"While many of you have asked what our plans are for this holding, as with our other investments, we do not disclose in advance what we intend to do in the future for obvious reasons. After our failed proxy contest at Target, we held our investment for more than 19 months until the price rose to a level where we found better uses for capital. We may choose to exit J.C. Penney after more or less time depending on developments at the Company, the stock price, and the availability of other investment opportunities." - Bill Ackman, August 20
The Fed’s Confession: We Can Avoid A Crash At The End Of QE If Everybody Believes That Everybody Believes In A Mirage....Submitted by testosteronepit on 08/14/2013 12:33 -0400
With impeccable timing.
- JPMorgan Nears Settlement With SEC on London Whale Loss (BBG)
- Without even a wristslap: Iksil to face no U.S. charges in 'Whale' probe (Reuters)
- China’s Credit Expansion Slows as Li Curbs Shadow Banking (BBG)
- China slowdown shows signs of abating (FT), even as...
- Australia central bank Lowers Growth Outlook as Economy Transitions From Mining (BBG)
- SAC Business Plan Goes to Judge, Plan Would Allow Firm to Maintain Business Operations but Restrict Its Ability to Move Assets (WSJ)
- Another buyer of Herbalife? - Norway’s oil fund plans to turn active (FT)
- Mark Carney plays down scepticism over interest rate policy (FT)
- Orders Evaporate for Celebrity Perfumes (WSJ)
The most financially savvy country and western crooner in America, Merle Hazard, returns with the must-watch release of a new economics chart-topper: "The Great Unwind." As Warren Buffett previously noted, "all over the world, everybody that manages money is waiting to catch the signal that the Fed will reverse course," and this two-minutes of country-music magnificence should concentrate the mind as "we've never had the degree of disgorgement that might be called for down the line, and who knows how it'll play out."
This 4 year Bull market has been registering new all-time highs on a nearly daily basis. Days like today’s 57 basis point drop in the S&P 500 are being mocked as a correction or large sell off for the current environment. It appears that after so many years of the “Great Rotation” being hyped, the public has (to an extent) been trained to take their Bond fund proceeds and roll them into equity ETFs. While it is unlikely that baby boomer money will come back to equities and sustain the rotation, there is money flowing in. While we are no fans of the bond market, we are still stunned that there are people selling “safe” assets and rolling the proceeds into “risky” assets at all-time highs. There are three cornerstones to our current view that risk far outweighs opportunity...
Many high profile investors, economists and companies got burned during China's recent woes. We look at the errors they made and what you can learn from them.
With euphoria returning to equity markets, it's worth remembering that stocks are unlikely to make you really rich. We have some ideas what might though.
Danger and opportunity arrive hand in hand.
- ICE's NYSE to determine the rate used by key competitor CME: NYSE Euronext to Take Over Libor (WSJ)
- Japan slams China over maritime disputes (FT)
- The Twinkie Returns, With Less Baggage (WSJ)
- Pentagon Workers From Pennsylvania to Ghana Hit by Cuts (BBG)
- Why Prostitutes Aren't Enough to Deprive the World of Eliot Spitzer (BBG)
- Groups gather in Turkish protest park after night of clashes (Reuters)
- Apartment Rents Rise, But the Pace Is Slowing (WSJ)
- Asiana Seen Saving Millions With Tactic to Bar U.S. Suits (BBG)
- Bin Laden's life on the run revealed by Pakistani inquiry (Reuters)
- Fracking Firms Face New Crop of Competitors (WSJ)
As the escalation in violence between members of the pro-Mursi Muslim Brotherhood and the military-backed victors of this week's coup gets worse with at least 6 dead now according to Al Arabiya, the US Secretary of State is busy...
a) Getting debriefed and preparing for a diplomatic statement
b) In the air between point A and point B promoting US domestic and foreign interests abroad
c) Informing Warren Buffett about the aphrodisiac benefits of ketchup
d) Spending a (second consecutive) exhausting afternoon on his sailboat.
And the correct answer is...
Demand for Warren Buffett, the investor, peaked in 2012 when an anonymous donor bid $3,456,789 for the annual Glide Foundation's eBay lunch with the Octogenarian of Omaha. Demand for Warren Buffett, 82, the Obama tax and fairness advisor, however, is a mere fraction as the stunned Glide Foundation found out last night when the final bid for the "Power Lunch for 8 with Warren Buffett to Benefit GLIDE Foundation" auction closed at the lowest possible 6 digit increment, or an embarrassing $1,000,100. This was the lowest demand to have lunch with Buffett since 2007. This is a stunning result considering that with every passing year, for obvious reasons, the likelihood of many more such "power lunches" drops exponentially. We hope Buffett-demand is not a proxy leading indicator for the stock market or else a 71% plunge is coming.
One of the problems with QE is that the Fed is forcing people to buy riskier investments than they otherwise would have. The immorality of their actions aside, they create a significant psychological mismatch between assets and their holders. Stocks are in weak hands, insuring one great stampede for the chairs when the music stops.
Is the coming financial collapse going to be inflationary or deflationary? Are we headed for rampant inflation or crippling deflation? This is a subject that is hotly debated by economists all over the country. Some insist that the wild money printing that the Federal Reserve is doing combined with out of control government spending will eventually result in hyperinflation. Others point to all of the deflationary factors in our economy and argue that we will experience tremendous deflation when the bubble economy that we are currently living in bursts. So what is the truth? Well, for the reasons listed below, we believe that we will see both.
Since before the tech bust, we’ve been suggesting that while Americans “think” they’re getting richer... they’re actually heading in the other direction. They’re getting poorer. This proposition has been easier for folks to entertain since housing busted and the financial crisis reversed the “wealth effect” in 2008. With that in mind, let’s take a look at the logic of the American Empire and what you can expect in the year(s) ahead.
- Hilsenrath: A Top Contender at the Fed Faces Test Over Easy Money (WSJ)
- Yen drops further as G7 avoids criticizing Japan (Reuters)
- Markets missed Flaherty’s clues on next Bank of Canada chief (G&M)
- Republicans turn screws over Tea Party tax probes (FT)
- Dual-track Libor replacement lined up (FT)
- Risks to China recovery seen as factory output underwhelms (Reuters)
- Barack Obama’s goal of universal healthcare could be set back significantly by Texas Governor Rick Perry (FT)
- Gold Bears Pull $20.8 Billion as BlackRock Says Buy (BBG)
- Mexico sets shelters as volcano shakes, spews ash (AP)
- Europe Eases Corporate Tax Dodge as Worker Burdens Rise (BBG)
- IPOs Set to Raise Most Cash Since Crisis (WSJ)
- Melting Ice Opens Fight Over Sea Routes for Arctic Debate (BBG)
- Top hedge funds bet on Greek banks (FT)
- Icahn Asks Investors to Make Big Bet on a Debt-Laden Dell (BBG)