Rosenberg Roasts The Roundtable Of Groupthink

Tyler Durden's picture

It appears that when it comes to mocking consensus groupthink emanating from lazy career 'financiers' who seek protection from their lack of imagination and original thought, 'creation' of negative alpha and general underperformance (not to mention reliance on rating agencies, only to jump at the first opportunity to demonize the clueless raters), in the sheer herds of other D-grade asset "managers" (for much more read Jeremy Grantham explaining this and much more here), David Rosenberg enjoys even more linguistic flexibility than even us. Case in point, his just released trashing of the latest Barron's permabull groupthink effort titled "Outlook: Mostly Sunny." And just as it so often happens, no sooner did those words hit the cover of that particular rag, that it started raining, generously providing material for the latest "Roasting with Rosie."

From Gluskin Sheff:

Consensus Creates A Contrary Call

When the experts and forecasts agree, something else is going to happen."

Bob Farrell's investment rule #9.

Did the folks at Barron's intentionally lob a ball right into my wheelhouse? The front cover says it all — Outlook: Mostly Sunny. Check it out. Any perma-bull out there right now should be trembling by the front cover effect. This is no different than the fabled Death of Equities in the 1979 Businessweek, the Economist front cover calling for oil prices to basically head towards zero circa 1998, and the front cover of Barron's a decade ago saying That's All, Folks when it came to interest rates supposedly bottoming out. Come to think of it, Barron's ran with Dow 15,000 on its front cover back on February 13, 2012, and last we saw, at the nearby peak in early April, the blue-chip index closed 1,700 points below that threshold (and has been roughly flat since the date of that article).

What Barron's is referring to here is the latest Big Money poll that it conducts semi-annually. The actual title of the article (on page 25) is Reason to Cheer. Reason to cheer? About what? Margins being squeezed? Profit growth practically evaporating? Earnings downgrades still significantly outpacing upgrades? The recovery so excruciatingly slow that senior members of the Fed are contemplating QE3? Insolvency of Spanish banks? Hard landing risks in China? The 2013 fiscal cliff? The fact that over 60% of the data in the past two months have surprised to the downside?

The results of the Big Money Poll were startling:

  • 55% of the portfolio managers are either bullish or very bullish. Only 14% are bearish or very bearish.
  • Financials and technology are the favourites, with 31% citing both as being the top performers in the next six to 12 months.
  • Favourite stock ... Apple (surprised?).
  • Utilities are seen as the worst performer — by 30% of those polled.
  • With respect to Treasuries, 81% are bears, just 2% are bulls. How can yields rise in such a lopsided environment? I mean, who is there left to sell? This is a classic bullish contrary signpost.
  • Bonds of all types are detested — 33% bearish on corporates while 14% are bullish; 35% are bearish on munis while only 12% are bullish.
  • But ... 41% are bulls on real estate; only 10% bears are left.
  • For gold, 39% bears and 30% are bulls. That is great— the one asset class that has been in a secular bear market for 12 years is adored (equities), and the two that have actually made you money over this time span (the bond- bullion barbell) is to be avoided. Go figure!

The latest market positioning by non-commercial accounts (proxy for what the hedge funds are doing) from the weekly Commitment of Traders report is also rather instructive (futures and options contracts combined):

  • 10-year T-note: Net speculative short position of 130,045 contracts on the CBOT. As I said above, who is left to sell?
  • DJIA index: Net long 13,285 contracts on the CBOT.
  • EAFE stocks: Net short 440 contracts on the CME but this number has been coming down.
  • EM stocks: Net short 4,787 contracts on the CME, also coming down of late as the shorts cover.
  • Nikkei index: Net short 4,894 contracts and also on the descent.
  • Copper: Net long 1,229 contracts.
  • Energy: Net short 124,941 natural gas contracts on the NYMEX: net long 288,393 WTI oil contracts. Patient investors know what to do.
  • Gold: Net long position has been cut in half since last summer to 146,833 contracts. The latest corrective action has been healthy as the earlier froth is gone.
  • Silver: Ditto — the net speculative long position has been sliced 40% to 21,309 contracts.
  • Euro: Net short 117,062 contracts on the CME (likely why the currency won't go down ... the bears are already all in that trade!).
  • Sterling: Net short 13,456 contracts (and is enjoying a humdinger of a short- covering rally of late).
  • Yen: Net short 57,984 contracts (if the Japanese government is telling you they want the currency to depreciate, we should probably take heed).
  • Canadian dollar: Still has a net speculative long position of 37,873 contracts on the CME, which could hold back the gains.

It is viewed as a global darling. But the Aussie dollar still commands a net speculative long position of 48,902 contracts and the Reserve Bank of Australia is about to cut rates while the Bank of Canada seems itchy to raise them as they did in 2010 — so there could be an opportunity on the 'cross rate' here.

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hedgeless_horseman's picture



Stocks seeing unusually high volume during today's session




"They" are selling..but "we" are buying. 


Remain calm...our robots are better than their robots.


All is well...just watch CNBC and believe.



slewie the pi rat's picture

glass houses Dave, glass houses


Mar 19, 2009 

Enjoy the Sucker's Rally, Says Merrill's Rosenberg^gspc,^dji,^ixic

7 December 2009


mayhem_korner's picture



The reach of those desperate to hold on to power continues to defy description.

DoChenRollingBearing's picture

"Unfair Review of Barron's -- Dated 23 April"

I discussed the Big Money Poll there at my blog.

GeneMarchbanks's picture

'But the Aussie dollar still commands a net speculative long position of 48,902 contracts and the Reserve Bank of Australia is about to cut rates while the Bank of Canada seems itchy to raise them as they did in 2010 — so there could be an opportunity on the 'cross rate' here.'

Well that makes sense since Australia is almost out of bullets on the housing bust up while Canada...  I guess you'll have to take his word for it.

CClarity's picture

A lot of portfolio managers are going to get spanked, again.  Optimism and magical thinking don't produce "performance"

55% of the portfolio managers are either bullish or very bullish. Only 14% are bearish or very bearish.

The Heart's picture

Please excuse the channel change, but is this what everyone really wants?


Pass this around on your tweeters.

Scalaris's picture

Yeah I wouldn't pay much heed to the "Big Money Poll" results, since even the most bullish gambler woudn't be adding right now, especially when the markets are about to shut until mid-September, and while during the interim things are bound to be "cloudy" at best, with the last tranche of synthetic liquidity drying up and the 24-hour news cycle about to switch in doom mode, or reality in any other translation, while the politico-economic representative elite will be engaging in the usual, "crucial", long-winded meetings, debating the measures needed to be taken and the compromises needed to be made in order to reposition the economic expectation "in the right track", and to safeguard the already diminished faith in the severely strained and heavily distorted financial systems.

Bam_Man's picture

Does anybody actually read Barron's anymore?

I cancelled my subscription back in 2007 and haven't touched an issue since.

CIABS's picture

I don't read Murdoch's - sorry, Barron's - any more.  Nor any of his other rags.

DoChenRollingBearing's picture

No sweat, I read it for you!

"Unfair Review of Barron's -- Dated 23 April"  Save yourselves the $5.00!

Excursionist's picture

Don't shoot the messenger, people..  The mag was just reporting survey findings.

economicmorphine's picture

Are you really that naive?  It was their survey, Chief!  Do you have any idea how easy it is to stack your own survey?  I'm shooting the messenger.

Ted Baker's picture


Soul Train's picture

Equities - risk off.

Gold - risk on.

"Secret" Service and the rest of the DC Feds - always on "jerk off"

XRAYD's picture

Here is the lead paragraph from this weeks Barron's cover:


Color America's money managers cautiously optimistic about the stock market's prospects in the year ahead. Corporations generally are in fine financial health; Europe's problems seem more manageable than they did just a few months ago; and near-zero interest rates have done much to burnish the appeal of riskier assets.

Even Washington could be a plus for the market, for a change, if President Barack Obama is re-elected but Republicans maintain a majority in the House of Representatives and seize control of the Senate in November's elections, much as respondents to Barron's latest Big Money poll expect. Two-party rule usually produces policy-making gridlock, not an optimal state but one that at least prevents more harmful legislation.

In view of these and other favorable trends, 55% of the professional money managers responding to our spring survey call themselves bullish or very bullish about the outlook for stocks through the middle of next year. That is up modestly from last fall's survey, when 52% of managers were bullish, and down modestly from the spring 2011 poll, when 59% of Big Money pros were bulls.

The current crop of bullish investors expects the Dow Jones industrials to rise by 6% through year end, to 13,756, and add another 3% thereafter, to arrive at 14,183 by June 2013. In round numbers that's a gain of 10% from Friday's close of 13,029.26, although there is no guarantee the path from here will be smooth.

The Big Money bulls likewise see the Standard & Poor's 500 adding 6% more this year, to 1456, en route to 1508 by the middle of 2013. The Nasdaq, they say, could rally 7% by year end, to 3211, before reaching 3360 next June.



AND NOW, FOR SOME GOOD NEWS: THE OTHER SHOE isn't going to drop. After a winter of discontent marked by massive write-offs on Wall Street and a wilting economy on Main, America's portfolio managers have declared that the worst is over. More than half of the institutional investors participating in our latest Big Money poll say they're bullish or very bullish about the prospects for stocks through the end of 2008. Their forecasts suggest they're even more upbeat about the first half of 2009.


Much has changed since we took the pros' pulse last October, little for the better. Oil is up, profits are down, credit's constrained and a major brokerage is kaput. As for stocks, the Dow Jones Industrial Average peaked Oct. 9 at 14,164, only to plummet to 11,740 before regaining enough ground to land at 12,892.


5-Yr DOW chart:







R_Soles's picture

It's tough to get enthused about a bull market in anything except lead. Seriously, every single western country ( I mean fuk south africa and poland and these kinds of countries) is on the verge of riots as debt is swallowing up the ability of both private and public sectors to do anything!

I fully expect some serious rioting in the streets this summer most likely in SPain, ireland and Greece and look for serious gov shifts in these places and others to either the far left or far right . The world is going to get a whole lot smaller

SlorgGamma's picture

Every time I think the 1% can't possibly become more psychotic, criminal and outright delusional, they prove me wrong.

The entire country is broke.

There is no recovery.

The pain level out here in 99PercentLand is indescribable. It just keeps getting worse.

zebrasquid's picture

Funny how some think Obama can't lose.

The only way he can't lose is to lose, and let Romney go down in history as Hoover II.

reTARD's picture

Outlook: Sunny-side up

Reality: Scrambled (and repackaged into an Omelet?)