Speaking at a Reuters activist conference, ValueAct's Jeffrey Ubben, said that his firm had been taking money out of the capital markets as valuations have become overextended, leaving it with $3 billion in cash. "I really feel that the large-cap activist plays are very treacherous with high PEs (price-to-earnings) and not a lot of growth."
If 2016 was the year of the breakthrough, 2017 could see the status-quo fightback, with Europe likely to form the battleground ahead of pivotal elections. And, while next month's general election in The Netherlands may not be the biggest showdown of the year, the outcome could set the tone for 2017.
"It’s been kind of worst-case scenario for the bulls... Mother nature continues to be bearish, ultra-bearish... The utter lack of (heating) demand is, in my opinion, 99.9 percent of the natural-gas story."
"...the recent increase in equity prices might in part reflect investors’ anticipation of a boost to earnings from a cut in corporate taxes or more expansionary fiscal policy, which might not materialize.... They also expressed concern that the low level of implied volatility in equity markets appeared inconsistent with the considerable uncertainty attending the outlook for such policy initiatives."
Despite desperate attempts to jawbone March rate-hike-odds higher, because as Master said last night "we don't want to surprise the markets", Fed Funds Futures imply just a 36% chance (down from a week ago). That suggests, if The Fed is serious about March, that today's minutes must be spun towards that narrative. Here are the five key areas to watch for...
"Speculators often prosper through ignorance; it is a cliche that in a roaring bull market, knowledge is superfluous and experience is a handicap. But the typical experience of the speculator is one of temporary profit and ultimate loss."
On Tuesday the Foreign Exchange Commission (FEC) announced today that Banxico was instructed to offer dollar FX hedge to the market for up of US$20 billion. The hedging instruments will settle in local currency and will have a maturity of up to 12-months.
Simply put, the massively overcrowded hedge fund herding into US equities has created a crisis situation. With liquidity levels at record lows, the market will be unable to smoothly absorb any concerted selling pressure from large money managers.
Financial engineering masks the true performance and health of companies and nations. But the damage goes much deeper, deluding decision-makers into thinking that things are better than they are, and that solutions to problems can be deferred.
The Federal Reserve has pursued the unprecedented monetary policy of lowering rates to zero and increasing their portfolio from 500 billion to over 4 trillion. But as the Fed reminds us, there is a cost.