When your bet is on policy certainty in India, maybe it’s time to reevaluate that bet…. From BofAML:
Ignoring the risk-love silliness, we think this means a whole load of policy certainty has been priced into Indian markets ahead of the Modi-led BJP’s presumed victory in the just finished elections. From BofAML again: Read more
We’re fans of The Reformed Broker. Reluctantly, sometimes. But fans nevertheless.
So we should just note that a Josh Brown post from Wednesday, looking at the relentless growth of passive asset management and its effect on equity markets has, quite simply, gone viral.
In fact, if you are a market professional and it’s not in your inbox already this morning, you are a failure.
To save your blushes, here’s the link to the original, here’s Josh’s follow up, and here are some choice quotes to memorise quickly… Read more
A new year is a new country, so far as the investment prognostication world is concerned. What will people do with their clean slates, we wonder?
Buy equities is a strong contender. It appears to be what retail investors finally did last year after years of revealing their preference for bonds, and they aren’t done yet. If you don’t believe us, well, we have charts… Read more
One-year total return of the Athens stock index, to the end of October 2013: +50%
One-year return of the Bloomberg Greece Sovereign Bond Index, same period: +134%
One-year net return of Dromeus Capital’s Greek Advantage Fund: +107%
Yep — FT Alphaville hears that the first-year performance of Dromeus Capital’s Greece-focused fund would make it one of 2013′s best-performing, having already made a strong start at the beginning of the year.
It’s another indicator of how much both Greek equities, and the sovereign’s restructured debt, have recovered this year… Read more
*CISION: RECEIVED FINGERPRINT RELEASE FROM CONTACT AT FINGERPRINT
That would be the release announcing a $650m acquisition of Fingerprint Cards by Samsung, which – regrettably – has turned out to be completely made-up, and possibly a matter for the Swedish authorities. Read more
OK, hands up. We did not pay attention in March when Canadian securities regulators proposed to tighten rules for when investors must disclose their activities to the rest of the market.
The CSA is still considering, and the Globe and Mail reported on Monday that it’s not just activists who are wary. However, what has belatedly caught our notice are some excellent ideas from ISDA about derivatives disclosure, which could also be relevant south of the border. Read more
This is is a guest post from Philip Pilkington, a writer and research assistant at Kingston University.
Gavyn Davies recently had an interesting take on stock prices in the US. Davies made the point that the profit share in the US had risen substantially against the wage share in recent years, and then argued that this rise in the profit share is what currently underpins equity prices. Read more
Time for a rush into Gold? Nope. Read more
“Does the Stock Market Gender Stereotype Corporate Boards? Evidence from the Market’s Reaction to Directors’ Trades.”
Does this title of a recently published study by a group of researchers at the University of Exeter make you think:
A. Hmm, “gender stereotype”. That’s wordy.
B. Oh boy, what’s the media going to do with this one… Read more
Here it is Goldman’s big call: the S&P 500 will reach 1,750 by the end of this year; 1,900 in 2014; and 2,100 in 2015.
H/T Josh Brown, who points out this isn’t about earnings but a re-rating of equities (and dividends). Read more
Yes, we know it’s not new, but the divergence between stock markets and commodity prices is now looking extreme. Consider this chart from Julian Jessop at Capital Economics…
1.) Steal headline from Lorcan. On Twitter.
2.) Multiple choice test to decide your condescending lede!
Question: When a fake (hacked!) Associated Press tweet about a White House attack moves the stock market down, then it recovers really fast — but maybe not making anyone much money — this is a referendum on the credibility of:
b) Associated Press
c) The stock market
d) How FT Alphaville makes a living
e) All of the above
f) None of the above, shut up and get off Twitter
Isn’t that the big question here?
Given that this story — about the auditor firing a partner over “providing non-public client information to a third party, who then used that information in stock trades involving several West Coast companies” — has now slammed straight into the Herbalife story. Read more
US industrial production has grown at least twice as fast as GDP since the start of the recovery.
“Onshoring” work because wage differentials are narrowing plus falling electricity prices because of shale gas = more growth, so… great! Maybe? Read more
… but regally proportioned, unemployed gents with untreated gonorrhoea and mother issues generally find it tough going.
Not so with Aim-traded online dating specialist Cupid according to Bronte Capital’s John Hempton who threw up a rather extreme fake profile — Fat, lazy, poor sick guy wants support – to see if he got many bites. Read more
From Albert Edwards’ latest:
I was on gardening leave when the Dow reached its previous peak in October 2007. One echo from those days is that I was beginning to feel lonely. Pessimism (realism) is very rare on the sell-side so I took a coffee with my fellow bear, Bob Janjuah and cheered up tremendously, reinforced in my belief that this is all going to end very, very badly indeed. Read more
Financial pundits, academics, fund managers and analysts all have an amazing tendency to over-complicate matters.
Sometimes, however, it takes just one person spelling out the obvious to really get to the root of the problem. Read more
With all the excitement about ‘the great rotation’, it often feels that the debate focuses too much on analysing the recent flows, and less about the greed/fear dynamics driving them.
It’s been well documented that bond holders are increasingly frustrated by the miserable yields on offer in the fixed income markets, and are apparently flocking into the ‘cheap’ equity markets. We’ve already voiced our scepticism about the scale of this flocking. Yet what’s potentially also underestimated is the degree of skittishness by bond holders when the stock markets show signs of a wobble. After all, a lot of capital in fixed income got there after investors were burnt in the early 2000s. This loss aversion shouldn’t be underestimated. Read more
The ‘great rotation’ from bonds into equities: a few weeks ago it was looking like it might be seriously on. Even Albert Edwards sort of kind of said equities were cheap. And Ray Dalio said it is happening, too.
But there are a bunch of reasons why it doesn’t seem to be quite such a sure thing, at least for now. Read more
The 17th annual Sohn conference took place last May in New York and drew a star-studded panel of fund managers to offer (a few of) their best trade ideas.
Everyone was there, from David Einhorn to John Paulson and Bill Ackman. Topics as diverse as palladium, French CDS and Argentina’s sovereign debt were discussed.
But were the trade ideas any good? Read more
Sadly, FT Alphaville’s New York wing couldn’t make it to this year’s Societe Generale-run bear sighting in London — the bank’s Global Strategy conference starring Albert Edwards and Dylan Grice (who’s off to the buyside).
But we did hear that Albert had called European stocks “unambiguously cheap”. It’s a “once in a generation” buying opportunity, and so on. Is Albert, no longer a equities bear!? Read more
An interesting debate is popping up regarding the topic of capital expenditure.
Take the latest from Societe Generale’s Andrew Lapthorne and team. They argued on Thursday that the commonly held belief that companies’ capital investing ratios have been falling, whilst hoarded cash pools have been going up, is inaccurate. Read more
WARNING: what has happened is no guarantee of what will happen.
WARNING II: if you need the first WARNING, perhaps see us after class?
Anyway… here’s some January European equity lessons from Morgan Stanley: Read more
And the Societe Generale strategist (who says he will “resurface on the buy side early next year”) is going out in style — taking a leaf from the book of the order Blattodea.
From Dylan Grice’s last Popular Delusions note:
All good things come to an end, sadly. So it is with my time here alongside Albert, Andy and the rest of the gang at SG. I’m signing off, checking out, moving on to pastures new. It’s been a wonderful time. But after three years of trying to sound clever it’s time for me to do something altogether more difficult, and actually be clever. So early next year, I will join a small but outstanding investment practice. Naturally, I hope it will be a great success. But what makes a great success? Since there are few more accomplished species on earth than the lowly cockroach where better to start looking for an answer?
Risk assets have had a good run from western policymakers for several decades, says Morgan Stanley’s Gerard Minack. But that time is probably over. Read more
Well we’re no longer off 300 points on the Dow. (Off 265, as we went to pixels.) But what went on here?
Spotted on Tuesday — a market getting itself in a lather as soon as the Spanish prime minister denies that a bailout is ‘inminente’. (Via Google Finance)
Oops, we missed this from Macro Risk Advisors on Tuesday — the charts track realised volatility being higher on days the S&P 500 has closed up than when it’s fallen, so far this year. Which, they say, is a little unusual.
If life seems jolly rotten, there’s something you’ve forgotten
And that’s to laugh and smile and dance and sing [and buy stocks]
When you’re feeling in the dumps, don’t be silly, chumps
Just purse your lips and whistle [and buy stocks], that’s the thing
– By Eric Idle Read more