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Clive Corcoran  

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  • Quantitative Easing Will Never End [View article]
    There may be a trade-off at some point between the risks of the Fed terminating QE - and you have summarized these well - and the risks of losing its tenuous credibility as the lender (counter-party) of last resort. Perhaps you are intimating at that when you refer to the continued existence of the Fed.

    One of the more ominous scenarios is that we could get two undesirable outcomes at once. The Treasury may, for reasons related to either increased inflation or the disappearance of income to pension funds etc., need to provide coupons on long term debt that are nearer to historical norms and the Fed may have to maintain its stance of buying a sizable share of each issue to prevent a disorderly market.

    Also you are right to focus on Debt Service/Tax Revenue as a more meaningful ratio of solvency than the normal Debt/GDP ratio. Ultimately the lack of political resolve to raise sufficient revenues to service interest payment is the weak link in the chain
    Apr 1, 2013. 12:32 PM | Likes Like |Link to Comment
  • Trading A Defiant Market Against An Import Warning [View article]
    Some very good observations.

    Using a framework of bipolar markets which I have written about it is my belief that we are now entering the manic/euphoric phase of being disconnected from reality.
    Feb 15, 2013. 12:50 PM | 1 Like Like |Link to Comment
  • Educate Yourself To The Investing Opportunity In John Wiley & Sons [View article]
    Good suggestion...and they have published two of my books!
    Dec 8, 2012. 05:24 AM | Likes Like |Link to Comment
  • When The Growth Model Changes, Abandon The Correlations [View article]
    The comparison between present day China and Japan in the 80's seems to me to be right on the money.

    Where I would deviate from this article is in the latter part where it is claimed that the often commented shortcomings of economics as a discipline are attributed to the manner in which the subject is taught.

    Surely this understates the problem as it was the lack of a cogent explanation of boom/bust cycles within mainstream macro economics which explains why so few economists' models were able to anticipate the GFC. Minsky is cited in the article but how many mainstream economists are familiar with his work - or for that matter the real Keynes rather than the domesticated version.

    I am much more inclined to the view that only when there is a paradigmatic shift in macro economic theory will there be a more useful explanatory framework for the functioning of financial markets and the investment cycle and economic behaviour in general.
    Oct 28, 2012. 08:54 AM | 1 Like Like |Link to Comment
  • Insider-Traders Of Last Resort: Fed And ECB Will Be Solvent Longer Than Markets Are Irrational [View article]
    Enjoyable article that covers a lot of territory.

    My only quibble would be your most recent comment that "Every valuation or appraisal standard skips over the reality that markets are sometimes in disequilibrium, at which point mark-to-market is misleading."

    It seems to me that markets are invariably not in equilibrium and that it is now, given all of the intervention by CB's (which is likely to continue for a very long time), the default scenario is precisely that "there is no point in doing rational valuations of bonds"

    To extend the point further and regarding your quote from Keynes, I think that the conclusion which Keynes reached is that markets are not rational but ultimately hinge on the boom/bust related concept of "animal spirits" which he rightly left as an enigmatic cornerstone of his economic theory.
    Sep 22, 2012. 07:52 AM | Likes Like |Link to Comment
  • Your Retirement Investments: Addressing The Bonds Dilemma [View article]
    The first part of your article makes the case that the current financial environment is "unusual" with QE and very low yields etc. and yet your further advice that - "the older you are, the riskier it is to not own a significant amount of bonds versus stocks" - may no longer be the expression of prudent asset allocation that it used to be.

    If QE does lead to elevated inflation in the longer term then for a pensioner holding a portfolio of bonds with high modified duration there will not only be significant capital losses (if sold prior to maturity) but the coupon income will not be commensurate with an increased cost of living.
    Sep 22, 2012. 05:42 AM | 2 Likes Like |Link to Comment
  • Emperor Bernanke, 3 Castles, And An Inevitable Unwind [View article]
    A good piece
    Regarding the quote from David Stockman that "people will realize the emperor is naked" I wonder what people he is referring to. Most astute investors/traders have known for a long time that the Treasury market is a massive ponzi scheme. It's hard to know how many more people need to be convinced of it before we reach a tipping point.

    Switching from your metaphors of castles and chateaus (which are good) it would seem that chairman Bernanke is hoping that enough people can be persuaded that there really is a stairway to heaven.
    Sep 15, 2012. 12:30 PM | 10 Likes Like |Link to Comment
  • Market Thermometer Points To Further Gains [View article]
    Difficult to disagree with your short term bullish view on risk on but longer term more cautious.

    One question --- how high do you think the S&P 500 will have to go to "rope" doubting investors in to the market? I'm sure that Bernanke's ploy is to induce the doubters off the sidelines but given the psychological and financial damage done in 2007/9 it might be that even really silly prices won't do the trick.
    Sep 15, 2012. 08:55 AM | 1 Like Like |Link to Comment
  • Don't Be The Equivalent Of A Stock Market Racist [View article]
    Re @byloe n. selheigh

    If I understood you correctly I would take issue with the logic of your comment that
    "Any given individual has a 50% chance of being an above average investor"....(and therefore) being able to beat the market since..."the market simply IS the average investor writ large"

    Market returns - say the returns provided by a benchmark index such as the S&P 500 - do not have to be equivalent to the performance of an average investor even though on the surface they may seem to be. Investing in equities is not a zero sum game where each winner is matched by an equivalent loser. If it was a zero sum game then perhaps (although the complexity of markets and the issue that emergent properties are more than the sum of the parts would arise) your claim might be easier to defend.

    Because of asymmetries of information, access to capital and different skills in judgement it is quite likely that the winners in the market versus the losers has no reason to be split on a 50:50 basis. This is also borne out by plenty of studies which have shown, for example, that most fund managers do not beat the market.
    Sep 15, 2012. 08:49 AM | 2 Likes Like |Link to Comment
  • The Significance Of BRIC Seems To Be Eroding [View article]
    Re the C in BRIC and the idea that lumped together these are examples of "emerging" markets it is fanciful and unhelpful to consider the world's second largest economy - China - as being in the same league as Russia and India where the "emerging" description is more apt.
    Sep 9, 2012. 12:05 PM | Likes Like |Link to Comment
  • Pay Attention: European Financials Give Harsh Warning To Bears [View article]
    The only caution I would add to your overall bullish stance, and that the end of the world trade is obsolete, comes from the following two sentences (similar to many others) which appear in a good study called Long Term Asset Returns circulated by Deutsche Bank recently:

    ….many economic or financial variables are at levels unique to this cycle, even if we extend the analysis back hundreds of years. This must surely reduce the confidence levels in predicting the future to fairly low levels

    With a lethal cocktail of unparalleled levels of global debt and unparalleled global money printing, and with many financial indicators at multi-century highs/lows, we really are embarking on a Journey into the Unknown.
    Sep 9, 2012. 11:14 AM | 5 Likes Like |Link to Comment
  • What Can Gold Do For You? [View article]
    Leaving aside all of the possible "fundamental" reasons for forthcoming strength, I shall simply comment on the technical pattern on the weekly chart for GLD which you presented.

    The cup and handle interpretation is a possibility although it would be more apt to look for this when the spot gold price has approached its previous highs just above $1900 from a year ago.
    What is encouraging is that from a longer term perspective the price of gold closed last week decisively above the weekly Ichimoku cloud formation for the first time this year. Apart from removing a layer of overhead resistance it suggests that if $1750 can be crossed then a move back to the $1900 level seems highly probable in coming weeks.

    After that it could well be, in line with your comments, that a pullback to form the handle of the cup would take place (this would have
    similarities with the right hand side of an inverse H&S pattern) and if this unfolds then much higher prices could be seen in 2013.
    Sep 9, 2012. 10:47 AM | Likes Like |Link to Comment
  • Buffett's Track Record Spotty On Bonds [View article]
    As suggested he'll get it right eventually.
    Sep 9, 2012. 07:26 AM | Likes Like |Link to Comment
  • Euro: A Good Short Whether Unlimited Bond Purchasing is Successful or Not [View article]
    Question is which is the more oversold...the euro or the dollar?
    Sep 9, 2012. 07:16 AM | 1 Like Like |Link to Comment
  • 4 Reasons Stocks Can Move Significantly Higher [View article]
    Your first two premises are probably right and in essence your argument amounts to "Don't fight the Fed"

    Your third premise is more questionable - there is an inherent contradiction in Draghi's position that the tail risk on the survivability of the euro has been removed AND his emphasis on conditionality. He has to keep reiterating the latter to placate Merkel (although he notably failed to keep Weidmann on board) and if support for Spanish/Italian bonds is conditional - surely the tail risk remains. Unless of course the ECB completely reneges on its insistence on conditionalilty - which is of course perfectly feasible.

    With regard to the fourth premise about the long term charts - a possible analysis of the inflation adjusted performance of the S&P 500 (a good proxy for risk assets) over the last twenty years suggests that we could be very near to a topping pattern with a notable trend-line showing a series of lower highs.
    Sep 8, 2012. 11:48 AM | 3 Likes Like |Link to Comment