"I was having lunch with a very dear friend of mine yesterday, who is also a very successful financial planner and advisor, who stunned me with an obvious question: 'Has the dumb money become the smart money?'"
I would say Apple is the most dangerous holding on the street right now for portfolio managers.
The End Of Guitar Center (And An Irrational Addiction To Growth & The Scourge Of Unregulated Structured Finance)Submitted by Tyler Durden on 02/05/2015 21:15 -0400
The fact is, the die is cast. In a couple of weeks, Guitar Center will need to report its Christmas performance to its bondholders. If things do not look good, its bonds will be ripped apart like RadioShack’s. Here’s what this really means: it’s the end of big box retail, an irrational addiction to growth, and the scourge of unregulated structured finance. For a few years, unwise urban planning and unregulated banks created a new bubble in the American suburbs. The objective truth is that the growth of the last decade was financed by banking fraud, and that financial trickery of this sort only fools people in the short-term. Eventually, you must have a product people demand, sold by competent people who care about the business, financed in a way that makes sense.
Bond Yields Set To Plunge In 2015: Next Year Global Treasury Supply Will Tumble By 20% As ECB Joins The PartySubmitted by Tyler Durden on 12/20/2014 17:15 -0400
According to Goldman's own calculations, the demand squeeze for the High Quality Collateral that is global "Developed Market" Treasurys is about to go through the roof mostly thanks to central banks which will - even in the Fed's temporary hiatus from the monetization scene - soak up an unprecedented amount of Treasury collateral from both the primary issuance and secondary private market in their scramble to push global equity prices to unseen bubble levels and achieve the kind of Keynes-vindicating, demand-pull inflation that Russia was delighted to enjoy in the past several weeks.
How much? The answer: a lot, as in a whopping 20% collapse in supply, once the ECB joins the fray!
This problem is north of $9 trillion… literally than the economies of Germany and Japan COMBINED. And it's bursting NOW.
Globally the US Dollar carry trade is believed to be north of $3 trillion (larger than the economy of France). What happens when it begins to unwind?
- Maliki digs in as U.S. pushes for new Iraq government (Reuters)
- Ukraine's forces say close to taking rebel-held Donetsk (Reuters)
- Anger Over Michael Brown Shooting Leads to Looting (WSJ)
- German Economy Backbone Bending From Lost Russia Sales (BBG)
- Kinder Morgan to Consolidate Empire (WSJ)
- Early Failure to Detect Gaza Tunnel Network Triggers Recriminations in Israel (WSJ)
- You’ll never guess how much BuzzFeed raised from Horowitz (FT)
- The dumb money is now chasing Chinese oligarchs: Norway’s Wealth Fund Buys $576 Million of Mayfair Area (BBG)
- Clinical trial to start soon on GSK Ebola vaccine (Reuters)
- No drone skeet shooting any time soon (WSJ)
Will investing based on fundamentals eventually find favor once again with investors? The problem is that market participants no longer view the financial markets as a place to invest savings over the "long term" to ensure future purchasing power parity. Today, they view the markets as a place to "create" wealth to offset the lack of savings. This mentality has changed the market dynamic from investing to gambling. As Seth Klarman warned, "There is a growing gap between the financial markets and the real economy. Not surprisingly, lessons learned in 2008 were only learned temporarily. These are the inevitable cycles of greed and fear, of peaks and troughs." Simply put, fundamentals will matter, but only after the fact.
Another conspiracy "theory" becomes conspiracy "fact" as The FT reports "a cluster of central banking investors has become major players on world equity markets." The report, to be published this week by the Official Monetary and Financial Institutions Forum (OMFIF), confirms $29.1tn in market investments, held by 400 public sector institutions in 162 countries, which "could potentially contribute to overheated asset prices." China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, according to officials, and we suspect the Fed is close behind (courtesy of more levered positions at Citadel), as the world's banks try to diversify themselves and "counters the monopoly power of the dollar." Which leaves us wondering where are the central bank 13Fs?
The big question remains: will the current signal be a sign of complacency, which suggests that lower prices are ahead or will the current signal be a failed signal leading to significant market gains?
There is no edge.
I am sure those who were buying the "Kool-aid" at the market highs feel that way, but the numbers tell a different story.
Hot Air Hisses Out Of Housing Bubble 2.0: Even Two Middle-Class Incomes Aren’t Enough Anymore To Buy A Median HomeSubmitted by testosteronepit on 04/07/2014 12:35 -0400
“There was a moment when it made sense,” said Blackstone Group, largest home buyer in the US. But not anymore.
The "smart money" indicator is at its most extreme degree of selling since November, 2010.
According to Goldman, the median company’s EV/sales ratio is now the highest in 35 years, surpassing even the dot com bubble.