Finance

Bob Brinker Fan Club Blog

The following commentary is from my “Retirement Advisor” writing partner, David Korn. Caller: This caller noticed Bob saying recently that he thought GNMA would take a hit that he was no more suggesting them. The caller said she still owns a sizable position in GNMAs and wanted to know what Bob would do. Bob said his suggestion against buying the GNMA fund is based on a risk/prize decision over an extended period of time.

Bob said he is recommending shorter length set-income securities within an overall diversified bond portfolio. Bob said the average duration he could be suggesting is about 1 year. The GNMA fund duration is typically several years. Bob said he thinks we will eventually see a normalization of interest rates and when that happens you will see the net asset value of the GNMA degrade and given what they are paying it is not worth the risk. David Korn: The Vanguard GNMA finance (VFIIX) that Bob recommended for so a long time is actually up 2.48% year-to-date, not too shabby at all. Sell GNMA to Buy Fidelity Floating Rate Income Fund, Bad, or Good Advice?

ES futures relocated down by about 0.5% practically instantly, driven without doubt partially by trading allows monitoring news services for keywords and pushing a thin overnight futures market downwards. In comparison, the markets virtually ignored the story about a shooting at a high school just north of Seattle. What if the news headlines wires had reported shooter was a local 14 year-old boy who converted to Islam, would the ages have reacted differently? If the scenario that I outlined is correct, then we have to more or less throw out all the technical analysis across the brief correction as it was only a momentary panic. It is time to make contact with fundamentals and real life.

Where does the marketplace stand today? Week Last, I highlighted analysis from John Butters of Factset on the US profits view and season. Here is the updated Factset chart of how consensus forward 12-month EPS estimates are evolving (annotations in red are mine). I have highlighted in red earlier shows when the forward 12-month EPS estimations have rolled over.

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These periods have been associated with either keep marketplaces or corrections as the market digests an uncertain profits outlook. Earnings Scorecard: From the 208 companies that have reported earnings to day for Q3 2014, 75% have reported income above the mean estimate and 60% have reported sales above the mean estimate.

Earnings Guidance: For Q4 2014, 29 companies have issued negative EPS guidance and 8 companies have released positive EPS assistance. For investors, the current amount of stalling ahead EPS development is not an indication for panic, as forwards EPS does not may actually lead the stock market. It seems to be Rather, at best, a coincidental indicator.

Where is the EPS weakness via? Diving further into the latest profits reviews and company meeting phone calls, it seems to be coming mostly from concerns about European development. US large-cap companies derive a significant portion of their sales abroad and global weakness undoubtedly weighs down the wages outlook.