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Showing posts from September, 2015

Who Gets The Last Laugh on Stocks?

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Myles Udland of Business Insider reports, Bill Gross is literally laughing at the stock market:
Bill Gross is literally laughing at the stock market.

In a tweet on Tuesday morning, Janus Capital's Bill Gross said: "Stock market refrain from a few months ago: "Where else are you gonna put your money?" LOL ... Ever considered cash?"

Put another way, Gross is laughing at people who invested in the stock market because there was nothing else to invest in.

Folks who have been reading Gross' investment updates over the past year or so most likely know that Gross would prefer holding cash to being invested in the stock market — or almost anything else.

Early in September, Gross' monthly missive basically said everything sucked.

Gross wrote:
Global fiscal (and monetary) policy is not now constructive nor growth enhancing, nor is it likely to be. If that be the case, then equity market capital gains and future returns are likely to be limited if not downward …

Ontario Teachers’ Eyes London Expansion?

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Joseph Cotterill of the Financial Times reports, Ontario Teachers’ eyes London expansion:
Ontario Teachers’, the Canadian pension plan that owns the UK’s High Speed One railway and its National Lottery operator, is planning to expand further in London, tripling the size of its European investment team.

It revealed on Thursday that it aimed to grow its private equity arm by adding staff in infrastructure and in what it calls “relationship investing” — investing in public or nearly-public companies and working closely with the managers.

Teachers’, which has $160bn in assets, this month moved from Leconsfield House, MI5’s former haunt, into a bigger steel-and-glass building overlooking Marylebone’s leafy Portman Square.

Its expansion is expected to lead to further purchases in the UK, where it also owns Birmingham and Bristol airports.

“We own four airports, so why wouldn’t we look at London City Airport?,” says Jo Taylor, Teachers’ European head, highlighting one asset that is coming to…

A Looming Catastrophe Ahead?

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Caroline Valetkevitch of Reuters reports, Wall Street braces for grim third quarter earnings season:
Wall Street is bracing for a grim earnings season, with little improvement expected anytime soon.

Analysts have been cutting projections for the third quarter, which ends on Wednesday, and beyond. If the declining projections are realized, already costly stocks could become pricier and equity investors could become even more skittish.

Forecasts for third-quarter S&P 500 earnings now call for a 3.9 percent decline from a year ago, based on Thomson Reuters data, with half of the S&P sectors estimated to post lower profits thanks to falling oil prices, a strong U.S. dollar and weak global demand.

Expectations for future quarters are falling as well. A rolling 12-month forward earnings per share forecast now stands near negative 2 percent, the lowest since late 2009, when it was down 10.1 percent, according to Thomson Reuters I/B/E/S data.

That's further reason for s…

The End Of The Deflation Supercycle?

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Ambrose Evans-Pritchard of the Telegraph reports, The world economy as we know it is about to be turned on its head (click on images to enlarge):
Workers of the world are about to get their revenge. Owners of capital will have to make do with a shrinking slice of the cake.

The powerful social forces that have flooded the global economy with abundant labour for the past four decades years are reversing suddenly, spelling the end of the deflationary super-cycle and the era of zero interest rates.

"We are at a sharp inflexion point," says Charles Goodhart, a professor at the London School of Economics and a former top official at the Bank of England.

As cheap labour dries up and savings fall, real interest rates will climb from sub-zero levels back to their historic norm of 2.75pc to 3pc, or even higher.

The implications are ominous for long-term US Treasuries, Gilts or Bunds. The whole structure of the global bond market is a based on false anthropology.


Prof Goodhart says the co…

Sea Change At The Fed?

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Mary Childs of Bloomberg reports, Gross Tells Fed to `Get Off Zero Now!' as Economies Run on Empty:
Bill Gross said the Federal Reserve needs to raise interest rates as soon as possible, trading some near-term market losses for longer-term stability and a healthier financial system.

If zero interest rates become the long-term norm, economic participants will soon run on empty because their investments aren’t producing the gains or cash flow needed to finance past promises in an aging society, he wrote in an investment outlook on Wednesday for Denver-based Janus Capital Group Inc. That’s already beginning to happen as Detroit, Puerto Rico, and, he predicts, soon Chicago, struggle to meet their liabilities.

“My advice to them is this: get off zero and get off quick,” Gross urged the central bankers. He said it’s time for a “new thesis” that allows people in developed economies to save, enabling liability-based business models to survive and spurring more private investment, “which i…

Harvard Endowment Warns of Market Froth?

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Stephen Foley of the Financial Times reports, Harvard endowment warns of market ‘froth’:
Harvard is looking for investment managers with expertise as short-sellers, as the world's biggest university endowment becomes more cautious about the outlook for financial markets.

In its latest annual report, which showed investment returns fell to 5.8 per cent in the year to June, the $38 billion endowment said its managers had started to increase cash holdings and feared that some markets had become "frothy"."We are proceeding with caution in several areas of the portfolio," Harvard Management Company chief executive Stephen Blyth wrote in the report.

"We are being particularly discriminating about underwriting and return assumptions given current valuations.

"In addition, we have renewed focus on identifying public equity managers with demonstrable investment expertise on both the long and short sides of the market."

Mr Blyth, a British-born statistician…