Markets News Stocks 

Emerging markets are red hot right now. Three investments for the rest of 2019

“This is one of the best times to diversify into emerging markets,” said Luca Paolini, chief strategist at Pictet Asset Management” writes unknown author for cnbc.com. Emerging markets have been one of the hottest trades of the year thus far.Investors thinking about betting in emerging markets should look at Brazilian stocks, Mexican bonds and banks in the space, according to strategists and analysts. “Everything is pointing to outperformance in emerging markets.”.  Source: cnbc.com

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Investors’ cash buildup comes at a cost

“Analysts and fund managers said the stampede into cash is understandable, but safety comes with a steep opportunity cost” reports businessinsider.com. At same time, the yields on money funds stuffed with all that safe-haven cash have trickled lower.While money market funds offer safety, they come at a cost as they accept a lower yield,” said Jerome Schneider, head of short-term portfolio management at PIMCO in Newport Beach, California.Risk-averse investors could shift some cash into short-term and floating-rate bond funds to pick up extra yields without extensively lifting their risk profile,…

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Investors are buying stocks AND bonds, which means something has to give

“Investors are buying into the riskiness of stocks, but they’re also buying the security of the bond market” writes Patti Domm for cnbc.com. Boockvar said investors are buying the U.S. 10-year Treasury, as they also buy negatively yielding Japanese government bonds and the 10-year German bund, now yielding 0.17 percent.Michael Schumacher, director rate strategy at Wells Fargo, said the buying in both markets could be resolved by a sell-off in bonds.If there’s low inflation and good growth, people would happily be buying both markets,” said Peter Boockvar, chief investment strategist…

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As recession fears fade, the stars are aligning for one crucial part of the market — and BAML says its future returns could put stocks to shame

“Further increase in rates could pose problems for the bond market, he said” writes Marley Jay for businessinsider.com. On Wednesday, the Federal Reserve all but proclaimed it’s done raising interest rates for a while, saying it will be “patient” in choosing how it handles rates in the future.In a period where experts think the stock market will be volatile, BAML says bond prices might make bigger gains.”In the present environment investment grade credit outperforms equities,” Mikkelsen wrote, adding that trading volumes in that part of the bond market were extremely…

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EU charges eight banks over alleged government bond cartel

“If found guilty of breaching EU antitrust rules, the banks could face fines up to 10 percent of their global turnover” writes Alastair Macdonald for reuters.com. BRUSSELS/FRANKFURT (Reuters) – The European Union’s antitrust authority has charged eight unnamed banks with operating a cartel in trading euro zone government bonds between 2007 and 2012, years when the financial crisis dragged down banks and countries.The European Commission said in a statement that some traders at the banks exchanged commercially sensitive information and coordinated trading strategies on the euro-denominated bonds, mainly through online…

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Contrarian who called the 2008 housing crash expects a global recession this year

“The International Monetary Fund has cut its estimates for global growth in 2019, citing concerns about weakness in Europe” writes Howard Gold for marketwatch.com. Read: These 3 leading economic indicators show no recession is coming One well-known independent economist thinks it will happen even sooner—he’s looking for a global recession to start in 2019.He also predicted a 2012 global recession that never happened.But there’s plenty of overvaluation in many financial markets, thanks, he says, to the Fed’s largesse after the Great Recession. Source: marketwatch.com

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As China’s economy falters, some fund managers look to bonds

“The phased inclusion of some Chinese bonds in global indexes starting this year also should draw inflows” reports businessinsider.com. He’s not alone in favoring Chinese bonds over equities.On top of this, weak income growth and rising household debt will hit growth of premiums.His Shanghai-based ChangAn Xinyi Enhanced Mixed Fund has increased its assets over the past two weeks by shunning Chinese stocks for bonds.That was one factor driving yields on benchmark 10-year Chinese government bonds down nearly 40 basis points in the quarter. Source: businessinsider.com

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PG&E misses interest payment on 2024 notes; bonds, shares plummet

“In a form filed with the SEC on Monday, PG&E announced its intention to not make the payment” reports businessinsider.com. The 2040 bond , which is worth $800 million and sports a 5.4 percent coupon, saw its price fall by 4.75 points on Tuesday.Prices of shares and bonds have been falling since.FILE PHOTO: PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise, Thomson Reuters By Kate Duguid NEW YORK (Reuters) – The price of bonds and shares in PG&E Corp plummeted after the…

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PG&E’s $30 billion in potential liabilities is worrying debt holders who fear they won’t be paid

“It is very unusual that high yield borrowers go bankrupt before they join the high yield index, a scenario that Bank of America dubs a “failing angel.”” writes Callum Burroughs for businessinsider.com. That means PG&E, whose debt was downgraded to high yield last week, could pay claims of $32 billion before any permanent impairment to its $22 billion of debt.Other debt holders will be wary of the potential for further complications in the event that further wildfires damage the company during its re-organization process.PG&E’s most heavily traded 2034 bonds have…

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Cold, hard safety blanket: Cash rules as stocks, bonds waver

“For years, cash languished at the bottom of the investment rankings, weighed down by nearly non-existent interest rates” writes The Associated Press for seattletimes.com. Even bonds, which carry the risk of falling prices if interest rates rise, would likely return more because they have higher yields.An investor planning to retire decades in the future would likely get much, much higher returns from stocks than cash, which is only just starting to match the rate of inflation.And while the steadiness of cash can be a comfort when markets are heaving, it…

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