as "intellectual property products"—drove the bulk of this growth, expanding at almost a 9% rate in real terms. Spending on structures, not surprisingly after a generalized real estate collapse, continued to decline, by 2.9%, in real terms. In 2011–12, the declines in spending on structures turned into a modest expansion, but true to past cyclical patterns, spending on equipment and intellectual property slowed, growing at a much lower 6.3% annual pace, also slower than in past recoveries.1

The pattern in 2013 also held true to this form. With business utilizing a still low 78.5% of existing capacity, the growth in outlays for capital equipment, intellectual products, and new structures continued to slow. Spending on structures grew barely over 1.0% in real terms, while spending on equipment and intellectual products expanded only 3.0% in real terms.2 And because of the spirit-dampening weight on this recovery, this continued slowdown, though true to the general contours of past cyclical patterns, was considerably slower than the averages from those past cycles.

This pace will not likely pick up anytime soon. Perhaps distance from the pain of 2008–09 will allow the "animal spirits" of business to rise a bit, but otherwise all that has dampened that appetite for risk and expansion to date remains in place. More significantly, perhaps, rates of capacity utilization across industry will remain too low to spur a desire to increase productive capacity. Typically, this rate needs to climb above 82–83% to spur the second, later-cycle phase of rapid capital spending growth, and at likely rates of overall expansion, that point is still a long way off. Even in the unlikely event that the overall annual pace of real economic growth were to remain above 3.0% a year,3 it would take until 2016 before capacity utilization would reach a point sufficient to prompt an acceleration in capital spending, and that is pushing the likelihoods on growth.

A Littler Closer to the Deck

Taking the analysis down to a slightly lower elevation that can reveal greater detail, a marked difference from the past emerges, not only from past cycles but, pointedly, also from the trends that existed just before the financial crisis and the change in administrations in Washington. (Given common usage these days, the metaphor here should talk about "drilling down" instead of less elevation; but having started with an airplane metaphor, it seems only right to stick with it. Besides, the introduction of the word "drilling" immediately focuses minds on fracking, but that is only a part of this picture.)

The only industries that have accelerated their spending on structures from before the crisis are restaurants and bars, air transportation, special care medical facilities, and petroleum and gas drilling. The last, of course, reflects the fracking revolution, and will likely persist for some time. Spending by air transportation, no doubt, reflects the long neglected need to upgrade airport facilities and will run its course. The sudden spending on restaurants and bars inspires the imagination as to the whys, but without evidence, such speculation has no place here. The spending on special medical facilities, such as nursing homes, is no doubt an aspect of the well-established aging trend in the population and will likely also persist for some time. More interesting, and perhaps troubling, are the sectors that have shown dramatic spending decelerations. These include building for hospitals and most aspects of manufacturing. The former almost surely reflects a response to the constraints and uncertainties imposed by the Affordable Care Act. The latter reflects the caution implicit throughout this recovery. Neither looks likely to change anytime soon.

Where equipment and intellectual products are concerned, the picture hardly speaks to "animal spirits" either, and is even more problematic for the future. There, almost everything has slowed from before the crisis, even though this area has seen the fastest pace of growth so far in this recovery. The only exceptions are spending on cars, trucks of all kinds, and railroad equipment. The spending on railroad equipment may well have a connection to the fracking revolution, especially since regulatory considerations have impeded pipeline construction. For the rest, the problem is that much of this spending reflects a catch-up in areas long neglected. It will run its course, probably quite soon, and then no area of size will exhibit an acceleration from pre-crisis rates of expansion. It is particularly disappointing in this detail, especially in the quest for "animal spirits," that real spending on custom software, research and development, and scientific effort in general have all shown a particularly marked slowdown, growing at a 5.8% annual rate so far in this recovery, compared with a 9.2% annual rate of advance during the three years prior to the crisis.4

Prospects

Combined, the picture suggests continued growth, but at a comparatively slow pace, as it has shown throughout this recovery. Especially from the configuration of detailed spending, it seems that the cautions and concerns that have weighed on this recovery will continue to do so. Sluggish hiring and restrained spending across the board indicate continued lingering fears from the financial crisis and great recession, while policy in Washington is hardly poised to lift the uncertainties that have dampened the verve of business for some time now. In the meantime, capacity utilization remains low enough to allow business to postpone any need for capacity expansion for a year more or longer. The "animal spirits" that Mr. Keynes identified as essential should remain subdued for the foreseeable future.

* I would like to thank Steve Lipper, Lord Abbett Investment Strategist, for suggesting this line of analysis

1 All data from the Department of Commerce.

2 Ibid.

3 Ibid. 

4 Ibid.

The opinions in the preceding economic commentary are as of the date of publication, are subject to change based on subsequent developments, and may not reflect the views of the firm as a whole. This material is not intended to be relied upon as a forecast, research, or investment advice regarding a particular investment or the markets in general. Nor is it intended to predict or depict performance of any investment. This document is prepared based on information Lord Abbett deems reliable; however, Lord Abbett does not warrant the accuracy and completeness of the information. Consult a financial advisor on the strategy best for you.

(c) Lord Abbett

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Chasing yield has become a challenging mission for investors in recent years. As yields collapsed in fixed income, investors flocked to bond-like substitutes such as high dividend-yielding stocks. Now that these stocks have become a bit pricey, we think companies with strong dividend-growth potential offer a better way to source equity income.

There are many ways to look at dividends. A good starting point is the payout ratio, which measures the proportion of net income that a company pays out to shareholders. At the end of 2013, US companies were only paying out one third of their earnings as dividends, well below the average of the past 60 years (Display).

Payout ratios matter. When they’re low, the ratios tell us that many companies have lots of room to raise dividends. And since US companies have record cash positions and solid balance sheets today, we think it’s easy to envision how payouts can increase.

Dividend Growth Is Outpacing Earnings
This also helps explain why dividends have been growing faster than profits. For US nonfinancial companies, earnings growth remained sluggish in 2013. Yet because payout ratios were so low, dividend growth outpaced earnings growth by a wide margin (Display). And since companies with strong dividend growth haven’t typically been on investors’ radar screens, they’re trading at especially cheap valuations compared with high dividend-yield stocks.

 

Examples can be found across sectors. Boeing increased its annualized dividend by 50% at its last board meeting in December. Meanwhile, during 2013, UnitedHealthcare raised its dividend by 32%, while CVS Caremark, a consumer staples group, lifted its dividend by 30%. And even in financials, Wells Fargo boosted its dividend by 31%. What do all of these companies have in common? Low dividend-payout ratios.

So how can we identify companies with strong dividend-growth potential? It all starts with the payout ratio. When a company has a high payout ratio, it often means that management doesn’t see compelling opportunities to invest in growing the business. We believe that companies with lower payout ratios have more control over their destiny than peers with weaker cash dynamics, which gives them capital flexibility to invest in future growth projects and/or to return excess capital to shareholders by increasing dividends or share buybacks.

Playbook for Investing in Dividend Growth
But even companies with low payout ratios need to be scrutinized. It’s especially important to look beneath reported earnings, which can be misleading. By focusing on the cash economics of a business, investors can get a better grip on the company’s capital needs and commitment to investing in growth opportunities.

For example, a close look at the balance sheet can help gauge a company’s capacity to finance expansion and to evaluate the percentage of normal cash flow being paid out as dividend. The goal is to identify healthy companies that are capable of sustaining macro-economic shocks and withstanding competitive threats.

Finding income is still high on the agenda of many investors. Yet traditional sources of yield in fixed- income and equity markets have simply become overpriced, in our view. It’s definitely possible to find stocks with higher dividend yields today. But we believe that companies with low payout ratios and high dividend-growth potential can provide investors with a better way to quench their thirst for income over the long term.

This blog was originally published on InstitutionalInvestor.com

 

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AllianceBernstein portfolio-management teams.

(c) AllianceBernstein

[description] => Chasing yield has become a challenging mission for investors in recent years. As yields collapsed in fixed income, investors flocked to bond-like substitutes such as high dividend-yielding stocks. Now that these stocks have become a bit pricey, we think companies with strong dividend-growth potential offer a better way to source equity income. [author] => Frank Caruso [legacyinterface_firm_id] => 20 [published_on] => 2014-03-11 [digest_date] => 2014-03-11 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-11 15:07:45 [created_by] => 948 [modified_on] => 2014-03-11 15:08:35 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 233 [hits] => 0 ) [7] => stdClass Object ( [legacyinterface_commentary_id] => 169 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13431 [apv_conversation_id] => [content_type] => market-commentary [title] => Weekly Commentary & Outlook [slug] => mcintyre_031114 [fulltext] =>

Markets waited all week for the jobs report for February. After its release the data continued to be mixed at best. 

As the charts above illustrate, markets didn’t do much last week as the events in Ukraine and concern over the global economy weighed down sentiment. For the week, both the Dow Jones Industrial Average as well as the NASDAQ Composite racked up modest gains of less than one percent. 

The Markets & Economy 

The good news from last week’s jobs report (see chart next page) was that weather oddly didn’t play a role in the data as 175,000 non-farm payroll jobs were created. This resulted in the unemployment rate RISING to 6.7%.

 

The bad news is just about everything else contained in the report. Average weekly earnings showed their slowest growth rate in 5 years. Over the past year, earnings are higher by just 1.3%. Given higher taxes and expenses for fuel etc., this will hardly cut it for the economy as we head into the spring. Hours worked are actually dropping due to the jump in part-time work due to Obamacare etc… 

What this means quite simply is that the difficulty you are reading about in the consumer sector, whether it be retail sales or consumer sentiment in general, is based upon this background and it is not likely to change suddenly should this winter weather ever end. 

Additionally, events around the world starting with the Ukraine and its impact on Europe, or China, which is so concerned about its growth rate (and perhaps terrorism at home) that it has been causing the value of its currency to fall over the past month, are adding to concerns. This is putting a damper on economies which export to China as well as increasing concern that China is once again manipulating (it never stopped) its currency. It appears that China has now joined Japan in devaluing their currency as a way of combating economic weakness at home. 

All of this is more proof that 2014 will be another year of 2% growth, give or take. This will result in more calls for the government to do something, but people must come to realize that “something” is in many cases the reason the global economy cannot get going. Time to lessen the role of government spending, taxing and regulation and allow incentives to create the organic growth needed to truly change the direction of the economy. Under the current circumstances, accelerating the efforts to develop and export our natural gas to Europe would help so many problems but the Obama administration, at present, just doesn’t see it this way. 

What to Expect This Week 

Few earnings reports will rattle the markets, and the economic calendar calls for an update on retail sales towards the end of the week. Don’t expect much positive news there. 

As a result, the day-to-day trading will hinge upon news coming out of Europe and perhaps the growing concern that terrorism was involved in the loss of the Malaysian airliner. Don’t expect anything positive to come out of either of these issues. 

Finally, the “better” than expected payroll report has given renewed hope to the bulls on the economy, but as one can see from the weekly report from the Economic Cycle Research Institute, there is little to get optimistic about. The lackluster trend, implying a slow growth economy, remains intact. I suspect that what you see is what you will get for some time. 

 

As you know, investors should cheer that this economy is neither collapsing nor approaching anything resembling a breakout year. Higher dividends & earnings per share (through buy backs) remain the foundation for this bull market. 

 

It has been reported that Vodafone has increased its takeover offer for the Spanish cable operator Ono, in an attempt to acquire the Company before its planned IPO.  Ono is holding its annual meeting on March 13th, at which management plans to present its intention to sell shares in an IPO.  Vodafone has been meeting with large shareholders and has offered to buy the company for $9.7 billion, although no final agreement has been reached. 

This caused a sell-off in the shares of Vodafone on Friday and again this morning as some feel the Company will have to over pay for Ono.  Some investors think it might make Vodafone less attractive to potential buyers itself, most notably AT&T.  This story is going to stay in the forefront this week especially until Ono’s annual meeting on Thursday. 

 

We believe this weakness offers an excellent buying opportunity and are adding to our position at these levels.  Vodafone has been buying up European cable assets so that they are able to bundle phone, internet and television services to all of their customers and Ono is one of the few assets still available.  The landscape in the European telecommunication/media arena is changing quickly, but we believe the value of Vodafone assets are worth significantly more than they are currently trading for. 

We did receive the cash portion of the Verizon Wireless deal in our accounts last week, which completes the transaction.  We believe that buying more shares of Vodafone is an excellent use of the cash given the weakness of the past couple of days.  We expect the shares of Vodafone will be trading for more than $50 by the end of this year.

(c) McIntyre, Freedman & Flynn

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Investors tend to ignore events that do not demand immediate attention. Unfortunately, this approach is no longer an option following the recent events taking place in Ukraine. Michael Cirami, co-director of Eaton Vance’s Global Income Group, was in Kiev the week before President Yanukovych was ousted. In the following interview, he shares his views on the crisis in this emerging market and its implications for investors.

What is happening in Ukraine?

Former Ukraine President Viktor Yanukovych was forced from power following large-scale protests over corruption and the former government’s failure to sign an Association Agreement with the European Union (EU).

The situation has morphed into something much more dangerous and uncertain as Russia asserted itself. A combination of Russian troops and pro-Russian forces has occupied official buildings within the Crimean Peninsula – a largely ethnic-Russian region in the south of the Ukraine that is also home to an important Russian naval base on the Black Sea.

Geopolitically, we are headed into unfamiliar waters. The U.S. and other western powers have condemned Russia’s move as an act of aggression, and imposition of economic sanctions is a real possibility.

You’ve avoided Ukraine for some time now. Why?

All of the portfolios managed by the Global Income Group had zero exposure to Ukraine, as of the most recent public disclosure of portfolio holdings. From an economic standpoint, Ukraine’s economy has been deteriorating for several years, mired in large fiscal and current account deficits. The government is in dire need of foreign money to keep the country running. Prior to this crisis, that money was expected to come from Russia – that now appears unlikely. The International Monetary Fund (IMF) and Ukraine are expected to start negotiations over a new economic program this week, but in recent years the country has shown little regard for this type of a program, so it could take some time to come to an agreement.

Do you see the crisis being resolved anytime soon?

These events can continue to escalate with a broad array of potential outcomes, ranging from outright war with Russia or civil war to peaceful negotiations. We hope cooler heads will prevail, but the situation is extremely fluid, making it impossible to predict how or if the situation will be resolved. But with that in mind, the worst-case outcomes continue to be the least probable ones – at least for now.

Why should investors care?

Three reasons why investors should care:

1.Ukraine is operating under severe economic stress with a real possibility of default. At 40% of GDP (according to IMF statistics), Ukraine’s debt level is not extreme, but it is a source of concern, given that the country already has a recent default on its books from 2000.

2.Both Ukrainian and Russian asset values are likely to experience increased volatility. Russian banks, too, are likely to be stressed, given their large exposure to Ukrainian assets. Further, a possible Ukrainian default might also spark contagion that could spread to some banks in Western Europe.

3.Sanctions on Russia would likely be economically destabilizing globally.

What’s your view of emerging markets?

Ukraine’s turmoil underscores the fact that geopolitical uncertainty is never pleasant, but it doesn’t overturn the longer-term case for emerging markets – investors who discount these countries altogether may miss some of the strongest growth potential in the world. That said, we believe that emerging-market risk is currently growing, as tempers and political instability in select countries appear to be increasing while, at the same time, the U.S. Federal Reserve reduces the amount of liquidity it provides to global markets.

What should investors do?

Flexibility is key in fluid situations like these. We believe there remain exciting opportunities within emerging markets. To best capitalize on these opportunities, we feel investors should consider strategies that have the ability to:

1.Invest in long and short positions, to take advantage of both improving and deteriorating situations.

2.Include countries that are outside of common emerging-market benchmarks. Such a benchmark-agnostic approach widens the opportunity set and can help improve portfolio diversification - important tool to help navigate geopolitical uncertainty.

About Risk

Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical or other conditions. In emerging countries, these risks may be more significant. Derivative instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can magnify losses), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. Diversification does not guarantee profit or eliminate the risk of loss.

About Eaton Vance

Eaton Vance Corp. (NYSE: EV) is one of the oldest investment management firms in the United States, with a history dating to 1924. Eaton Vance and its affiliates offer individuals and institutions a broad array of investment strategies and wealth management solutions. The Company’s long record of exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today’s most discerning investors. For more information, visit eatonvance.com.

The views expressed in this Portfolio Manager Viewpoints are those of the author and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and the author disclaim any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund.

This Portfolio Manager Viewpoints may contain statements that are not historical facts, referred to as forward-looking statements. A Fund’s actual future results may differ significantly from those stated in forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund’s filings with the Securities and Exchange Commission.

Before investing, investors should consider carefully the investment objectives, risks, charges and expenses of a mutual fund. This and other important information is contained in the prospectus and summary prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing.

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©2014 Eaton Vance Distributors, Inc.

Member FINRA/SIPC

Two International Place, Boston, MA 02110 800.836.2414 

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Yo-yo

Do we have your attention yet?

The irascible, and sometimes irrational, actions of the major indices this year should confirm for all observers that there's something at work in the financial markets that goes way beyond "traditional" fundamental analysis and good stock picking.

In back-to-back fashion, the market last week traversed consecutive near-200 point days (on the Dow Jones), first down, then up.  Is there anything in that type of behavior other than a manic response to current events (Ukraine, unemployment, GDP) or an indication of fear which underlies the actors' mindset itself?  The inmates truly are running the asylum.

Look, I'm not going to cast aspersions on my peers or lay heavy psychoanalysis upon others.  I'm neither qualified to do so nor inclined.  But suffice it to say that the catalysts for equity momentum and trading are changing, and trending more towards behavioral  science than economic  science.  The mere appearance  of conflict abroad, or disappointing data, provides enough impetus to recalibrate market calculus.  And in the process, our mental state, our confidence  in the financial markets to reflect our hopes and aspirations, becomes shredded at the periphery.

The subtext of all this volatility is that despite what appears to be improvements in economic statistics, fewer people feel comfortable putting their assets to work in a game that appears not to be played in their best interest.  "Luck" is not the kind of engine anyone would like to see propelling their retirement funds.  Conversely, I think the fear factor is significantly higher today, and rightfully so.  Retail and sophisticated institutional investors are left scratching their heads over the frequency and magnitude of inter-day volatility.

As I have previously written, my analytics indicate that this year should be a continuation of a bull market cycle now in its fifth year.  But I remain cautious about the sustainability of peaks at these levels  where new highs in the averages have become commonplace, but potentially risky.  If there is any bias in my work at present, it might be for a downside response in the averages, and not necessarily a clean or tidy process.

Spare the Pollyanna

In fact, it is more likely that we have downward revisions in earnings forecasts because year-over-year comparisons to the early years of the recovery are impossible to sustain.  Coming from the depths at which we were in 2008, any  improvement in productivity or economic activity was bound to create a groundswell of buying that would have moved valuations strongly and consistently.  Faced with the truisms of our current plight, however, one has to ask "for how much longer, and how much farther?"

If my projections are correct, the loss of earnings momentum from inflation and pricing power in natural resources, low employment, depleted consumer savings, and corporate inventory reductions should be reflected by mid single-digit returns in stocks this year.  Right now,  there are only "anecdotal" inferences about inflation, with no Federal data to corroborate.  In fact, however, in our daily lives we experience price increases throughout a host of activities, from necessities to extravagances.   While some are quick to blame the Winter weather for negative data spillover, I lay the blame upon unrealistic expectations, irrational trading behavior, and unsustainable cyclic stochastic integers.

"Optimism" is always relative, but to expect a repeat of last year's equity performance would be beyond the ken.

In the short term, "doing nothing" is not an option, but neither is trying to "time" the irrational gyrations of a market following the herd.  The best strategy is to have a discipline for equity selection and to stick with it.  In my case, I look for consistent, but not artificially manufactured, earnings acceleration...growth engendered by what we call the "better mousetrap" business model.  Create a product the public wants, and they'll not only beat a path to your door, but pay a premium to own it.  This would be true whether you were a neighborhood pizzeria, a global biotech firm, a local manufacturing company, or a motion picture conglomerate.

The trouble with last week was that macro themes and demographics got caught up in the foolishness of the game-players, themselves, who ruined it for everyone else.

 

Arlington Econometrics is a quantitative market tool.  Utilizing proprietary algorithmic equations, AE offers solutions for market-timing, asset allocation, and macro economic analysis.  Using historical time-series measurements, Arlington Econometrics optimizes the analytical process and forecasting coefficients to make economic forecasting more objective.  

 

The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed.  This report is not to be construed as an offer to sell or solicitation to buy any security.  It is intended for private information purposes only.  Any opinions expressed are subject to change without notice.  Alexander Capital and its affiliated companies and/or individuals may from time to time own or have positions in the securities or contrary to the recommendations discussed herein.  Neither Alexander Capital, LP nor any of its affiliates (collectively, “Alexander Capital, LP”) is responsible for any recommendation, solicitation, offer or agreement or any information about any transaction, security, customer account, or account activity in this communication.

(c) Alexander Capital

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Merger and acquisition (M&A) activity is heating up among specialty pharmaceutical companies and potentially creating a once-in-a-generation investment opportunity in an industry that is quickly consolidating. We believe a convergence of factors will drive further M&A activity and value creation for investors in 2014.

While M&A activity has long been a tool driving growth among pharmaceutical companies, the uptick in 2013 was considerable, with more acquisition activity (in terms of deal value) than the two previous years combined. The average deal size and total value of deals also reached highs in 2013.

In several cases, both the acquirer and acquired company have seen a jump in stock price after announcing deals. Yet as a group, the market multiple for specialty pharmaceutical companies is in line with the rest of the index, suggesting room for further stock appreciation as more companies announce deals. And there are plenty of reasons more deals will follow.

A few important secular trends are encouraging consolidation in the industry. The pharmaceutical industry has been incredibly fragmented globally, with the largest five companies owning less than 10% of market share. But the supply chain of companies buying drugs has consolidated and now has only four major buyers. Those four large buyers have considerable clout and are pushing down prices throughout the industry. By consolidating, the pharmaceutical companies have a chance to gain some scale of their own and push back on prices.

The potential of drugs in many specialty pharmaceutical companies’ pipelines is another factor driving acquisition activity. In an environment focused on lowering health care costs, innovative therapies that significantly improve patient outcomes are the only treatments that can command pricing power. Innovative therapies also have a much easier time getting FDA approval than “me-too” drugs that offer only an incremental benefit over existing treatments. Many of these innovative therapies lie with specialty pharmaceutical companies, and large-cap pharmaceutical companies are finding it is often more profitable to acquire those companies than research and develop their own drugs.

Savvy management teams are also driving M&A activity. In the late 2000s, many specialty pharmaceutical stocks underperformed, driving management changes at many companies. Now, the quality of management teams within the industry has never been higher, in our view. This new generation of managers is more aggressive, more global in scope and more willing to access accommodative debt markets to make deals.

The interests of new management teams are often well-aligned with shareholders. At Forest Laboratories, for example, the new CEO put $5 million of his own money into the company’s stock. Similarly, Endo Health Solutions’ new CEO invested $7 million into the company’s stock. New CEOs also have incentive structures that are generally more aligned with stock performance, which has resulted in management teams looking for deals that drive value.

While secular trends and aggressive management teams are the main drivers of consolidation, there is also a tax benefit to many acquisitions. By acquiring a company overseas, U.S.-based pharmaceutical companies have an opportunity to re-domicile and convert to a lower overseas tax rate. Conversely, the tax-advantaged status of a non-U.S. pharmaceutical company allows that company to come into the U.S. market and pay a premium for an acquisition target in a deal that is still accretive to the acquiring company because they are moving the U.S. company into a lower tax structure. 

The inherent tax advantage is a quick boost to the earnings power of companies, and the market has responded favorably when such acquisitions are announced. For example, Endo Health Solutions is up 78% since its November announcement it would acquire Paladin Labs and re-domicile in Ireland. Likewise, Actavis and Forest Laboratories were up 17% and 39%, respectively, after Actavis announced in mid-February it would acquire Forest Laboratories.

The secular trends favoring industry consolidation, aggressive management teams, accommodative debt markets and the tax advantages of many acquisitions, should keep M&A activity heated among specialty pharmaceutical companies. Given the inherent benefits of many of these acquisitions, and with valuations at a reasonable starting point, we would also expect the market to continue to respond favorably as more deals are made. 

Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus or, if available, a summary prospectus containing this and other information, please call Janus at 877.33JANUS (52687) or download the file from janus.com/info. Read it carefully before you invest or send money.

Investing involves market risk. Investment return and value will fluctuate, and it is possible to lose money by investing.

The health care industries are subject to government regulation and reimbursement rates, as well as government approval of products and services, which could have a significant effect on price and availability, and can be significantly affected by rapid obsolescence and patent expirations.

The views expressed are those of Janus research analysts as of March 2014. They do not necessarily reflect the views of Janus portfolio managers or other persons in Janus’ organization. These views are subject to change at any time based on market and other conditions, and Janus disclaims any responsibility to update such views. No forecasts can be guaranteed. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any Janus fund.

In preparing this document, Janus has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources.

Statements in this piece that reflect projections or expectations of future financial or economic performance of the markets in general are forward-looking statements. Actual results or events may differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include general economic conditions such as inflation, recession and interest rates.

Investment products offered are: NOT FDIC-INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.

Janus Distributors LLC

FOR MORE INFORMATION CONTACT JANUS
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C-0214-57846 03-30-15                                                                                                                 

188-15-27501 03-14     

 

 

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U.S. equities increased 1.1% last week after somewhat volatile trading due to heightened tension in Ukraine.1  Although the crisis dominated headlines, the market relegated the major geopolitical issue to the back burner. The broader macro narrative did not change, as concerns about dampened growth momentum continued to be pacified by the distortion from adverse weather. Several dynamics seem to support ongoing recovery, including better-than- expected February labor market data, some upbeat corporate and industry commentary and the outperformance of key cyclical market segments.

The Economy: Not Too Hot or Too Cold

The economy added 175,000 jobs in February and the prior two months were revised upward to add 25,000 new jobs.2 The unemployment rate moved up slightly to 6.7% from 6.6%, but this reflects labor force expansion in professional positions and wholesale trade.2 Presumably job growth would have been stronger under normal weather conditions, suggesting healthy underlying economic momentum. We have reached the mid-point of the business cycle, as indicated by lower volatility and a fading memory of the recession. Thus far, signs of overheating do not exist to entice major central banks to remove liquidity. We believe the best outcome for risk markets is for the world economy to continue to grow just above potential, neither too hot nor too cold. A much stronger economy could bring a faster end to easy money and pose questions about the amount of damage such a reversal would cause. A much softer economy would signal weakness in monetary policy and raise concerns about the downside. The result is that value dominates, forcing investors out of cash.

Weekly Top Themes

1.February Non-Manufacturing ISM® was well below expectations, falling to 51.6, the lowest reading since 2010.3 The disappointment sends a cautionary signal about momentum in the economy.

2.We foresee U.S. capital goods spending accelerating. Industrial capacity utilization is rising closer to historical inflection points for accelerating domestic capital goods purchases. We believe projected higher interest rates will stay below investment hurdle rates and not impact capital spending.

3.It appears that lower interest expense, control of labor costs and share buy- backs have impacted on per share profit growth. The bad news is it may be difficult to grow profit margins going forward. The good news is stronger top line growth could result in greater bottom line gains.

4.The European Central Bank (ECB) suggested the economic tide in the Eurozone may be turning fast enough to avoid additional easing. Mario Draghi indicated that the present policy could become more accommodative if the economy strengthens and inflation moves higher. We are not confident that inflation expectations will remain stable, and persistent ultra-low inflation could threaten rebalancing and debt sustainability.

5.The U.S. is relatively insulated from the Ukrainian turmoil. Trade between the United States and Ukraine is minimal, and Russia accounts for about 1% of overall U.S. trade. The peripheral impacts of geopolitical tensions are difficult to assess, however, and uncertainty affects equities.

The Big Picture

Stocks broke out to new highs after stumbling in late January. The conditions for sustained increases do not appear to be in place yet. Decisive global economic acceleration will be required to attract enough cash from the sidelines back into equities so that demand exceeds profit-taking. Global growth should gradually accelerate this year, led by the U.S. and developed economies. Recent soft U.S. economic data appear primarily weather-related and should normalize in the months ahead. Hiring plans and consumer confidence have hit new cyclical highs.

China is a forecasting challenge, but the best bet is stable growth. Europe is a swing factor for the global economy and is moving in a positive direction that should gradually strengthen. We do not expect the increase in the consumption tax in Japan to derail the recovery, in light of ongoing monetary policy support. G7 central banks and the Fed are strongly committed to reflation, which benefits risk assets. Investors should gradually rotate out of safe haven assets and into select risk assets, as confidence in the economic recovery solidifies. The process will be slow, and this is a tailwind for stocks and a headwind for bonds. 

1 Source: Morningstar Direct, as of 3/7/14.  2 Source: Bureau of Labor Statistics, “The Employment Situation – February 2014,” March 7, 2014, http://www.bls.gov/news.release/empsit.nr0. htm. 3 Source: February 2014 Non-Manufacturing ISM® Report On Business,® March 5, 2014, http://www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad domestic economy. Euro STOXX 50 Index is Europe’s leading Blue-chip     index for the Eurozone and covers 50 stocks from 12 Eurozone countries. FTSE 100 Index is a capitalization-weighted index of the 100 most highly capitalized companies traded on the London Stock

Exchange. Deutsche Borse AG German Stock Index (DAX Index) is a total return index of 30 selected German blue chip stocks traded on the Frankfurt Stock Exchange. FTSE MIB Index is an index of the 40 most liquid and capitalized stocks listed on the Borsa Italiana. Nikkei 225 Index is a price-weighted average of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange. Hong Kong Hang Seng Index is a free-float capitalization-weighted index of selection of companies from the Stock Exchange of Hong Kong. Shanghai Stock Exchange Composite is a capitalization-weighted index that tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The MSCI World Index ex-U.S. is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets minus the United States. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

RISKS AND OTHER IMPORTANT CONSIDERATIONS

The views and opinions expressed are for informational and educational purposes only as of the date of writing and may change at any time based on market or other conditions and  may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific  legal, investment or tax advice. The information provided does not take into account the specific  objectives, financial situation, or particular needs of any specific person. All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Equity investments are subject to market risk or the risk that stocks will decline in response to such factors as adverse company news or industry developments or a general economic decline. Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, tax risk, political and economic risk, and income risk. As interest rates rise, bond prices fall. Non- investment-grade bonds involve heightened credit risk, liquidity risk, and potential for default. Foreign investing involves additional risks, including currency fluctuation political and economic instability, lack of liquidity and differing legal and accounting standards. These risks are magnified in emerging markets. Past performance is no guarantee of future results.

Nuveen Asset Management, LLC is a registered investment adviser and an affiliate of Nuveen Investments, Inc.

GPE-BDCOMM2-0314P

(c) Nuveen Asset Management

[description] => U.S. equities increased 1.1% last week after somewhat volatile trading due to heightened tension in Ukraine. Although the crisis dominated headlines, the market relegated the major geopolitical issue to the back burner. The broader macro narrative did not change, as concerns about dampened growth momentum continued to be pacified by the distortion from adverse weather. [author] => Bob Doll [legacyinterface_firm_id] => 320 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 17:04:08 [created_by] => 948 [modified_on] => 2014-03-10 18:00:19 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 220 [hits] => 0 ) [12] => stdClass Object ( [legacyinterface_commentary_id] => 156 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13418 [apv_conversation_id] => [content_type] => market-commentary [title] => Happy Birthday, Bull Market [slug] => blackrock_031014 [fulltext] =>
  • March 10, 2014, could be considered the fifth birthday of the current equity bull market.
  • Investors looked beyond mixed economic data and turmoil in the Ukraine to push stocks to further gains last week.
  • Stocks still remain a more attractive option relative to traditional bonds and cash.

Markets Look Past Geopolitics to Post Gains

It was March 9, 2009, when the stock market bottomed amid the throes of the financial crisis. The next day marked the start of an upturn, meaning today could be considered the fifth birthday of the current bull market. And, in true celebratory fashion, investors looked beyond the turmoil in the Ukraine to push stocks to further gains. The Dow Jones Industrial Average advanced 0.80% last week to 16,453, while the S&P 500 Index rose 1% to 1,878 and the Nasdaq Composite added 0.65% to close at 4,336. Meanwhile, in fixed income markets, the yield on the 10-year Treasury rose from 2.65% to 2.79%, as prices correspondingly fell.

Investors Shrug Off Ukraine Concerns

After a negative reaction early last week, the markets quickly got over their jitters about Russia, Ukraine and Crimea. Monday saw a brief selloff and spike in volatility, but the effect was modest. The VIX Index (a widely cited volatility index) crept up to the upper teens, which is still well below its long-term average. By Tuesday, markets recovered and again reached new highs. At the same time, investors began moving out of "safe haven" assets such as Treasuries, which explains why Treasury yields rose (and prices fell) last week.

Part of the turnaround in sentiment can be attributed to some easing of tensions in the region. Russian President Vladimir Putin disavowed any broader territorial ambitions, which caused a collective sigh of relief. Clearly, though, this is a situation that bears close watching. Crimea has scheduled a March 16 referendum that would determine whether the region splits from the Ukraine and joins Russia, a potential move that is being hotly debated among world leaders. As that date approaches, we may see markets paying more attention to this region of the world.

Economic Data Remain Mixed

Financial markets also benefited from some better-than-expected economic data, including improvements in manufacturing as well as a rebound in the jobs market. The February labor market report showed that 177,000 new jobs were created last month. This represented a significant improvement over December and January, and suggests part of the earlier weakness may, in fact, have been related to the poor weather.

Overall, however, economic data continue to be mixed. Despite last month's uptick in jobs growth, the pace of labor market improvements remains subpar compared to previous economic recoveries. The labor market participation rate remains low and long-term unemployment high, reaffirming that the U.S. jobs market is still troubled. Outside of the labor report, the Institute for Supply Management's non-manufacturing survey (a key gauge of the service sector) also sank to a four-year low in February.

Happy Birthday! And Many More?

In any case, it does seem that investors are looking past weak economic data and that momentum, low interest rates and "good enough" economic and earnings figures have been enough to keep stock prices moving higher. But now that the bull market is entering its sixth year, where does that leave investors?

To start, we would say equities are no longer cheap and that stronger economic growth will be needed to drive earnings and prices higher. But we do believe stock prices are more likely to head higher rather than lower from here. Equities still look like a more attractive option than cash or bonds. Cash investments are effectively paying nothing, and traditional areas of the bond market offer little return after factoring in the effects of inflation and taxes.

As such, we would encourage investors to maintain their emphasis on stocks. Even after a five-year bull market, and prospects for more volatility ahead, both the macro environment (low inflation, low rates and a gradually improving economy) and relative valuations offer sound arguments for overweighting stocks.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of March 10, 2014, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

©2014 BlackRock, Inc. All Rights Reserved. BLACKROCK, BLACKROCK SOLUTIONS, iSHARES, and SO WHAT DO I DO WITH MY MONEY are registered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

Prepared by BlackRock Investments, LLC, member FINRA.

Not FDIC Insured | May Lose Value | No Bank Guarantee

USR–3625

(c) BlackRock Investment Management

[description] => March 10, 2014, could be considered the fifth birthday of the current equity bull market. Investors looked beyond mixed economic data and turmoil in the Ukraine to push stocks to further gains last week. Stocks still remain a more attractive option relative to traditional bonds and cash. [author] => Russ Koesterich [legacyinterface_firm_id] => 50 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 17:11:50 [created_by] => 948 [modified_on] => 2014-03-10 17:59:36 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 221 [hits] => 0 ) [13] => stdClass Object ( [legacyinterface_commentary_id] => 157 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13419 [apv_conversation_id] => [content_type] => market-commentary [title] => Earning Estimates Plunging Around The World [slug] => gavekal_031014 [fulltext] =>

Earnings estimates (and sales estimates to an extent) have taken a beating over the past three months. On average, EPS growth estimates are down 5.3% for the next fiscal year during this time. Not a single industry group out of the 24 MSCI classifications have seen their earning estimates rise and only four industries have seen their sales growth estimate increase. Europe has seen the worst of it. On average, FY1 EPS estimates have dropped by 8%. That number for Asia-Pacific and North America are -4.7% and -4%, respectively.

MSCI World
imageimage

Only 40% of stocks have seen a positive EPS revision in the past three months, with no individual industry having more than 59% of their stocks seeing positive revisions. Household and Personal Products have had the worse revision ratio with only 17% of the stocks having a positive revision in the past three months. Somewhat amazingly stocks are up nearly 5% during this time.

imageimage

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(c) GaveKal Capital

[description] => Earnings estimates (and sales estimates to an extent) have taken a beating over the past three months. On average, EPS growth estimates are down 5.3% for the next fiscal year during this time. Not a single industry group out of the 24 MSCI classifications have seen their earning estimates rise and only four industries have seen their sales growth estimate increase. [author] => [legacyinterface_firm_id] => 173 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 17:13:37 [created_by] => 948 [modified_on] => 2014-03-10 17:13:46 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 222 [hits] => 0 ) [14] => stdClass Object ( [legacyinterface_commentary_id] => 158 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13422 [apv_conversation_id] => [content_type] => market-commentary [title] => Four Reasons to Consider Emerging Markets for the Long Term [slug] => invesco_031014 [fulltext] =>

Emerging markets are at that peculiar place where everyone likes them over the long term, but very few like them in the short term. Many well-publicized headwinds from 2013 remain going into 2014, accompanied by election uncertainty in Brazil, India, Indonesia, South Africa and Turkey. And political uncertainty keeps surfacing in such places as Thailand, Turkey and the Ukraine.

Interest rates are rising, and the commodities complex has softened, which, although beneficial for commodities importers such as Turkey, India and China, is clearly negative for the region as a whole.  Revised earnings expectations continue to be a headwind, although the pace of earnings downgrades has slowed considerably since the middle of 2013. In addition, weakening currencies aggravate inflation, which complicates the scenario for the central banks of these countries.

Given the dominance of negative headlines these days, I think it is important to remind ourselves of the positive elements — and opportunities — in emerging markets.

  • Emerging markets are experiencing far greater policy uncertainty than developed markets at this time. But it’s important to remember that stocks were weakest during times of significant policy uncertainty in developed markets — for example, the US in 2009 and Europe in 2011, which, in hindsight, were clearly great buying opportunities.
  • Returns on equity (ROE), a good indicator of quality, remain higher in emerging markets than they are in developed markets (although emerging markets ROE is currently trending down).
  • Earnings expectations appear to be stabilizing and valuation levels look far more attractive for long-term investors.
  • With emerging markets awash in negatives, investors may have lost sight of this opportunity: 90% of the world’s middle class will be in emerging markets by 2030, according to the World Bank. It is simply too large a piece of the global economic pie to simplistically avoid.  Most of the reasons the investor community got excited about emerging markets a decade ago still hold today.

Over the long term, we believe the best predictor of future equity returns is the valuation paid today, as investors tend to make more money when they buy low and sell high. Emerging markets currently offer very low valuations, and we believe long-term investors should not forget this positive indicator among the negative headlines.

Important information

Return on equity (ROE) is the amount of net income returned as a percentage of shareholder equity.

In general, stock and other equity securities values fluctuate in response to activities specific to the company as well as general market, economic and political conditions.

The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues. An investment in emerging market countries carries greater risks compared to more developed economies.

Commodities may subject an investor to greater volatility than traditional securities such as stocks and bonds and can fluctuate significantly based on weather, political, tax, and other regulatory and market developments.

Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa.

NOT FDIC INSUREDMAY LOSE VALUE NO BANK GUARANTEE

All data provided by Invesco unless otherwise noted.

Invesco Distributors, Inc. is a US distributor for retail mutual funds, exchange-traded funds, institutional money market funds and unit investment trusts. 

Invesco unit investment trusts are distributed by the sponsor, Invesco Capital Markets, Inc. and broker dealers including Invesco Distributors, Inc. These Invesco entities are indirect, wholly owned subsidiaries of Invesco Ltd.

©2014 Invesco Ltd. All rights reserved.

blog.invesco.us.com

 

[description] => Emerging markets are at that peculiar place where everyone likes them over the long term, but very few like them in the short term. Many well-publicized headwinds from 2013 remain going into 2014, accompanied by election uncertainty in Brazil, India, Indonesia, South Africa and Turkey. And political uncertainty keeps surfacing in such places as Thailand, Turkey and the Ukraine. [author] => Borge Endresen [legacyinterface_firm_id] => 225 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 18:53:18 [created_by] => 948 [modified_on] => 2014-03-10 19:05:25 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 223 [hits] => 0 ) [15] => stdClass Object ( [legacyinterface_commentary_id] => 159 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13420 [apv_conversation_id] => [content_type] => market-commentary [title] => It Is Informed Optimism To Wait For The Rain [slug] => hussman_031014 [fulltext] =>

Based on valuation metrics that have demonstrated a near-90% correlation with subsequent 10-year S&P 500 total returns, not only historically but also in recent decades, we estimate that U.S. equities are more than 100% above the level that would be associated with historically normal future returns. We presently estimate 10-year nominal total returns for the S&P 500 averaging just 2.2% annually over the coming decade, with zero or negative nominal total returns on every horizon of less than 7 years. Regardless of very short-term market direction, it is urgent for investors to understand where the equity markets are positioned in the context of the full cycle.

Importantly, this expectation fully embeds projected nominal GDP growth averaging over 6% annually over the coming decade. To the extent that nominal economic growth persistently falls short of that level, we would expect U.S. stock market returns to fall short of 2.2% nominal total returns (including dividends) over this period. These are not welcome views, but they are evidence-based, and the associated metrics have dramatically higher historical correlation with actual subsequent returns than a variety of alternative approaches such as the “Fed Model” or various “equity risk premium” models. We implore investors (as well as FOMC officials) to examine and compare these historical relationships. It is not difficult – only uncomfortable.

The depressed level of short-term interest rates does not change the arithmetic here. It simply offers investors additional discomfort – the choice of accepting risk in equities that are already intolerably overvalued, or to instead accept the certain prospect of near-zero near-term returns. For our part, we expect dramatically better investment opportunities to emerge over the completion of the present market cycle. It is optimism, not pessimism, about those future opportunities that leads us to avoid reaching for low-return, high-risk equity exposure here. Investors should only expect meaningful total returns to the extent that they wish to speculate that long-term prospective returns will be driven even lower than 2.2% annually (on a 10-year horizon).

Of course, that’s really the story of the past few years – a persistent willingness of investors to drive long-term prospective returns lower, as they feel both encouraged and forced to do so by Federal Reserve policies. Just as the willingness of investors to accept lower long-term interest rates implies that a willingness to pay higher bond prices (and vice versa), the willingness of investors to accept lower long-term stock market returns implies a willingness to pay higher stock prices (and vice versa).

Objectively, there is no specific level at which investors can be told “no, stop, don’t” once the speculative bit is in their teeth. Historically, however, such periods have typically reached their extremes when a syndrome of overvalued, overbought, overbullish, rising-yield conditions emerges. By the time one observes extreme conditions simultaneously – rich valuations, overbought market conditions, lopsided bullish sentiment, and rising 10-year yields – equity markets have generally been at precarious and climactic highs. Prior to the current market cycle, these points singularly include 1929, 1972, 1987, 2000, and 2007 (slightly broader criteria also would include 1937). In the uncompleted half-cycle since 2009, however, we’ve seen these conditions at the 2011 market peak (followed by a near 20% decline that was truncated by investor enthusiasm about fresh quantitative easing), and several instances over the past year – specifically, February 2013, May 2013, December 2013, and today.

It is the series of extreme instances over the past year that give investors the hope and delusion that historically reckless market conditions will lead only to further gains and greater highs. This is a mistake born of complacency in the face of a nearly uninterrupted, Fed-enabled 5-year market advance, and is the same mistake that was made in 2000 and again in 2007. By the time the present market cycle is completed, we expect the S&P 500 to be at least 40% lower than present levels. Only the reliance on historically unreliable valuation metrics, and what Galbraith called the “extreme brevity of financial memory” makes that assertion seem the least bit controversial.

Investors and policy-makers that focus attention on some alternative valuation measure (usually because it seems pleasantly benign) would be well-advised to examine the data, and compare the historical relationship between competing measures and actual subsequent market returns. Remember also that outliers are instructive. For example, the actual total return on equities in the decade following 1964 was much weaker than one would have projected, because stock valuations collapsed at the 1974 market low. Conversely, the actual total return on equities in the decade following 1990 was much stronger than valuations would have projected, because valuations became so extreme by the 2000 bubble peak. To the extent that stocks have done a few percent better in the most recent 10-year period than valuations would have projected, it is because stocks have become so profoundly elevated at present. Such outliers are the first thing to be wiped out over the completion of the market cycle.

Again, regardless of very short-term market direction, it is urgent for investors to understand where the equity markets are positioned in the context of the full market cycle. While the most extreme overvalued, overbought, overbullish, rising-yield syndrome we define has generally appeared only at the most wicked market peaks in history, investors have ignored those conditions over the past year. We can’t be certain when the deferred consequences will emerge. But a century of market history provides strong reason to believe that any intervening gains will be wiped out in spades.

It’s instructive that the 2000-2002 decline wiped out the entire total return of the S&P 500 – in excess of Treasury bills – all the way back to May 1996, while the 2007-2009 decline wiped out the entire excess return of the S&P 500 all the way back to June 1995.  Overconfidence and overvaluation always extract a terrible payback.

It may also be helpful to remember that market peaks are a process, not an event. In the presence of a broad range of reliable valuation metrics uniformly at more than twice their historical norms, coupled with the most severe overvalued, overbought, overbullish, rising-yield syndrome we define, it is instructive how shorter-term action has evolved near those points. Outside of today and 1929, the other two instances are, not surprisingly, 2000 and 2007. The chart below provides a more granular reminder that market peaks are often a broad process and can involve hard initial downturns and swift recoveries. The ultimate follow-through provides some insight regarding the full scale of our concerns.

A final note – in my view, it is incorrect to believe that the 2008-2009 market plunge and financial crisis were caused by the housing bubble. The housing bubble was merely the expression of a very specific underlying dynamic. The true cause of that episode can be found earlier, in Federal Reserve policies that suppressed short-term interest rates following the 2000-2002 recession, and provoked a multi-year speculative “reach for yield” into mortgage securities. Wall Street was quite happy to supply the desired “product” to investors who – observing that the housing market had never experienced major losses – misinvested trillions of dollars of savings, chasing mortgage securities and financing a speculative bubble. Of course, the only way to generate enough “product” was to make mortgage loans of progressively lower quality to anyone with a pulse. To believe that the housing bubble caused the crash was is to ignore its origin in Federal Reserve policies that forced investors to reach for yield.

Tragically, the Federal Reserve has done the same thing again – starving investors of safe returns, and promoting a reach for yield into increasingly elevated and speculative assets. Thinking about the crisis only from the perspective of housing, investors and policy-makers have allowed the same process to play out more broadly in the equity market. On a quantitative basis, the overvaluation of the equity market is greater percentage-wise, and greater dollar-wise, than the overvaluation of housing in 2006-2007. We fully expect that from present valuations, U.S. stocks will produce zero or negative returns on every horizon shorter than 7 years. There is no antidote or alchemy that will allow a buy-and-hold approach to squeeze water from this stone. There is no painless monetary fix that will shift the allocation of capital toward productive investment and away from distortive speculation. Instead, one must wait for the rain. Impatient, crowd-following investors are all too willing to wastefully scatter seeds onto this parched desert, thinking that this is their only chance to sow. To wait patiently in the expectation of fertile soil and rain is not an act of pessimism, but an act of optimism and informed experience.

Past performance does not ensure future results, and there is no assurance that the Hussman Funds will achieve their investment objectives. An investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted above. More current performance data through the most recent month-end is available at www.hussmanfunds.com. Investors should consider the investment objectives, risks, and charges and expenses of the Funds carefully before investing. For this and other information, please obtain a Prospectus and read it carefully.

(c) Hussman Funds

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Today marks the fifth anniversary of the stock market’s bull run in the wake of the financial crisis. Yet despite the strong performance posted by equities—or perhaps because of it—investor sentiment remains cynical and fearful. 

Maybe a five-year bull market hasn’t made believers out of a lot of investors because 2008 cut them too deep. Or maybe it’s because the recent exuberance doesn’t quite match up with the improvement in fundamentals. Either way, there’s still a lot of money on the sidelines—far too much for a rally of this size and length. 

Looser for Longer

But investor anxiety over the stock market is shortsighted for two very important reasons. First, we expect the Federal Reserve to remain very accommodative. Just look at Friday’s release of the February employment report.And the subsequent reassuring comments from New York Fed President and FOMC Vice Chair William Dudley, who told the Wall Street Journal that the “economy should do better” this year and the bar is “pretty high” for changes to the pace of tapering.

“With monetary policy likely to remain supportive, or ‘looser for longer,’ stocks should continue to benefit. ”

Even though the jobs data was surprisingly positive, it doesn’t mean the Fed will change its taper timeline or when it starts to raise the federal funds rate. Second, monetary policy, while used to maximize employment and maintain price stability according to the Fed’s mandate, is most effective in inflating prices of stocks and homes. With monetary policy likely to remain supportive, or “looser for longer,” stocks should continue to benefit. 

So while investor sentiment remains tepid, it’s likely to improve. Investors’ reluctance to move out on the risk curve may ease as they recognize the Fed’s accommodative policy stance and an economy that continues to recover, albeit unevenly. And that not only bolsters the case for stocks, but also breeds higher confidence. 

High on a Feeling

Interestingly, the Fed last week released the most recent balance sheet of US households and nonprofit organizations, a measure of Americans’ net worth. For the purposes of this survey, net worth includes homes, stocks and other assets minus their debts and other liabilities. Not surprisingly, household net worth increased by 14% in 2013 to its highest level ever: $80.7 trillion. 

If the “wealth effect” theory holds, then this increase in net worth should help boost consumer confidence. Why? When the value of net worth rises due to higher stock and home prices, people feel more secure about their wealth, which leads them to spend more money. With home prices and stock prices up significantly in the past few years, it’s reasonable to assume that consumer sentiment and spending will also rise.

However, with both retail sales and consumer sentiment data scheduled to be released later this week, it’s not clear whether the increase in household net worth will actually translate into higher confidence and more spending. That’s because the improvement in net worth has been concentrated among more affluent households and older Americans.

A recent paper released by the Weidenbaum Center at Washington University entitled “Inequality, the Great Recession, and Slow Recovery” argues that the bottom 95% of American households, in terms of income, have experienced rising income inequality since the 1980s. That trend has “contributed in an important way to the unsustainable increase in household leverage that triggered the collapse in consumer demand and the Great Recession,” according to the paper. 

Further, the authors argue that rising income inequality has negatively impacted demand growth since the Great Recession, dampening the recovery. Whether it continues to hamstring the recovery remains a big question mark that’s predicated on the extent to which the “bottom 95%” own stocks and homes.

“With fewer stockowners and homeowners post-2008, will the “wealth effect” still translate into higher investor and consumer confidence?”

Wages: More Than a Feeling

But it’s not net worth that may make the biggest difference for the bottom 95% of Americans. It’s an improving labor market. The February jobs report showed that shorter-term unemployment—the number of people who have been jobless for 26 weeks or less as a percentage of the overall labor force—has finally reached its long-term average, which is the point when we’ve historically seen upward pressure on wages begin to materialize. Perhaps not coincidentally, the February jobs report also showed a solid 0.4% monthly increase in hourly earnings.

Fittingly, the wealth effect and pay increases set the stage for this week’s retail sales and consumer sentiment data. Hopefully, even if most Americans haven’t participated in the stock-market rally or the recovery in home prices, enough are experiencing an improved job market—especially higher pay—to make a difference. That could translate into better consumer moods and higher spending soon—if it hasn’t already.

Kristina Hooper, CFP, CAIA, CIMA, ChFC, is US head of investment and client strategies for Allianz Global Investors. She has a B.A. from Wellesley College, a J.D. from Pace Law and an M.B.A. in finance from NYU, where she was a teaching fellow in macroeconomics.

Purchasing Managers’ Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies. The Chicago-PMI survey registers manufacturing and non-manufacturing activity in the Chicago region. Investors care about this indicator because the Chicago region somewhat mirrors the nation in its distribution of manufacturing and non-manufacturing activity. 

Thomson Reuters/University of Michigan Surveys of Consumers is a consumer confidence index published monthly by the University of Michigan and Thomson Reuters. The index is normalized to have a value of 100 in December 1964. At least 500 telephone interviews are conducted each month of a continental United States sample (Alaska and Hawaii are excluded). Five core questions are asked.

The material contains the current opinions of the author, which are subject to change without notice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Forecasts and estimates have certain inherent limitations, and are not intended to be relied upon as advice or interpreted as a recommendation.

Past performance of the markets is no guarantee of future results. This is not an offer or solicitation for the purchase or sale of any financial instrument. It is presented only to provide information on investment strategies and opportunities. 

A Word About Risk: Equities have tended to be volatile, involve risk to principal and, unlike bonds, do not offer a fixed rate of return. Foreign markets may be more volatile, less liquid, less transparent and subject to less oversight, and values may fluctuate with currency exchange rates; these risks may be greater in emerging markets.

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AGI-2014-03-10-9121

(c) Allianz Global Investors

[description] => The Federal Reserve’s loose monetary policy and gradual improvement in the economy are two big reasons the stock market can keep moving higher, says Kristina Hooper. Will it be reflected in this week’s consumer sentiment and spending data? [author] => Kristina Hooper [legacyinterface_firm_id] => 23 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 20:19:02 [created_by] => 948 [modified_on] => 2014-03-10 20:19:11 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 225 [hits] => 0 ) [17] => stdClass Object ( [legacyinterface_commentary_id] => 161 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13424 [apv_conversation_id] => [content_type] => market-commentary [title] => Tech Bubble 2.0? [slug] => fortigent_031014 [fulltext] =>

EASING TENSIONS BOLSTER MARKETS 

An easing of geopolitical risk led to positive performance for equity markets, pushing the DJIA up 0.8% and leading to a 1.0% increase in the S&P 500.  

A wide range of data in the U.S. offered positive support for the economy, despite concerns that weather-related slowness would continue to impact economic releases. 

Manufacturing was an encouraging bright spot last week.  The ISM Manufacturing Index rose to 53.2 in February following a sharp deceleration in January.  Readings above 50 indicate expansion in the manufacturing sector.  Positive momentum was apparent in new orders, which suggests that manufacturing should have some forward momentum entering the spring season.  

The service sector took a divergent path in February after it was announced that the U.S. nonmanufacturing ISM Index dropped to 51.6 in the month from 54.0 the month prior.  It turned out to be the weakest reading since early 2010 due to a pronounced slowdown in the employment component.  Winter weather was widely attributed as the cause for the slowdown and economists took solace from the fact that new orders actually rose slightly, suggesting that the weakness would be fleeting.  

Data on consumer income and spending painted a mixed picture for January.  Personal income jumped 0.3% and personal consumption rose 0.4%.  Spending data was less robust than first glance, with the goods component falling 0.6% and services increasing 0.9%.  The strong rise in service spending was largely a result of a 1.6% jump in health care spending, which was directly correlated to recent signups for the Affordable Care Act.   

Markets closed out the week with the closely watched nonfarm payrolls report on Friday.  Despite the weather-related crutch that many economists are citing, job growth proved stronger than expected in February.  A total of 175,000 jobs were added to the economy, with the private sector contributing 162,000 jobs and government employees regaining 13,000 positions.

Weather did have at least a marginal impact on labor markets in February with average weekly hours moving lower by 0.1 to 34.2 in the month.  Counteracting that mild disappointment was a 0.4% bump in average hourly earnings for the private sector.  

As an interesting aside, payroll employment is gradually nearing its January 2008 peak of 138.365 million jobs.  In the latest month, there were 137.699 million people employed.  Calculated Risk Blog estimates that a new employment peak will be established by June 2014.  

 

TECH BUBBLE 2.0? 

The $19 billion acquisition of WhatsApp by Facebook in late February put an exclamation point on several high profile takeovers in the technology space in recent months.  Sizeable deals such as Google’s $3 billion acquisition of Nest and Facebook’s $3 billion offer for SnapChat have fueled the idea that an indiscriminate buying spree in the technology space a la 1999 could set up financial markets for another valuation bubble.  

As noted by UK-newspaper Telegraph, Facebook’s WhatsApp acquisition was the fourth largest technology acquisition in history.  Furthermore, the $42.4bn in technology M&A through the first six weeks of the year is the highest transaction dollar amount observed worldwide in 14 years.

Despite the concerns, a first glance at the technology sector performance in 2014 shows the component index up just 2.5% through last Friday – slightly ahead of the headline S&P 500, but tied for fourth among the major GICS sectors.  Nor do valuations look relatively expensive, with the S&P 500 technology sector trading at an 18.0x P/E multiple – squarely in the middle of the sector pack.

What an analysis of the S&P 500 masks, however, is the clear bifurcation between old and new technology in the US equity market.  A more holistic look at the Russell 3000 index – which includes large, mid, and small cap securities – reveals a clear division between the largest, bellwether names in technology (think the Cisco’s and Intel’s of the world) and newer up-and-coming companies. 

The nine members of the Russell 3000 technology index that are larger than $100 billion in market cap posted an average return of 3.7% through last Friday.  After excluding Facebook, however – the relative newcomer to the space – the average of that group falls to just 0.6%.  Furthermore, the median price-to-earnings multiple for that group is just 13.3x.  At more than 56% of the index, these eight bellwether names tend to skew the headline level statistics.

A look at the bottom 400 or so companies in the sector tells a different story.  The average return of that group is 6.6% thus far in 2014, while the median P/E multiple stands at 34.0x times.  While one could attribute this discrepancy to a small cap effect, recent trends bear out the thesis that smaller cap names have been bid up in the technology sector.  Since late 2011/early 2012, when both the bellwether tech names and the rest of the Russell 3000 technology index traded below 20x earnings, there has been a clear divergence in valuations: mega caps trended down below 15x, while the median multiple of non-mega cap names more than doubled.

The strong outperformance of many securities in 2013 lacking on fundamentals was well documented, as many of the most highly shorted companies rallied sharply.  This was a headwind for many hedge funds last year and has contributed to lighter short books generally in 2014.  However, as investors become more discriminate with regards to stock selection, a normalization effect could impact many of these securities.

Thus, the implication for investors is to invest wisely within the technology space in 2014.  In a world where ETF usage is increasingly common, market participants may want to be more selective in a space that has clearly become bifurcated.  Indeed, many of the “old” tech bellwethers have found their way into value investors’ portfolios – a once unthinkable development.  While the word “bubble” probably does not apply to today’s technology market yet, greater discretion certainly does. 

THE WEEK AHEAD 

Economic releases will quiet down this week, but central bank meetings will pick up the slack. 

Releases that bear monitoring in the U.S. include February retail sales, the producer price index, and consumer sentiment.  

On the central banking side, meetings to watch are those in Japan, New Zealand, Korea, Thailand, Peru, Chile, and Russia.   

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[description] => The $19 billion acquisition of WhatsApp by Facebook in late February put an exclamation point on several high profile takeovers in the technology space in recent months. Sizeable deals such as Google’s $3 billion acquisition of Nest and Facebook’s $3 billion offer for SnapChat have fueled the idea that an indiscriminate buying spree in the technology space a la 1999 could set up financial markets for another valuation bubble. [author] => Chris Maxey, Ryan Davis [legacyinterface_firm_id] => 159 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 20:30:45 [created_by] => 948 [modified_on] => 2014-03-10 20:31:52 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 226 [hits] => 0 ) [18] => stdClass Object ( [legacyinterface_commentary_id] => 162 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13425 [apv_conversation_id] => [content_type] => market-commentary [title] => How Much Slack Is in the U.S. Economy? The Inflation Jury Should Decide [slug] => pimco_031014 [fulltext] =>
  • The unemployment rate may not be a reliable indicator of output slack in the U.S. economy.
  • We’ll know (with a lag) if the economy has reached the end of the cyclical downturn when inflation picks up.
  • The Fed will have to choose between risking a hawkish mistake or being behind the curve, waiting to see inflation actually increase. We expect it will choose the latter.
This article originally appeared on institutionalinvestor.com on 5 March 2014.

In order to fulfill its dual mandate of price stability and full employment, the Federal Reserve has been guided by the Taylor rule since the 1990s. The Taylor rule goes something like this: The appropriate short-term interest rate (set by the central bank) is a function of the slack in the labor market and the difference between actual inflation and the inflation target. Until the Great Recession of 2008, the unemployment rate was a good enough indicator of the labor slack. Hence, the Fed could set interest rates simply based on core inflation and the unemployment rate. Thanks to this framework, the Fed managed to be successful on the employment front but even more so on the price stability front. 

But the situation has changed recently. On one hand, inflation was painfully low in 2013, and on the other, the unemployment rate has dropped sharply. Which part of the dual mandate should the Fed favor?

Gordon versus Yellen 
Some observers are arguing that the drop in the unemployment rate should result in earlier rate hikes. Writers of a few Fed blogs are citing a recent study from Robert Gordon of Northwestern University. They claim that short-duration unemployment (less than 26 weeks) is the best indicator of labor slack, and that since it has already fallen below pre-recession averages (Figure 1), the economy is at risk of overheating.

 

Meanwhile, in her testimony to U.S. Congress, freshly appointed Fed Chair Janet Yellen went in the opposite direction, saying there was probably more slack in the economy than what a naïve look at the unemployment rate would indicate: “Those out of a job for more than six months continue to make up an unusually large fraction of the unemployed, and the number of people who are working part time but would prefer a full-time job remains very high. These observations underscore the importance of considering more than the unemployment rate when evaluating the condition of the U.S. labor market.”

Both sides have a legitimate point of view, but “Gordon versus Yellen” is a bit like “Ali versus Frazier.” They’re both seasoned heavyweights. That the two can have such a stark difference of opinion about the unemployment rate underscores its questionable nature as an indicator. Most likely Yellen will have the last word, but she might also have her own agenda. Would she really be concerned by a bit too much inflation due to a tighter labor market?

Based on PIMCO’s bottom-up analysis, our outlook for 2014 inflation has core personal consumption expenditures (PCE) moving up to 1.6% year-over-year at the end of 2014, compared with the current 1.2% rate. Longer term, it really depends on what the Fed does.

The Fed’s choice 
Since the unemployment rate may or may not be the right measure of output slack, it is not a reliable indicator for conducting monetary policy. We’ll know (with a lag) if the economy has reached the end of the cyclical downturn when inflation picks up. Hence the Fed will have to choose between being behind the curve, waiting to see inflation actually pick up, and risking a hawkish mistake. The last time it chose to ignore weak inflation prints and started to discuss monetary policy tightening, Mihir Worah and I warned that the Fed would end up doing more quantitative easing to compensate for its hawkish mistake (Viewpoint, “Promise to Be Irresponsible,” June 2013). That same month, Chairman Bernanke announced that when “asset purchases ultimately come to an end, the unemployment rate would likely be in the vicinity of 7 percent.” Now, the Fed is still expanding its balance sheet while the unemployment rate is well below 7%.

PIMCO expects that, balancing the risks between a hawkish mistake and some inflation overshoot, Yellen will choose the latter, especially since inflation has undershot the Fed’s mandate by so much in recent years. Since 2009, inflation as measured by PCE has averaged 1.4%. Given a medium-term inflation target of 2.0%, inflation could average 2.6% for the next five years to catch up. Basically, we believe Yellen could wait for core PCE to move back to a solid 2% before she hikes the rate. Since the unemployment rate is an unreliable measure, we believe inflation should guide monetary policy. But it’s up to the inflation jury to decide.

In the meantime, investors can position their portfolios to benefit from this monetary policy framework. Shorter duration assets should be “safer” than longer duration assets because they benefit from the low-for-longer policy rate stance, while longer duration will likely suffer from inflation uncertainties. We expect that strategies seeking carry from curve steepeners will perform well. The inflation premium should rise and, importantly, inflation uncertainties mean real assets should be less volatile than nominal ones.

All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed.

This material contains the opinions of the author but not necessarily those of PIMCO and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO and YOUR GLOBAL INVESTMENT AUTHORITY are trademarks or registered trademarks of Allianz Asset Management of America L.P. and Pacific Investment Management Company LLC, respectively, in the United States and throughout the world.

©2014, PIMCO.

[description] => The unemployment rate may not be a reliable indicator of output slack in the U.S. economy. We’ll know (with a lag) if the economy has reached the end of the cyclical downturn when inflation picks up. The Fed will have to choose between risking a hawkish mistake or being behind the curve, waiting to see inflation actually increase. We expect it will choose the latter. [author] => Jeremie Banet [legacyinterface_firm_id] => 335 [published_on] => 2014-03-10 [digest_date] => 2014-03-10 [access] => 1 [ordering] => 0 [post_to_apviewpoint] => 0 [post_to_rss] => 1 [post_to_legacy_database] => 1 [enabled] => 1 [created_on] => 2014-03-10 20:34:44 [created_by] => 948 [modified_on] => 2014-03-10 20:35:11 [modified_by] => 948 [checked_out_time] => 0000-00-00 00:00:00 [checked_out] => 0 [asset_id] => 227 [hits] => 0 ) [19] => stdClass Object ( [legacyinterface_commentary_id] => 143 [legacyinterface_template_id] => 9 [legacyinterface_record_id] => 13405 [apv_conversation_id] => [content_type] => market-commentary [title] => Cold War: Thoughts on Ukraine Based on a Month Spent in Latvia [slug] => broadleaf_030714 [fulltext] =>

Note: This Economic Update is a bit different than most both in subject and writing style.  However, we still thought we had some personal insights and perspectives that were worth sharing.  We’d enjoy hearing your feedback – good, bad or indifferent.   

I have been intensely more interested in the situation developing in Ukraine over the past few months than those that circled Greece, a country of similar size, or Libya and the Arab Spring a few years ago.  For the most part, I’ve taken geopolitical flare-ups in stride in terms of their potential impact to the stock market and the economy.  In general, this approach has been the right one.  (View a printable version of this Economic Update: Cold War: Thoughts on Ukraine Based on a Month Spent in Latvia)

Anticipating geopolitical events is nearly impossible, but it is equally as true that once concerns start to surface in the mainstream media, financial markets usually become far more skittish.  At the same time, ever since the Gulf War, the markets have invariably enjoyed counterintuitive rallies once events progress from fear to reality.

On Monday, fears of Russian troops occupying Ukraine spooked global markets but, almost in a clockwork fashion, they rallied the next day when Vladimir Putin staged a press conference to explain his yet questionable intentions.   While I think the overall strategy regarding the current geopolitical flair-up – standing pat – remains sound investment advice for the long term investor, I will also admit that it has worried me a bit more than most.  The key difference may likely be familiarity.

I grew up during the Cold War and remember having real, childhood nightmares over the possibility of a nuclear war with Russia.  At one point in high school, I had had a Russian friend whose parents had managed to escape the country with cartons of cigarettes lined with $100 dollar bills.  They were extremely scared that anyone knocking on the door of their American home could be a KGB agent coming to deport them or even worse, eliminate them.  A few years ago, when trying to locate “Eugene” for our 20th reunion, I called his parents, who repeatedly and suspiciously questioned me on who I was and why I was calling, even though the Cold War had long since ended.

I remember watching the Olympics during the seventies and my dad commenting about how “hot” the East German swimmers were, their muscles bulging in comparison to those in the outer lanes and who, in spite of the extra drag, chose not to shave their armpits.  As a former college swimmer, I thought my dad might actually be serious about his declarations of love for the East German swim team, but also wondered why he would then marry my mother, who was so very feminine and frankly, very well groomed.  Those who lived behind the Iron Curtain were only seen and heard from once every four years by the West, and when we did see them, it felt like we were observing humans from the “other” zoo.

The Sochi Olympics were a highly different affair than those I had watched growing up.  We were far less concerned about nukes and roided up female swimmers and far more concerned about Bob Costas’ eye malady, how much Putin had spent on the games, and if Pussy Riot – the formerly jailed Russian punk band – would be allowed to lead a rainbow colored gay parade in Olympic Village.  Instead of an ushanka-wearing Leonid Brezhnev, there was Vladimir Putin garbed in the Russian equivalent of Under Armour sportswear, dripping with the logos of what I would guess were Russian sponsors.   Rumor has it that Putin socialized on multiple occasions with the Canadian Olympic team which, in hindsight, proved to be ineffective scouting efforts for the Russian hockey team.

In addition to living through the Cold War, perhaps I’ve not been doing myself any favors, having just read The Proud Tower and Guns of August, two highly regarded World War I related books by Barbara Tuchman.  Some say that those who don’t learn from history are doomed to repeat it, but it could also be said that those who learn history might see parallels to events today that quite simply don’t exist.  In this sense, ignorance can also be bliss.

My heightened sensitivity could also relate to the fact that I spent four weeks in Latvia a few months ago with my wife and youngest son.  Latvia, for those that don’t know, is another former Soviet bloc country which, similar to Ukraine, regained its independence when the Soviet Union fell in the early 1990’s.  While I might have hoped to cross a trip to Hawaii off my bucket list before taking a trip to Latvia, sometimes things just work out that way.  The alternative option for us at the time had been Kiev, Ukraine, so at least on that front, the choice was a solid one.

While spending a month in Latvia certainly doesn’t make me  an expert in Eastern European and Russian foreign affairs, I did pick up a few, first hand perspectives that haven’t necessarily been aired in recent media coverage of Ukraine.  In a situation that could be similar to the consequences America faces today in supporting slavery early in its history, Russia may similarly be experiencing the consequences of seizing and occupying territory that at one time was not their own.

Following the end of World War II, Russia forced the migration of native peoples from Latvia and other annexed territories like Estonia and Ukraine to Siberia, replacing them with Russian nationals.  This migration policy was a calculated one, meant to ensure cultural interbreeding and a generational shift of allegiance to Mother Russia over time.  When the Soviet Union fell fifty years later, for the most part these large ethnic Russian minority groups stayed in the newly independent countries, having established lives and families of their own.

These ethnic Russian minority groups likely face considerable prejudice for what prior generations had done physically, spiritually and emotionally to the native populations throughout the former Soviet territories, similar to the real prejudice Israel may feel today or may be made to feel today in occupying the West Bank with the explicit support of America.  If Native American Indian populations had a more powerful minority voice, I suspect we’d be hearing more of their story as well, but as is almost always the case, history is usually recorded by the winners of world events, not its losers.

Regardless of whether or not I agree with Putin’s justification that entering Crimea was for the purpose of protecting his Naval fleet on the Black Sea and the large ethnic Russian population in this autonomous area of Ukraine, I am also quite certain that our leaders would have done the same thing for Americans had we been in similar shoes.  At the same time, Putin’s justification for entering Crimea sets a dangerous precedent if gone unopposed as he could then feel free to enter any former territory, including Latvia, if he felt native Russians were in danger due to political instability.

Returning to the subject of Latvia, I will say that the people of Riga, Latvia’s capital city where we stayed, weren’t – to put it bluntly – all that friendly.  You could say the same thing about New Yorkers though and at least in New York, the people don’t have the excuse that English isn’t their native language or that they had at one time been occupied by a foreign country whose leaders threw them in jail for saying the wrong things.  Not say anything at all may have been something young Latvians quickly learned.

In spite of their lack of Midwestern, American smiles and nods of acknowledgement on city sidewalks, Latvian’s were an otherwise normal people, trying to make a living and enjoy the ups and downs of daily life.  The people, particularly the women, were much taller than I had expected and they definitely had a liking for high fashion.  The city itself was beautiful as well, a cobblestoned cross between Washington DC and Charleston, South Carolina.

A few days into our trip, a supermarket in Riga collapsed, killing 54 people and making international news.   Several friends reached out to me through Facebook to make sure we were okay, recognizing the name of a city, Riga, which they normally would have glossed right over had I not been there.  (Apparently, I’m not the only one whose sense of concern is heightened by familiarity.)  In a  strange turn of events, the popular Prime Minister of Latvia who had helped the country join the European Union and recover from the worldwide recession, suddenly  resigned, taking the blame for the supermarket disaster.  I say strange only because I couldn’t imagine, from an American point of view, Barrack Obama or any other President resigning over similar issues.

Given the disaster and the resulting resignation of the prime minister, there were several protests in the streets of Riga in front of the Mayor’s headquarters.  The protests were smaller than those that had just started in Ukraine, but they were nevertheless very real.   A coalition government would have to fill the vacuum for a time, which unsettled many, to say the least.  Much to my wife’s chagrin, I walked among the protestors, each side hurling unknown verbal assaults at one another.  Claiming to be a stupid American, I snapped a few shots with my camera and asked the police why they were protesting.

According to the police, some of the protesters were angry with the mayor’s office for the handling of the supermarket disaster.  Later conversations with others suggested that some didn’t like the mayor of Riga, believing him to be a “puppet of Russia” and far too liberal in buying votes through costly social programs that benefited the few at the expense of many.  While some in the United States have voiced similar opinions to the first point, the comment about the Mayor being a puppet of the Russians seemed strange to me, implying some type of corruption.  Wasn’t this Latvia, after all?

While it may indeed be the country of Latvia, the large ethnic Russian populations here and in other former Russian territories like the Ukraine, maintain a powerful political influence just as some minority groups are collectively and independently very powerful in the United States’ democracy.  Ethnic Russians may not, in fact, be corrupt in their ties to Russia, but like the entire State of Texas, just a lot more patriotic about their original Motherland.

Heck, it could be that “Crimean Peninsula” in English means “Texas Panhandle.”  No wonder George Bush and Vladimir Putin were so tight many years ago!

 

Kindest Regards,

Doug MacKay, CEO & CIO

[description] => I have been intensely more interested in the situation developing in Ukraine over the past few months than those that circled Greece, a country of similar size, or Libya and the Arab Spring a few years ago. For the most part, I've taken geopolitical flare-ups in stride in terms of their potential impact to the stock market and the economy. In general, this approach has been the right one. 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( ) [modelDispatcher:protected] => FOFModelDispatcherBehavior Object ( [_observers:protected] => Array ( [0] => FOFModelBehaviorFilters Object ( [_subject:protected] => FOFModelDispatcherBehavior Object *RECURSION* [_errors:protected] => Array ( ) ) [1] => FOFModelBehaviorAccess Object ( [_subject:protected] => FOFModelDispatcherBehavior Object *RECURSION* [_errors:protected] => Array ( ) ) ) [_state:protected] => [_methods:protected] => Array ( [onafterbuildquery] => Array ( [0] => 0 [1] => 1 ) [onbeforesave] => Array ( [0] => 0 [1] => 1 ) [onbeforedelete] => Array ( [0] => 0 [1] => 1 ) [onbeforecopy] => Array ( [0] => 0 [1] => 1 ) [onbeforepublish] => Array ( [0] => 0 [1] => 1 ) [onbeforehit] => Array ( [0] => 0 [1] => 1 ) [onbeforemove] => Array ( [0] => 0 [1] => 1 ) [onbeforereorder] => Array ( [0] => 0 [1] => 1 ) [onbeforebuildquery] => Array ( [0] => 0 [1] => 1 ) [onaftersave] => Array ( [0] => 0 [1] => 1 ) [onafterdelete] => Array ( [0] => 0 [1] => 1 ) [onaftercopy] => Array ( [0] => 0 [1] => 1 ) [onafterpublish] => Array ( [0] => 0 [1] => 1 ) [onafterhit] => Array ( [0] => 0 [1] => 1 ) [onaftermove] => Array ( [0] => 0 [1] => 1 ) [onafterreorder] => Array ( [0] => 0 [1] => 1 ) [onaftergetitem] => Array ( [0] => 0 [1] => 1 ) [__construct] => Array ( [0] => 0 [1] => 1 ) [update] => Array ( [0] => 0 [1] => 1 ) [__tostring] => Array ( [0] => 0 [1] => 1 ) [def] => Array ( [0] => 0 [1] => 1 ) [get] => Array ( [0] => 0 [1] => 1 ) [getproperties] => Array ( [0] => 0 [1] => 1 ) [geterror] => Array ( [0] => 0 [1] => 1 ) [geterrors] => Array ( [0] => 0 [1] => 1 ) [set] => Array ( [0] => 0 [1] => 1 ) [setproperties] => Array ( [0] => 0 [1] => 1 ) [seterror] => Array ( [0] => 0 [1] => 1 ) ) [_errors:protected] => Array ( ) ) [_errors:protected] => Array ( ) ) ) [_basePath:protected] => /var/www/html/apcms/components/com_legacyinterface [_defaultModel:protected] => commentaries [_layout:protected] => default [_layoutExt:protected] => php [_layoutTemplate:protected] => _ [_path:protected] => Array ( [template] => Array ( [0] => /var/www/html/apcms/templates/aptheme/html/com_legacyinterface/commentaries/ [1] => /var/www/html/apcms/templates/aptheme/html/com_legacyinterface/commentaries/ [2] => /var/www/html/apcms/templates/aptheme/html/com_legacyinterface/commentaries/ [3] => /var/www/html/apcms/components/com_legacyinterface/views/commentaries/tmpl/ [4] => /var/www/html/apcms/templates/aptheme/html/com_legacyinterface/commentary/ [5] => /var/www/html/apcms/components/com_legacyinterface/views/commentary/tmpl/ [6] => /var/www/html/apcms/templates/aptheme/html/com_legacyinterface/commentaries/ [7] => /var/www/html/apcms/components/com_legacyinterface/views/commentaries/tmpl/ ) [helper] => Array ( [0] => /var/www/html/apcms/administrator/components/com_legacyinterface/helpers/ [1] => /var/www/html/apcms/components/com_legacyinterface/helpers/ ) ) [_template:protected] => [_output:protected] => [_escape:protected] => htmlspecialchars [_charset:protected] => UTF-8 [config:protected] => Array ( [option] => com_legacyinterface [view] => commentaries [input] => FOFInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 [limitstart] => 2260 [option] => com_legacyinterface [view] => commentaries [Itemid] => 616 [layout] => [task] => browse [directionTable] => asc [sortTable] => published_on [filter_order] => published_on [filter_order_Dir] => desc [savestate] => 1 [base_path] => /var/www/html/apcms/components/com_legacyinterface ) [inputs:protected] => Array ( [get] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 ) [inputs:protected] => Array ( [get] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 ) [inputs:protected] => Array ( ) ) [post] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [cookie] => JInputCookie Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( [get] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 ) [inputs:protected] => Array ( ) ) [post] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [cookie] => JInputCookie Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [files] => JInputFiles Object ( [decodedData:protected] => Array ( ) [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( [get] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 ) [inputs:protected] => Array ( ) ) [post] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [cookie] => JInputCookie Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [files] => JInputFiles Object ( [decodedData:protected] => Array ( ) [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [env] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [request] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 [limitstart] => 2260 [option] => com_legacyinterface [view] => commentaries [Itemid] => 616 ) [inputs:protected] => Array ( ) ) [server] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [HTTP_AUTHORIZATION] => [HTTP_CACHE_CONTROL] => no-cache [HTTP_CONNECTION] => Keep-Alive [HTTP_PRAGMA] => no-cache [HTTP_ACCEPT] => */* [HTTP_ACCEPT_ENCODING] => gzip, deflate [HTTP_FROM] => bingbot(at)microsoft.com [HTTP_HOST] => apcms.hubtech.tv [HTTP_IF_MODIFIED_SINCE] => Wed, 23 May 2018 07:38:02 GMT [HTTP_USER_AGENT] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm) [PATH] => /sbin:/usr/sbin:/bin:/usr/bin [SERVER_SIGNATURE] => [SERVER_SOFTWARE] => Apache/2.4.16 (Amazon) PHP/5.5.31 [SERVER_NAME] => apcms.hubtech.tv [SERVER_ADDR] => 10.28.13.29 [SERVER_PORT] => 80 [REMOTE_ADDR] => 207.46.13.149 [DOCUMENT_ROOT] => /var/www/html/apcms [REQUEST_SCHEME] => http [CONTEXT_PREFIX] => [CONTEXT_DOCUMENT_ROOT] => /var/www/html/apcms [SERVER_ADMIN] => ben@hubtech.tv [SCRIPT_FILENAME] => /var/www/html/apcms/index.php [REMOTE_PORT] => 9909 [GATEWAY_INTERFACE] => CGI/1.1 [SERVER_PROTOCOL] => HTTP/1.1 [REQUEST_METHOD] => GET [QUERY_STRING] => start=2260 [REQUEST_URI] => /?start=2260 [SCRIPT_NAME] => /index.php [PHP_SELF] => /index.php [REQUEST_TIME_FLOAT] => 1529449466.648 [REQUEST_TIME] => 1529449466 ) [inputs:protected] => Array ( ) ) [session] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [__default] => Array ( [session.counter] => 1 [session.timer.start] => 1529449467 [session.timer.last] => 1529449467 [session.timer.now] => 1529449467 [session.client.browser] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm) [registry] => Joomla\Registry\Registry Object ( [data:protected] => stdClass Object ( [com_legacyinterface] => stdClass Object ( [commentaries] => stdClass Object ( [limitstart] => 2260 [filter_order] => published_on [filter_order_Dir] => desc ) ) ) ) [user] => JUser Object ( [isRoot:protected] => [id] => 0 [name] => [username] => [email] => [password] => [password_clear] => [block] => [sendEmail] => 0 [registerDate] => [lastvisitDate] => [activation] => [params] => [groups] => Array ( [0] => 9 ) [guest] => 1 [lastResetTime] => [resetCount] => [requireReset] => [_params:protected] => Joomla\Registry\Registry Object ( [data:protected] => stdClass Object ( ) ) [_authGroups:protected] => Array ( [0] => 1 ) [_authLevels:protected] => Array ( [0] => 1 [1] => 1 ) [_authActions:protected] => [_errorMsg:protected] => [_errors:protected] => Array ( ) [aid] => 0 ) ) ) [inputs:protected] => Array ( ) ) [jrequest] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) ) ) [env] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( ) [inputs:protected] => Array ( ) ) [request] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [start] => 2260 [limitstart] => 2260 [option] => com_legacyinterface [view] => commentaries [Itemid] => 616 ) [inputs:protected] => Array ( ) ) [server] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [HTTP_AUTHORIZATION] => [HTTP_CACHE_CONTROL] => no-cache [HTTP_CONNECTION] => Keep-Alive [HTTP_PRAGMA] => no-cache [HTTP_ACCEPT] => */* [HTTP_ACCEPT_ENCODING] => gzip, deflate [HTTP_FROM] => bingbot(at)microsoft.com [HTTP_HOST] => apcms.hubtech.tv [HTTP_IF_MODIFIED_SINCE] => Wed, 23 May 2018 07:38:02 GMT [HTTP_USER_AGENT] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm) [PATH] => /sbin:/usr/sbin:/bin:/usr/bin [SERVER_SIGNATURE] => [SERVER_SOFTWARE] => Apache/2.4.16 (Amazon) PHP/5.5.31 [SERVER_NAME] => apcms.hubtech.tv [SERVER_ADDR] => 10.28.13.29 [SERVER_PORT] => 80 [REMOTE_ADDR] => 207.46.13.149 [DOCUMENT_ROOT] => /var/www/html/apcms [REQUEST_SCHEME] => http [CONTEXT_PREFIX] => [CONTEXT_DOCUMENT_ROOT] => /var/www/html/apcms [SERVER_ADMIN] => ben@hubtech.tv [SCRIPT_FILENAME] => /var/www/html/apcms/index.php [REMOTE_PORT] => 9909 [GATEWAY_INTERFACE] => CGI/1.1 [SERVER_PROTOCOL] => HTTP/1.1 [REQUEST_METHOD] => GET [QUERY_STRING] => start=2260 [REQUEST_URI] => /?start=2260 [SCRIPT_NAME] => /index.php [PHP_SELF] => /index.php [REQUEST_TIME_FLOAT] => 1529449466.648 [REQUEST_TIME] => 1529449466 ) [inputs:protected] => Array ( ) ) [session] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script [19] => style [20] => title [21] => xml ) [attrBlacklist] => Array ( [0] => action [1] => background [2] => codebase [3] => dynsrc [4] => lowsrc ) ) [data:protected] => Array ( [__default] => Array ( [session.counter] => 1 [session.timer.start] => 1529449467 [session.timer.last] => 1529449467 [session.timer.now] => 1529449467 [session.client.browser] => Mozilla/5.0 (compatible; bingbot/2.0; +http://www.bing.com/bingbot.htm) [registry] => Joomla\Registry\Registry Object ( [data:protected] => stdClass Object ( [com_legacyinterface] => stdClass Object ( [commentaries] => stdClass Object ( [limitstart] => 2260 [filter_order] => published_on [filter_order_Dir] => desc ) ) ) ) [user] => JUser Object ( [isRoot:protected] => [id] => 0 [name] => [username] => [email] => [password] => [password_clear] => [block] => [sendEmail] => 0 [registerDate] => [lastvisitDate] => [activation] => [params] => [groups] => Array ( [0] => 9 ) [guest] => 1 [lastResetTime] => [resetCount] => [requireReset] => [_params:protected] => Joomla\Registry\Registry Object ( [data:protected] => stdClass Object ( ) ) [_authGroups:protected] => Array ( [0] => 1 ) [_authLevels:protected] => Array ( [0] => 1 [1] => 1 ) [_authActions:protected] => [_errorMsg:protected] => [_errors:protected] => Array ( ) [aid] => 0 ) ) ) [inputs:protected] => Array ( ) ) [jrequest] => JInput Object ( [options:protected] => Array ( ) [filter:protected] => JFilterInput Object ( [tagsArray] => Array ( ) [attrArray] => Array ( ) [tagsMethod] => 0 [attrMethod] => 0 [xssAuto] => 1 [tagBlacklist] => Array ( [0] => applet [1] => body [2] => bgsound [3] => base [4] => basefont [5] => embed [6] => frame [7] => frameset [8] => head [9] => html [10] => id [11] => iframe [12] => ilayer [13] => layer [14] => link [15] => meta [16] => name [17] => object [18] => script