"This Is Going To Be A National Crisis" - One Of The Largest U.S. Pension Funds Set To Cut Retiree Benefits
Submitted by Tyler D.
04/20/2016 - 23:42
The Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, has filed an application to cut participant benefits, which would be effective July 1 2016, as it "projects" it will become officially insolvent by 2025.
S&P 500. Se alcanza el objetivo alcista, pero podríamos ver máximos históricos
Análisis técnico Citi
Jueves, 21 de Abril del 2016 - 17:17
El objetivo del doble suelo en 2.082 se ha cumplido; Sin embargo, el S&P 500 prosigue su constante subidas y parece que va a probar los máximos de 2015 alrededor de 2116-2135.
Una ruptura por encima daría lugar a nuevos máximos históricos y sería una ruptura muy positiva.
Las rebajas de Moody's a "basura" en el primer trimestre superan a las de todo 2015
Jueves, 21 de Abril del 2016 - 17:24
En los tres primeros meses de este año, unas 51 empresas fueron degradas a un rating basura por Moody's, superando al conjunto de 2015.
El volumen de deuda que se encuentra en el filo, es decir que está en el umbral de rating basura con una perspectiva negativa, aumentó a 265.000 millones de dólares a finales de marzo, frente a 234.000 millones de finales de 2015, y más que duplica el volumen de hace un año..
22 de los "ángeles caídos" en el primer trimestre eran empresas de materias primas, mientras que 28 eran empresas brasileñas.
Futures, Crude Unchanged Ahead Of Draghi As Parabolic Move In Steel, Iron Ore Continues
Submitted by Tyler D.
04/21/2016 - 06:51
One day after stocks were this close from hitting new all time highs on what have been either ok earnings, if looking at non-GAAP data, or atrocious earnings, based on GAAP, and where any oil headline is now immediately translated as bullish by the oil algos, so far futures are relatively flat, while European stocks were at their moments ago in anticipation of the latest ECB announcement due out in just one hour. However, unlike last month's "quad-bazooka", this time the market expects far less from Draghi. “Having pulled put the monetary bazooka in March, the market is sensibly expecting no further policy measures from the ECB,”
Todos felices
José Luis Martínez Campuzano de Citi
Jueves, 21 de Abril del 2016 - 18:00:00
Desde mediados de febrero el CNY se ha apreciado un 2 % frente al USD.Pero, las monedas asiáticas (sin el Yuan) se han apreciado un 5.5 % frente a la moneda norteamericana.Luego, la competitividad de China ha mejorado y el mejor contexto financiero mundial ha beneficiado a los países asiáticos.Como ven, todos felices.
Hoy un titular en Bloomberg recoge que las autoridades chinas se pueden adaptar a la normalización monetaria en USA.Si me lo permiten, yo lo matizaría un tanto: se pueden adaptar siempre y cuando no sea distorsionador en el resto de los mercados financieros internacionales.
Es un buen ejemplo de las ventajas y beneficios que todos tenemos de la colaboración internacional.Y una advertencia de los peligros de no mantenerla.
La cuestión de fondo es que siguen existiendo enormes incertidumbres a futuro, antiguas y nuevas. China es una de ellas. Aunque, en mi opinión, una de las más importantes es precisamente el comportamiento de los mercados. Su revalorización sin duda es una buena noticia, para los inversores y para la economía. La falta de liquidez y profundidad, es una nueva advertencia sobre la necesidad de que los ajustes y reformas económicas sigan adelante. Al final, los mercados no lo son todo; pero son mucho.
Jueves 21/04/16 Ventas de casas existentes
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Re: Jueves 21/04/16 Ventas de casas existentes
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Atención: Sismo de 5.2° al norte de Chile
Chile, asentado en el Cinturón de Fuego del Pacífico, es considerado uno de los países más sísmicos del planeta.
SANTIAGO DE CHILE.
Un sismo de magnitud 5.2 sacudió la región chilena de Antofagasta, sin causar víctimas o daños materiales, informó el Centro Sismológico Nacional de la Universidad de Chile.
El temblor se sintió a las 15:07 hora local y su epicentro se localizó a 77 kilómetros al noreste de la localidad de San Pedro de Atacama.
En tanto, el hipocentro, se situó a 180.6 kilómetros de profundidad.
Según el instituto sismológico, en las últimas 24 horas se registraron un total de doce temblores, con magnitudes de entre 2.5 y 4.
Chile, asentado en el Cinturón de Fuego del Pacífico, es considerado uno de los países más sísmicos del planeta.
Publicado el Jueves, 21 de Abril del 2016
Todo el mundo mira al petróleo, pero el gas natural también está en suelo
Jueves, 21 de Abril del 2016 - 19:10
El analista y gestor financiero Andrew Thrasher cree que aunque todo el mundo está mirando actualmente al petróleo, el gas natural también está haciendo suelo como muestra en el gráfico adjunto.
Thrasher muestra que el RSI está desarrollando una divergencia alcista, que junto con las medias móviles sugieren que el gas natural seguirá al alza en el corto/medio plazo.
La OPEP y la teoría de juego
Carlos Montero
Jueves, 21 de Abril del 2016 - 19:45:00
El petróleo ha sido uno de los principales factores de interés de los mercados en los últimos meses. La falta de acuerdo de la OPEP en la pasada reunión de Doha está siendo ampliamente analizada. Creemos interesante completar esos análisis con la visión de David Merkel, inversor profesional, que en un reciente artículo interpreta la decisión de los miembros de la OPEP desde el punto de vista de la teoría de juegos. Merkel señala lo siguiente:
La mayoría de los juegos en la vida son cooperativos. Muchos son competitivos. Unos pocos son perversos.
Eso es lo que el mercado del crudo es hoy en día. Me recuerda el dilema del prisionero. En el dilema del prisionero, dos partes que se beneficiarían de cooperar juntas tienden a no hacerlo debido a otros incentivos que si ambos siguen, se verían perjudicados.
Esto se debe a tres problemas que enfrenta la OPEP [Organización de Países Exportadores de Petróleo].
1. Los saudíes y los iraníes no quieren tomar ninguna acción que pueda beneficiar a la otra, incluso si se ayudaran a sí mismos.
2. Es prácticamente imposible mantener a las naciones miembros de la OPEP en el engaño, y que se oculte que algunos produzcan más de su cuota.
3. Gracias a la fracturación hidráulica (al menos por ahora) hay suficiente suministro fuera de la OPEP a precios económicos, por lo que si la OPEP decidiera recortar la producción en grupo, podría no beneficiarse como lo hicieron en la década de los 70 y 80.
Los factores 1 y 2 interactúan, ya que aunque había una oferta creíble en la mesa para reducir la producción, los saudíes probablemente piensan que los iraníes podrían engañarlos y producir más.
Hay que recordar que el modelo neoclásico del hombre como un maximizador de la utilidad o del beneficio es a menudo equivocado. La gente y las naciones son envidiosas, y tomarán decisiones que les perjudican si eso significa que aquellos que no les gustan se ven aún más perjudicados. Los saudíes pueden estar quemando rápidamente sus reservas financieras, pero prácticamente todos los demás miembros de la OPEP están en una situación aún peor. Los saudíes pueden pensar que conseguirían un mejor acuerdo cuando casi todo el mundo esté desesperado.
El escenario que manejo es un prolongado periodo de tiempo con bajos precios del petróleo, probablemente entre 30-50 dólares por barril brent. De todas formas, hay algunos hechos que podrían cambiar este escenario:
- Un crecimiento económico más rápido.
- Turbulencias en las regiones productoras de petróleo que pudieran reducir el suministro.
- Agotamiento de las fuentes de corta vida y bajo coste (como a la que tienen acceso la fracturación hidráulica).
- El éxito de los intermediarios en la OPEP que logren que los saudíes y los iraníes cooperen.
En resumen, los intereses partidistas de los miembros de la OPEP están provocando un perjuicio para todos ellos. La esperanza de cada uno de ellos es que creen que serán los últimos que se mantengan en pie.
Lacartadelabolsa
General Motors: alcista mientras no pierda los 31 dólares
Trading Central
[ GENERAL MOTORS ]
Jueves, 21 de Abril del 2016 - 20:17
Nuestro punto de rotación se sitúa en 31.
Nuestra preferencia: la subida se mantiene siempre que el soporte se sitúe en 31.
Escenario alternativo: por debajo de 31, el riesgo es una caída hasta 29.8 y 29.1.
En lo referente al análisis técnico, el índice de fuerza relativa (RSI) se encuentra por encima de su zona de neutralidad de 50. El indicador de convergencia/divergencia de medias móviles (MACD) se sitúa por encima de su línea de señal y es positivo.
Asimismo, la acción se sitúa por encima de su media móvil de 20 y 50 días (se sitúa a 30.62 y 30.28 respectivamente).
Philly Fed Dead-Cat-Bounce Dies, Plunges Back Into Contraction
Submitted by Tyler D.
04/21/2016 - 08:46
Remember March and all those hopefull regional fed survey bounces? They are over! Philly Fed just printed -1.6, back into contraction for the 8th month of last 9, missing expectations of a +9.0 print. Every subcomponent weakened (aside from prices paid and received) but what saved the headline from further collapse was an unexpected surge in optimism for six-months ahead (right after the election?).
El principio del fin de la QE
Jueves, 21 de Abril del 2016 - 20:32:00
Los traders están ahora mirando el futuro de la flexibilización cuantitativa de los bancos centrales, cambiando su atención sobre que banco central será el primero en cambiar de rumbo y retirar los estímulos, de acuerdo con el estratega de Bank of America Merrill Lynch Athanasios Vamvakidis.
La zona del euro, Japón, Noruega, Nueva Zelanda y Suecia son los cinco principales países desarrollados en los que los bancos centrales han aliviado la política monetaria este año, y por algunos indicadores financieros, no tienen motivos para estar muy orgullosos.
En todos estos casos, las monedas se han fortalecido frente al dólar EE.UU. a raíz de una política monetaria más acomodaticia (indicado por un círculo en el gráfico adjunto).
The SUNE Finally Sets: SunEdison Files For Bankruptcy
Submitted by Tyler D.
04/21/2016 - 09:36
It's over. After months of arguing that everything will be ok as investors flee the troubled company, it is now officialy over:
SUNEDISON FILES FOR BANKRUPTCY AFTER ACQUISITION BINGE, SECURES $300M IN NEW DIP FINANCING
Los mejores analistas creen que el oro seguirá subiendo
Jueves, 21 de Abril del 2016 - 21:25:00
El oro, uno de los activos con mejor comportamiento este año, tiene espacio para extender su avance, de acuerdo con los analistas top del mercado de metales.
Capital Economics y Cantor Fitzgerald son optimistas con el metal precioso, ya que las tasas de interés reales probablemente se quedarán bajas, incluso si la Reserva Federal eleva los costos de endeudamiento en respuesta a una mayor inflación.
El lingote puede aumentar a $1.350 la onza para el fin de año, dice Simona Gambarini, economista de Capital Economics en Londres. El metal seguirá aumentando, aunque a un ritmo más lento, dijo Rob Chang de Cantor Fitzgerald en Toronto.
Precious Metals Puke - 'Someone' Dumps $2 Billion Of Gold Into Futures Markets
Submitted by Tyler D.
04/21/2016 - 10:37
What goes up... must not be allowed to...
Como superar los malos tiempos actuales
Jueves, 21 de Abril del 2016 - 21:52:00
Diversificar sus economías, flexibilidad y profundización financiera para mejorar las perspectivas de consumo e inversión, cubrir el déficit de infraestructuras en un entorno de sostenibilidad de la deuda.... estas son las recomendaciones del FMI para los países en desarrollo en momentos tan inciertos como los actuales.
Nosotros lo hemos denominado como una "estructura económica rota"; en definitiva, la necesidad de reducir su dependencia a la demanda de China en algunos casos y/o la necesidad de reducir la estructura de producción volcada en la exportación de materias primas. Pero esto no es fácil, aunque siempre es una ayuda que las condiciones financieras mejoren en un contexto de entrada de inversión internacional. Aunque sea de corto plazo.
De acuerdo con el FMI, las crisis en las economías en desarrollo se han saldado en el pasado en el 90 % de las ocasiones con caídas en el producto equivalentes al 20 %. Es por tanto relevante que las autoridades de estas economías se esfuercen por hacer su crecimiento más resistente, mientras toman medidas estructurales para aumentar su crecimiento potencial y evitar debilidades. De hecho, una de las conclusiones de las reuniones de primavera de la semana pasada es precisamente confirmar la resistencia que han mostrado las economías en desarrollo en un contexto de shock financieros internacional y caída de los mercados de exportación. Pero parte de esta resistencia ha descansado precisamente en la mayor flexibilidad de las divisas, la acumulación de reservas y la menor dependencia de la deuda en divisas.
Con todo, observo una diferencia fundamental a la hora de valorar los potenciales problemas de estas economías con respecto al pasado. Así, en el pasado se consideraba como un tema marginal desde el punto de vista desarrollado. Ahora, se observa de una forma bien diferente como consecuencia tanto de la debilidad de fondo de las economías desarrolladas como por el elevado peso de las economías en desarrollo en estos momentos. En definitiva, antes las crisis eran originadas por factores internacionales (como las subidas de tipos de la Fed) mientras que ahora la debilidad de estas economías y mercados condiciona a la propia Fed a la hora de subir los tipos de interés. Al final, son tiempos difíciles para todos. Y todos deben considerar de forma conjunta cómo enfrentarse a ellos.
José Luis Martínez Campuzano
Estratega de Citi en España
BVL retoma alza impulsada por acciones mineras, financieras y juniors
La Bolsa de Valores de Lima (BVL) presentó ganancias al cierre de hoy, retomando el alza de sesiones pasadas, impulsada por las acciones mineras, financieras y juniors, en línea con el avance del precio del cobre en el mercado internacional y pese al retroceso de Wall Street.
Indicadores
El Índice General de la BVL, el más representativo de la bolsa local, subió 0.41% al pasar de 13,242 a 13,295 puntos.
El Índice Selectivo de la plaza bursátil limeña, que está conformado por las 15 acciones más negociadas en el mercado, avanzó 0.77% al pasar de 339.13 a 341.74 puntos.
En la sesión de hoy el monto negociado en acciones se situó en 21.47 millones de nuevos soles en 562 operaciones de compra y venta.
Entre las principales acciones que presentaron una evolución positiva en la BVL destacaron Peruvian Precious Metals (11.43%), Panoro Minerals (10.74%) y Minera Corona (10.03%).
Mercados foráneos
Los mercados regionales cerraron mixtos, mientras la Bolsa de Valores de Nueva York (NYSE) presentó indicadores desfavorables.
El índice industrial Dow Jones de la bolsa neoyorkina cayó 0.63, mientras el índice Standard & Poor’s y el indicador tecnológico Nasdaq retrocedieron 0.52% y 0.05%, respectivamente.
Andina
Publicado el Jueves, 21 de Abril del 2016
Chile, asentado en el Cinturón de Fuego del Pacífico, es considerado uno de los países más sísmicos del planeta.
SANTIAGO DE CHILE.
Un sismo de magnitud 5.2 sacudió la región chilena de Antofagasta, sin causar víctimas o daños materiales, informó el Centro Sismológico Nacional de la Universidad de Chile.
El temblor se sintió a las 15:07 hora local y su epicentro se localizó a 77 kilómetros al noreste de la localidad de San Pedro de Atacama.
En tanto, el hipocentro, se situó a 180.6 kilómetros de profundidad.
Según el instituto sismológico, en las últimas 24 horas se registraron un total de doce temblores, con magnitudes de entre 2.5 y 4.
Chile, asentado en el Cinturón de Fuego del Pacífico, es considerado uno de los países más sísmicos del planeta.
Publicado el Jueves, 21 de Abril del 2016
Todo el mundo mira al petróleo, pero el gas natural también está en suelo
Jueves, 21 de Abril del 2016 - 19:10
El analista y gestor financiero Andrew Thrasher cree que aunque todo el mundo está mirando actualmente al petróleo, el gas natural también está haciendo suelo como muestra en el gráfico adjunto.
Thrasher muestra que el RSI está desarrollando una divergencia alcista, que junto con las medias móviles sugieren que el gas natural seguirá al alza en el corto/medio plazo.
La OPEP y la teoría de juego
Carlos Montero
Jueves, 21 de Abril del 2016 - 19:45:00
El petróleo ha sido uno de los principales factores de interés de los mercados en los últimos meses. La falta de acuerdo de la OPEP en la pasada reunión de Doha está siendo ampliamente analizada. Creemos interesante completar esos análisis con la visión de David Merkel, inversor profesional, que en un reciente artículo interpreta la decisión de los miembros de la OPEP desde el punto de vista de la teoría de juegos. Merkel señala lo siguiente:
La mayoría de los juegos en la vida son cooperativos. Muchos son competitivos. Unos pocos son perversos.
Eso es lo que el mercado del crudo es hoy en día. Me recuerda el dilema del prisionero. En el dilema del prisionero, dos partes que se beneficiarían de cooperar juntas tienden a no hacerlo debido a otros incentivos que si ambos siguen, se verían perjudicados.
Esto se debe a tres problemas que enfrenta la OPEP [Organización de Países Exportadores de Petróleo].
1. Los saudíes y los iraníes no quieren tomar ninguna acción que pueda beneficiar a la otra, incluso si se ayudaran a sí mismos.
2. Es prácticamente imposible mantener a las naciones miembros de la OPEP en el engaño, y que se oculte que algunos produzcan más de su cuota.
3. Gracias a la fracturación hidráulica (al menos por ahora) hay suficiente suministro fuera de la OPEP a precios económicos, por lo que si la OPEP decidiera recortar la producción en grupo, podría no beneficiarse como lo hicieron en la década de los 70 y 80.
Los factores 1 y 2 interactúan, ya que aunque había una oferta creíble en la mesa para reducir la producción, los saudíes probablemente piensan que los iraníes podrían engañarlos y producir más.
Hay que recordar que el modelo neoclásico del hombre como un maximizador de la utilidad o del beneficio es a menudo equivocado. La gente y las naciones son envidiosas, y tomarán decisiones que les perjudican si eso significa que aquellos que no les gustan se ven aún más perjudicados. Los saudíes pueden estar quemando rápidamente sus reservas financieras, pero prácticamente todos los demás miembros de la OPEP están en una situación aún peor. Los saudíes pueden pensar que conseguirían un mejor acuerdo cuando casi todo el mundo esté desesperado.
El escenario que manejo es un prolongado periodo de tiempo con bajos precios del petróleo, probablemente entre 30-50 dólares por barril brent. De todas formas, hay algunos hechos que podrían cambiar este escenario:
- Un crecimiento económico más rápido.
- Turbulencias en las regiones productoras de petróleo que pudieran reducir el suministro.
- Agotamiento de las fuentes de corta vida y bajo coste (como a la que tienen acceso la fracturación hidráulica).
- El éxito de los intermediarios en la OPEP que logren que los saudíes y los iraníes cooperen.
En resumen, los intereses partidistas de los miembros de la OPEP están provocando un perjuicio para todos ellos. La esperanza de cada uno de ellos es que creen que serán los últimos que se mantengan en pie.
Lacartadelabolsa
General Motors: alcista mientras no pierda los 31 dólares
Trading Central
[ GENERAL MOTORS ]
Jueves, 21 de Abril del 2016 - 20:17
Nuestro punto de rotación se sitúa en 31.
Nuestra preferencia: la subida se mantiene siempre que el soporte se sitúe en 31.
Escenario alternativo: por debajo de 31, el riesgo es una caída hasta 29.8 y 29.1.
En lo referente al análisis técnico, el índice de fuerza relativa (RSI) se encuentra por encima de su zona de neutralidad de 50. El indicador de convergencia/divergencia de medias móviles (MACD) se sitúa por encima de su línea de señal y es positivo.
Asimismo, la acción se sitúa por encima de su media móvil de 20 y 50 días (se sitúa a 30.62 y 30.28 respectivamente).
Philly Fed Dead-Cat-Bounce Dies, Plunges Back Into Contraction
Submitted by Tyler D.
04/21/2016 - 08:46
Remember March and all those hopefull regional fed survey bounces? They are over! Philly Fed just printed -1.6, back into contraction for the 8th month of last 9, missing expectations of a +9.0 print. Every subcomponent weakened (aside from prices paid and received) but what saved the headline from further collapse was an unexpected surge in optimism for six-months ahead (right after the election?).
El principio del fin de la QE
Jueves, 21 de Abril del 2016 - 20:32:00
Los traders están ahora mirando el futuro de la flexibilización cuantitativa de los bancos centrales, cambiando su atención sobre que banco central será el primero en cambiar de rumbo y retirar los estímulos, de acuerdo con el estratega de Bank of America Merrill Lynch Athanasios Vamvakidis.
La zona del euro, Japón, Noruega, Nueva Zelanda y Suecia son los cinco principales países desarrollados en los que los bancos centrales han aliviado la política monetaria este año, y por algunos indicadores financieros, no tienen motivos para estar muy orgullosos.
En todos estos casos, las monedas se han fortalecido frente al dólar EE.UU. a raíz de una política monetaria más acomodaticia (indicado por un círculo en el gráfico adjunto).
The SUNE Finally Sets: SunEdison Files For Bankruptcy
Submitted by Tyler D.
04/21/2016 - 09:36
It's over. After months of arguing that everything will be ok as investors flee the troubled company, it is now officialy over:
SUNEDISON FILES FOR BANKRUPTCY AFTER ACQUISITION BINGE, SECURES $300M IN NEW DIP FINANCING
Los mejores analistas creen que el oro seguirá subiendo
Jueves, 21 de Abril del 2016 - 21:25:00
El oro, uno de los activos con mejor comportamiento este año, tiene espacio para extender su avance, de acuerdo con los analistas top del mercado de metales.
Capital Economics y Cantor Fitzgerald son optimistas con el metal precioso, ya que las tasas de interés reales probablemente se quedarán bajas, incluso si la Reserva Federal eleva los costos de endeudamiento en respuesta a una mayor inflación.
El lingote puede aumentar a $1.350 la onza para el fin de año, dice Simona Gambarini, economista de Capital Economics en Londres. El metal seguirá aumentando, aunque a un ritmo más lento, dijo Rob Chang de Cantor Fitzgerald en Toronto.
Precious Metals Puke - 'Someone' Dumps $2 Billion Of Gold Into Futures Markets
Submitted by Tyler D.
04/21/2016 - 10:37
What goes up... must not be allowed to...
Como superar los malos tiempos actuales
Jueves, 21 de Abril del 2016 - 21:52:00
Diversificar sus economías, flexibilidad y profundización financiera para mejorar las perspectivas de consumo e inversión, cubrir el déficit de infraestructuras en un entorno de sostenibilidad de la deuda.... estas son las recomendaciones del FMI para los países en desarrollo en momentos tan inciertos como los actuales.
Nosotros lo hemos denominado como una "estructura económica rota"; en definitiva, la necesidad de reducir su dependencia a la demanda de China en algunos casos y/o la necesidad de reducir la estructura de producción volcada en la exportación de materias primas. Pero esto no es fácil, aunque siempre es una ayuda que las condiciones financieras mejoren en un contexto de entrada de inversión internacional. Aunque sea de corto plazo.
De acuerdo con el FMI, las crisis en las economías en desarrollo se han saldado en el pasado en el 90 % de las ocasiones con caídas en el producto equivalentes al 20 %. Es por tanto relevante que las autoridades de estas economías se esfuercen por hacer su crecimiento más resistente, mientras toman medidas estructurales para aumentar su crecimiento potencial y evitar debilidades. De hecho, una de las conclusiones de las reuniones de primavera de la semana pasada es precisamente confirmar la resistencia que han mostrado las economías en desarrollo en un contexto de shock financieros internacional y caída de los mercados de exportación. Pero parte de esta resistencia ha descansado precisamente en la mayor flexibilidad de las divisas, la acumulación de reservas y la menor dependencia de la deuda en divisas.
Con todo, observo una diferencia fundamental a la hora de valorar los potenciales problemas de estas economías con respecto al pasado. Así, en el pasado se consideraba como un tema marginal desde el punto de vista desarrollado. Ahora, se observa de una forma bien diferente como consecuencia tanto de la debilidad de fondo de las economías desarrolladas como por el elevado peso de las economías en desarrollo en estos momentos. En definitiva, antes las crisis eran originadas por factores internacionales (como las subidas de tipos de la Fed) mientras que ahora la debilidad de estas economías y mercados condiciona a la propia Fed a la hora de subir los tipos de interés. Al final, son tiempos difíciles para todos. Y todos deben considerar de forma conjunta cómo enfrentarse a ellos.
José Luis Martínez Campuzano
Estratega de Citi en España
BVL retoma alza impulsada por acciones mineras, financieras y juniors
La Bolsa de Valores de Lima (BVL) presentó ganancias al cierre de hoy, retomando el alza de sesiones pasadas, impulsada por las acciones mineras, financieras y juniors, en línea con el avance del precio del cobre en el mercado internacional y pese al retroceso de Wall Street.
Indicadores
El Índice General de la BVL, el más representativo de la bolsa local, subió 0.41% al pasar de 13,242 a 13,295 puntos.
El Índice Selectivo de la plaza bursátil limeña, que está conformado por las 15 acciones más negociadas en el mercado, avanzó 0.77% al pasar de 339.13 a 341.74 puntos.
En la sesión de hoy el monto negociado en acciones se situó en 21.47 millones de nuevos soles en 562 operaciones de compra y venta.
Entre las principales acciones que presentaron una evolución positiva en la BVL destacaron Peruvian Precious Metals (11.43%), Panoro Minerals (10.74%) y Minera Corona (10.03%).
Mercados foráneos
Los mercados regionales cerraron mixtos, mientras la Bolsa de Valores de Nueva York (NYSE) presentó indicadores desfavorables.
El índice industrial Dow Jones de la bolsa neoyorkina cayó 0.63, mientras el índice Standard & Poor’s y el indicador tecnológico Nasdaq retrocedieron 0.52% y 0.05%, respectivamente.
Andina
Publicado el Jueves, 21 de Abril del 2016
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Jueves 21/04/16 Ventas de casas existentes
por Fenix » Jue Abr 21, 2016 8:20 pm
UBS Warns "Beware The Bull Trap" As Breadth Breaks Down
Tyler D.
04/21/2016 11:10 -0400
In January and in early February UBS' technical analysts said that while they do not believe in a 2008 event, 2016 should be a highly volatile and a trading oriented year for equities... and so far it has. But now Michael Riesner and Marc Muller see a high likelihood to move into our suggested early Q2 cycle top this week.
With last week’s higher low at 2033, we have a new pivotal support in place in the SPX, which makes 2033 to a tactical key support.
On the upside the market has still strong resistance at 2080/2100. A re-break below last week’s breakout level at 2075 would be initially negative. A break of 2033 would imply that a more important tactical top is in place with support/initial targets at 2022, 1980 and 1950.
Again, from a cyclical aspect we think that a potential April top will be important and the basis for a significant correction into initially early May before starting a rebound, which should hit a lower high, and ultimately down into July, where we expect the next bigger tactical buying opportunity.
We reiterate our last week’s call and would not chase the new breakout in the SPX!
Deteriorating Breadth and Toppish Seasonality
Particularly in February and into mid-March the breadth of the rebound/bear market rally in global equities was quite strong, which is not a big surprise given that several markets were on multi-year oversold levels, where normally we see significant and longer lasting mean reversion rallies, which was our call in early February.
However, since late March, the momentum in global equities has been clearly deteriorating. In Europe and Japan we have seen initial and significant pullbacks into early April, whereas the US markets continued to outperform. Also in the US, the selectivity has been increasing over the recent 3 to 4 weeks. The new reaction high in the SPX has not been confirmed by transport, which creates a classic divergence in the Dow Theory.
Since late March, the number of SPX stocks trading above their 20-day moving average has been deteriorating...
And even the new reaction high in the Russell-2000 last week (which is actually good news) has produced a smaller divergence in the new 52-week highs in the broader market, which is tactically toppish.
Together with a divergence forming in the VIX index, and with the seasonality getting toppish we continue to see the risk of a significant and longer lasting tactical correction leg in the US and global equities into summer.
After the strong rebound in global equities, the MSCI World has broken its 2015 downtrend and its 200-day moving average largely on the back of the US outperformance.
With forming a divergence in our daily trend work, we see the risk that this breakout finally represents a bull trap, where a re-break below 396 would be bearish.
US Government "Agrees In Principle" With Volkswagen's $10 Billion-plus 'Sorry-We-Cheated' Compensation Plan
Submitted by Tyler D.
04/21/2016 - 11:23
Judge Charles Breyer has confirmed that Volkswagen's $10 billion-plus plan to resolve claims by the U.S. government and lawsuits by American car owners over its pollution-cheating debacle has been 'agreed in principle' by the Justice Department and various other US agencies. The plan covers at least 480,000 cars in the US and over 600 lawsuits offering consumers flexibility including buybacks and "substantial compensation," but does not address fines or penalties.
How Can Older Workers Compete In An Economy That Values Youth?
Submitted by Tyler D.
04/21/2016 - 12:01
Workers of all ages are caught in a vice. Older workers need to keep working longer in an economy which values younger workers (and their cheaper healthcare premiums). And here's why so many workers have to work longer - earned income's share of the GDP has been in a free-fall for decades as Fed-funded financiers and corporations skim an ever greater share of the nation's GDP. (Thanks again, Federal Reserve, for hollowing out our economy to benefit the few at the expense of the many.)
Why Commodities Are Selling Off (And What It Means For Demand)
Tyler D.
04/21/2016 12:37 -0400
Every market participant has pondered the shenanigans occurring in many commodities in recent weeks as Iron ore, Rebar, Copper, and Steel prices have all gone parabolic. We warned that this was not real demand-driven but purely credit-fuleed malinvestment here, and today, as Credit Suisse notes, we seem to have got confirmation as these metals are tumbling after China raises margins/commission on metal futures.
Credit Suisse explains:
Some metal commodity turn negative after china apparently increase the commission for some metal futures.
DCE raises margin requirement on iron ore contracts which is hitting gold, silver, copper, rebar etc (Lion Shi) –unconfirmed
They are indeed, for example one of the biggest beneficiaries of the recent parabolic move such as rebar.
Iron Ore:
And Copper:
Indeed, this is the biggest drop in over a month for Rebar - since the last parablic squeeze:
Credit Suisse then adds that
If true, it will have the bears saying something like "see, we were right that commodity prices were just up on liquidity recently pumped into the system rather than real demand, China is telling us that with this move."
It appears that was correct and this chart inevitably will revert.
Since Dec 23rd 2015 when the US imposed a 256% tariff on Chinese steel imports, composite steel prices have soared almost 50% even as exports have slipped...
As inventories continue to drop.
So soaring prices were not a signal of soaring demand after all as yet another credit-engineered bubble that needs to be burst by the government central-planners that created it, before it too gets out of hand. Perhaps China realized that enabling its zombie steel mills to produce at record output levels (as credit markets begin to shut) may have unintended consequences after all - i.e. a bigger glut, especially compared to 'real' demand.
Why Is The Stock Market So Strong?
04/21/2016 13:02 -0400
Submitted by Pater Tenebrarum
Dismal Earnings, Extreme Valuations
The current earnings season hasn’t been very good so far. Companies continue to “beat expectations” of course, but this is just a silly game. The stock market’s valuation is already between the highest and third highest in history depending on how it is measured.
NYSE
Corporate earnings are clearly weakening, and yet, the market keeps climbing. The rally is a bit of a “wall of worry” type of phenomenon actually, since many of the negatives are of course widely known.
1-SPX and COMP
The S&P 500 and the Nasdaq Composite, daily. The vertical blue bar on the right shows the range we expected the rebound to be contained in – this has now clearly been exceeded. However, the technology sector continues to underperform the broader market in this rally – click to enlarge.
After the immediate crash danger receded in February, we expected that a sizable rebound would be in the offing, but it is fair to say that the rebound has by now gone quite a bit further than we expected, if not by much yet. In fact, the S&P 500 Index is almost back at the level of early November as we write this.
Note though that the Nasdaq continues to underperform in the current rally – which has been mainly driven by sectors that were previously weak. In the process, market internals have improved considerably, but the former leading sectors all remain well below their previous peaks. So all is not well just yet, even from a technical perspective.
To see how extremely overvalued the market is, take a look at the chart below, provided by John Hussman, which measures stock market valuation as the ratio of non-financial market capitalization to national non-financial gross value added, including estimated foreign revenues (note: due to stronger internals, Dr. Hussman is currently not strongly bearish in the short term).
2-wmc160418a
In terms of this measure, the market has only been more overvalued than today at the peaks of 1929 and 1999/2000. 1937 came close as well.
We should add that the recent combination of rising stock prices and declining earnings has driven the market’s trailing P/E ratio to its second-highest level in history (we are only considering bull market extremes – in 2008/9, a collapse in earnings drove P/Es even higher). However, at e.g. the 1929 market peak, the S&P’s dividend yield actually exceeded today’s by more than 50% (to be fair, bond yields were significantly higher as well).
Anyway, the main point we want to make is that from a valuation standpoint, investors are playing with fire. Obviously, neither declining earnings nor extreme valuations mean that the market has to decline or cannot keep rising even further. After all, it has happened before. Moreover, the opposite can happen as well: in 1973-1974, S&P 500 earnings rose every quarter – and yet, the market fell by 56%.
Over the long term, the stock market actually rises approximately 67% of the time. The reason why it makes sense to try to identify bear markets ahead of their occurrence is not that they happen very often – the main reason is that recovering from big drawdowns is quite hard and can sometimes take a very long time.
Contrary to the buy and hold philosophy, one can actually achieve far better long term returns by avoiding big drawdowns, even if one misses some of the market’s upside due to being cautious. One can get very unlucky if one fails to side-step bear markets, such as recently happened to all those invested in Greek and Cypriot stocks, which lost 92%, resp. 99% from their peak levels.
After the large bear market of the early 30’s, it took the US market 25 years to regain its nominal peak. It is not yet known when Japan’s market will make investors whole who have been holding since the 1980s. Most presumably won’t live to see the day. So why is the market currently so strong, and why does it actually rise such a large percentage of the time?
The Cause of Nominal Price Gains
First of all we should note that in spite of the phenomenal advance between 2009 and early 2015, in real terms buy & holders of a broad market benchmark index have not much to write home about over the past 16 years. They are basically treading water (if they had the nerve to hold through two of the biggest bear markets in history that is).
Nominal gains in stock prices are largely a function of monetary inflation. At the moment, there is still plenty of monetary inflation in the US and Europe, and it is not certain for how long its lagged effects will affect stocks. The level and trend of stock prices is actually not an indicator of the economy’s health. It is primarily an indicator of money supply inflation, even though the correlation is largely a long term phenomenon, and subject to significant leads and lags, which in turn are greatly influenced by investor perceptions.
3-TMS-2
US money supply TMS-2 and the associated asset price booms since the late 1980s – click to enlarge.
Currently, the true money supply is growing at 8% y/y in the US, and 13.3% y/y in the euro zone. This remains historically a very high level, even though US money supply growth is well down from its 2009 and 2011 peaks:
4-TMS-2-growth rate, ann
TMS-2, annual growth rate – click to enlarge.
5-Euro Area true money supply
Euro area – this is actually M1, i.e., currency and demand deposits, incl. savings deposits available on demand. It excludes foreign resident euro deposits, so is only a close approximation of TMS, but good enough for our purposes – click to enlarge.
The next chart illustrates quite starkly that stock prices are not an indicator of the economy’s health. It shows one of the nominally best performing stock markets in the world:
6-Caracas
It cannot be seen on this linear chart, but in 2002 the IBC General Index in Caracas traded at just 6 points. It stands at more than 16,000 points today, after rising more than 16-fold since early 2013 alone – click to enlarge.
Venezuela’s economy is in such a bad state, that people have to queue for hours to acquire staples like bread, oil, flour or toilet paper. All these goods are rationed these days. There is hyperinflation and the government has taken numerous financial repression type measures so as to contain capital flight.
As a result, investors in Venezuela are trying to preserve their wealth by buying stocks, which represent claims to real assets, while corporate debt has been inflated away. In this particular case it is of course glaringly obvious what an important role monetary inflation plays in the stock market’s trend.
Venezuela’s situation is of course not comparable to that of developed economies. Our assumption is that central banks in the developed world may well be prepared to tolerate a certain degree of “price inflation” beyond their official targets, but they will attempt to counter it if it becomes too great.
As the 1970s have shown, high price inflation that stops well short of hyperinflation is something that causes investors to assign much lower multiples to stocks, as rising nominal earnings are no longer considered to be worth as much. This is however certainly not a near term concern.
For the current market rally to continue, other things have to go just right – quite a few of them we think. To name just three: it is inter alia predicated on the belief that a) central bank largesse will continue to an extent sufficient to keep all the plates in the air, b) that weak earnings and the huge amount of debt corporations have amassed won’t choke off the buyback spigot, and c) that the recent rise in US core inflation rates is really only a temporary affair and doesn’t accelerate to a point that forces to Fed to alter its dovish policy stance.
Conclusion
It cannot be ruled out that the stock market will eventually break out to new highs – but its long term returns are still going to be valuation-dependent. In the short term, there remains the fact that while some indexes are close to their previous highs and internals have strengthened, other indexes continue to diverge noticeably.
Although money supply growth remains historically strong and investors are desperately chasing returns in today’s ZIRP world and are therefore evidently prepared to take much greater risks than they otherwise would, an extremely overvalued market is always highly vulnerable to a change in perceptions.
High rates of monetary inflation during the echo bubble period and the weakness of the accompanying economic recovery suggest that the threshold at which the pace of money supply growth will become too slow to maintain asset prices at such lofty levels is much higher than it used to be. So in a sense the rebound may actually turn out to be self-defeating, as it will increase the Fed’s willingness resume tightening policy.
Tyler D.
04/21/2016 11:10 -0400
In January and in early February UBS' technical analysts said that while they do not believe in a 2008 event, 2016 should be a highly volatile and a trading oriented year for equities... and so far it has. But now Michael Riesner and Marc Muller see a high likelihood to move into our suggested early Q2 cycle top this week.
With last week’s higher low at 2033, we have a new pivotal support in place in the SPX, which makes 2033 to a tactical key support.
On the upside the market has still strong resistance at 2080/2100. A re-break below last week’s breakout level at 2075 would be initially negative. A break of 2033 would imply that a more important tactical top is in place with support/initial targets at 2022, 1980 and 1950.
Again, from a cyclical aspect we think that a potential April top will be important and the basis for a significant correction into initially early May before starting a rebound, which should hit a lower high, and ultimately down into July, where we expect the next bigger tactical buying opportunity.
We reiterate our last week’s call and would not chase the new breakout in the SPX!
Deteriorating Breadth and Toppish Seasonality
Particularly in February and into mid-March the breadth of the rebound/bear market rally in global equities was quite strong, which is not a big surprise given that several markets were on multi-year oversold levels, where normally we see significant and longer lasting mean reversion rallies, which was our call in early February.
However, since late March, the momentum in global equities has been clearly deteriorating. In Europe and Japan we have seen initial and significant pullbacks into early April, whereas the US markets continued to outperform. Also in the US, the selectivity has been increasing over the recent 3 to 4 weeks. The new reaction high in the SPX has not been confirmed by transport, which creates a classic divergence in the Dow Theory.
Since late March, the number of SPX stocks trading above their 20-day moving average has been deteriorating...
And even the new reaction high in the Russell-2000 last week (which is actually good news) has produced a smaller divergence in the new 52-week highs in the broader market, which is tactically toppish.
Together with a divergence forming in the VIX index, and with the seasonality getting toppish we continue to see the risk of a significant and longer lasting tactical correction leg in the US and global equities into summer.
After the strong rebound in global equities, the MSCI World has broken its 2015 downtrend and its 200-day moving average largely on the back of the US outperformance.
With forming a divergence in our daily trend work, we see the risk that this breakout finally represents a bull trap, where a re-break below 396 would be bearish.
US Government "Agrees In Principle" With Volkswagen's $10 Billion-plus 'Sorry-We-Cheated' Compensation Plan
Submitted by Tyler D.
04/21/2016 - 11:23
Judge Charles Breyer has confirmed that Volkswagen's $10 billion-plus plan to resolve claims by the U.S. government and lawsuits by American car owners over its pollution-cheating debacle has been 'agreed in principle' by the Justice Department and various other US agencies. The plan covers at least 480,000 cars in the US and over 600 lawsuits offering consumers flexibility including buybacks and "substantial compensation," but does not address fines or penalties.
How Can Older Workers Compete In An Economy That Values Youth?
Submitted by Tyler D.
04/21/2016 - 12:01
Workers of all ages are caught in a vice. Older workers need to keep working longer in an economy which values younger workers (and their cheaper healthcare premiums). And here's why so many workers have to work longer - earned income's share of the GDP has been in a free-fall for decades as Fed-funded financiers and corporations skim an ever greater share of the nation's GDP. (Thanks again, Federal Reserve, for hollowing out our economy to benefit the few at the expense of the many.)
Why Commodities Are Selling Off (And What It Means For Demand)
Tyler D.
04/21/2016 12:37 -0400
Every market participant has pondered the shenanigans occurring in many commodities in recent weeks as Iron ore, Rebar, Copper, and Steel prices have all gone parabolic. We warned that this was not real demand-driven but purely credit-fuleed malinvestment here, and today, as Credit Suisse notes, we seem to have got confirmation as these metals are tumbling after China raises margins/commission on metal futures.
Credit Suisse explains:
Some metal commodity turn negative after china apparently increase the commission for some metal futures.
DCE raises margin requirement on iron ore contracts which is hitting gold, silver, copper, rebar etc (Lion Shi) –unconfirmed
They are indeed, for example one of the biggest beneficiaries of the recent parabolic move such as rebar.
Iron Ore:
And Copper:
Indeed, this is the biggest drop in over a month for Rebar - since the last parablic squeeze:
Credit Suisse then adds that
If true, it will have the bears saying something like "see, we were right that commodity prices were just up on liquidity recently pumped into the system rather than real demand, China is telling us that with this move."
It appears that was correct and this chart inevitably will revert.
Since Dec 23rd 2015 when the US imposed a 256% tariff on Chinese steel imports, composite steel prices have soared almost 50% even as exports have slipped...
As inventories continue to drop.
So soaring prices were not a signal of soaring demand after all as yet another credit-engineered bubble that needs to be burst by the government central-planners that created it, before it too gets out of hand. Perhaps China realized that enabling its zombie steel mills to produce at record output levels (as credit markets begin to shut) may have unintended consequences after all - i.e. a bigger glut, especially compared to 'real' demand.
Why Is The Stock Market So Strong?
04/21/2016 13:02 -0400
Submitted by Pater Tenebrarum
Dismal Earnings, Extreme Valuations
The current earnings season hasn’t been very good so far. Companies continue to “beat expectations” of course, but this is just a silly game. The stock market’s valuation is already between the highest and third highest in history depending on how it is measured.
NYSE
Corporate earnings are clearly weakening, and yet, the market keeps climbing. The rally is a bit of a “wall of worry” type of phenomenon actually, since many of the negatives are of course widely known.
1-SPX and COMP
The S&P 500 and the Nasdaq Composite, daily. The vertical blue bar on the right shows the range we expected the rebound to be contained in – this has now clearly been exceeded. However, the technology sector continues to underperform the broader market in this rally – click to enlarge.
After the immediate crash danger receded in February, we expected that a sizable rebound would be in the offing, but it is fair to say that the rebound has by now gone quite a bit further than we expected, if not by much yet. In fact, the S&P 500 Index is almost back at the level of early November as we write this.
Note though that the Nasdaq continues to underperform in the current rally – which has been mainly driven by sectors that were previously weak. In the process, market internals have improved considerably, but the former leading sectors all remain well below their previous peaks. So all is not well just yet, even from a technical perspective.
To see how extremely overvalued the market is, take a look at the chart below, provided by John Hussman, which measures stock market valuation as the ratio of non-financial market capitalization to national non-financial gross value added, including estimated foreign revenues (note: due to stronger internals, Dr. Hussman is currently not strongly bearish in the short term).
2-wmc160418a
In terms of this measure, the market has only been more overvalued than today at the peaks of 1929 and 1999/2000. 1937 came close as well.
We should add that the recent combination of rising stock prices and declining earnings has driven the market’s trailing P/E ratio to its second-highest level in history (we are only considering bull market extremes – in 2008/9, a collapse in earnings drove P/Es even higher). However, at e.g. the 1929 market peak, the S&P’s dividend yield actually exceeded today’s by more than 50% (to be fair, bond yields were significantly higher as well).
Anyway, the main point we want to make is that from a valuation standpoint, investors are playing with fire. Obviously, neither declining earnings nor extreme valuations mean that the market has to decline or cannot keep rising even further. After all, it has happened before. Moreover, the opposite can happen as well: in 1973-1974, S&P 500 earnings rose every quarter – and yet, the market fell by 56%.
Over the long term, the stock market actually rises approximately 67% of the time. The reason why it makes sense to try to identify bear markets ahead of their occurrence is not that they happen very often – the main reason is that recovering from big drawdowns is quite hard and can sometimes take a very long time.
Contrary to the buy and hold philosophy, one can actually achieve far better long term returns by avoiding big drawdowns, even if one misses some of the market’s upside due to being cautious. One can get very unlucky if one fails to side-step bear markets, such as recently happened to all those invested in Greek and Cypriot stocks, which lost 92%, resp. 99% from their peak levels.
After the large bear market of the early 30’s, it took the US market 25 years to regain its nominal peak. It is not yet known when Japan’s market will make investors whole who have been holding since the 1980s. Most presumably won’t live to see the day. So why is the market currently so strong, and why does it actually rise such a large percentage of the time?
The Cause of Nominal Price Gains
First of all we should note that in spite of the phenomenal advance between 2009 and early 2015, in real terms buy & holders of a broad market benchmark index have not much to write home about over the past 16 years. They are basically treading water (if they had the nerve to hold through two of the biggest bear markets in history that is).
Nominal gains in stock prices are largely a function of monetary inflation. At the moment, there is still plenty of monetary inflation in the US and Europe, and it is not certain for how long its lagged effects will affect stocks. The level and trend of stock prices is actually not an indicator of the economy’s health. It is primarily an indicator of money supply inflation, even though the correlation is largely a long term phenomenon, and subject to significant leads and lags, which in turn are greatly influenced by investor perceptions.
3-TMS-2
US money supply TMS-2 and the associated asset price booms since the late 1980s – click to enlarge.
Currently, the true money supply is growing at 8% y/y in the US, and 13.3% y/y in the euro zone. This remains historically a very high level, even though US money supply growth is well down from its 2009 and 2011 peaks:
4-TMS-2-growth rate, ann
TMS-2, annual growth rate – click to enlarge.
5-Euro Area true money supply
Euro area – this is actually M1, i.e., currency and demand deposits, incl. savings deposits available on demand. It excludes foreign resident euro deposits, so is only a close approximation of TMS, but good enough for our purposes – click to enlarge.
The next chart illustrates quite starkly that stock prices are not an indicator of the economy’s health. It shows one of the nominally best performing stock markets in the world:
6-Caracas
It cannot be seen on this linear chart, but in 2002 the IBC General Index in Caracas traded at just 6 points. It stands at more than 16,000 points today, after rising more than 16-fold since early 2013 alone – click to enlarge.
Venezuela’s economy is in such a bad state, that people have to queue for hours to acquire staples like bread, oil, flour or toilet paper. All these goods are rationed these days. There is hyperinflation and the government has taken numerous financial repression type measures so as to contain capital flight.
As a result, investors in Venezuela are trying to preserve their wealth by buying stocks, which represent claims to real assets, while corporate debt has been inflated away. In this particular case it is of course glaringly obvious what an important role monetary inflation plays in the stock market’s trend.
Venezuela’s situation is of course not comparable to that of developed economies. Our assumption is that central banks in the developed world may well be prepared to tolerate a certain degree of “price inflation” beyond their official targets, but they will attempt to counter it if it becomes too great.
As the 1970s have shown, high price inflation that stops well short of hyperinflation is something that causes investors to assign much lower multiples to stocks, as rising nominal earnings are no longer considered to be worth as much. This is however certainly not a near term concern.
For the current market rally to continue, other things have to go just right – quite a few of them we think. To name just three: it is inter alia predicated on the belief that a) central bank largesse will continue to an extent sufficient to keep all the plates in the air, b) that weak earnings and the huge amount of debt corporations have amassed won’t choke off the buyback spigot, and c) that the recent rise in US core inflation rates is really only a temporary affair and doesn’t accelerate to a point that forces to Fed to alter its dovish policy stance.
Conclusion
It cannot be ruled out that the stock market will eventually break out to new highs – but its long term returns are still going to be valuation-dependent. In the short term, there remains the fact that while some indexes are close to their previous highs and internals have strengthened, other indexes continue to diverge noticeably.
Although money supply growth remains historically strong and investors are desperately chasing returns in today’s ZIRP world and are therefore evidently prepared to take much greater risks than they otherwise would, an extremely overvalued market is always highly vulnerable to a change in perceptions.
High rates of monetary inflation during the echo bubble period and the weakness of the accompanying economic recovery suggest that the threshold at which the pace of money supply growth will become too slow to maintain asset prices at such lofty levels is much higher than it used to be. So in a sense the rebound may actually turn out to be self-defeating, as it will increase the Fed’s willingness resume tightening policy.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Jueves 21/04/16 Ventas de casas existentes
por Fenix » Jue Abr 21, 2016 8:22 pm
Janet Yellen's 'Death Cross'
Submitted by Tyler D.
04/21/2016 - 14:22
From 2011 (Jackson Hole) to 2015 (end QE3) everything was awesome for The Fed's 'trickle-down optimism' plan. As stocks rose so consumer confidence lurched higher as the artfice of equity market 'wealth' smoke-and-mirror-ed the population to believe that even if stuff wasn't awesome now, it soon would be. That has now ended... and as the following 'death cross' shows - Yellenomics is over.
"This Is The Most Crowded Trade in History"
Submitted by Tyler D.
04/21/2016 - 14:27
"Instead of looking for manager’s and investment opportunities to beat the market, investors are opting to be the market and are likely creating the most crowded trade in history. Stagnant monetary policy fosters a groupthink outlook. The Fed Put prompts the same positioning. Computerized programs trade correlations and relationships established during an extended period of abnormal policy. Active managers continue to retrench as the market diverges from the fundamentals, but the blind buyers continue to participate - it does not matter if the market is 10x, 15x, or 20x earnings, they buy for one reason, it is the market."
Notorious Short Seller Raises $100 Million To Take Down Unknown Company
Submitted by Tyler D.
04/21/2016 - 14:35
Kerrisdale Capital's Sahm Adrangi is no stranger to stirring up notoriety and self-promoting publicity if it helps generate inbound capital or profits. Back in 2013 New York magazine's spellbound Kevin Roose wrote an extended profile of the then-32 year old hedge fund manager and prominent short seller, describing him as "the hedge-fund world’s first full-on social-media-savvy investor can move markets with the flick of a tweet." Fast forward to today when we learn that Adrangi has synthesized all these components into his latest marketing gimmick: as Reuters reports Kerrisdale has raised approximately $100 million from investors to bet against a single stock.
VIX And The Elephant In The Room
04/21/2016 15:22 -0400
Via ConvergEx's Nick Colas,
Who’s afraid of the big bad bear? No one, it seems.
The CBOE VIX Index sits at 13, just 8% higher than its one year low from last July. In our monthly look at the “VIX of” everything from tech stocks to gold and high yield bonds, we can see why. It is the most interest rate-sensitive industry groups – Utilities, Consumer Staples and Telecomm – that show similar levels of implied volatility in their listed options (what the VIX actually measures). At the other end of the spectrum are Energy, Financials and Consumer Discretionary names. These groups are still 25-98% away from their one year lows in terms of their “VIX”.
Given that declining implied volatility correlates with rising asset prices, this makes these the go-to groups for traders looking for “catch up” moves if volatility continues to decline. A big “If” indeed, because it’s clear from this analysis that equity market prices are anchored by one central assumption: that the Fed will raise rates once this year, at most.
Back in 2007 a Chicago man named John Maloof bought a box at a storage locker auction, just like you see people do on those reality TV shows. He was looking for historical pictures of his neighborhood for a book project. After scanning through the boxes he had purchased he was disappointed to find that nothing really fit the bill. He put the box away and moved on.
Two years later, he opened the box again and started looking through the images. What he found were thousands of street photos. People, kids, animals, everyday life. He put some of the images up on Flickr, and got rave reviews. After some detective work, he found out that the photographer’s name was Vivien Maier and she had died in 2009. No one had ever heard of her, but the quality of her work and its breadth – well over 100,000 images once Maloof tracked them all down – was astounding.
Despite her obvious talent, Vivien Maier was not a professional photographer; she was a nanny. Once Maloof tracked down the families that had employed her over the years, her story became clearer. She would take the children in her charge for long walks, snapping pictures all the way. Here are a few links of her work: Street scenes, black and white:, Some color photography, and a trailer to a movie about her life and art (about 2 ½ minutes long).
Vivien Maier had something that many investors would appreciate: the ability to see life just a little bit differently from the rest of us. Not so much so that it becomes frightening or morbid, but rather just enough to reveal something deeper. Very few people have the talent to pull that off, but it can be an object lesson nonetheless.
Back in the more prosaic world of capital markets, one way we look for a slightly different perspective on stock and bond prices is to examine the listed options market for a whole range of asset types and industry groups. The idea here is to isolate the “Implied Volatility” in these options prices, very much like the CBOE VIX Index measures the uncertainty implied by S&P 500 futures market. Over time, the VIX has been conflated with “Fear” – a larger VIX implies more near term worry about a decline in large cap U.S. stocks, and a lower VIX points to less concern.
The above charts show the findings of our monthly analysis, but here is a summary of what we see in the data:
The decline in the CBOE VIX to its current 13 reading, not far off the closing one-year lows of 12, is mirrored by the general decline in implied volatility across the 19 industry groups and asset types we track. The “VIX of” high yield bonds, for example, was down 17.5% last month. All three market cap ranges for U.S. stocks – small, mid and large – saw declines in their “VIX” as well. The only asset classes that saw meaningful increases in their “Fear Indices” were silver (+11%), EAFE stocks (+7%) and Investment Grade Bonds (+3%).
Why the complacency? The answer offered by the Implied Volatility data is clear: equity markets don’t believe the Fed is going to raise rates more than (maybe) once this year. Looking at the one year trends in Implied Vol (the “VIX of”) for three rate sensitive groups – Utilities, Telecomm and Consumer Staples – all three are also at/near their one-year lows for “Fear”. All three sectors are known for stable dividend payouts and (therefore) their bond-like qualities. If there is little “Fear” baked into their options, it is because investors believe the Fed is on a slow path to raise rates because inflation remains at bay.
Any groups that might still move? The rally in global equities from their February lows has become the most hated move in the most hated long term bull market in history. That said, the price action says investors and traders are starting to join the bulls since they obviously haven’t beaten them.
For those looking for laggard groups that might still move as markets rally further, three pop out of our analysis today: Energy, Financials, and Consumer Discretionary. Energy, for example, is still not close to its 2015 lows for Implied Volatility. Current readings for the “VIX of” Energy stocks are 24; the lows were 12. Same for Financials, where the lows were 12 and current readings are 16. Consumer Discretionary “VIX” sits at 13 and the lows last year were 11.
Since price and Implied Volatility are typically inversely correlated, a further decline in the “VIX of” these groups should coincide with higher price levels.
* * *
There is an elephant in the room, of course, so we’ll finish up by taking its picture, Vivien Maier style.
When the VIX goes below 14, it is one standard deviation away from its long run average of 20. Not enough to signal an imminent correction, but enough to cause concern. As we outlined, market action is sending a very clear message:
The Fed is on hold or may raise rates once this year.
Currency volatility, thanks to an unofficial truce at the Shanghai G-20 meeting, is low and will remain so.
Negative interest rates in Japan and Europe will keep US long term rates low as well, supporting equity valuations.
The U.S is not going into a recession (and neither is any other major developed economy), even though current GDP growth is close to zero.
Now, if you agree with this set of assumptions, then stocks still have room to run.
But if you have any concerns, well, it might be better to wait for that “Modest pullback” everyone keeps looking for.
Submitted by Tyler D.
04/21/2016 - 14:22
From 2011 (Jackson Hole) to 2015 (end QE3) everything was awesome for The Fed's 'trickle-down optimism' plan. As stocks rose so consumer confidence lurched higher as the artfice of equity market 'wealth' smoke-and-mirror-ed the population to believe that even if stuff wasn't awesome now, it soon would be. That has now ended... and as the following 'death cross' shows - Yellenomics is over.
"This Is The Most Crowded Trade in History"
Submitted by Tyler D.
04/21/2016 - 14:27
"Instead of looking for manager’s and investment opportunities to beat the market, investors are opting to be the market and are likely creating the most crowded trade in history. Stagnant monetary policy fosters a groupthink outlook. The Fed Put prompts the same positioning. Computerized programs trade correlations and relationships established during an extended period of abnormal policy. Active managers continue to retrench as the market diverges from the fundamentals, but the blind buyers continue to participate - it does not matter if the market is 10x, 15x, or 20x earnings, they buy for one reason, it is the market."
Notorious Short Seller Raises $100 Million To Take Down Unknown Company
Submitted by Tyler D.
04/21/2016 - 14:35
Kerrisdale Capital's Sahm Adrangi is no stranger to stirring up notoriety and self-promoting publicity if it helps generate inbound capital or profits. Back in 2013 New York magazine's spellbound Kevin Roose wrote an extended profile of the then-32 year old hedge fund manager and prominent short seller, describing him as "the hedge-fund world’s first full-on social-media-savvy investor can move markets with the flick of a tweet." Fast forward to today when we learn that Adrangi has synthesized all these components into his latest marketing gimmick: as Reuters reports Kerrisdale has raised approximately $100 million from investors to bet against a single stock.
VIX And The Elephant In The Room
04/21/2016 15:22 -0400
Via ConvergEx's Nick Colas,
Who’s afraid of the big bad bear? No one, it seems.
The CBOE VIX Index sits at 13, just 8% higher than its one year low from last July. In our monthly look at the “VIX of” everything from tech stocks to gold and high yield bonds, we can see why. It is the most interest rate-sensitive industry groups – Utilities, Consumer Staples and Telecomm – that show similar levels of implied volatility in their listed options (what the VIX actually measures). At the other end of the spectrum are Energy, Financials and Consumer Discretionary names. These groups are still 25-98% away from their one year lows in terms of their “VIX”.
Given that declining implied volatility correlates with rising asset prices, this makes these the go-to groups for traders looking for “catch up” moves if volatility continues to decline. A big “If” indeed, because it’s clear from this analysis that equity market prices are anchored by one central assumption: that the Fed will raise rates once this year, at most.
Back in 2007 a Chicago man named John Maloof bought a box at a storage locker auction, just like you see people do on those reality TV shows. He was looking for historical pictures of his neighborhood for a book project. After scanning through the boxes he had purchased he was disappointed to find that nothing really fit the bill. He put the box away and moved on.
Two years later, he opened the box again and started looking through the images. What he found were thousands of street photos. People, kids, animals, everyday life. He put some of the images up on Flickr, and got rave reviews. After some detective work, he found out that the photographer’s name was Vivien Maier and she had died in 2009. No one had ever heard of her, but the quality of her work and its breadth – well over 100,000 images once Maloof tracked them all down – was astounding.
Despite her obvious talent, Vivien Maier was not a professional photographer; she was a nanny. Once Maloof tracked down the families that had employed her over the years, her story became clearer. She would take the children in her charge for long walks, snapping pictures all the way. Here are a few links of her work: Street scenes, black and white:, Some color photography, and a trailer to a movie about her life and art (about 2 ½ minutes long).
Vivien Maier had something that many investors would appreciate: the ability to see life just a little bit differently from the rest of us. Not so much so that it becomes frightening or morbid, but rather just enough to reveal something deeper. Very few people have the talent to pull that off, but it can be an object lesson nonetheless.
Back in the more prosaic world of capital markets, one way we look for a slightly different perspective on stock and bond prices is to examine the listed options market for a whole range of asset types and industry groups. The idea here is to isolate the “Implied Volatility” in these options prices, very much like the CBOE VIX Index measures the uncertainty implied by S&P 500 futures market. Over time, the VIX has been conflated with “Fear” – a larger VIX implies more near term worry about a decline in large cap U.S. stocks, and a lower VIX points to less concern.
The above charts show the findings of our monthly analysis, but here is a summary of what we see in the data:
The decline in the CBOE VIX to its current 13 reading, not far off the closing one-year lows of 12, is mirrored by the general decline in implied volatility across the 19 industry groups and asset types we track. The “VIX of” high yield bonds, for example, was down 17.5% last month. All three market cap ranges for U.S. stocks – small, mid and large – saw declines in their “VIX” as well. The only asset classes that saw meaningful increases in their “Fear Indices” were silver (+11%), EAFE stocks (+7%) and Investment Grade Bonds (+3%).
Why the complacency? The answer offered by the Implied Volatility data is clear: equity markets don’t believe the Fed is going to raise rates more than (maybe) once this year. Looking at the one year trends in Implied Vol (the “VIX of”) for three rate sensitive groups – Utilities, Telecomm and Consumer Staples – all three are also at/near their one-year lows for “Fear”. All three sectors are known for stable dividend payouts and (therefore) their bond-like qualities. If there is little “Fear” baked into their options, it is because investors believe the Fed is on a slow path to raise rates because inflation remains at bay.
Any groups that might still move? The rally in global equities from their February lows has become the most hated move in the most hated long term bull market in history. That said, the price action says investors and traders are starting to join the bulls since they obviously haven’t beaten them.
For those looking for laggard groups that might still move as markets rally further, three pop out of our analysis today: Energy, Financials, and Consumer Discretionary. Energy, for example, is still not close to its 2015 lows for Implied Volatility. Current readings for the “VIX of” Energy stocks are 24; the lows were 12. Same for Financials, where the lows were 12 and current readings are 16. Consumer Discretionary “VIX” sits at 13 and the lows last year were 11.
Since price and Implied Volatility are typically inversely correlated, a further decline in the “VIX of” these groups should coincide with higher price levels.
* * *
There is an elephant in the room, of course, so we’ll finish up by taking its picture, Vivien Maier style.
When the VIX goes below 14, it is one standard deviation away from its long run average of 20. Not enough to signal an imminent correction, but enough to cause concern. As we outlined, market action is sending a very clear message:
The Fed is on hold or may raise rates once this year.
Currency volatility, thanks to an unofficial truce at the Shanghai G-20 meeting, is low and will remain so.
Negative interest rates in Japan and Europe will keep US long term rates low as well, supporting equity valuations.
The U.S is not going into a recession (and neither is any other major developed economy), even though current GDP growth is close to zero.
Now, if you agree with this set of assumptions, then stocks still have room to run.
But if you have any concerns, well, it might be better to wait for that “Modest pullback” everyone keeps looking for.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Jueves 21/04/16 Ventas de casas existentes
por Fenix » Jue Abr 21, 2016 8:27 pm
The Faith Is Gone: The Middle Class Flees The Market As Record Low Number Of Americans Own Stocks
Submitted by Tyler D.
04/21/2016 - 15:52
With the Dow Jones industrial average near its record high, slightly more than half of Americans (52%) say they currently have money in the stock market, matching the lowest ownership rate in Gallup's 19-year trend. And the worst news for Yellen: "although Americans in all income groups are less likely to have stock investments now than before the Great Recession, middle-class Americans have been the most likely to flee the market"
Cycles, Bounces, & The Only Question That Matters
Submitted by Tyler D.
04/21/2016 - 16:28
Unfortunately, when central-planners "drag forward" future consumption today, you leave a "void" in the future that must be filled. That future "void" continues to expand each time activity is dragged forward until, inevitably, it can not be filled. This is currently being witnessed in the overall data trends as seen in the deterioration in corporate earnings and revenues. The only question is whether Central Banks can continue to support asset prices long enough for the economic cycle to catch up. Historically, such is a feat that has never been accomplished.
The Party Is Over: Regulators Propose To Cap, Defer And Clawback Wall Street Bonuses
Submitted by Tyler D.
04/21/2016 - 16:47
Coming off a year in which Wall Street experienced the lowest average bonus since 2012, it now has to brace itself for new regulation on incentive compensation. One of the last pieces of Dodd-Frank to be written and implemented, regulators are looking to firm up the rules surrounding incentive pay for banks. The final regulation, once agreed upon, will not just apply to banks, it will also apply to investment advisers, broker dealers, credit unions, and executives at mortgage finance companies Fannie Mae and Freddie Mac according to the Wall Street Journal.
JPM Emails High Net Worth Clients, Urging Them To "Stay Invested"
Submitted by Tyler D.
04/21/2016 - 16:55
Gold - What Happens Next?
Tyler D.
04/21/2016 17:40 -0400
Where we are... and where we're going?
If the 70s play out again, it implies a 6-fold gain for gold and 9-fold surge for Silver.
China's Other Big Problem - Porkflation
Submitted by Tyler D.
04/21/2016 - 18:30
For those who believe that broad-based stimulus is coming to save the world from China (via RRR cuts or even pure QE) - as opposed to the hole-filling credit pump they just supported - think again. As we warned last year, this is 'western' thinking as the go to policy of the rest of the world's central banks has been - put on pants, print money, paper over cracks, proclaim victory. However, in China there is one big problem with this... stoking inflation... and most crucially the social unrest concerns when suddenly a nation of newly minted equity - and now bond - losers can no longer afford their pork - which is surging to record highs.
"We Aren’t Thinking About It At All", Or How Kuroda Just Assured That Helicopter Money Is Coming To Japan
Submitted by Tyler D.
04/21/2016 - 19:18
The question isn't if the BoJ will be the first central bank to implement helicopter money, the question is when.
Soros Warns China Credit Cycle Has Gone "Parabolic" Just To Keep Zombies Alive
Submitted by Tyler D.
04/21/2016 - 20:35
After warning last year of a "practically unavoidable" hard-landing to come in China, George Soros unleashed his central-planner-crushing self last night on the great red ponzi. As we noted last night, Soros warned the "parabolic" rise in credit is very worrisome, and "eerily reminiscent of US in 2007-8," specifically adding that "most of the money that banks are supplying is needed to keep bad debts and loss-making enterprises alive." Soros' full discussion can be found below...
Pimco Economist Has A Stunning Proposal To Save The Economy: The Fed Should Buy Gold
Submitted by Tyler D.
04/21/2016 - 20:59
Back in December 2014, just before the ECB officially launched its initial phase of QE in which it would monetize government bonds, Mario Draghi was asked a very direct question: what types of assets could the ECB buy as part of its quantitative easing program. He responded, "we discussed all assets but gold."
The reason for his tongue in cheek response was because over the prior few weeks speculation had arisen that gold could be part of the central bank’s asset purchases after Yves Mersch, a member of the ECB executive board and former Governor of the Central Bank of Luxembourg, said on November 17 that "theoretically the ECB could purchase other assets such as gold, shares, ETFs to fulfill its promise of adopting further unconventional measures to counter a longer period of low inflation."
Mario Draghi promptly shot down that idea.
But according to a provocative paper released by none other than Pimco's strategist Harley Bassman, Yves Mersch's inadvertent peek into what central bankers are thinking, may have been on to something.
In "Rumpelstiltskin at the Fed", Bassman goes down the well-trodden path of proposing Fed asset purchases as the last ditch panacea for the US economy, however instead of buying bonds, or stocks, or crude oil, Bassman has a truly original idea: "the Fed should unleash a massive Fed gold purchase program that could echo a Depression-era effort that effectively boosted the U.S. economy."
He is of course, referring to FDR's 1933 Executive Order 6102, which made it illegal for a citizen to own gold bullion or coins. Americans promptly sold their gold to the government at the official price of $20.67, with the resulting hoard of gold was then placed in Fort Knox.
The Gold Reserve Act of 1934 raised the official price of gold to $35.00, a near 70% increase. It also resulted in an implicit devaluation of the US dollar. As Bassman points out, over the three years from January 1934 to December 1936, GDP increased by 48%, the Dow Jones stock index rose by nearly 80%, and most salient to our topic, inflation averaged a positive 2% annually, despite a national unemployment rate hovering around 18%.
In short, a brief economic nirvana which was unleashed by the devaluation of the dollar confiscation of gold. In fact, we have frequently hinted in the past that another Executive Order 6102 is inevitable for precisely these reasons. However this is the first time when we see a "respected economist" openly recommend this idea as a matter of monetary policy.
Bassman says that the Fed should "emulate a past success by making a public offer to purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce? It would be operationally simple as holders could transact directly at regional Federal offices or via authorized precious metal assayers."
What would the outcome of such as "QE for the goldbugs" look like? His summary assessment:
A massive Fed gold purchase program would differ from past efforts at monetary expansion. Via QE, the transmission mechanism was wholly contained within the financial system; fiat currency was used to buy fiat assets which then settled on bank balance sheets. Since QE is arcane to most people outside of Wall Street, and NIRP seems just bizarre to most non-academics, these policies have had little impact on inflationary expectations. Global consumers are more familiar with gold than the banking system, thus this avenue of monetary expansion might finally lift the anchor on inflationary expectations and their associated spending habits.
The USD may initially weaken versus fiat currencies, but other central banks could soon buy gold as well, similar to the paths of QE and NIRP. The impactful twist of a gold purchase program is that it increases the price of a widely recognized “store of value,” a view little diminished despite the fact the U.S. relinquished the gold standard in 1971. This is a vivid contrast to the relatively invisible inflation of financial assets with its perverse side effect of widening the income gap.
And before Krugman accuses Bassman of secretly being on our payroll, this is how Pimco's economist defends his unorthodox idea:
Admittedly, this suggestion is almost too outrageous to post under the PIMCO logo, but NIRP surely would have elicited a similar reaction a decade ago. But upon reflection, it could be an elegant solution since it flips the boxes on a foreign currency “prisoner’s dilemma” (more on this below). Most critically, a massive gold purchase has the potential to significantly boost inflationary expectations, both domestic and foreign.
* * *
Many people will rightfully dismiss the gold idea as absurd, as just another fanciful strategy to print money; why not just buy oil, houses or some other hard asset? In fact, why fool around with gold; why not just execute helicopter money as originally advertised? I would answer the former by noting that only gold qualifies as money; and as for the latter, fiscal compromise on that order seems like a daydream in Washington today – don’t expect a helicopter liftoff anytime soon.
Let’s be honest; most people thought NIRP was just as nonsensical a few years ago, yet it has now been implemented by six central banks with little evidence it is effective. And while a gold purchase program should qualify as a fairy tale, what is unique here is that it actually occurred with a confirmed positive effect on the U.S. economy.
We agree, if for no other reason than everything central banks have done and tried in history has been a disastrous mistake, leading to either huge asset bubbles or massive busts, which in turn have needed even more spectacular bubbles to be reflated and so on. As such, the one thing that central banks should do is that which they are "genetically" against - purchasing the one asset class which is their inherent nemesis, the one Ben Bernanke said had value only because of "tradition": Gold.
Of course, all of the above assumes Americans would be willing to sell their gold to the Fed at any prices, but as Bassman finally lays it out, it is worth finding out. Janet, are you listening?
* * *
From PIMCO, by Harley Bassman
Rumpelstiltskin at the Fed
Though it seems incredibly farfetched, a massive Fed gold purchase program could echo a Depression-era effort that effectively boosted the U.S. economy.
As our title alludes, I am about to spin a monetary policy fairy tale, a fantasy that could certainly never occur … except for the small detail that it’s happened before.
First I must remind you there are only two avenues out of a debt crisis – default or inflate – and inflation is just a slow-motion default. Thus in the darker days of the global financial crisis, the U.S. Federal Reserve set sail on a monetary experiment tangentially suggested by late Nobel laureate Milton Friedman, the original coiner of the phrase “helicopter money.” (Ben Bernanke borrowed this clever construct in his famous November 2002 speech, “Deflation: Making Sure ‘It’ Doesn’t Happen Here.”)
The notion was simple: Increase monetary velocity via financial repression to create inflation, depreciate nominal debt and deleverage both the public and private economies of the U.S. The toolkit of financial repression would include, but not be limited to, near-zero overnight interbank borrowing rates, massive asset purchase programs (also known as quantitative easing or QE), term surface restructuring (known as Operation Twist) and good old-fashioned jawboning, in this case taking the form of distant forward guidance.
Notwithstanding various political exhortations, there can be little doubt the Fed’s aggressive monetary policies after the collapse of Lehman Brothers were quite effective in cushioning the macro economy from the financial turmoil. Would the economy have cured itself without the Fed? We can’t prove a negative, but up until China allowed the devaluation of the yuan last August and Japan implemented negative interest rates in January, the Fed’s “Plan A” was working reasonably well.
But we do not operate in a vacuum, and various monetary machinations from the eurozone, Japan and China are now working in concert to export deflation to the U.S. This is quite worrisome as it may well hinder the U.S. economy from reaching the Fed’s target inflation level (2%) and escape-velocity economic growth.
Thus did Fed Chair Janet Yellen, in her most recent visit to Congress, tentatively start to explore a “Plan B” (which looks like Plan A on steroids) that includes, if only in theory, the barest remote possibility of a negative interest rate policy (NIRP).
There are a host of reasons PIMCO believes NIRP would be not only ineffective, but also possibly harmful to the U.S. economy, and these have been detailed by CIOs Scott Mather and Mihir Worah. But this does raise the question as to whether the Fed has indeed reached the bottom of its toolkit. Many things are possible, at least in theory, including the famous helicopter drop. Another option is to resurrect a plan that was actually implemented (with great success) 83 years ago.
The real fairy tale
From shortly after the October 1929 stock market crash to just before Franklin Delano Roosevelt became president in 1933, U.S. gross domestic product (GDP) declined by nearly 43%; during a similar timeframe, consumer prices declined by nearly 24%.
Employing what can only be described as force majeure politics, in April 1933 the U.S. government issued Executive Order 6102, which made it illegal for a citizen to own gold bullion or coins. Lest they risk a five-year vacation in prison, citizens sold their gold to the government at the official price of $20.67. This hoard of gold was then placed in a specially built storage facility – Fort Knox.
The Gold Reserve Act of 1934 raised the official price of gold to $35.00, a near 70% increase; positive results were almost immediate. Over the three years from January 1934 to December 1936, GDP increased by 48%, the Dow Jones stock index rose by nearly 80%, and most salient to our topic, inflation averaged a positive 2% annually, despite a national unemployment rate hovering around 18%.
Such a pity that these halcyon days were soon sullied as the government tightened financial conditions (both fiscal and monetary) from late 1936 to early 1937, which many point to as the precipitant of the Dow’s 33% decline. Additionally, the 1938 calendar reported a 6.3% decline in GDP and a 2.8% deflation in consumer prices. (Many suspect it is the fear of a 1937 redux that motivates the Fed to contemplate additional extraordinary actions, including NIRP.)
So in the context of today’s paralyzed political-fiscal landscape and a hyperventilated election process, how silly is it to suggest the Fed emulate a past success by making a public offer to purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce? It would be operationally simple as holders could transact directly at regional Federal offices or via authorized precious metal assayers.
Admittedly, this suggestion is almost too outrageous to post under the PIMCO logo, but NIRP surely would have elicited a similar reaction a decade ago. But upon reflection, it could be an elegant solution since it flips the boxes on a foreign currency “prisoner’s dilemma” (more on this below). Most critically, a massive gold purchase has the potential to significantly boost inflationary expectations, both domestic and foreign.
Asset or currency?
While never an officially stated policy, there has been a slow-moving, low-intensity currency war taking place over the past decade. The U.S. was the first mover, implementing QE in 2009, which had the effect of depreciating the trade-weighted U.S. dollar (USD) by 16%. Japan was next, implementing “Abenomics” in 2012; this helped depreciate the yen (JPY) versus the USD by over 30% in eight months. Europe went last when Mario Draghi followed through on “whatever it takes” in 2014; the euro devalued versus the USD from peak to trough by 24%. China had pegged the yuan to the USD to help maintain a stable trading environment, however, the increasing value of their currency against their other trading partners was hindering growth, and thus the motivation for a slight realignment last August.
The problem the world’s major economies now face is that any attempt to depreciate their currencies to improve the terms of trade must effectively come out of the pockets of their partners; this creates a classic prisoner’s dilemma. Thus the interesting twist of a Fed gold purchase program.
Warren Buffett famously railed against the shiny yellow metal in 2012 when he noted all the gold in the world could be swapped for the totality of U.S. cropland and seven ExxonMobils with $1 trillion left over for “walking-around money.” His point was that these assets can generate significant returns while owning gold produces no discernable cash flow.
While this observation is certainly true, the rub is that this is not a fair comparison since gold is not an asset; rather, it should be considered an alternate currency. Pundits often describe the five factors that define “money”:
1. Its supply is controlled or limited,
2. It is fungible/uniform – this is why diamonds cannot qualify,
3. It is portable – this is why land cannot qualify,
4. It is divisible – thus art cannot be money, and
5. It is liquid – this means people will readily accept it in exchange.
By this definition, gold is certainly a form of money, and to Mr. Buffett’s point, one also earns no cash flow on paper dollars, euros, yen or yuan.
Raising expectations
A massive Fed gold purchase program would differ from past efforts at monetary expansion. Via QE, the transmission mechanism was wholly contained within the financial system; fiat currency was used to buy fiat assets which then settled on bank balance sheets. Since QE is arcane to most people outside of Wall Street, and NIRP seems just bizarre to most non-academics, these policies have had little impact on inflationary expectations. Global consumers are more familiar with gold than the banking system, thus this avenue of monetary expansion might finally lift the anchor on inflationary expectations and their associated spending habits.
The USD may initially weaken versus fiat currencies, but other central banks could soon buy gold as well, similar to the paths of QE and NIRP. The impactful twist of a gold purchase program is that it increases the price of a widely recognized “store of value,” a view little diminished despite the fact the U.S. relinquished the gold standard in 1971. This is a vivid contrast to the relatively invisible inflation of financial assets with its perverse side effect of widening the income gap.
In coda I would respond to the argument that a central bank cannot willfully create inflation – I disagree; it just depends upon how hard one tries. There are plenty of examples ranging from Weimar Germany to Zimbabwe where central banks have unleashed uncontrolled hyperinflations.
The more interesting question is not whether the Fed can create a 15% to 20% price spiral, but rather can they implement policies that will result in a somewhat gentle and controlled 2% to 3% inflation rate that will slowly deleverage the U.S. debt load while simultaneously increasing middle class nominal wages.
Many people will rightfully dismiss the gold idea as absurd, as just another fanciful strategy to print money; why not just buy oil, houses or some other hard asset? In fact, why fool around with gold; why not just execute helicopter money as originally advertised? I would answer the former by noting that only gold qualifies as money; and as for the latter, fiscal compromise on that order seems like a daydream in Washington today – don’t expect a helicopter liftoff anytime soon.
Let’s be honest; most people thought NIRP was just as nonsensical a few years ago, yet it has now been implemented by six central banks with little evidence it is effective. And while a gold purchase program should qualify as a fairy tale, what is unique here is that it actually occurred with a confirmed positive effect on the U.S. economy.
So when the next seat for a Fed governor becomes available, I would nominate Rumpelstiltskin … just a thought.
Submitted by Tyler D.
04/21/2016 - 15:52
With the Dow Jones industrial average near its record high, slightly more than half of Americans (52%) say they currently have money in the stock market, matching the lowest ownership rate in Gallup's 19-year trend. And the worst news for Yellen: "although Americans in all income groups are less likely to have stock investments now than before the Great Recession, middle-class Americans have been the most likely to flee the market"
Cycles, Bounces, & The Only Question That Matters
Submitted by Tyler D.
04/21/2016 - 16:28
Unfortunately, when central-planners "drag forward" future consumption today, you leave a "void" in the future that must be filled. That future "void" continues to expand each time activity is dragged forward until, inevitably, it can not be filled. This is currently being witnessed in the overall data trends as seen in the deterioration in corporate earnings and revenues. The only question is whether Central Banks can continue to support asset prices long enough for the economic cycle to catch up. Historically, such is a feat that has never been accomplished.
The Party Is Over: Regulators Propose To Cap, Defer And Clawback Wall Street Bonuses
Submitted by Tyler D.
04/21/2016 - 16:47
Coming off a year in which Wall Street experienced the lowest average bonus since 2012, it now has to brace itself for new regulation on incentive compensation. One of the last pieces of Dodd-Frank to be written and implemented, regulators are looking to firm up the rules surrounding incentive pay for banks. The final regulation, once agreed upon, will not just apply to banks, it will also apply to investment advisers, broker dealers, credit unions, and executives at mortgage finance companies Fannie Mae and Freddie Mac according to the Wall Street Journal.
JPM Emails High Net Worth Clients, Urging Them To "Stay Invested"
Submitted by Tyler D.
04/21/2016 - 16:55
Gold - What Happens Next?
Tyler D.
04/21/2016 17:40 -0400
Where we are... and where we're going?
If the 70s play out again, it implies a 6-fold gain for gold and 9-fold surge for Silver.
China's Other Big Problem - Porkflation
Submitted by Tyler D.
04/21/2016 - 18:30
For those who believe that broad-based stimulus is coming to save the world from China (via RRR cuts or even pure QE) - as opposed to the hole-filling credit pump they just supported - think again. As we warned last year, this is 'western' thinking as the go to policy of the rest of the world's central banks has been - put on pants, print money, paper over cracks, proclaim victory. However, in China there is one big problem with this... stoking inflation... and most crucially the social unrest concerns when suddenly a nation of newly minted equity - and now bond - losers can no longer afford their pork - which is surging to record highs.
"We Aren’t Thinking About It At All", Or How Kuroda Just Assured That Helicopter Money Is Coming To Japan
Submitted by Tyler D.
04/21/2016 - 19:18
The question isn't if the BoJ will be the first central bank to implement helicopter money, the question is when.
Soros Warns China Credit Cycle Has Gone "Parabolic" Just To Keep Zombies Alive
Submitted by Tyler D.
04/21/2016 - 20:35
After warning last year of a "practically unavoidable" hard-landing to come in China, George Soros unleashed his central-planner-crushing self last night on the great red ponzi. As we noted last night, Soros warned the "parabolic" rise in credit is very worrisome, and "eerily reminiscent of US in 2007-8," specifically adding that "most of the money that banks are supplying is needed to keep bad debts and loss-making enterprises alive." Soros' full discussion can be found below...
Pimco Economist Has A Stunning Proposal To Save The Economy: The Fed Should Buy Gold
Submitted by Tyler D.
04/21/2016 - 20:59
Back in December 2014, just before the ECB officially launched its initial phase of QE in which it would monetize government bonds, Mario Draghi was asked a very direct question: what types of assets could the ECB buy as part of its quantitative easing program. He responded, "we discussed all assets but gold."
The reason for his tongue in cheek response was because over the prior few weeks speculation had arisen that gold could be part of the central bank’s asset purchases after Yves Mersch, a member of the ECB executive board and former Governor of the Central Bank of Luxembourg, said on November 17 that "theoretically the ECB could purchase other assets such as gold, shares, ETFs to fulfill its promise of adopting further unconventional measures to counter a longer period of low inflation."
Mario Draghi promptly shot down that idea.
But according to a provocative paper released by none other than Pimco's strategist Harley Bassman, Yves Mersch's inadvertent peek into what central bankers are thinking, may have been on to something.
In "Rumpelstiltskin at the Fed", Bassman goes down the well-trodden path of proposing Fed asset purchases as the last ditch panacea for the US economy, however instead of buying bonds, or stocks, or crude oil, Bassman has a truly original idea: "the Fed should unleash a massive Fed gold purchase program that could echo a Depression-era effort that effectively boosted the U.S. economy."
He is of course, referring to FDR's 1933 Executive Order 6102, which made it illegal for a citizen to own gold bullion or coins. Americans promptly sold their gold to the government at the official price of $20.67, with the resulting hoard of gold was then placed in Fort Knox.
The Gold Reserve Act of 1934 raised the official price of gold to $35.00, a near 70% increase. It also resulted in an implicit devaluation of the US dollar. As Bassman points out, over the three years from January 1934 to December 1936, GDP increased by 48%, the Dow Jones stock index rose by nearly 80%, and most salient to our topic, inflation averaged a positive 2% annually, despite a national unemployment rate hovering around 18%.
In short, a brief economic nirvana which was unleashed by the devaluation of the dollar confiscation of gold. In fact, we have frequently hinted in the past that another Executive Order 6102 is inevitable for precisely these reasons. However this is the first time when we see a "respected economist" openly recommend this idea as a matter of monetary policy.
Bassman says that the Fed should "emulate a past success by making a public offer to purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce? It would be operationally simple as holders could transact directly at regional Federal offices or via authorized precious metal assayers."
What would the outcome of such as "QE for the goldbugs" look like? His summary assessment:
A massive Fed gold purchase program would differ from past efforts at monetary expansion. Via QE, the transmission mechanism was wholly contained within the financial system; fiat currency was used to buy fiat assets which then settled on bank balance sheets. Since QE is arcane to most people outside of Wall Street, and NIRP seems just bizarre to most non-academics, these policies have had little impact on inflationary expectations. Global consumers are more familiar with gold than the banking system, thus this avenue of monetary expansion might finally lift the anchor on inflationary expectations and their associated spending habits.
The USD may initially weaken versus fiat currencies, but other central banks could soon buy gold as well, similar to the paths of QE and NIRP. The impactful twist of a gold purchase program is that it increases the price of a widely recognized “store of value,” a view little diminished despite the fact the U.S. relinquished the gold standard in 1971. This is a vivid contrast to the relatively invisible inflation of financial assets with its perverse side effect of widening the income gap.
And before Krugman accuses Bassman of secretly being on our payroll, this is how Pimco's economist defends his unorthodox idea:
Admittedly, this suggestion is almost too outrageous to post under the PIMCO logo, but NIRP surely would have elicited a similar reaction a decade ago. But upon reflection, it could be an elegant solution since it flips the boxes on a foreign currency “prisoner’s dilemma” (more on this below). Most critically, a massive gold purchase has the potential to significantly boost inflationary expectations, both domestic and foreign.
* * *
Many people will rightfully dismiss the gold idea as absurd, as just another fanciful strategy to print money; why not just buy oil, houses or some other hard asset? In fact, why fool around with gold; why not just execute helicopter money as originally advertised? I would answer the former by noting that only gold qualifies as money; and as for the latter, fiscal compromise on that order seems like a daydream in Washington today – don’t expect a helicopter liftoff anytime soon.
Let’s be honest; most people thought NIRP was just as nonsensical a few years ago, yet it has now been implemented by six central banks with little evidence it is effective. And while a gold purchase program should qualify as a fairy tale, what is unique here is that it actually occurred with a confirmed positive effect on the U.S. economy.
We agree, if for no other reason than everything central banks have done and tried in history has been a disastrous mistake, leading to either huge asset bubbles or massive busts, which in turn have needed even more spectacular bubbles to be reflated and so on. As such, the one thing that central banks should do is that which they are "genetically" against - purchasing the one asset class which is their inherent nemesis, the one Ben Bernanke said had value only because of "tradition": Gold.
Of course, all of the above assumes Americans would be willing to sell their gold to the Fed at any prices, but as Bassman finally lays it out, it is worth finding out. Janet, are you listening?
* * *
From PIMCO, by Harley Bassman
Rumpelstiltskin at the Fed
Though it seems incredibly farfetched, a massive Fed gold purchase program could echo a Depression-era effort that effectively boosted the U.S. economy.
As our title alludes, I am about to spin a monetary policy fairy tale, a fantasy that could certainly never occur … except for the small detail that it’s happened before.
First I must remind you there are only two avenues out of a debt crisis – default or inflate – and inflation is just a slow-motion default. Thus in the darker days of the global financial crisis, the U.S. Federal Reserve set sail on a monetary experiment tangentially suggested by late Nobel laureate Milton Friedman, the original coiner of the phrase “helicopter money.” (Ben Bernanke borrowed this clever construct in his famous November 2002 speech, “Deflation: Making Sure ‘It’ Doesn’t Happen Here.”)
The notion was simple: Increase monetary velocity via financial repression to create inflation, depreciate nominal debt and deleverage both the public and private economies of the U.S. The toolkit of financial repression would include, but not be limited to, near-zero overnight interbank borrowing rates, massive asset purchase programs (also known as quantitative easing or QE), term surface restructuring (known as Operation Twist) and good old-fashioned jawboning, in this case taking the form of distant forward guidance.
Notwithstanding various political exhortations, there can be little doubt the Fed’s aggressive monetary policies after the collapse of Lehman Brothers were quite effective in cushioning the macro economy from the financial turmoil. Would the economy have cured itself without the Fed? We can’t prove a negative, but up until China allowed the devaluation of the yuan last August and Japan implemented negative interest rates in January, the Fed’s “Plan A” was working reasonably well.
But we do not operate in a vacuum, and various monetary machinations from the eurozone, Japan and China are now working in concert to export deflation to the U.S. This is quite worrisome as it may well hinder the U.S. economy from reaching the Fed’s target inflation level (2%) and escape-velocity economic growth.
Thus did Fed Chair Janet Yellen, in her most recent visit to Congress, tentatively start to explore a “Plan B” (which looks like Plan A on steroids) that includes, if only in theory, the barest remote possibility of a negative interest rate policy (NIRP).
There are a host of reasons PIMCO believes NIRP would be not only ineffective, but also possibly harmful to the U.S. economy, and these have been detailed by CIOs Scott Mather and Mihir Worah. But this does raise the question as to whether the Fed has indeed reached the bottom of its toolkit. Many things are possible, at least in theory, including the famous helicopter drop. Another option is to resurrect a plan that was actually implemented (with great success) 83 years ago.
The real fairy tale
From shortly after the October 1929 stock market crash to just before Franklin Delano Roosevelt became president in 1933, U.S. gross domestic product (GDP) declined by nearly 43%; during a similar timeframe, consumer prices declined by nearly 24%.
Employing what can only be described as force majeure politics, in April 1933 the U.S. government issued Executive Order 6102, which made it illegal for a citizen to own gold bullion or coins. Lest they risk a five-year vacation in prison, citizens sold their gold to the government at the official price of $20.67. This hoard of gold was then placed in a specially built storage facility – Fort Knox.
The Gold Reserve Act of 1934 raised the official price of gold to $35.00, a near 70% increase; positive results were almost immediate. Over the three years from January 1934 to December 1936, GDP increased by 48%, the Dow Jones stock index rose by nearly 80%, and most salient to our topic, inflation averaged a positive 2% annually, despite a national unemployment rate hovering around 18%.
Such a pity that these halcyon days were soon sullied as the government tightened financial conditions (both fiscal and monetary) from late 1936 to early 1937, which many point to as the precipitant of the Dow’s 33% decline. Additionally, the 1938 calendar reported a 6.3% decline in GDP and a 2.8% deflation in consumer prices. (Many suspect it is the fear of a 1937 redux that motivates the Fed to contemplate additional extraordinary actions, including NIRP.)
So in the context of today’s paralyzed political-fiscal landscape and a hyperventilated election process, how silly is it to suggest the Fed emulate a past success by making a public offer to purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce? It would be operationally simple as holders could transact directly at regional Federal offices or via authorized precious metal assayers.
Admittedly, this suggestion is almost too outrageous to post under the PIMCO logo, but NIRP surely would have elicited a similar reaction a decade ago. But upon reflection, it could be an elegant solution since it flips the boxes on a foreign currency “prisoner’s dilemma” (more on this below). Most critically, a massive gold purchase has the potential to significantly boost inflationary expectations, both domestic and foreign.
Asset or currency?
While never an officially stated policy, there has been a slow-moving, low-intensity currency war taking place over the past decade. The U.S. was the first mover, implementing QE in 2009, which had the effect of depreciating the trade-weighted U.S. dollar (USD) by 16%. Japan was next, implementing “Abenomics” in 2012; this helped depreciate the yen (JPY) versus the USD by over 30% in eight months. Europe went last when Mario Draghi followed through on “whatever it takes” in 2014; the euro devalued versus the USD from peak to trough by 24%. China had pegged the yuan to the USD to help maintain a stable trading environment, however, the increasing value of their currency against their other trading partners was hindering growth, and thus the motivation for a slight realignment last August.
The problem the world’s major economies now face is that any attempt to depreciate their currencies to improve the terms of trade must effectively come out of the pockets of their partners; this creates a classic prisoner’s dilemma. Thus the interesting twist of a Fed gold purchase program.
Warren Buffett famously railed against the shiny yellow metal in 2012 when he noted all the gold in the world could be swapped for the totality of U.S. cropland and seven ExxonMobils with $1 trillion left over for “walking-around money.” His point was that these assets can generate significant returns while owning gold produces no discernable cash flow.
While this observation is certainly true, the rub is that this is not a fair comparison since gold is not an asset; rather, it should be considered an alternate currency. Pundits often describe the five factors that define “money”:
1. Its supply is controlled or limited,
2. It is fungible/uniform – this is why diamonds cannot qualify,
3. It is portable – this is why land cannot qualify,
4. It is divisible – thus art cannot be money, and
5. It is liquid – this means people will readily accept it in exchange.
By this definition, gold is certainly a form of money, and to Mr. Buffett’s point, one also earns no cash flow on paper dollars, euros, yen or yuan.
Raising expectations
A massive Fed gold purchase program would differ from past efforts at monetary expansion. Via QE, the transmission mechanism was wholly contained within the financial system; fiat currency was used to buy fiat assets which then settled on bank balance sheets. Since QE is arcane to most people outside of Wall Street, and NIRP seems just bizarre to most non-academics, these policies have had little impact on inflationary expectations. Global consumers are more familiar with gold than the banking system, thus this avenue of monetary expansion might finally lift the anchor on inflationary expectations and their associated spending habits.
The USD may initially weaken versus fiat currencies, but other central banks could soon buy gold as well, similar to the paths of QE and NIRP. The impactful twist of a gold purchase program is that it increases the price of a widely recognized “store of value,” a view little diminished despite the fact the U.S. relinquished the gold standard in 1971. This is a vivid contrast to the relatively invisible inflation of financial assets with its perverse side effect of widening the income gap.
In coda I would respond to the argument that a central bank cannot willfully create inflation – I disagree; it just depends upon how hard one tries. There are plenty of examples ranging from Weimar Germany to Zimbabwe where central banks have unleashed uncontrolled hyperinflations.
The more interesting question is not whether the Fed can create a 15% to 20% price spiral, but rather can they implement policies that will result in a somewhat gentle and controlled 2% to 3% inflation rate that will slowly deleverage the U.S. debt load while simultaneously increasing middle class nominal wages.
Many people will rightfully dismiss the gold idea as absurd, as just another fanciful strategy to print money; why not just buy oil, houses or some other hard asset? In fact, why fool around with gold; why not just execute helicopter money as originally advertised? I would answer the former by noting that only gold qualifies as money; and as for the latter, fiscal compromise on that order seems like a daydream in Washington today – don’t expect a helicopter liftoff anytime soon.
Let’s be honest; most people thought NIRP was just as nonsensical a few years ago, yet it has now been implemented by six central banks with little evidence it is effective. And while a gold purchase program should qualify as a fairy tale, what is unique here is that it actually occurred with a confirmed positive effect on the U.S. economy.
So when the next seat for a Fed governor becomes available, I would nominate Rumpelstiltskin … just a thought.
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