Two Really Bad Long-Term Chart Omens for U.S. House Prices

Friday, April 13th, 2012

The younger population is falling behind in real income growth, making them less able to purchase homes at rising prices from retiring and downsizing older homeowners. The rising and crushing burden of loans for college and graduate school education, further diminishes funds available to pay for first and upgraded homes.

Source: Business Insider

Tags: Business Insider, Chart House, College Graduate, Graduate School Education, House Prices, Loans For College, Omens, Population, Source Business
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David Einhorn Slams Bernanke

Friday, May 27th, 2011

David Einhorn, hedge fund manager of Greenlight Capital, was on top form at the Ira Sohn Conference when he played a clip from Airplane II to illustrate his apprehension over the nation’s monetary policy.

The following from Business Insider:

“It’s a scene starring 80s model and actress Julie Hagerty as a stewardess, explaining to the passengers that the plane has been thrown off-course “just a tad …” (aka 500,000 miles) and that the navigation system has been shattered and can’t seem to change course.

“When she admits that they’re also out of coffee, there’s a mutiny on board! Signs around the cabin start flashing, “Don’t Panic.”

Followed swiftly by smoke and flames, and a flashing light with the updated advisory: “Ok, Panic!”

Over the P.A system, stewardess Jules says: “Listen to me, your crew is complete control of the situation.”

And the cabin signs start flashing, “BULLSHIT.”

Then: “UNBELIEVABLE BULLSHIT.”

After the clip played, Einhorn quipped: “Did anybody else notice that Julie Hagerty looks a little like Ben Bernanke?”

Here’s the clip:

Source: Business Insider, May 26, 2011.

Tags: 80s, Airplane, Anybody Else Notice, Apprehension, Ben Bernanke, Bullshit, Business Insider, Complete Control, David Einhorn Hedge Fund, Flames, Flashing Light, Hedge Fund Manager, Ira Sohn Conference, Julie Hagerty, Monetary Policy, Mutiny, Navigation System, Slams, Source Business, Stewardess
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Developed World’s Standard of Living Must Plummet Sharply (Crispin Odey)

Saturday, May 14th, 2011

by Courtney Comstock, Business Insider

Crispin Odey, a London-based hedge fund manager, warned that the standard of living in the developed world will come down sharply in the future.

Not in the near term, he said (at the Morningstar investment conference in London yesterday), but eventually.

It has to do with the fact that emerging markets have not yet revalued their currencies, and developed countries will not raise interest rates until they do.

Eventually, he said, salary gaps in the emerging and developed worlds will close. This will go on to shape future thinking about the economy.

Context: Right now, emerging markets like China keep wages low, which supports their heavy export business, but hurts Western economies like the U.S., which currently outsources rather than produce goods in the U.S. Until emerging markets revalue their currencies, this will continue.

But once they do -

A wave of inflation will come when emerging markets post current account deficits and workers’ wages converge, according to Odey. His comments were reported by CityWire UK.

The fact that it hasn’t happened yet and won’t for awhile is one reason why the U.S. won’t raise interest rates yet, Odey says. [Raising interest rates would only make it harder for us to pay back obligations to China, for example.]

“We will not see any interest rate rise until wage inflation is well on the up. When it does come through, it will take us out like a flood.”

The west can try to speed up the process through quantitative easing, he says. Quantitative easing should speed up the process of wage rises in emerging markets, which then translates into a bullish factor for the West, which is becoming increasingly competitive despite emerging market resistance.

Being invested in the West is the best place to be when this happens, according to Odey.

Fun fact: Crispin Odey is the manager who taught Hugh Hendry.

Tags: Account Deficits, Business Insider, Citywire, Comstock, Crispin Odey, Current Account, Developed Countries, Emerging Market, Emerging Markets, Export Business, Hedge Fund Manager, Hugh Hendry, Interest Rate Rise, Morningstar Investment Conference, Quantitative Easing, Source Business, Standard Of Living, Wage Inflation, Wages, Western Economies
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John Paulson’s Take on Markets

Thursday, May 12th, 2011

John Paulson, hedge fund billionaire of Paulson & Co that capitalized on the problems in mortgage backed securities, a few days ago addressed a Global Financial Services Conference hosted by UBS. The notes below are being circulated among traders. The original source is not known, but this version comes courtesy of Business Insider – Clusterstock.

In short, Paulson is bullish on financials and gold, confident about the recovery, and thinks housing will be stable by 2012.

The following are a few bullets on his talk:

• Believes financials are under-followed at present whilst earnings are recovering.

• Confident US recovery is going to continue. One weak segment impeding growth is housing. However transition rate of delinquencies has dropped, i.e pool of delinquent mortgages is declining.

• Expect normal housing market by 2013.

• Assuming 7% S&P earnings and a normalized market PE, there is 34% upside.

• Financials’ earnings expected to recover strongly as provision expenses decline.

• Sees 40–60% upside in bank stocks.

• Sees US banks as better capitalized an over-reserved vs European once, hence only European holding is Lloyds.

• Doesn’t see any good shorting opportunities in financials.

• Expect to see pick-up in M&A in financials, particularly cross-border.

• Doesn’t think gold is a crowded trade. Only a small portion of pension fund assets held in gold.

Source: Business Insider – Clusterstock, May 10, 2011.

[AA's Note:] Lyxor/Paulson Advantage Fund Limited and Lyxor/Paulson International Fund Limited can be accessed indirectly via PROPEL MULTI-STRATEGY FUND (PPF.UN-T), a closed-end trust, which trades on the Toronto Stock Exchange. The fund allocates roughly 80% of assets to the two Paulson partnerships, and the remaining 20% is allocated to the SPDR Gold Trust by way of forward agreement. [AA]

Disclosure: no position

Tags: Advantage Fund, Bank stocks, Business Insider, Cross Border, Delinquencies, Delinquent Mortgages, E Pool, Global Financial Services, Gold, Gold Source, Hedge Fund Billionaire, Housing Market, John Paulson, Lloyds, Mortgage Backed Securities, Original Source, Pension Fund Assets, Small Portion, Source Business, Strategy Fund, Toronto Stock Exchange
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Inflection Point for Inflation

Friday, January 14th, 2011

The U.S. economy is on the brink of turning from a deflationary environment to an inflationary one, according to Deutsche Bank (via Business Insider –  Clusterstock).

Deutsche Bank said: “For the past several months we have emphasized the notion that the inflection point for consumer prices, whereby disinflation yields to modest inflation, is likely to be reached in the near term – probably sometime in the current quarter. When this trend becomes more apparent, it will have significant implications for the monetary policy outlook and interest rates. In particular, the decisiveness of the turn in inflation will influence the Fed transition from quantitative easing toward less accommodative policy. If the inflation profile evolves as we project, then the probability for QE3 is low.”

It is quite apparent that inflationary pressures have started building up. (How long ago did the Fed remark that inflation was “well-anchored”?)

Source: Business Insider –  Clusterstock, January 12, 2011.

Tags: Brink, Business Insider, Decisiveness, Deutsche Bank, Disinflation, Economy, inflation, Inflationary Pressures, Inflection Point, interest rates, Monetary Policy Outlook, Notion, Probability, Profile, Qe3, Quantitative Easing, Source Business, Transition
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Rising Oil = Head Wind

Friday, December 24th, 2010

The crude oil price has been scaling new recovery highs over the past few days and indications are that the trend is solidly up. Although oil is marching higher as a result of increased demand, an increasing price also represents a head wind for the economy – almost like an additional tax. Here is why:

“Every $1 per barrel rise in oil decreases U.S. GDP by about $100 billion per year, and every one cent increase in the gasoline price decreases U.S. consumer disposable income by about $600 million per year,” said Joseph Lazzaro of Daily Finance.

The price chart of gasoline is below and the oil chart is here.

Source: Business Insider – Clusterstock, December 23, 2010.

Source: Bob Englehart, Comics.com, December 22, 2010.

Tags: Bob Englehart, Business Insider, Comics, Crude Oil Price, Disposable Income, Economy, Few Days, Finance, Gasoline Price, GDP, Head Wind, Joseph Lazzaro, Oil Head, Source Business
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Video-Rama: Ring out the old, ring in the new

Friday, January 2nd, 2009

Although this is a holiday-shortened trading week, there has certainly not been a lack of video clips hitting the airwaves. A number of these review the historically brutal year that has just drawn to a close. Others attempt to cast light on the outlook for 2009, debating whether markets will stabilize, or at least be less ugly than 2008.

Also featuring prominently is a fair bit of footage on the rapidly deteriorating situation in China. Let’s see what the Year of the Ox will bring – the Ox after all is “a sign of prosperity through fortitude and hard work”, according to Wikipedia.

A few of the more interesting clips that have attracted my attention are shared below. All the material is worth watching, but do make a special effort to watch the Jim Rogers video (even though it runs for almost 20 minutes). On a lighter note, John Paczkowski’s “2008 – the year in wisecracks” is also not to be missed.

CNBC: 2008 in review
“CNBC looks back at the top stories from the past year, with CNBC’s Bill Griffeth.”

Source: CNBC, December 30, 2008.

Business Week: 2008 – economic misery
“2008 has been a historical year for the economy and the country. We look back at the financial crisis that changed the economic landscape.”

Source: Business Week, December 30, 2008.

Digital Daily: 2008 – the year in wisecracks

Source: John Paczkowski, Digital Daily, December 24, 2008.

CNBC: 2009 – what’s ahead
“Discussing what’s ahead for the economy and markets in 2009, with Peter Morici of the University of Maryland, John Ryding of RDQ Economics and CNBC’s Erin Burnett.”

Source: CNBC, December 31, 2008.

Bloomberg: Jim Rogers – “I’m prepared for the worst”

Source: Bloomberg (via YouTube), December 29, 2008.

CNBC: Marc Faber – outlook for ’09

Source: CNBC, December 29, 2008.

CNBC: How to invest in 2009
“The next stage in this financial crisis would be the collapse in employment, says Roger Nightingale, strategist at Pointon York. In light of this, he offers advice on how to inves.”

Source: CNBC, December 28, 2008.

Financial Times: 2009 – predictions of some known unknowns
“The Financial Times team of pundits is back, once again, to risk its professional reputation on bold predictions of some known unknowns.”

Click here for the article.

Source: Financial Times, December 30, 2008.

CNBC: Credit and the economy
“Discussing the credit market and the economy with Jan Hatzius, of Goldman Sachs, and John Lonski, of Moody’s Capital Markets.”

Source: CNBC, December 29, 2008.

CNBC: Nobel thoughts on the economy
“Insight on how soon the recession will end, with Edmund Phelps, Nobel Laureate and Columbia University professor.”

Source: CNBC, December 30, 2008.

Barron’s: Seasonal patterns for the market
“Barron’s Michael Santoli discusses what market patterns to expect in the closing days of 2008 and the beginning of 2009.”

Source: Barron’s, December 29, 2008.

CNBC: Get Ready to short 30-year US Treasuries
“Bill Smith of SAM Advisors is getting ready to short the 30-year US treasuries as he believes they are wildly inflated. He reveals more of his investment strategy to CNBC’s Martin Soong.”

Source: CNBC, December 30, 2008.

CNBC: Scam of the century
“Today [Wednesday] is the deadline for Bernard Madoff to disclose his personal assets. Jacob Frenkel, a former SEC enforcement attorney, discusses the scandal with CNBC.”

Source: CNBC, December 31, 2008.

CNBC: Skeptical about China’s stimulus plan
“Fraser Howie, author of “Privatizing China, Inside China’s Stock Markets” is skeptical about the kind of effect that China’s fiscal stimulus package will have on the economy. He tells Cheng Lei & CNBC’s Martin Soong why.”

Source: CNBC, December 30, 2008.

CNBC: China’s “dual-listed” labor market
“Unemployment is rising in China. But in its “dual-listed” labor market, the pain is more pronounced among high-skilled workers, notes Luca Silipo, chief economist for Asia Pacific at Natixis.”

Source: CNBC, December 31, 2008.

Tags: Asia Pacific, Bernard Madoff, Bill Griffeth, Bill Smith, Bloomberg, Business Week, Cheng Lei, Chief Economist, chief economist for Asia Pacific, China, Cnbc, Cnbc Business, Columbia University, December 29, Economic Landscape, Economic Misery, Edmund Phelps, enforcement attorney, Erin Burnett, Financial Times, Fortitude, Fraser Howie, Goldman Sachs, Jacob Frenkel, Jan Hatzius, Jim Rogers, John Lonski, John Paczkowski, John Ryding, Luca Silipo, Marc Faber, Martin Soong, Maryland, Michael Santoli, Peter Morici, Pointon York, professor, Roger Nightingale, Rogers Video, SAM Advisors, Source Business, Special Effort, Strategist, the Financial Times, U.S. Securities and Exchange Commission, United States, University of Maryland, Wikipedia, Wisecracks, Year Of The Ox, Youtube
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