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Happy Holidays from Hennion and Walsh!

From our family at Hennion & Walsh to yours, best wishes for a very happy holiday season and a healthy new year. If there is anything we can do to help you position your investment portfolios for 2014, please do not hesitate to contact us ... Read More

Will Santa Claus Come to Town in 2013?

The technical anomaly popularly called the “Santa Claus Rally” describes the abnormal positive returns the market experiences in the last month of the calendar year. Logic would suggest that the optimistic behavior of market participants due to the holidays, combined with higher sales during the busiest shopping season of the year, justify the movement in stock prices, but shouldn’t this seasonality be priced into the market already? After all, the New York Stock Exchange (NYSE) is one of the world’s largest and most efficient markets with sophisticated, complex traders building events like the holiday shopping season into their respective models ... Read More

Happy Thanksgiving!

From our family at Hennion & Walsh to yours, best wishes for a very happy and healthy Thanksgiving. As we move into the final month of 2013, if there is anything that we can do to assist with your year-end investment needs, please do not hesitate to contact us ... Read More

2013 Remaining Market Outlook

Investors continue to listen for clues from the Federal Reserve (“Fed”) and are making adjustments to their portfolios to brace themselves for an inevitable environment of rising interest rates. Whether the Fed actually increases rates later this year, in 2014 or by the middle of 2015 is somewhat irrelevant as market perception of interest rates has already changed and affected bond prices and their associated yields. Reductions in the Fed’s monthly bond purchase program (which could start as soon as later this year but is more likely to start early in 2014) will also impact bond prices and yields. As result, we would expect the rotational shift out of fixed income funds and into equity and alternative asset class funds to continue ... Read More

Government Shutdown a Convenient Excuse for Market Pullback?

While it is true that there has not been a shutdown of the federal government in over 17 years, the current partial shutdown of the federal government is the 18th such shutdown since 1976. According to a recent “Investment Insights” article from Ashvin Chhabra of Merrill Lynch, the market impact, in the short term, of a U.S. government shutdown - which has been the defined result of a failure of Congress to pass a budget since 1981 - has been relatively insignificant and perhaps slightly positive for equity investors ... Read More

Asset Class Returns during Previous Fed Tightenings

The Federal Funds Rate is the interest rate at which institutions lend funds maintained at the Federal Reserve (“Fed”) to other institutions. The Fed Funds Rate is often looked at as a benchmark for other interest rates and has a profound influence on overall economic activity as its level can either help to stimulate the economy or control inflation pressures. The Fed’s Federal Open Market Committee (FOMC) sets targets for the Fed Funds Rate and looks to achieve these targets through their own open market operations. Following the market meltdown of 2008 – early 2009, the Fed adopted an accommodative stance by lowering interest rates, through various operations including quantitative easing, to historic lows with an overarching goal of stimulating the economy through less expensive sources of credit. Now that the economic recovery is getting to a point where the Fed believes that the U.S. economy may be able to stand on its own two legs, the Fed will be in a position to tighten (i.e. be less accommodative) by raising their Fed Funds target rate. This then begs the question as to which asset classes have historically fared better, from a total return perspective, when the Federal Funds rate was increased in previous years ... Read More

Understanding the Three Rs: REITs and Rising Interest Rates

When the Federal Reserve suggested in June that they may consider tapering their massive, monthly bond buying program sooner than expected, market investors interpreted their optimism as a sign that interest rates would likely be rising in the short-term. As weeks passed, investors came to the realization that this is not the case as economic growth and unemployment remain well below Fed target levels. However, the damage in the REIT sector was already done as REITs, as measured by the Dow Jones (DJ) Equity All REIT index, experienced a total return of -2.1% for the quarter – the weakest quarterly return for the index since the third quarter of 2011. The DJ Equity All REIT index components include publicly traded companies in the S&P Dow Jones Indices U.S. stock universe that have elected to be taxed as REITs and are classified as Equity REITs according to the Dow Jones REIT Industry Classification Hierarchy ... Read More

June Fund Flows Suggest Overall Rotational Shift by Investors

When the Federal Reserve (the “Fed”) announced in June that the U.S. economic recovery was showing such progress, based on their assessments at that time, that they may consider starting to taper their bond buying program (i.e. quantitative easing) sooner than originally expected, perhaps as early as the Fall of 2013, investors fled the markets; bonds and equities, in droves. Order was eventually restored to the markets as investors came to their senses, realizing after some additional time to digest the entirety of the comments from the Fed, that the Fed did not suggest that they were going to start raising interest rates, or even sell bonds, in 2013, the damage was already done. Mutual fund and Exchange-traded fund (ETF) flows for the month of June provide evidence of this exiting behavior on the part of investors as well as what we believe to be a re-positioning of portfolios by investors (presumably with diversified growth objectives) to brace for an environment of rising interest rates - where economic, and stock market, growth would be expected to continue to progress to some degree ... Read More