| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Money managers see sunshine ahead |
NEW YORK (Reuters) - Money managers who had sought shelter under the protective umbrella of investments backed by the U.S. government during the financial crisis are becoming more confident that a sustainable global economic recovery is under way, prompting them to cast a wider investment net.
Speakers at the Reuters Investment Outlook Summit in New York on Monday painted an investment climate warmed by the sunshine of modest economic growth and low inflation.
Driving the continuing appetite for higher-risk investments was confidence that the Federal Reserve will keep interest rates extremely low, meaning that investors will have to look elsewhere for higher returns.
"I would be absolutely, unbelievably shocked if Bernanke raised rates in the next six months," said Martin Sass, founder and chief executive officer of investment advisory firm M.D. Sass.
And now that many companies have cut staffing levels to the bone and are squeezing out large productivity gains from remaining staff, they could enjoy a profitability "sweet spot" for some time.
"Prospects for corporate profits generally are good. There is absolutely no wage pressure," said legendary Wall Street economist Henry Kaufman, who advocated buying stocks in "good quality corporations."
Stocks, along with intermediate-maturity, good quality corporate bonds, "should do well" in the new year, said an uncharacteristically upbeat Kaufman.
Kaufman was known as "Dr. Doom" in the 1970s and 1980s after presciently warning of the risk of dangerously high inflation when he was the chief economist with Salomon Brothers.
Now, he said, "inflation is not a problem for the foreseeable future.
NO DOUBLE-DIPPING
Among the managers speaking on Monday, there was barely a whiff of worry that a tepid recovery might open the door to a double-dip recession. That fear has driven some investors to call the rally in financial markets over recent months a bear market rally that cannot be sustained.
Instead, the strategists voiced confidence in the economic and investment outlook.
Friday's unexpectedly strong November U.S. employment report -- with job losses of only 11,000 against a forecast of 130,000 and an unexpected fall in the jobless rate -- added to that sense of optimism.
"It's certainly heartening news for the economy," said Mary Miller, director of the fixed income division at T. Rowe Price.
Credit markets, after a year of extraordinary turmoil, are now trading more on fundamentals, Miller said.
"We started the year with the haves and have nots: the markets that had government support and those that didn't. Today, the greater opportunities are in parts of the market that were not supported," she said. "The focus has really shifted."
Emerging markets, some of which have seen big rallies in recent months, are part of the equation, Miller said. "We still like markets in India and have a range of interests in the Far East. And some markets in South America" including Brazil, as well as Mexico.
Brazil's stock market is up more than 80 percent this year, and Mexican equities hit a two-year high earlier this month.
Margaret Patel, senior portfolio manager with Evergreen Investments, said the recovering economy in 2010 could drive double-digit returns for U.S. high-yield bonds.
Equities should also do well, at least in the first half of 2010, she said, adding, "I think we will see a surprisingly strong rebound in sales and revenue."
Investment-grade corporate bonds, meanwhile, could follow this year's 20 percent returns by racking up another 5 percent to 8 percent potential return in 2010, she said.
SYNCHRONIZED RECOVERY
Sass, meanwhile, said that a "synchronized global recovery" is under way, and that the startling equity market rally since March has not yet run its course.
"On a valuation basis we still see the market has being mildly undervalued," he said.
"We are looking at a very big increase, 45 percent or so, in S&P 500 earnings for 2010 versus 2009. ... We are looking at another significant gain in corporate profits in 2011."
The Standard & Poor's 500 index has already rallied more than 50 percent from its March lows, and hit a 14-month high in early December.
The challenge in the new year might be to cherry-pick a handful of stocks that can still outperform a market no longer so drastically underpriced, said Sass.
(Editing by Leslie Adler)
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