Friday, March 23, 2012

Niall Ferguson sees China growing at 4%

Wilbur Ross hates bonds

Wilbur Ross offers perspective on banking, equities and natural gas. And Rebecca Patterson, JP Morgan Asset Management, encourages investors to take advantage of easy monetary policy by taking risk: "We're looking to emerging market debt."

Doug Kass likes life insurance companies, would sell banks

Doug Kass, Seabreeze Partners, discusses his outlook on corporate profit margins and why he believes S&P 500 earnings are likely to fall short relative to consensus forecasts. Also, the winners and losers in a rising rate environment.

Bob Janjuah Sees Stocks Falling 10% in Q2

Gary Shilling expects home prices to drop another 20%

Tuesday, March 20, 2012

Marc Faber On The Perils of Money Printing

Jeremy Kroll on managing risk

Jeremy Kroll, K2 Global Consulting CEO/co-founder, discusses the trends clients are looking for while investing in a post-Madoff and post-credit crisis universe.

John Taylor (FXConcepts): Short the Greenback Now

Megachange 2050

'The Economist' looks ahead to the year 2050, examining everything from demographics, technology and the world economy.

BlackRock's Kapito: Investing Amid Volatility

Dennis Gartman, of the Gartman Letter, offers his view on wheat, soybeans and corn after they took a hit. And Rob Kapito, president of BlackRock, explains how to invest in a volatile world.

Alan Blinder: US Heading for a Fiscal Cliff?

Alan Blinder, former Clinton Council of Economic Advisors, says the country can't solve the whole budget picture with tax increases. He also discusses whether growth can be accomplished through spending cuts.

Friday, March 16, 2012

Doug Kass: Sell Banks, Short Bonds

Meredith Whitney: Banks Oversold, Muni Defaults Coming

"The banks should trade at tangible (book value) or a little better. But that doesn't mean they're off to the races and that there's tremendous momentum behind the fundamentals of these banks."

Peter Clarke sees Hedge Fund Demand From Asia Investors

Man Group CEO Peter Clarke talks about the global hedge fund industry and Man's business strategy. Clarke also discusses investment opportunities in China and Europe.

John Mauldin sees `Currency Wars' on Weak Euro and Yen

Mauldin sees the Euro going to parity, the Yen spiking to 150 to 200 to the dollar. The question is how will China and Korea react to a dramatically weaker Yen?

Peter Elston: Investors Should Be `Getting Out' of Stocks

Peter Elston, a strategist at Aberdeen Asset Management, talks about the U.S. economy and financial markets. Elston also discusses China's holdings of Treasuries.

JPMorgan's Mowat sees hard landing in China

Adrian Mowat, chief Asian and emerging-market strategist at JPMorgan Chase & Co., talks about the outlook for the Chinese economy.

If you look at the Chinese data, you should stop debating about a hard landing. China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.

Thursday, March 15, 2012

ECRI: Why Our Recession Call Stands

On coincident indicators:
year-over-year growth in GDP, after peaking at 3½% in Q3/2010, has basically flatlined around 1½% for the last three quarters. Broad sales growth has followed a similar pattern, while the growth rates of personal income and industrial production have dropped to their lowest readings since the spring of 2010.

On leading indicators:
We find that year-over-year growth in ECRI’s Weekly Leading Index (WLI) remains in a cyclical downturn (top line in chart) and, as of early March, is near its worst reading since July 2009.

Why Our Recession Call Stands

Tuesday, March 13, 2012

Benepe, Bryan, Matthews on Precious Metals

Rachel Benepe, a portfolio manager at First Eagle, Caesar Bryan, a portfolio manager Gabelli & Co., and Steve Matthews, chief investment officer of Flintlock Capital, participate in a discussion about their investment strategies for precious metals at the Bloomberg Link Precious Metals Conference.

Jim Grant: Bond Market Is `Desert of Value'

James Grant of Grant's Interest Rate Observer talks about monetary policy, the bond market, investment strategy, and China.

John Hussman Says Market Crash Coming

Portfolio manager John Hussman, whose bear market warnings have been snubbed by a market up nearly 10% this year and 24% since October lows, has stepped up his prophecy of doom, saying present conditions put this market in the most negative 1.5% of historical periods in which to invest.

The key conditions that Hussman associates with markets about to crash are an S&P 500 trading sharply above its 52-week moving average and more than 50% above its four-year low; a “Shiller P/E” well above 18; a 10-year Treasury well above levels reached six months ago; and high bullishness and low bearishness among investment advisors.

Doomsayer Hussman Says Market Crash Coming—According to History

Steve Keen talks to Max Keiser about bubbles

Taleb: it's an illusion that the dollar can bail out the world

Taleb is on CNBC for the first time since 2010 to express his support for Ron Paul. Some great quotes as always:

"From my risk-based vantage point I think one candidate represents the right policies ... and that candidate is Ron Paul"

"Eventually there will be loss of confidence in the dollar, because that's the last thing that's holding us together, and to me it's an illusion that the dollar can bail out the world"

"You don't gamble with future generations' money and you don't gamble with hyperinflation"

"I don't trust treasury bonds. I happen to own stocks. I'd rather have a dividend than a coupon ... I'm afraid of hyperinflation, not of inflation, but hyperinflation. I have no choice but to own stocks and some real estate."

"I also own some euros because in spite of the bad press they know the problems in Europe and here we're not aware of it"

Monday, March 12, 2012

Get Ready for the Winter Cycles

Paul Gambles, Managing Partner, MBMG Group, says developed economies are in the winter cycle right now because growth has stalled. He adds in this cycle, there are only three strategic assets to invest in, namely gold, government bonds and cash.

El-Erian: We are living in a financial repression

"We are living in a financial repression right now," says Mohamed El-Erian, sharing insight on the Greek default, the euro zone crisis, and the outlook for the markets and economy.

Investing in Mongolia's Resources Sector

Travis Hamilton of Khan Investment Management, and Uwe Parpart of Reorient Financial Markets say the Mongolian resources sector will be an attractive play this year because of increased investments in infrastructure.

Kyle Bass on Gold (Video)

Kyle Bass of Hayman Capital explains why he's so bullish on gold on CNBC.

Bove: Bank Stress Tests Flawed

Dick Bove says bank stress tests are based on unrealistic hypotheticals. Meanwhile, the Fast Money traders discuss a possible slowdown in China and management changes at Pepsi, with Bill Schmitz, Deutsche Bank.

John Armitage's picks

John Armitage, Egerton Capital, offers insight on where the smartest investors are finding opportunities in a low-yield environment. He also shares his five favorite stock picks.

David Kostin sees S&P at 1250 in 2012

David Kostin, chief U.S. equity strategist at Goldman Sachs talks about the outlook for U.S. stocks, corporate earnings and investor sentiment.

Friday, March 9, 2012

Richard Duncan: The Next Chapter in the Asian Story

Richard Duncan is chief economist at Blackhorse Asset Management. He has a long history in equity research and investment strategy, also worked at the World Bank. Duncan is the author of one of our favorite books, The Dollar Crisis: Causes, Consequences, Cures. He recently spoke at the CFA Institute Asia Pacific Investment Conference, and the presentation is a must-watch.
[Link to Presentation: The Next Chapter in the Asian Economic Story]

Margie Patel: Few Alternatives to High Yield (Audio)

Margie Patel, a money manager at Wells Fargo  in Boston, who oversees about $1B, says "high yield is still the only game in town for fixed income investors." Patel has a very good track record as the manager of the Pioneer High Yield fund.
[Download MP3]

Bill Gross: Greek CDS will be triggered (Audio)

Bill Gross of PIMCO says Greek credit default swaps will be triggered and markets are pricing-in a second default. Gross talks with Bloomberg's Ken Prewitt and Tom Keene on Bloomberg Radio's "Bloomberg Surveillance."
[Download MP3]

David Malpass is ‘Pretty Optimistic’ About Economy (Audio)

David Malpass of Encima Global sees a "v-shaped recovery in 2012" for the US economy.
[Download MP3]

Ken Rogoff sees a slow recovery

I think we are on a trajectory towards a slow recovery, says Kenneth Rogoff, Harvard economics professor, who discusses the reasons for sluggish jobs growth and when the economy will brighten.

Ray Dalio: Man and Machine

The Economist profiles [link to article] the kooky but incredibly successful CIO of BridgeWater, Ray Dalio today. We have written about Dalio before (see here and here), and we are amazed at his firm's ability to navigate these treacherous waters. BridegWater's Pure Alpha Strategy (18% volatility) was up 17.2% in 2008, 5% in 2009, 60.7% in 2010, and an astonishing 36.4% in 2011.

Dalio still believes that we are in the middle of a long deleveraging cycle, and he is careful to distinguish between a short-term business cycle and a long-term debt cycle.

Two sorts of credit cycle are at the heart of Mr Dalio’s economic model: the business cycle, which typically lasts five to eight years, and a long-term (“long wave”) debt cycle, which can last 50-70 years. A business cycle usually ends in a recession, because the central bank raises the interest rate, reducing borrowing and demand. The debt cycle ends in deleveraging because there is a “shortage of capable providers of capital and/or a shortage of capable recipients of capital (borrowers and sellers of equity) that cannot be rectified by the central bank changing the cost of money.”

He notes that deleveraging cycles are difficult to recognize and fix:

A deleveraging is much harder to end. According to Mr Dalio, it usually requires some combination of debt restructurings and write-offs, austerity, wealth transfers from rich to poor and money-printing. A “beautiful deleveraging” is one in which all these elements combine to keep the economy growing at a nominal rate that is higher than the nominal interest rate.

Print too little money and the result is an ugly, deflationary deleveraging (see Greece); print too much and the deleveraging may become inflationary, as in Weimar Germany.

And, more importantly, he is currently optimistic given the ECB's LTRO program:

Although he still expects debt restructuring in Spain, Portugal, Italy and Ireland, on top of that in Greece, he says that the “risk of chaos has been reduced and we are now calming ourselves down.”

Finally, according to a recent update from the firm, BW has now flipped to a short-treasury position, and is also net long equities.

Dalio at The Economist’s Buttonwood Gathering on October 26th-27th 2011

Thursday, March 8, 2012

Jim Grant see central bankers 'printing money like mad'

The irreplaceable Jim Grant was on CNBC today and deriding the madness of central bankers as only he can. In just a few years we will look back on the actions of the BOE, ECB, Fed with shock and wonder how we could all have been so blind and foolish... You can't print your way to prosperity and you can't fix the problem of having too much debt by issuing even more debt.

We should call this what it is, it is market manipulation, that's what we call it in the private sector. what the fed is doing is manhandling the structure of interest rates to the end of achieving of what it takes to be desirable macro outcomes.

... There's inflation certainly in spots. obviously commodity inflation. but there's also inflation, I think, in market assets that are stimulated, to use that favorite word of the authorities, stimulated by ultra-low interest rates. for example, in the distressed debt markets, you'll find companies that have not made a profit in five years, issuing debt, as if this company were somehow soundly and demonstrably solvent. by pressing down interest rates, by repressing interest rates, the fed is in effect dulling the risk sensors of the entire marketplace.

... The world over we're seeing unprecedented things. we're seeing interest rates that are lower than ever, and central banks that have never been more recklessly pro creative, to use Warren Buffett's words, about assets. They're printing money like mad and people can't seem to get enough long-term bonds, because the central banks are manipulating expectations about the future of interest rates. I think it's all very dangerous.

John Manley and David Tice Debate Markets

John Manley of Wells Fargo and David Tice of Prudent Bear fame talk about the outlook for U.S. stocks and bonds, and investment strategy.

Mark Mobius likes Nigeria, Vietnam, Dubai

Mark Mobius of Templeton Emerging Markets Group talks about investment strategy in frontier markets and the outlook for the European sovereign debt crisis.

Bill Ackman: Borders was my worst investment

Bill Ackman of Pershing Square Capital is no longer invested in McDonald's but has respect for what the company has done. In a long interview with CNBC, he discusses his previous investment in Borders, Amazon's dominance in the e-book market, and says Warren Buffett's advice on buying homes presents an opportunity.

Wednesday, March 7, 2012

NPR: Is US Energy Independence Finally Within Reach?

Barry Ritholtz remains skeptical about the US consumer

"I'm pretty confident the calls we've been making on retail have been dead right. The consumer doesn't have access to credit. They don't have a lot of pent up demand and they are in the process of deleveraging."

Martin Hutchinson:The profits bubble

Scott Minerd (Guggenheim): Winning the War in Europe

Mervyn Davies (Corsair Capital): Need for `New Order' in Banking

Mervyn Davie of Corsair Capital (and former CEO of Standard Chartered) talks about the outlook for the global financial services industry. Davies also discusses Europe's debt crisis and Asia's emerging markets.Corsair Capital is one of the oldest PE firms focused exclusively on financial services.

Tuesday, March 6, 2012

Citigroup: ‘We Love Colombia’ (Audio)

Jason Press, a Latin American equity strategist for Citigroup, says Colombia represents a long term investment opportunity for investors.
[Download MP3]

Armored Wolf’s Brynjolfsson Sees Weaker Euro (Audio)

John Brynjolfsson, who runs the $725 million hedge fund Armored Wolf LLC in Aliso Viejo, California, says the debt crisis in Europe "speaks to a weaker euro."
[Download MP3]

John Mauldin: US Deficit Is a ‘Cancer’ (Audio)

John Mauldin says U.S. lawmakers are coming to the realization that the budget deficit is "a true crisis."
[Download MP3]

Investing in Foreclosures

Geoffrey Jacobs, Empire Group, discusses investment opportunities in distressed properties, and cashing in on rental properties

Marc Faber: When the Government Will Take Your Gold

Satyajit Das on Max Keiser

Ken Langone's Market Plays

Ken Langone discusses the markets and politics, including his support of GOP candidate, Mitt Romney; what worries him in the market; and where investors can find big opportunities.

Investing in Water

Kevin Bannon, CIO at Highmount Capital, explains why his firm is a big believer in Water ETFs

Monday, March 5, 2012

Brynjolfsson, Cuggino on Bonds, Oil, Strategy

John Brynjolfsson of Armored Wolf and Michael Cuggino of Pacific Heights Asset Management talk about their investment strategies for Treasuries, corporate debt and oil.

Friday, March 2, 2012

Sean Carroll: Distant time and the hint of a multiverse

BBC Documentary on Time

Steve Forbes interviews Mohnish Pabrai

An oldie but a goodie.

Jeff Hirsch (Stock Traders Almanac): Beware the 'slides' of March

Jeffrey Hirsch, president of the Hirsch Organization and editor of the "Stock Trader's Almanac," talks about the outlook for U.S. stocks markets and his advise for investors.

Marc Faber: Stocks Might `Disappoint' After May

Marc Faber, publisher of the Gloom, Boom & Doom report, talks about the outlook for global financial markets, Europe's debt crisis and his investment strategy. Faber also discusses the Facebook IPO.

Oakmark's David Herro: European Banks will rally 75%!

Oakmark's David Herro on Europe Banks, Investment Strategy

Bill Gross: Savers Face Lengthy `Financial Repression'

Bill Gross talks about Pimco's new Total Return Exchange-Traded Fund, Greek CDS, the U.S. federal budget deficit and the performance of Pimco's Total Return Fund.

Lakshman Achuthan (ECRI) still not backing away from recession call

Achuthan has been all over the media to defend his bold US recession call, and here he speaks with Ali Veshi on CNN. Business Insider has a good piece refuting his claims, but we tend to lean on the side of the Hussman/Achuthan 2012 recession call.

Thursday, March 1, 2012

Walter Schloss: 16 Golden Rules of Investing

[HT: Frank Voisin]
From the late, great Walter Schloss, a super-investor with an enviable long-term record, who recently passed away at a ripe old age.
  1. Price is the most important factor to use in relation to value
  2. Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.
  3. Use book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock).
  4. Have patience. Stocks don’t go up immediately.
  5. Don’t buy on tips or for a quick move. Let the professionals do that, if they can. Don’t sell on bad news.
  6. Don’t be afraid to be a loner but be sure that you are correct in your judgment. You can’t be 100% certain but try to look for the weaknesses in your thinking. Buy on a scale down and sell on a scale up.
  7. Have the courage of your convictions once you have made a decision.
  8. Have a philosophy of investment and try to follow it. The above is a way that I’ve found successful.
  9. Don’t be in too much of a hurry to sell. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock goes up say 50%, people say sell it and button up your profit. Before selling try to reevaluate the company again and see where the stock sells in relation to its book value. Be aware of the level of the stock market. Are yields low and P-E rations high? Is the stock market historically high? Are people very optimistic etc?
  10. When buying a stock, I find it helpful to buy near the low of the past few years. A stock may go as high as $125 and then decline to $60 and you think it attractive. 3 years before the stock sold at $20, which shows that there is some vulnerability in it.
  11. Try to buy assets at a discount rather than trying to buy earnings. Earning can change dramatically in a short time. Usually assets change slowly. One has to know much more about a company if one buys earnings.
  12. Listen to suggestions from people you respect. This doesn’t mean you have to accept them. Remember it’s your money and generally it is harder to keep money than to make it. Once you lose a lot of money, it is hard to make it back.
  13. Try not to let your emotions affect your judgment. Fear and greed are probably the worst emotions to have in connection with the purchase and sale of stocks.
  14. Remember the work of compounding. For example, if you can make 12% a year and reinvest the money back, you will double your money in 6 years, taxes excluded. Remember the rule of 72. Your rate of return into 72 will tell you the number of years to double your money.
  15. Prefer stock over bonds. Bonds will limit your gains and inflation will reduce your purchasing power.
  16. Be careful of leverage. It can go against you.

Doug Kass: Short These Stocks Ahead of Sell-Off

“It rarely pays to buy stock when 85% of the S&P trades above its 50-day moving average as is the case today.” 

"The market also tends to decline when only a small number of S&P stocks are oversold, again the case now."

Historically stocks don't perform well when 10-week moving average of gasoline prices rises. “At the rate they’re moving now– historically it has not paid to own stocks.”

1. Discretionary consumer based companies: Kass suggests shorting American Express, Regal Cinemas, Henry Schein, RTH
2. China: Kass says to play it short FXI
3. Companies leveraged to capital markets: Kass tells us he's shorting Goldman Sachs, Morgan Stanley

Sustaining China's Economic Growth after the Global Financial Crisis

Nicholas Lardy presents the findings of his new book, Sustaining China's Economic Growth after the Global Financial Crisis at a Feb 1, 2012 meeting held by the Peterson Institute for International Economics.

Buffett: Opportunities in U.S. Business

Buffett on Banks: Wells Fargo A Good Asset

How I Made My Millions -- Episode 14

In this episode of "How I made My Millions," the owners of the Jelly Belly Company and Designs by Lolita share their struggles and their successes. And meet the people who operate Quirky, using social media to help inventors improve their products.

Doug Kass: Equities Vulnerable to Decline

Doug Kass of Seabreeze says the market is very vulnerable to a decline of 4-7%.

Risks to the Market Rally?

Should investors be using the rally as an opportunity to sell? Gina Sanchez, Roubini Global Economics, explains.

Kiernan: U.S. 'Becoming China's Bitch'

Peter Kiernan, Kiernan Ventures CEO, says China is delighted by U.S. disorder because it gives the economic giant the opportunity to build "uncanny" strength. Kiernan's book, "Becoming China's Bitch," is at the top of the Amazon best-seller list.

Silver Lake's View on Tech in 2012

Glenn Hutchins, Silver Lake co-founder & managing director, discusses what's next for the tech sector in the new year.

Keith McCullough's (Hedgeye) month-end trades

Keith McCullough, Hedgeye Risk Management, explains how he is allocating his long and short positions in cash, fixed income, commodities, and equities.

First Solar and the End of the Energy Surge

Gordon Johnson, Axiom Capital, discusses the problems at First Solar that led to its negative outlook. Also, Dennis Gartman weighs in on whether the surge in energy is over and how to trade it.

Jimmy Rogers: I don't own any US Equities

The Dow closes above 13,000 for the first time since 2008, but will the market continue to rally? Jim Rogers, Rogers Holdings CEO & chairman; Michael Holland, Holland & Company chairman, and Steve Grasso, Stuart Frankel managing director, discuss whether an economic rebound is brewing; the impact of high oil on stocks, and the outlook for housing and the U.S. dollar.

4 Plays for the Next 4 Years

Use dividend paying stocks to hedge bond exposure, says Alan Reid, Forward CEO. He also explains why he likes Brasil Foods, CF Industries and Komatsu stock and a real estate play based in Hong Kong.

Can Mobile Save Yahoo?

CNBC's Jon Fortt reports on which companies are winning the mobile wars in the US. Among the top three are Google, Facebook, and surprisingly, Yahoo. Discussing whether Yahoo can turn mobile traffic into profits, with Shahid Khan, MediaMorph chairman. [Disclaimer: we own YHOO common stock]

Price Signals: Top clicks in February

Larry Fink: Get Off The Sidelines!

Larry Fink, BlackRock CEO, says there could be serious repercussions for investors not getting into the stock market:

"The one thing that I think we're saying loudly is there's a cost of owning cash, and so everyone thinks cash is risk-free. And definitionally cash is risk-free. However, the cost of inaction may be far greater"

"The biggest risks for investors are not making decisions"

So, get off your couch and invest in Blackrock's funds!

The Best Asset Classes over the last 5 years

Top 3: Gold, Silver, Crude Oil
Bottom 3: Irish Equities, European Banks, Greek Equities
[From FT Alphaville]

An interesting observation:
The Spanish, Portuguese, Japanese, Italian, Irish and Greek indices are -24%, -40%, -41%, -51%,-62%, and -81% respectively. For the European countries here, these returns reflect a situation where being unable to control your response to a major financial crisis ends up severely impeding your economy and assets. The underlying problems here are not much greater than say the UK but the response has been completely different.