June 27, 2014

Tenets of investing for the long run



Chief Investment Strategist James Swanson highlights a few of the rules of thumb that he relies on to help him determine where we are in the business cycle and which markets are too rich, too cheap or fairly valued.

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June 17, 2014

Oil on the rise?

An oil supply shock could be a threat to the markets in mid-2014.
A rise in the global price of oil would cut spending and hurt profits.
If there is no quick solution, this could be a summer of market discontent.


The sudden and successful advance of Sunni militants from the Islamic State of Iraq and Syria (ISIS) into northern and western Iraq has captured our attention and raised some concern. There is no ignoring the risks to the markets from this rapidly developing situation. The most important bargaining chip — or weapon — in such a situation is a country’s biggest economic asset. For Iraq, that asset is its oil.

Flying back to Boston from Dubai last Friday, I was far from reassured as I thought over the six days I had just spent in the Persian Gulf region. While there, I asked everyone I could about the prospect for upheavals in the flow of oil and political power.
 

June 12, 2014

More saving and less inflation

Yields on high-quality bonds have stayed low despite the improving economy.
Such low yields — and high prices — seem to warn investors of potential dangers.
Still, tight spreads in the credit markets could be signaling better times ahead.


Typically, accelerating economic growth puts pressure on the bond market. As better performance is expected from investments in other types of securities, the anticipated return on bonds has to rise to offset higher returns on riskier assets. Furthermore, growth usually leads to inflationary pressures on consumer and producer prices because demand pushes up the costs of labor, products and services. Then central banks, nervous at the sight of wage and price inflation, force up interest rates.

But not this time.