This column was originally published on RealMoney on Feb. 7 at 1:44 p.m. EST. It’s being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here. Could this be the long-awaited breakout of Apple (AAPL) ? This stock has been, with the possible exception of Google (GOOG) , the most profound disappointment of 2007. The froth of the iPhone coupled with a belief that the new device must be a failure because of its price point...
TheStreet.com TV Recap: A Lack of Antitrust
February 15, 2007 on 12:02 pm | In |
This column by Doug Kass was originally published on Feb. 2 at 8:08 a.m. EST on Street Insight. It’s being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.
This week, the market has advanced into record territory as market participants’ enthusiasm over a noninflationary period of growing and sustained economic growth seems to have improved.
Indeed, since mid-2006, investors have been immersed and have been captivated by a world known as Cramerica, a world in which everything is coming up booyahs, as both good news and bad news are treated as good news.
According to my hedge fund contacts (an admittedly small sampling!), and despite what you may read from others, this week’s ramp also resulted in the capitulation by many shorts. The short side has become, for most long/short investors, simply a hedge against profits. And in the competitive hedge fund industry’s mandate to create excess returns above the market (alpha), this is rendering the appetite for hedging (read: shorting) increasingly undesirable (to put it mildly).
My Tuesday night debate with Larry Kudlow on CNBC’s “Kudlow & Company” pretty much framed the bull/bear argument.
Real GDP growth is currently vigorous (and above expectations), the rate of growth in inflation appears muted, retail spending seemed to be advancing, and, to many, signs of a bottom in housing is at hand.
From my perch (which these days is increasingly taking place on that cold linoleum floor drinking cheap tequila), the dual impact of a mild November and December when coupled with an unusually sharp drop in energy costs has overstated the health of the U.S. economy.
A snapshot of the economy and the uninterrupted rise in the world equity markets is encouraging the notion of a “Goldilocks” scenario. It is supporting a positive investment landscape characterized by narrow credit spreads, record low levels on the major volatility indices, improving investor sentiment and recognition of the benefits of the emergence of new (and emerging markets) and the excessive global liquidity that this development entails.
In looking at the sustained march in equities (13 out of 14 months have recorded positive returns) and the significant records being recorded (consecutive trading days without a 2% or 10% correction), it is clear that we are in a bull market for optimism/momentum and for financial assets (particularly of a long-only kind), while we are in a bear market for skepticism/disbelief and for hedging/short-selling.
My ursine view is focused on the future, not the present. As such, it is less easily defended when equities move upward in an almost uninterrupted manner. It is a prospective and anticipatory view that gives less weight to the seemingly positive recent economic releases and conditions.
It is a contrarian view, because it argues that current trends should not be extrapolated. Rather, my opinion suggests that many of the core arguments that underscore the Goldilocks case will be re-examined over the upcoming weeks and months.
Underlying my fundamental concerns are:
- A tightening labor market (and rising unit labor costs).
- A likely downturn in productivity gains.
- A five-year high in the CRB RIND Index with attendant cost-push inflation implications. (This index measures spot raw-materials prices across a broad group of categories including steel and cooper scrap, tin, zinc, wheat, corn, sugar … and even lard!)
- The expectation of rising interest rates and cost of capital.
- An implosion in the subprime mortgage market (and a consequent restriction in credit to prospective homebuyers).
- A bubble in credit availability (and private equity).
- The emerging bubble in emerging markets (e.g., over the last six years the India’s Sensex has increased by about 300%, while India’s total corporate profits have not even doubled — that’s P/E expansion!).
- The levered and vulnerable (long-biased) hedge fund and fund-of-funds (especially of a Swiss kind) industries.
- The broad tax implications of the Democratic tsunami.
- A spent-up American consumer, which should have broad and negative implications for consumer electronics (and the Nasdaq) and a more hawkish Federal Reserve than many expect. (Is anyone concerned about the $100 rally in gold since September 2006, or the quiet 40-basis-point rise in the yield on the 10-year U.S. note?)
To this observer, neither a recession (where my pal Larry Kudlow tries to pigeonhole me!) nor a Goldilocks scenario appears to be in the cards. Rather, I expect a period of lumpy and uneven economic growth in which both investment managers and corporate managers find it hard to navigate.
In time, we will undoubtedly see a mean reversion in home prices, interest rates, credit spreads (and losses), corporate profit margins … and the world’s equity markets.
But for now, it is abundantly clear that the timing of my pessimism couldn’t be worse — as my experience and historical perspective are my albatrosses.
1 What would best describe your stance heading into the coming week of trading?
Bullish
Bearish
Neutral
2 Which of these sectors do you think is set to move up in the coming week?
3 Which of these sectors do you think is set to move down in the coming week?
No Comments yet
Sorry, the comment form is closed at this time.
Daily Report: Volatile Markets But No Progress Made »Action Insight | Written by ActionForex.com | Dec 28 06 07:45 GMT | Forex Daily Technical Report Volatile Markets But No Progress Made Much volatility in the forex markets after Christmas holidays but not much progress was made. majors are still stuck in established range. Though further volatility should be triggered today by some important economic data from the US, all in all, we’d expect that be part of holiday consolidation and clear direction should be set next week by employment...
for an archive of Cramer’s “Mad Money” recaps. When a company does everything right, its stock will go higher — which is exactly what happened with Archer Daniels Midland (ADM) and Boeing (BA) , Jim Cramer told viewers of his “Mad Money” TV show Thursday. But when you have a great stock, “good is not good enough,” he said. “To really impress the Street you need to have better-than-expected earnings.” Starbucks (SBUX) , for...
TheStreet.com TV Recap: A Lack of Antitrust
February 3, 2007 on 9:01 am | In |
This column by Doug Kass was originally published on Feb. 2 at 8:08 a.m. EST on Street Insight. It’s being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.
This week, the market has advanced into record territory as market participants’ enthusiasm over a noninflationary period of growing and sustained economic growth seems to have improved.
Indeed, since mid-2006, investors have been immersed and have been captivated by a world known as Cramerica, a world in which everything is coming up booyahs, as both good news and bad news are treated as good news.
According to my hedge fund contacts (an admittedly small sampling!), and despite what you may read from others, this week’s ramp also resulted in the capitulation by many shorts. The short side has become, for most long/short investors, simply a hedge against profits. And in the competitive hedge fund industry’s mandate to create excess returns above the market (alpha), this is rendering the appetite for hedging (read: shorting) increasingly undesirable (to put it mildly).
My Tuesday night debate with Larry Kudlow on CNBC’s “Kudlow & Company” pretty much framed the bull/bear argument.
Real GDP growth is currently vigorous (and above expectations), the rate of growth in inflation appears muted, retail spending seemed to be advancing, and, to many, signs of a bottom in housing is at hand.
From my perch (which these days is increasingly taking place on that cold linoleum floor drinking cheap tequila), the dual impact of a mild November and December when coupled with an unusually sharp drop in energy costs has overstated the health of the U.S. economy.
A snapshot of the economy and the uninterrupted rise in the world equity markets is encouraging the notion of a “Goldilocks” scenario. It is supporting a positive investment landscape characterized by narrow credit spreads, record low levels on the major volatility indices, improving investor sentiment and recognition of the benefits of the emergence of new (and emerging markets) and the excessive global liquidity that this development entails.
In looking at the sustained march in equities (13 out of 14 months have recorded positive returns) and the significant records being recorded (consecutive trading days without a 2% or 10% correction), it is clear that we are in a bull market for optimism/momentum and for financial assets (particularly of a long-only kind), while we are in a bear market for skepticism/disbelief and for hedging/short-selling.
My ursine view is focused on the future, not the present. As such, it is less easily defended when equities move upward in an almost uninterrupted manner. It is a prospective and anticipatory view that gives less weight to the seemingly positive recent economic releases and conditions.
It is a contrarian view, because it argues that current trends should not be extrapolated. Rather, my opinion suggests that many of the core arguments that underscore the Goldilocks case will be re-examined over the upcoming weeks and months.
Underlying my fundamental concerns are:
- A tightening labor market (and rising unit labor costs).
- A likely downturn in productivity gains.
- A five-year high in the CRB RIND Index with attendant cost-push inflation implications. (This index measures spot raw-materials prices across a broad group of categories including steel and cooper scrap, tin, zinc, wheat, corn, sugar … and even lard!)
- The expectation of rising interest rates and cost of capital.
- An implosion in the subprime mortgage market (and a consequent restriction in credit to prospective homebuyers).
- A bubble in credit availability (and private equity).
- The emerging bubble in emerging markets (e.g., over the last six years the India’s Sensex has increased by about 300%, while India’s total corporate profits have not even doubled — that’s P/E expansion!).
- The levered and vulnerable (long-biased) hedge fund and fund-of-funds (especially of a Swiss kind) industries.
- The broad tax implications of the Democratic tsunami.
- A spent-up American consumer, which should have broad and negative implications for consumer electronics (and the Nasdaq) and a more hawkish Federal Reserve than many expect. (Is anyone concerned about the $100 rally in gold since September 2006, or the quiet 40-basis-point rise in the yield on the 10-year U.S. note?)
To this observer, neither a recession (where my pal Larry Kudlow tries to pigeonhole me!) nor a Goldilocks scenario appears to be in the cards. Rather, I expect a period of lumpy and uneven economic growth in which both investment managers and corporate managers find it hard to navigate.
In time, we will undoubtedly see a mean reversion in home prices, interest rates, credit spreads (and losses), corporate profit margins … and the world’s equity markets.
But for now, it is abundantly clear that the timing of my pessimism couldn’t be worse — as my experience and historical perspective are my albatrosses.
1 What would best describe your stance heading into the coming week of trading?
Bullish
Bearish
Neutral
2 Which of these sectors do you think is set to move up in the coming week?
3 Which of these sectors do you think is set to move down in the coming week?
No Comments yet
Sorry, the comment form is closed at this time.
Bond Funds — American Style »In the 1970s, hi-fi stereo wasn’t enough, so you went quadraphonic. In the early 1980s, a simple VCR wasn’t enough. You wanted portable and you wanted stereo, so you went and spent a thousand bucks. In the early 1990s, you dropped $500 on a brick-sized cell phone. In the late ’90s, you dropped another $800 on a first-generation PDA. Now you want to drop $500 on a new Apple iPhone. I’m not going to say whether that’s a good idea or not. That’s for...
LOS ANGELESWhew. The year 2006 is in the books, with no major Atlantic hurricanes or other such disasters. That’s definitely a good thing, especially for those in vulnerable areas. But as it turns out, it will help the rest of us financially too. Finally, after years of persistent annual increases, some in the double-digit range, property insurance rates — homeowners, renters and automobile insurance — should moderate. But is it time to celebrate? Insurance companies are...
TheStreet.com TV Recap: A Lack of Antitrust
February 3, 2007 on 9:01 am | In |
This column by Doug Kass was originally published on Feb. 2 at 8:08 a.m. EST on Street Insight. It’s being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.
This week, the market has advanced into record territory as market participants’ enthusiasm over a noninflationary period of growing and sustained economic growth seems to have improved.
Indeed, since mid-2006, investors have been immersed and have been captivated by a world known as Cramerica, a world in which everything is coming up booyahs, as both good news and bad news are treated as good news.
According to my hedge fund contacts (an admittedly small sampling!), and despite what you may read from others, this week’s ramp also resulted in the capitulation by many shorts. The short side has become, for most long/short investors, simply a hedge against profits. And in the competitive hedge fund industry’s mandate to create excess returns above the market (alpha), this is rendering the appetite for hedging (read: shorting) increasingly undesirable (to put it mildly).
My Tuesday night debate with Larry Kudlow on CNBC’s “Kudlow & Company” pretty much framed the bull/bear argument.
Real GDP growth is currently vigorous (and above expectations), the rate of growth in inflation appears muted, retail spending seemed to be advancing, and, to many, signs of a bottom in housing is at hand.
From my perch (which these days is increasingly taking place on that cold linoleum floor drinking cheap tequila), the dual impact of a mild November and December when coupled with an unusually sharp drop in energy costs has overstated the health of the U.S. economy.
A snapshot of the economy and the uninterrupted rise in the world equity markets is encouraging the notion of a “Goldilocks” scenario. It is supporting a positive investment landscape characterized by narrow credit spreads, record low levels on the major volatility indices, improving investor sentiment and recognition of the benefits of the emergence of new (and emerging markets) and the excessive global liquidity that this development entails.
In looking at the sustained march in equities (13 out of 14 months have recorded positive returns) and the significant records being recorded (consecutive trading days without a 2% or 10% correction), it is clear that we are in a bull market for optimism/momentum and for financial assets (particularly of a long-only kind), while we are in a bear market for skepticism/disbelief and for hedging/short-selling.
My ursine view is focused on the future, not the present. As such, it is less easily defended when equities move upward in an almost uninterrupted manner. It is a prospective and anticipatory view that gives less weight to the seemingly positive recent economic releases and conditions.
It is a contrarian view, because it argues that current trends should not be extrapolated. Rather, my opinion suggests that many of the core arguments that underscore the Goldilocks case will be re-examined over the upcoming weeks and months.
Underlying my fundamental concerns are:
- A tightening labor market (and rising unit labor costs).
- A likely downturn in productivity gains.
- A five-year high in the CRB RIND Index with attendant cost-push inflation implications. (This index measures spot raw-materials prices across a broad group of categories including steel and cooper scrap, tin, zinc, wheat, corn, sugar … and even lard!)
- The expectation of rising interest rates and cost of capital.
- An implosion in the subprime mortgage market (and a consequent restriction in credit to prospective homebuyers).
- A bubble in credit availability (and private equity).
- The emerging bubble in emerging markets (e.g., over the last six years the India’s Sensex has increased by about 300%, while India’s total corporate profits have not even doubled — that’s P/E expansion!).
- The levered and vulnerable (long-biased) hedge fund and fund-of-funds (especially of a Swiss kind) industries.
- The broad tax implications of the Democratic tsunami.
- A spent-up American consumer, which should have broad and negative implications for consumer electronics (and the Nasdaq) and a more hawkish Federal Reserve than many expect. (Is anyone concerned about the $100 rally in gold since September 2006, or the quiet 40-basis-point rise in the yield on the 10-year U.S. note?)
To this observer, neither a recession (where my pal Larry Kudlow tries to pigeonhole me!) nor a Goldilocks scenario appears to be in the cards. Rather, I expect a period of lumpy and uneven economic growth in which both investment managers and corporate managers find it hard to navigate.
In time, we will undoubtedly see a mean reversion in home prices, interest rates, credit spreads (and losses), corporate profit margins … and the world’s equity markets.
But for now, it is abundantly clear that the timing of my pessimism couldn’t be worse — as my experience and historical perspective are my albatrosses.
1 What would best describe your stance heading into the coming week of trading?
Bullish
Bearish
Neutral
2 Which of these sectors do you think is set to move up in the coming week?
3 Which of these sectors do you think is set to move down in the coming week?
No Comments yet
Sorry, the comment form is closed at this time.
Six months of agony at the heart of the Israeli crisis and one father just wants his son home »“WE’RE living in a constant nightmare, one that we just can’t wake up from,” says Noam Schalit, an anxious father sat in his modest home overlooking the olive groves of northern Israel. It has been a little more than six months since his son, Gilad, was kidnapped from an Israeli army border post in an overnight raid and taken into Gaza by Palestinian militants linked to Hamas. Since then, this middle-class Israeli family has had its life turned upside down with worry...