JPM's Mislav Matejka writes, "equities are down ytd, but notably the ’16 P/E is not much cheaper today than it was at the start of the year. In fact, for the US, the P/E multiple is currently higher than it was on 1st January, at 16.8x vs 16.6x then. For MSCI World, P/E is flattish vs Jan as the ’16 EPS has been revised lower by 5% so far ytd." JPM then adds why it refuses to buy the market: "Earnings rollover is the key headwind to buying the market outright over the medium term horizon."
Someone Isn't "Buying" This Rally: The "Smart Money" Sells For Five Consecutive Weeks As Buybacks SoarSubmitted by Tyler Durden on 03/01/2016 14:39 -0400
No matter what unleashed today's algo buying spree, one thing is clear: someone has to be buying and someone has to be selling into what, Investech yesterday explained, is the latest bear market rally. Thanks to Bank of America we know the answer to both.
Someone Is Very Wrong On The US Dollar: Hedge Funds Most Bullish In One Year, 'Real Money' Most BearishSubmitted by Tyler Durden on 02/29/2016 11:57 -0400
As JPM explained 10 days ago, before one can form a definitive view on the future direction of the S&P500, aside from BTFD "just because", one first has to decide what the USD will do from here. And that's where we run into a problem, because according to the latest Commitment of Traders data, the outlook of the "smart" money managers has never diverged as much as it does right now.
The mispricing of assets across world markets has reached epidemic proportions.
"Before any big move in gold we have always seen extreme volatility or volatility pick up. This was just a taste of what’s to come in the next few years... We’ll look back at this and be reflecting on how minimal this move was compared to what’s going to happen as we go forward... They’re just positioning themselves for what’s to come."
“Leave a million dollars with a bank, and in a year, you get only something like $990,000 back,” Marc Faber, respected publisher of the Gloom, Boom & Doom Report, told Bloomberg by phone yesterday. “I would rather want to own some solid currency, in other words ... gold” warned Faber.
How things have changed in the subsequent month. As the chart below shows, the biggest investor fear in February had nothing to do with a Chinese recession or an EM Debt crisis, and everything to do with the dreaded "R" word right inside the gold ole' US of A. In fact, four of the top "tail risks" are brand news, and in addition to a US recession include energy debt defaults, quantitative failure and a topic we have been covering since mid-2015, China's relentlessly encroaching capital controls.
We can only hope that Burry managed to sell out of his CYH stake (and, ironically, his various bank holdings) which he held just days after the Big Short hit the theaters in December ahead of today's devastation, or there may not be a Big Short sequel.
"Smart Money" flow is shifting in a disturbingly similar pattern to those seen at the prior 2 cyclical tops...
Instead of allocating capital to expensive tail risk bets on direct asset class collapse (in equities, credit, and commodities), it appears, just as we detailed previously, the 'smartest money in the room' is "betting" indirectly on a stock market crash through eurodollar options.
The Numbers Are In: Hedge Funds Furiously Dumped The Rally; Selling Was "Biggest In Nearly Two Years"Submitted by Tyler Durden on 02/02/2016 13:27 -0400
"Net sales last week by hedge funds were the biggest in nearly two years and the fourth-largest in our data history. This follows near-record levels of net buying by this group in early January."
"Please, PEPPER SPRAY ALL THE ATTENDEES OF DAVOS in order to halt the rape of taxpayers and consumers across the globe. This annual conclave is responsible for more wealth destruction and the widening disparity in GINI coefficients than any public policy."
"Assuming selling in accordance to the average allocation of FX Reserve Managers and SWF across asset classes, we estimate that the sales of bonds by oil producing countries will increase from -$45bn in 2015 to -$110bn in 2016 and that the sales of public equities will increase from -$10bn in 2015 to -$75bn in 2016."
“Fed Chair Janet Yellen will be forced to either acknowledge labor market tightening as reason to continue with the four-hike schedule for 2016 or risk her credibility, belittle job market stability and sound a warning about the risks of lower oil prices and cheap gasoline (sacrilege to regular Americans) by slowing the hiking pace after a single 0.25 percent increase last month. If she gets it wrong, things could get ugly fast."