As we enter into the two final months of the year, it is also the beginning of the seasonally strong period for the stock market. It has already been a phenomenal year for asset prices as the Federal Reserve's ongoing liquidity programs have seemingly trumped every potential headwind imaginable from Washington scandals, potential invasions, government shutdowns and threats of default. This leaves us with four things to ponder this weekend revolving around a central question: "Does the Fed's Q.E. programs actually work as intended and what are the potential consequences?"
When even Bank of America has a note titled "It's getting frothy, man", and joins such other bubble-warners as JPM, Bill Gross, Larry Fink, and David Einhorn, one can be absolutely positive that the Fed will do... absolutely nothing.
- How much does QE contribute to the growing inequality of wealth in this country and what are the risks this creates?
- How much systemic risk does the Fed create by becoming what Warren Buffett termed “the greatest hedge fund in history”?
- How might the Fed’s expanded balance sheet and its failure to even begin to “normalize” monetary policy four years into the recovery limit its flexibility to deal with the next recession or crisis?
Confused how to trade the second coming of the dot com bubble and a world in which irrational exuberance has hit irrationally exuberant levels? You are not alone. Here is some insight from none other than David Einhorn originating in his latest letter to investors.
While commission-takers the world over attempt to dispel the fact that throwing your hard-earned money into the US equity market is absolutely not gambling, Bloomberg has decided that the time is right to relaunch "Poker Night On Wall Street." Hosted by Trish Regan, David Einhorn, Jim Chanos, and Mario Gabelli are among the top-ranked investors and hedge fund managers facing-off in a winner-takes all charity poker tournament at the Borgata in Atlantic City. By way of guidance, we include what investors and gamblers have in common...
One of the most published academics on gold in the world is Dr Brian Lucey of Trinity College Dublin (TCD) and he and another academic who has frequently covered the gold market, Dr Constantin Gurdgiev have just this week had an excellent research paper on gold published.
They have researched the gold market, along with Dr Cetin Ciner of the University of North Carolina and their paper, ‘Hedges and safe havens: An examination of stocks, bonds, gold, oil and exchange rates’ finds that gold is a hedge against US dollar and British pound risk due to “its monetary asset role.”
- SURPRISE - Goldman Sachs won a preliminary victory to limit losses from a wave of erroneous trades that roiled U.S. options markets (WSJ)
- HP’s Whitman abandons 2014 revenue growth target (FT) - just keep doing those buybacks and ignore CapEx: revenue growth estimated in 2022
- Republicans in Echo Before Big Burn Defy Affordable Care (BBG)
- China's banks to take next step in rate reform push (Reuters)
- Berlin’s Consistency on Greece’s Rescue (FT) and lack thereof
- Summers as Obama Voice of Authority Rides Car Rescue in Fed Race (BBG)
- Cuomo in Manure Fight as New York Promotes Yogurt (BBG)
- Yellen’s Ties From London to Shanghai Bypass White House (BBG)
- Sanctions Gap Allows China to Import Iranian Oil (WSJ)
While we congratulate Carl Icahn (or is that iCahn) for once again taking over the spotlight in what has otherwise been a newsflow empty summer doldrum week, and like everyone else, are surprised by his most recent activist target, the country's on-again, off-again most valuable by market cap company, Apple, we do, as we did before when David Einhorn proposed virtually the same activist play, have some questions. Chief among them: how will AAPL fund any proposed expanded buyback or increased dividend using domestic cash?
We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come.
— Carl Icahn (@Carl_C_Icahn) August 13, 2013
This earnings season is much worse as almost every single company is missing on the revenue side which is not as easily to "fix" as the EPS....
China's GDP number should be in the 6.7% range for the quarter. This is the black swan ...
"Zero hour" - the day you can mark on a calendar when the price of real metal breaks away forever from the quoted price on media's ticker. The "zero hour" scenario is the ultimate emperor-has-no-clothes moment. Hans Christian Andersen’s original 19th-century tale The Emperor’s New Clothes has become a 20th- and 21st-century touchstone for obvious truths overlooked by the masses. It is almost a cliche. But it is singularly appropriate for our purposes today. The "emperor" here consists of central banks, commercial and investment banks and the commodities exchanges. The day everyone recognizes them as being buck naked — or in this case, stripped of the gold they claim to hold — will be "zero hour." At root, zero hour will come when everyone knows gold supply can no longer meet gold demand.
Third Point Q1 Holdings Update: Reduces YHOO, AIG Stakes, Adds New Stakes In Virgin Media, Tiffany And B/E AerospaceSubmitted by Tyler Durden on 05/15/2013 16:05 -0500
With Paulson's star long gone down, there are few remaining "new generation" hedge fund wunderkinds, especially in a world in which the best performing hedge fund is Federal Reserve Capital LLC - Onshore Fund. One among them is Third Point's Dan Loeb, who continues to be one of the best performing hedge fund managers for the 4th year in a row. He just filed his Q1 13F, amounting to $5.3 billion in disclosed long equity positions, which are summarized below. Of note are the following changes:
- New stakes in Virgin Media ($538MM), Tiffany ($188MM), Anadarko ($105MM), Thermo Fisher ($99MM), Cabot Oil and Gas ($84MM), Hess ($72MM) and others. Some of these overlap with the initiations of David Tepper and David Einhorn especially Hess: did some "idea dinners" take place in Q1 we were not aware of?
- Fully exited stakes in Tesoro, Morgan Stanley, Nexen, Symantec, Herbalife, Illumina, Coke, PVH, Abbott Labs and others.
- Reduced positions in Yahoo, AIG, New Corp, Murphy Oil, Delphi, Lyondell and others
- Added to stakes in International Paper, Abbvie, Dollar General, Constellation, and Ariad