PierAlert: European & Asian Economies Rebounding

Contrary to recent fears which caused a volatile market correction earlier this month, North Pier is seeing signs of firming in key international economies in Europe and Asia. This information has not hit the headlines…yet.

The October International Purchasing Manager Indices are showing a resurgence in Germany’s and Japan’s business-to-business sectors and general firming in China and the Euro-zone as a whole. This directly refutes concerns that international economies were heading for recession.

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In North Pier’s 10/16 PierAlert, we reminded our network of our July prediction for upcoming market volatility. That morning, following the market’s 460 point intra-day dive, we also counseled that dramatic corrections are completely normal in ascending bull markets. We reaffirmed our long-standing theme of global expansion, anchored by strength in the U.S. economy. We are now seeing indications that suggest international economic conditions may be more stable than many have thought. We will expand on our position in North Pier’s upcoming Market & Economic PIERspective.

All the best,

Jim

Did you know that North Pier provides tactical asset allocation consulting? Our clients are using this service to enjoy forward-thinking and unbiased advice that augments their existing traditional advisory/management relationships. If you oversee a DB, Trust or Endowment, ask us how and why…


PierAlert: Volatility Is Here, As Predicted.

On July 17th, in our Summer Market and Economic Commentary, we cautioned that the unusually calm conditions in the equity markets were likely near an end. After yesterday’s nearly 500 point intra-day drop in the Dow, clearly that predicted phase is amongst us.

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In my 25 year career, 7-10% corrections during healthy bull markets are the norm, and frequently are followed by further advances. As our regular readers know, along with our recent prediction of volatility, we still maintained that we were well entrenched in a long-term, secular bull market. After a day like yesterday, you may be asking, “What is North Pier thinking now?” The answer is…our themes aregenerally still intact. Though international economies are showing some initial signs of cooling, the US is still on very solid ground. Our key coveted indicators, the ISM Reports On Business, are still suggesting robust growth. However, with topics like ebola and ISIS in the news, emotions are high.

Stay tuned for our upcoming commentary. We’ll review the recent cooling factors and even more compelling evidence supporting our theme of predicted global expansion.

Until then, as we said in July, we have a firm hand on the helm and are watching our gauges…”Steady as She Goes.”

All the Best,

Jim


PIMCO Total Return Terminated by North Pier Investment Committee

In follow up to our announcement Friday regarding the resignation of PIMCO bond fund manager, Bill Gross, North Pier Fiduciary Management held an emergency meeting of its Investment Committee to discuss all PIMCO funds in our covered universe. North Pier’s committee has voted unanimously to terminate PIMCO Total Return in all of our discretionary 401(k) plans and are recommending replacement to our non-discretionarily advised 401(k)s. We have also  liquidated the fund from all of our discretionarily managed accounts. We view this manager change as a fatal blow to the fund’s track record, rendering it completely inapplicable in evaluation of the fund’s future prospects, thus making it an imprudent investment. We are presently conducting replacement searches.

North Pier is further evaluating other PIMCO funds in our universe that were not under Mr. Gross’ direct management, but may also be affected by fallout from analyst defections and the economic implications to PIMCO from massive redemptions. North Pier will vote on the remaining funds at our regularly scheduled October meeting.

For additional insight into the matter, please read Margaret Collin’s Bloomberg article, for which we were interviewed.