1.Western Europe, U.S. and China Car Sales Drop…
For the first time since January 2009, sales of cars declined year-over-year in all three of the world’s largest auto markets of Western Europe (-6.8%), China (-1.8%) and the United States (-3.7%). Combined, these three markets account for roughly 70% of the world’s auto sales
Lots of cars coming off lease.
Sorry…Some technical difficulties on train this morning.
1.Volatility ….Average Daily Range of S&P 500 Lowest Since 1970
From Dave Lutz at Jones
“The average daily range for the S&P 500 Index so far this year is 0.57%, which is the lowest range going back to 1970” says LPL
Next FBI Director Pop.
He attended Merrillville High School and graduated in 1970 from the United States Air Force Academy. He played basketball for four seasons at the Academy and in his senior year was the team captain and the leading scorer. He graduated with a bachelor’s degree in Soviet Studies, and he underwent Air Force intelligence gathering and processing training. At one point, Popovich considered a career with the Central Intelligence Agency.
Popovich served five years of required active duty in the United States Air Force, during which he toured Eastern Europe and the Soviet Union with the U.S. Armed Forces Basketball Team. In 1972, he was selected as captain of the Armed Forces Team, which won the Amateur Athletic Union (AAU) championship. This earned him an invitation to the 1972 U.S. Olympic Basketball Team trials.
1.EAFE profits remain 45% below their prior peak, notes Doug Ramsey, chief investment officer of the Leuthold Group.
Investors poured roughly $6 billion into European equities last week
Industry analysts look for EAFE earnings to increase by 18% to 19% this year, compared with an estimated gain of 10% in U.S. profits. While this rise comes off a low base for overseas stocks, it’s the direction and momentum that count most for investors. “We are in a normalization period” in which EAFE earnings will catch up with the U.S., says Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Merrill Lynch. Subramanian recommends underweighting the S&P 500 relative to other markets, and notes that positive earnings revisions have been more numerous lately in Europe and Japan than the U.S.
Sorry…Missed last couple days due to travel.
1.Advisors Betting on Bank Loans for Rate Rise.
Bank Loan ETF…Fixed Income Allocators Rushing to Plays on Rising Rates.
1.The Dividend Bull Market Has Pushed Valuations to Record Levels.
Larry Swedroe Weighs In…
The table below shows three value metrics—price-to-earnings (P/E), price-to-book value (P/B) and price-to-cash flow (P/CF)—for two of the market’s most popular dividend strategies: the SPDR S&P Dividend ETF (SDY), with more than $14 billion in assets under management (AUM), and the Vanguard Dividend Appreciation ETF (VIG), with more than $22 billion in AUM. Data is as of July 13, 2016. VIG buys the stocks of companies with rapid growth in their dividends.
The table also shows the two large-cap value ETFs with the most AUM, the iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV). Finally, I’ll compare the value metrics of these funds with that of the SPDR S&P 500 ETF (SPY). As you review the data, remember that the lower the price metric, the higher the expected return. Data is from Morningstar.
The above data makes clear that the popularity of the two dividend strategies (SDY and VIG) has led to a rise in the prices of these stocks and reduced their expected returns. No matter which value metric we look at, the expected returns for both SDY and VIG are now well below the expected returns of the two large value strategies, and also below that of the S&P 500 ETF. It’s an example of the curse of popularity, and what happens when a trade gets “crowded.” Forewarned is forearmed.
Larry Swedroe on Dividends
Dividend Stocks Have Doubled Since Pullback in Mid-2015