TD.TO - The Toronto-Dominion Bank

Toronto - Toronto Delayed Price. Currency in CAD
74.14
+0.18 (+0.24%)
At close: 4:00PM EST
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Previous Close73.96
Open73.86
Bid74.08 x 0
Ask74.09 x 0
Day's Range73.61 - 74.41
52 Week Range71.22 - 77.96
Volume2,429,288
Avg. Volume3,244,233
Market Cap134.39B
Beta (5Y Monthly)0.95
PE Ratio (TTM)11.86
EPS (TTM)6.25
Earnings DateFeb 26, 2020
Forward Dividend & Yield2.96 (4.00%)
Ex-Dividend DateJan 07, 2020
1y Target Est78.57
  • CNW Group

    TD Bank Group Comments on Expected Impact of TD Ameritrade Holding Corp.'s First Quarter Earnings

    TD Bank Group Comments on Expected Impact of TD Ameritrade Holding Corp.'s First Quarter Earnings

  • CNW Group

    TD Asset Management Inc. Announces TD ETF Distributions

    TD Asset Management Inc. Announces TD ETF Distributions

  • Brexit, Facebook, Endowments and Other Errors
    Bloomberg

    Brexit, Facebook, Endowments and Other Errors

    (Bloomberg Opinion) -- Every year for the past decade I have been making a list of what I got wrong. This act of contrition allows me to own my mistakes, recognize my fallibility and learn from the experience. I hope you find some value in doing the same exercise.Let’s get to the errors:No. 1. Trading commissions: Last February, I cited a Morningstar survey that found that “fees fell 8 percent in 2017, the largest one-year decline ever reported.” It seemed, according to data on fees, that the point of diminishing returns had been reached. “The race to zero may be reaching its natural limits,” I wrote.Boy, did Charles Schwab Corp. prove me wrong.Although commission-free trading has been around awhile, it was either a niche product or offered as a teaser for other products. After investment giant Schwab said in October that it would offer commission-free trading, everyone from Fidelity to Vanguard to TD Ameritrade followed suit.One caveat: There is no free lunch, and free trading means that offsetting fees may be hidden or buried in the fine print. I continue to believe that, at least in finance, cheap is better than free. No. 2. University endowments underperform: Each October, many college endowments release their investment performance data for the past fiscal year. I wrote about the Ivy League endowments and how they had failed to beat benchmark returns.But I made an assumption that the benchmark these endowments were being compared against was a globally diversified portfolio. I was wrong. As it turns out — buried in a footnote of the research I relied on — the benchmark used for the study was a domestic portfolio.  This is not a good comparison because the endowments invest globally. It stands to reason that they would look like laggards in a period of U.S. market outperformance versus the rest of the world. The lesson learned: The footnotes matter — a lot.No. 3. Brexit: I have been saying that the British will eventually come to realize that Brexit is a self-destructive and needless exercise and eventually would reverse the referendum mandating that the U.K. leave the European Union. I said it here, here and here.The election as prime minister of Boris Johnson, an opportunistic Brexiteer, pretty much means that the exit is going to be fast-tracked in a way that his predecessor, Theresa May, could never manage. There is no need to wait for it to be official: I was wrong about Brexit. The only argument left is whether the U.K. will leave the EU with or without a deal setting the terms of the departure.No. 4. Fiduciary rule: I have long argued that the brokerage industry owes consumers a higher level of care than now on offer and that putting client interests first should be the standard. In other words, rules should require brokers to serve as fiduciaries rather than as the glorified used-car salesmen that they historically have been.Despite opposition from the brokerage industry to any rule change, investors have been voting with their dollars and hiring financial advisers that conform to this better standard. It is all but inevitable, I wrote, that this fiduciary standard would be adopted by the industry, albeit with a nudge from the government.But I underestimated what the deeply motivated and deep-pocketed brokerage industry can accomplish in a deeply corrupt Washington. For now, rules requiring the adoption of the fiduciary standard are on hold.No. 5. Facebook didn't flip the 2016 election: I made a mistake on the long-running debate about the role of a weaponized Facebook in the 2016 election, arguing that very few people change their minds based on social media. Mostly, I argued, social media is a giant echo chamber and that people aggressively avoid ideas that challenge their established opinions.Given how close the 2016 election was — decided by a tiny share of the votes cast in three or four states — I am willing to admit that maybe Facebook content did persuade a few people to change their votes or stay home. Theoretically, this could have swung the election. And while I was predisposed to discount the role of social media in 2020, I now believe it could matter a lot. Let’s hope the 2020 election isn’t so close that the role of social media even matters.To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • CNW Group

    TD Announces Results of Conversion Privilege of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 5 (NVCC)

    TD Announces Results of Conversion Privilege of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 5 (NVCC)

  • Finance Professionals Split on Potential Economic Recession, Finds TD Bank Survey
    PR Newswire

    Finance Professionals Split on Potential Economic Recession, Finds TD Bank Survey

    Half of corporate treasury and finance professionals do not believe an economic recession is a threat in 2020, according to a recent survey conducted by TD Bank, America's Most Convenient Bank®, at the 2019 Association of Financial Professionals Annual Conference held in October in Boston, Massachusetts.

  • Oil Eases Losses After U.S., China Sign Phase One of Trade Deal
    Bloomberg

    Oil Eases Losses After U.S., China Sign Phase One of Trade Deal

    (Bloomberg) -- Oil erased some of the losses that followed the U.S. inventory report after the U.S. and China inked the first phase of a broader trade pact on Wednesday.Futures in New York settled 0.7% lower after falling as much as 1.5% earlier. China agreed to buy $52.4 billion of additional U.S. energy products as part of a landmark trade deal signed by the world’s two top economic superpowers. But a bearish US government report that showed swelling fuel inventories held back further gains from the newly minted deal.Oil rebounded from a low because of the signing of the initial U.S.-China trade deal, said Bart Melek, head of global commodity strategy at TD Bank in Toronto. “This agreement could pave the way for global demand to improve after nearly two years into the dispute.”Still, U.S. crude futures remained under pressure as traders focused on the nearly 15-million-barrel rise in U.S. petroleum inventories to the highest in four months, a sign of weak demand. At the same time, domestic oil production hit a fresh record.Additionally, the Organization of Petroleum Exporting Countries increased its forecasts for growth in output from non-members this year. This comes as tension between the U.S. and Iran is fading since the killing of an Iranian general earlier this month, easing concerns about supply from the Middle East.West Texas Intermediate crude for February delivery settled 42 cents lower to $57.81 a barrel on the New York Mercantile Exchange, after earlier falling to as low as $57.36.The prompt WTI futures spread remained in contango, a relationship normally suggesting oversupply. The February contract traded as low as a 7-cent discount to March.Brent futures for March settlement fell 49 cents to $64 a barrel on the ICE Futures Europe exchange. The global benchmark crude traded at a $6.16 premium to WTI for the same month.The EIA report shows U.S. gasoline stockpiles rose 6.68 million barrels last week, while distillate supplies increased 8.17 million barrels. In particular, the dip in distillate demand is counter seasonal, and likely due to recent warmer weather in the Northeast. U.S. crude production hit 13 million barrels a day. The rise in fuel stocks and production overshadowed the 2.55-million-barrel decrease in oil stockpiles.\--With assistance from James Thornhill, Elizabeth Low and Grant Smith.To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.netTo contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Mike Jeffers, Christine BuurmaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • TD Bank Provides $28.6 Million in Funding to Redevelop Affordable Housing Community in South Florida
    PR Newswire

    TD Bank Provides $28.6 Million in Funding to Redevelop Affordable Housing Community in South Florida

    Low-income residents of Broward County in South Florida will have additional affordable housing options in 2021. The Housing Authority of the City of Fort Lauderdale (HACFL) will revitalize Suncrest Court a 66-unit public housing community, by replacing it with 116 new, modern and affordable apartment units.

  • China’s Yuan Climbs Past Key Levels as Trade Tensions Ease
    Bloomberg

    China’s Yuan Climbs Past Key Levels as Trade Tensions Ease

    (Bloomberg) -- With a trade deal nearly signed and China’s economy on steadier footing, the path for China’s yuan to strengthen is now wide open.The currency on Tuesday touched its highest since July in the offshore market, after punching through 6.9 per dollar for the first time in more than five months on Monday. The latest leg up came from news of the Trump administration removing China from its designation as a currency manipulator.China’s currency has now recouped about a third of the losses it sustained against the dollar since mid-June 2018, when U.S.-China trade tensions soared as President Donald Trump pressed ahead with waves of tariff hikes. The exchange rate has also benefited lately from rising confidence that China has arrested an economic slowdown.Some now predict the currency will touch 6.8 per dollar within three months -- a level not seen since May last year.“Having a stronger currency is one way to show good will,” said Mitul Kotecha, a senior emerging-markets strategist at Toronto-Dominion Bank in Singapore. “Signs of a gradual, as opposed to rapid, slowdown in China’s economy and limited decline in China rates will provide support to the currency.”With Chinese Vice Premier Liu He expected to seal the partial Sino-American trade deal in Washington Wednesday, the Trump administration said Monday China had made “enforceable commitments” not to devalue the yuan and had agreed to publish exchange-rate information. The U.S. Treasury still kept China on a monitoring list for foreign-exchange practices.The yuan has also been advancing more broadly, climbing the past four sessions against a basket of trading partners’ currencies. The strengthening has helped bolster sentiment in stocks, with the CSI 300 Index closing at its highest level in almost two years Monday. Shares of Chinese companies also surged in Hong Kong.China’s currency weakened past the key 7 per dollar level for the first time in a decade in August, when tensions between the two nations escalated. The yuan’s slide last year reignited one of Trump’s favorite criticisms of China: that Beijing weakens its currency to aid exporters.Now, investor optimism over the economy and trade has kept the currency on the strong side of 7 for more than two weeks. With technical indicators flashing bullish signals, multiple measures of expected volatility are hovering near their lowest in about five months, signaling a reluctance among traders to hedge against swings. The yuan has gained more than 4% since September’s nadir.Why the U.S. Labeled China a Currency Manipulator: QuickTakeSome yuan watchers are advising caution. Cliff Tan, head of global markets research for East Asia at MUFG Bank Ltd., says expectations of fiscal stimulus may be running too high. Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd., says the yuan’s strength is temporary, as it’s partly related to corporate spending and exporter conversion before the Lunar New Year.Analysts started revising their 2020 forecasts for the yuan last month, following news that Beijing and Washington reached an agreement. Evidence that a slowdown in the world’s second-largest economy may not be as bad as feared has also helped, with recent data showing that China’s manufacturing sector continued to expand in December.Expectations that authorities will add to policies supporting growth -- while staying clear of large-scale monetary stimulus -- are also boosting sentiment for the yuan.The median forecast of analysts surveyed by Bloomberg is for the yuan to end 2020 at 6.95.“The yuan’s outperformance since last week has reflected the improving risk sentiment, thanks to signs of the economy bottoming out,” said Tommy Xie, an economist at Oversea-Chinese Banking. “There’s some speculation that China may get a better trade deal than expected.”(Adds context on losses since trade war escalated, in third paragraph.)To contact Bloomberg News staff for this story: Livia Yap in Shanghai at lyap14@bloomberg.net;Qizi Sun in Beijing at qsun62@bloomberg.netTo contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Christopher AnsteyFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.

  • CNW Group

    TD Asset Management Inc. Announces Final Annual Reinvested Distributions for New TD ETFs

    TD Asset Management Inc. Announces Final Annual Reinvested Distributions for New TD ETFs

  • Wall Street Is Gaming Out All the Possible U.S.-Iran Scenarios
    Bloomberg

    Wall Street Is Gaming Out All the Possible U.S.-Iran Scenarios

    (Bloomberg) -- Investors and analysts returning to work this week after the festive break found an unwanted item on their desks: a geopolitical puzzle with a bevy of players, complex rules and no clear solution. They’ve spent every minute since trying to figure it out.As the market turmoil sparked by the U.S. killing of an Iranian military leader eases, Wall Street is mapping out scenarios that range from retaliation by Tehran through proxies to tit-for-tat escalations.The threat appeared to intensify Tuesday after Iran said it is evaluating 13 possible ways to inflict a “historic nightmare” on America, while dozens were killed in a stampede at the general’s funeral.“The market is underestimating the risk,” said Fabrizio Fiorini, the chief investment officer at Pramerica Sgr Spa in Milan. “Investors are forgetting that equity is discounting a perfect alignment of planets in terms of monetary and fiscal stimulus and economic rebound and political stability. What happened in Iraq is suggesting that the planets are not aligned.”Here’s a look at some of the scenarios money managers and strategists are considering, in their own words:BlackRockBase case: Iranian retaliation is likely; energy infrastructure in the region is particularly vulnerable.Status quo: We prefer U.S. Treasuries to lower-yielding peers as portfolio ballast and like inflation-protected securities against inflation risks.Escalation: We believe markets are underestimating political risks, especially in the Gulf, North Korea and in cyberspace.Morgan Stanley Wealth ManagementBase case: Tensions are high and risk is elevated, but Iran and the U.S. have constraints that likely limit escalation.Status quo: Possible near-term Iranian retaliation includes attacks against Israel using Hezbollah, proxy escalations in northern Iraq and cyberattacks. Iran could pursue a more aggressive strategy, but the regime remains mindful of U.S. military power. Meanwhile, election-year politics likely limit U.S. engagement.Escalation: The primary threat to oil prices is an Iranian escalation that draws catastrophic U.S. reprisal. Middle East military escalation historically meant higher oil prices, but as we wrote in The New Economics of Oil, even a major escalation would likely drive prices for only a short time.Nomura InternationalBase case: The more likely scenario involves a retaliation from Iran, but not enough to spark an outright war with the U.S.Status quo: Even if we assign relatively a high probability (of around 80%) to the scenario of no severe escalation and maintain our view that the positive themes of U.S.-China trade, improving global data and a bottoming of the semiconductor down-cycle continue, the risk-reward of holding our current level of positive Asia risk has fallen from what it was a few weeks ago. Thus, we reduce some of our outright short USD/Asia FX positions.Escalation: The risk that the situation in the Middle East could intensify is undeniable and, if this occurs, it could lead to a further rise in crude oil prices and risk reduction. The sensitivity of major currencies to crude oil prices and global stock prices since October 2019 indicates that JPY appreciation is likely to become evident when crude oil prices rise during risk-off periods. Thus, in the short term, JPY long positions are effective as a hedge against the worsening situation in the Middle East.RabobankBase case: A nervous waiting game is likely to continue as investors brace themselves for Iran’s retaliation. It is worth noting that gold is trading only modestly below the recent high and USD/JPY is struggling to gain a better upside traction following its recent fall.Status quo: An indication that geopolitical risk remains elevated is Brent crude holding well above the pre-Iran crisis level. The sharp spike in oil does not bode well for energy importers. In the CEEMEA space Turkey and South Africa are particularly vulnerable as domestic factors are a major source of risk as well.Escalation: Geopolitical tensions may escalate substantially in the coming days as Iran is reportedly assessing 13 scenarios to revenge the killing of Qassem Soleimani.TD SecuritiesBase case: The reality is nobody can say with any confidence how the U.S.-Iran tensions will evolve. As such, the TD securities team would be keeping an open mind to changing the crude oil view should tensions escalate into 2020.Status quo: For now, the recent oil spike is being faded as we take at face value Iran’s “promise” to stick to military targets and keep any retaliation proportional.Escalation: The risk of increasing geopolitical tensions and a potential negative supply shock originating from the oil market could well mean that gold can move north of $1,600 should tensions escalate further, which also would help to send the rest of the precious metals complex to new multi-year highs.\--With assistance from Yakob Peterseil, Cecile Gutscher and Anchalee Worrachate.To contact the reporter on this story: Sam Potter in London at spotter33@bloomberg.netTo contact the editors responsible for this story: Sam Potter at spotter33@bloomberg.net, Sid Verma, Yakob PeterseilFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.

  • Stock Bulls Vindicated in Early Test of Billion-Dollar Rotation
    Bloomberg

    Stock Bulls Vindicated in Early Test of Billion-Dollar Rotation

    (Bloomberg) -- Stock bulls are facing their first big test of 2020, and seem to be emerging unscathed.After one of the best years for risk assets in decades, investors spent the fourth quarter unraveling safety trades that dominated 2019 and piling on risk. But with geopolitical uncertainty quickly rearing up to test their mettle, some began to wonder whether that rotation was premature.There’s certainly a fresh backdrop for this bunch of newly rejiggered portfolios. Just weeks ago, the low-volatility stock trade was losing its allure, flows into fixed-income funds were slowing in relation to equities, and everyone seemed to be rushing into shares that should outperform in an economic rebound. A U.S. airstrike that killed a top Iranian commander has altered the calculus behind that shift, but -- for now -- investors are holding the course.“People aren’t changing their investment theses based on it,” JJ Kinahan, chief market strategist at TD Ameritrade, said by phone. “They’re going to wait it out a little bit and see what the next escalation point, if there is one, is.”Despite the fiery rhetoric, market reaction so far has been contained. The benchmark’s fallen about half a percentage point from its record highs, after a year in which the S&P 500 Index gained almost 30%. A rebound in economic growth and corporate profits is still widely expected, but with billions of dollars recently shifting from defense to offense, the stakes are high.Investors poured $90 billion into equity ETFs in the three months ended December, the most in two years and more than twice the amount that flocked to bond funds, Bloomberg Intelligence data show. That brought total inflows for stock exchange-traded funds to $161 billion in 2019, and ended three quarters in which debt demand topped appetite for equities.Sector funds tracking technology and energy experienced their best three-month periods since 2016, taking in more cash than any other industry. Meanwhile, bond proxies including consumer staples and utilities ETFs, suffered their first quarter of outflows since the start of 2018.“We’ve gone from ultimate bearishness to essentially euphoria in the last few months,” Mike Dowdall, a portfolio manager at BMO Global Asset Management, which oversees $260 billion, said late December. “It’s a little bit surprising.”Perhaps more surprising is that investors seem to be maintaining their appetite for risk this year, even as tensions in the Middle East ratchet higher.Funds buying oil, energy stocks, gold or Treasuries -- which could all benefit from escalation -- have seen little additional interest. Instead, economically-sensitive areas of the stock market garnered attention, with investors pouring $700 million into the $11.8 billion Industrial Select Sector SPDR Fund on Friday, the most for any day since 2016.Granted, that ETF holds defense stocks alongside machinery companies, but investors also flocked to consumer discretionary and financial funds last week. The SPDR S&P 500 ETF Trust -- the world’s largest ETF -- meanwhile saw inflows of $4.6 billion.“The escalation of tensions with Iran warrants close watching,” said Sandip Bhagat, Whittier Trust’s chief investment officer, citing its potential impact on oil prices and global growth. “Even as uncertainty dissipated on several fronts in late 2019, the early days of 2020 have now seen an unexpected spike in geopolitical risks.”While gold prices have jumped in recent days, cash has yet to flood back into ETFs that own the precious metal. Going into the year, appetite for the safety of gold ETFs had soured, with funds tracking the commodity losing cash in the fourth quarter for the first time in over a year.Still, after weeks of underperformance, Todd Rosenbluth, director of ETF research at CFRA Research, sees potential upside for some more conservative strategies, such as those that pick low-volatility stocks.The firm’s equity analysts hold a year-end price target for the S&P 500 of 3,435. That would imply a gain of roughly 6%, far short of last year’s performance, and potentially a boon for funds like the $37 billion iShares Edge MSCI Min Vol USA ETF, which trades under the ticker USMV.“Given a lower expected return, we think investors will continue to focus on ways to reduce their equity risk profile and USMV is built to do just that,” according to Rosenbluth.(Updates market move in fifth paragraph.)To contact the reporter on this story: Sarah Ponczek in New York at sponczek2@bloomberg.netTo contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Rachel Evans, Rita NazarethFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.

  • 3 High Dividend Yield Stocks to Consider
    GuruFocus.com

    3 High Dividend Yield Stocks to Consider

    Their dividend yields thrash that of the S&P; 500 index Continue reading...

  • CNW Group

    /R E P E A T -- Media Advisory - TD Bank Group Executive to Present at the RBC Capital Markets Bank CEO Conference/

    /R E P E A T -- Media Advisory - TD Bank Group Executive to Present at the RBC Capital Markets Bank CEO Conference/

  • CNW Group

    TD Announces Dividend Rates on Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 5 (NVCC) and Non-Cumulative Floating Rate Preferred Shares Series 6 (NVCC)

    TD Announces Dividend Rates on Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 5 (NVCC) and Non-Cumulative Floating Rate Preferred Shares Series 6 (NVCC)

  • Oil Caps Strongest Year Since 2016 on OPEC Cuts, Trade Truce
    Bloomberg

    Oil Caps Strongest Year Since 2016 on OPEC Cuts, Trade Truce

    (Bloomberg) -- Oil in New York capped its biggest annual increase since 2016, as OPEC’s production cuts tempered supplies while a trade pact between the U.S. and China buoyed the outlook for demand.West Texas Intermediate futures fell 1% Tuesday yet climbed 34% this year as OPEC and its allies cut production and a trade deal between Washington and Beijing neared. With hedge funds’ net-bullish bets at a seven-month high, even protesters storming the American embassy in Iraq, OPEC’s second-biggest producer, couldn’t support prices on the final trading day of the year.“The U.S.-China trade war was in the driver’s seat when we entered 2019 and remains there as we exit the year,” said Vandana Hari, founder of industry consultant Vanda Insights in Singapore.Prices initially picked up on Tuesday as dozens of Iraqi militiamen and their supporters stormed the U.S. Embassy complex in Baghdad to vent their rage over deadly American airstrikes against an Iranian-backed force. The U.S. had launched air strikes on five bases in Iraq and Syria used by an Iranian-backed militia as a warning to Tehran over its aggressive moves in the region, the State Department said. The attack heightened concerns of destabilization in Iraq, which pumps nearly 5 million barrels of oil each day, or roughly 5% of global supplies. Iran, which the U.S. blamed for September’s strike on Saudi Arabia and earlier attacks on oil tankers, said this week that it detained a ship carrying smuggled fuel near the Strait of Hormuz.“The market is looking past the Iraq developments at this stage, as it is unlikely that there will be an impact on supply in the near term,” says Bart Melek, head of global commodity strategy at TD Bank in Toronto. “Any attempt by Iran to disrupt Iraq supply is not a factor at this time.”Oil markets have faced a tumultuous year, with much of WTI’s gains coming in its first few weeks. Prices saw their steepest one-day loss in four years on Aug. 1 after President Trump threatened to impose more tariffs on China, then soared the most in more than a decade in September when key oil facilities in Saudi Arabia were disabled in a missile attack.WTI for February delivery fell 62 cents to $61.06 a barrel on the New York Mercantile Exchange. Prices advanced by about $16 a barrel this year.Brent for March settlement fell 67 cents to $66.00 a barrel on London’s ICE Futures Europe exchange. The commodity ended the year 23% higher, posting the biggest annual gain since 2016.See also: Commodities Set for Best Year Since 2016 as Trade Worries EbbIn 2020, oil prices are likely to remain in check as OPEC+ production cuts are offset by higher output from other countries and a mixed outlook for demand, analyst forecasts show. Nevertheless, prices are seen climbing in the middle of the year amid stronger emerging-market consumption.\--With assistance from James Thornhill and Saket Sundria.To contact the reporters on this story: Kriti Gupta in New York at kgupta129@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.net;Alex Longley in London at alongley@bloomberg.netTo contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine TraywickFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.

  • The ‘Fire and Ice’ Decade That Changed Everything on Wall Street
    Bloomberg

    The ‘Fire and Ice’ Decade That Changed Everything on Wall Street

    (Bloomberg) -- It started with animal spirits left for dead by the financial crisis. It’s set to finish with stocks near records, volatility vanquished and the credit supercycle on steroids.This is the tale of global markets over a decade of “fire and ice.”In the 2010s traders braved everything from the sovereign meltdown in Europe and populist rage to “Volmageddon” and the shale revolution. Political earthquakes, shaky corporate earnings and credit shocks all came for the bull market. Central banks saved the day.Meanwhile, Donald Trump began the era as a reality TV star and will finish it as president and Tariff Man, with his America First agenda whipsawing billions of dollars in investment flows around the world. It all leaves investors dodging political bombs, recession fears and disappearing yields even as they close out the decade with some of best gains in a generation.Seeking clues on what lies ahead, Bloomberg reporters chronicle here how the past 10 years has transformed the major asset classes.Bonds: Return-Free RiskFrom risk-free return to return-free risk: The world of fixed income got turned upside down as bears went into extinction and every sell-off proved little more than a head-fake.At its peak a record $17 trillion stockpile of negative-yielding securities roiled global markets in 2019 -- spurring capital gains for holders while saddling the likes of pension funds with loss-making investments down the road.Benchmark 10-year Treasury yields are a shadow of their former selves, with those in Germany and Japan at epic lows. Thank demographics, growth angst, vanishing inflation, or monetary interventions. Whatever your worldview, the takeaway is the same: Interest rates failed to wake up from the crisis slumber.“These yields echo that the ghost of the Great Recession is still continuing to circulate through global capital markets,” said Jack Malvey, a debt veteran and former chief global fixed-income strategist at Lehman Brothers Holdings Inc. “With little room left for return in bonds, the big question for the 2020s is when does the mean reversion come?”The Bloomberg Barclays Global Aggregate Treasuries index has returned some 5% in 2019 alone through late December. It’s gained more than 19% since the start of 2010. Today coupons are paltry, if they exist at all. Further price gains look unlikely given the fierce starting point for valuations at the close of 2019.Yet the risks couldn’t be greater. Duration, a gauge of how much prices decline as yields rise, is near record levels while outstanding stock has exploded by trillions of dollars.FX: King DollarThe biggest danger in global finance this decade landed with the euro-area crisis, which threatened to wipe out the most ambitious currency project in history.High levels of government debt, soaring bond yields and a collapse in confidence pushed nations in Europe’s periphery to the brink of bankruptcy. Greek yields soared past 40% at one point in 2012 while those on Italian, Portuguese and Spanish securities also surged.It took a massive restructuring package and the famous “whatever it takes” declaration from then European Central Bank President Mario Draghi to stave off disaster. But big institutional frailties remain, like the conspicuous lack of a fiscal framework and full banking union. With high debt levels across much of the region and interest rates already at historic lows, the threat of another crisis remains very real.By contrast the dollar’s status as the world’s premier reserve currency looks as strong as ever, defying post-crisis fears that the center of monetary gravity would shift from America to China. The greenback accounts for some 60% of global foreign exchange reserves, around the same as late 2009 though below 2015 levels.That’s little solace for traders who rely on price swings to make money. While the global currency market has grown by more than a third to $6.6 trillion since 2010, volatility has plummeted as central banks dance to a dovish beat in concert.“It was pretty much a decade of fire and ice,” said Ned Rumpeltin, European head of foreign-exchange strategy at Toronto Dominion Bank. “We spent so much of the last 10 years lurching from crisis to crisis, but those episodes were interspersed with long periods of low vol.”There were flare-ups: Flash crashes hit currencies including the British pound and the South African rand, prompting the Bank for International Settlements to warn of danger ahead when volatility roars back to life.And that’s not the only hurdle the market will have to clear, as automation comes for Wall Street jobs and newfangled technologies like blockchain challenge the established order.Stocks: Unstoppable BullEvents like the 2015 yuan devaluation and the 2018 risk rout gave stock bulls a scare, but in the first decade to dodge a U.S. recession since records began it wasn’t enough to break them.“People can overreact to some of that news flow, which would undermine their ability to capture what’s been a clearly very strong 10-year growth cycle,” said Luke Barrs, EMEA head of fundamental equity client portfolio management at Goldman Sachs Asset Management.American stocks were ground zero for animal spirits, trouncing developed-market competitors. Adjusted for volatility risk, gains in the S&P 500 index since Dec. 31, 2009 look poised to be the highest of any decade since at least the 1950s.In dollar terms the Stoxx Europe 600 has posted only a third of the S&P 500’s total returns of more than 250% this decade. The region’s large exposure to beleaguered value shares, political risk from Brexit to Italian populism, and the absence of hot tech companies all played a role. Europe has suffered the biggest outflows among major markets, losing about $100 billion this year alone.Famously, public equity markets have been shrinking this decade thanks to corporate buybacks, private equity funds taking companies off the market and initial public offerings dwindling. Volumes have also been falling as a result.Meanwhile a number of leading Democratic candidates for the 2020 U.S. election are proposing higher corporate taxes, further threatening equity returns in the years ahead.Credit: Leverage MonsterGlobal corporate debt has nearly doubled this past decade, defying the oil-price crash and memories of the credit crisis. It became a seller’s market like never before: Negative-yielding corporate bonds surpassed $1 trillion in 2019, companies sold longer-duration debt and issuers dispensed with clauses to protect investors.Corporate bond buyers today are getting vanishing premiums, close to record interest-rate risk and hefty leverage to boot. Anyone investing $100 in U.S. junk bonds on the last day of 2009, however, is sitting on more than double the amount. Europe has produced similar returns.“It didn’t matter what you owned, everything went up because central banks were buying,” said Jonathan Gregory, a money manager at UBS Asset Management in London. “Who knows what the right price is when you have a buyer like that?”At the same time the quality of the market has deteriorated. In the past decade, the stock of U.S. bonds rated BBB, the lowest rung of investment grade, has tripled to $3 trillion. If history repeats, a huge swath of credit could fall to junk in a recession.Crude: AwakeningOil may have spent the first half of the decade dancing around $100 a barrel, but the crash in 2014 told the story that would define global commodity markets for years to come: The shale revolution is here to stay.“The U.S. has disrupted the industry in a way that was never expected,” said Abhishek Deshpande, head of oil market research at JPMorgan Chase & Co.American supply has bestowed the market with a game-changing buffer in the face of civil wars, terrorist attacks and military conquests.A drone strike in September shut down half of Saudi Arabia’s production in the single biggest disruption in the oil market’s history, yet investor reaction was largely sanguine after the initial shock. Lost barrels were offset by inventories.Citigroup Inc. recently pegged geopolitical risk at its highest in 15 years while WTI prices for 2019 are set for their fourth-lowest average of the decade.Looming over the market is China’s easing appetite for commodities to feed its export-led economic model. Double-digit oil demand growth has occurred almost half as many times this decade as in the previous one.There are also bigger threats to the commodity complex as the green lobby and the Paris agreement shape market sentiment, from speculation in the futures market to capital expenditure by oil companies.Emerging Markets: Alpha MaleWhat unites Argentina, India, Ivory Coast, Pakistan, Philippines and Saudi Arabia? At first blush, very little. It takes India hardly any time to produce the full-year gross domestic product of Ivory Coast. The sky-high inflation rates of Argentina contrast with negative price-growth in Saudi Arabia. Pakistan has never enjoyed the leadership continuity common among peers.Yet global investors have made billions over the past decade casting these markets in a similar vein in a key respect: They are in effect one-man shows.Think Narendra Modi of India, Mohammed bin Salman of Saudi Arabia, Rodrigo Duterte of the Philippines, Recep Tayyip Erdogan of Turkey, Vladimir Putin of Russia. These men and others helped set the terms for the asset class in the 2010s.Despite progress made this decade to beef up fiscal, trade and currency regimes, developing economies remain acutely prone to capital volatility, social unrest, and inflation flare-ups. A year’s gains can be wiped out in a week. A stable leader can make all the difference in pushing through reforms and maintaining order, rewarding investors with triple-digit returns along the way.So-called key man dependence is not without huge risks given the endless political games -- a threat looming over markets of all stripes in the 2020s.\--With assistance from Cecile Gutscher, Julian Lee and Selcuk Gokoluk.To contact Bloomberg News staff for this story: John Ainger in London at jainger@bloomberg.net;Liz Capo McCormick in london at emccormick7@bloomberg.net;Ksenia Galouchko in London at kgalouchko1@bloomberg.net;Tasos Vossos in London at tvossos@bloomberg.net;Alex Longley in London at alongley@bloomberg.net;Srinivasan Sivabalan in London at ssivabalan@bloomberg.netTo contact the editors responsible for this story: Paul Dobson at pdobson2@bloomberg.net, ;Dana El Baltaji at delbaltaji@bloomberg.net, Sid Verma, Sam PotterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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