"They say unemployment rate, but they really mean" the S&P 500 (SPY), says David Rosenberg, referring of course, to the esteemed members of the FOMC. "After all, to get the wealth effect to work on spending, you have to generate the wealth," he continues. As for the sustainability of the rally in both equities and fixed income, Rosenberg is having déjà vu: "Distortions caused by negative real interest rates, the mis-pricing of risk and promotion of leverage sounds a lot like the previous cycle … enjoy it while you can." (Also: NYSE margin debt signals return of leverage) [View news story]
Another economist forecasting a downturn for over 3 years now. I am sure Mr. Rosenberg will be correct one day but the opportunity cost of following his suggestions are material.
More on Apollo Global Management (APO) Q1 earnings: Times are good in P-E. Economic net income of $1.89/share vs. $1.10 a year ago. AUM of $114.3B vs. $86.1B a year ago. Management fee revenue of $164.3M up 26% Y/Y. Advisory fee revenue of $47.4M up 74%. Incentive business of $1.116.6B up 79%. $345.2M of realized gains from carried net interest up 130%. Q1 distribution declared of $0.57/share - $0.07 regular and $0.50 from fund realizations. Looking forward to CEO Leon "selling everything that's not nailed down" Black on the CC at 10 ET. (PR) [View news story]
Between Leon's comments encouraging an outright sale of everything combined the sale by insiders and institutions today I have a hard time holding this equity. Thanks for your candor Leon.
"There are less ways to cheat on a balance sheet than an income statement," says Bruce Berkowitz, explaining why he focuses on the one rather than the other (and why he'll probably never be a buyer of auto stocks). In this great 35-minute chat from late last year, he again makes his case for AIG and BAC - "it's the 90s all over again" - and SHLD - selling for the liquidation value of its merchandise; the brands and the real estate are free. [View news story]
Hard to find comfort in Bruce's insights. He is the fund manager that took and continues to take concentrated bets in financial service investments, real estate (JOE) among others and then defends his high beta selections with the research conducted by relatives with whom he no longer has relations.
Bruce is another example of an overcompensated fund manager who is paid regardless of his risk adjusted returns.
GE Capital (GE +2.5%) cuts off lending to gun shops in response to public backlash since the Sandy Hook shootings. Though the company isn't the first financial firm to back away from involvement with the gun industry, the development puts the spotlight back on sellers such as Dick's Sporting Goods (DKS -0.4%), Wal-Mart (WMT -1.2%), and Cabela's (CAB +0.9%) which could see more foot traffic. It's also of interest to gun manufacturers Smith & Wesson (SWHC +0.8%) and Sturn Ruger (RGR -0.8%) - wallowing around with relatively low P-E ratios with future demand tough to forecast. [View news story]
Nothing unusual about this. Most banks and non-banks (GE Capital) follow credit policies that pass on loans for gaming (casinos) and other borrowers that are viewed as not worth the public "noise". There are others that target (pun) these markets because they offer reasonable risk/reward. In the end, GE can follow its own policies and represent the interests of its constituents by not making loans to gun shops.
iShares Launches Target-Date Corporate Bond ETFs To Hedge Rising Rates [View article]
This ETF was just introduced (4/17/13). I just looked at 3 year A rated corporates that show a YTM of 1.48%. I do not think it possible to get 4.5% on 3 year "A" rated corps.
iShares Launches Target-Date Corporate Bond ETFs To Hedge Rising Rates [View article]
Great concept and compeeling alternative to buying individual bonds or fixed income mutual funds. One realizes the benefits of wholesale bond pricing along with full transparency.
USG (USG +2%-) gets a boost today after Credit Suisse ups the shares to Neutral on valuation and raises its price target from $22 to $27. The firm says recent checks of the wallboard market indicate that price increases appear to be sticking with no significant impact to sales volume, although distributors who deal more with commercial/non-residential markets have yet to see meaningful volume improvement. It's anticipating stronger trends as the year progresses, with wallboard pricing of +20% in FY13 and +8% in FY14. [View news story]
One of the best proxies for the housing market. Demand driven by both new construction (single and multi) and renovation. Also, helps that it is a BRK portfolio holding.
Mortgage REITs (MORT) catch the eye of D.C., with the Financial Stability Oversight Council reportedly set to cite the industry as a potential source of market vulnerability. The companies have seen assets quadruple to over $400B since 2009, but Annaly (NLY) CEO Wellington Denahan notes their capital bases have risen as well. A Two Harbors (TWO) presentation (page 8) shows mREITs are relatively small players in the MBS market. Maybe the Fed and the GSEs just don't like the competition. Annaly and American Capital (AGNC) are the 2 biggest mREITs, with Two Harbors a distant 3rd. [View news story]
Not true-rapidly declining collateral value caused TMA's creditors to demand additional capital. Lacking access to any source, it had no choice but to file for protection under CH. 11.
Unfortunately, the same forces that caused TMA's demise also hit others including GE but the later was deemed to big to fail and was offered access to the Fed. as a bank holding company. Recall CIT was also deemed to important to small business but still failed despite TARP funds and easy access to credit.
3 Moves To Make On The Verge Of Market Panic [View article]
Your statement that we will see mass selling is incorrect. Baby Boomers are not likely to stop working and liquidate savings at 65. Today's 65 year old is similar in many ways to previous generation 50 year olds. Actuarially, they should expect many more years and will supplement savings with continued work to support themselves.
The Biggest Housing Bubble Of Them All [View article]
Hard to argue with the price/value equation. Again consumers make decisions about housing based on the need for shelter and the rent versus buy decision strongly favors purchase. If you are willing to accepts the challenges associated with investing in residential real estate including property management, cheap capital combined with strong rental demands make it compelling.
U.S. stocks are overbought, says reknown perma-bear Marc Faber, and any more near-term gains are going to be big trouble for the market. As we continue to move higher, the probability of a crash becomes higher as well. The next crash, he says, could be worse than the one that crushed world markets in 2008. "The next crisis could lead to a deflationary bust. And a bust in governments. In other words, we may have a total collapse in confidence in the system." [View news story]
Sooner or much later Faber may be right. Unfortunately, following his sage advice would have been a disaster to one's financial position and outlook.
While many believe the global economy is stable and recovering, "permabear" economist David Rosenberg sees "a car being driven by a drunk, lurching from side to side on the road, narrowly avoiding the ditches each time." While the car is in the middle of the road right now, "is that because the driver has sobered up, or is it because the car is just passing through the middle on its way to the ditch on the other side?" [View news story]
If you care about the long term performance of your portfolio, do not spend more than a moment listening to any economist.
Shares of Ross Stores (ROST +6.9%) soar after the retailer beats the estimates of analysts with its December sales report and increases its guidance for Q4. Amidst a tough environment, the retailer's management team executed well to help the company show an improvement in margins. [View news story]
Classic-Citi downgraded the stock yesterday morning-good call.
Rethinking Gold Asset Allocations For 2013 [View article]
If you replace the word "gold" with "real estate", you will notice the exact same argument was used to justify over allocating to real estate in the 2004 to 2007 period. Following the dot-com blow-up, investors were urged to buy real estate because it was so much safer and a better inflation hedge.
"They say unemployment rate, but they really mean" the S&P 500 (SPY), says David Rosenberg, referring of course, to the esteemed members of the FOMC. "After all, to get the wealth effect to work on spending, you have to generate the wealth," he continues. As for the sustainability of the rally in both equities and fixed income, Rosenberg is having déjà vu: "Distortions caused by negative real interest rates, the mis-pricing of risk and promotion of leverage sounds a lot like the previous cycle … enjoy it while you can." (Also: NYSE margin debt signals return of leverage) [View news story]
More on Apollo Global Management (APO) Q1 earnings: Times are good in P-E. Economic net income of $1.89/share vs. $1.10 a year ago. AUM of $114.3B vs. $86.1B a year ago. Management fee revenue of $164.3M up 26% Y/Y. Advisory fee revenue of $47.4M up 74%. Incentive business of $1.116.6B up 79%. $345.2M of realized gains from carried net interest up 130%. Q1 distribution declared of $0.57/share - $0.07 regular and $0.50 from fund realizations. Looking forward to CEO Leon "selling everything that's not nailed down" Black on the CC at 10 ET. (PR) [View news story]
"There are less ways to cheat on a balance sheet than an income statement," says Bruce Berkowitz, explaining why he focuses on the one rather than the other (and why he'll probably never be a buyer of auto stocks). In this great 35-minute chat from late last year, he again makes his case for AIG and BAC - "it's the 90s all over again" - and SHLD - selling for the liquidation value of its merchandise; the brands and the real estate are free. [View news story]
Bruce is another example of an overcompensated fund manager who is paid regardless of his risk adjusted returns.
GE Capital (GE +2.5%) cuts off lending to gun shops in response to public backlash since the Sandy Hook shootings. Though the company isn't the first financial firm to back away from involvement with the gun industry, the development puts the spotlight back on sellers such as Dick's Sporting Goods (DKS -0.4%), Wal-Mart (WMT -1.2%), and Cabela's (CAB +0.9%) which could see more foot traffic. It's also of interest to gun manufacturers Smith & Wesson (SWHC +0.8%) and Sturn Ruger (RGR -0.8%) - wallowing around with relatively low P-E ratios with future demand tough to forecast. [View news story]
iShares Launches Target-Date Corporate Bond ETFs To Hedge Rising Rates [View article]
iShares Launches Target-Date Corporate Bond ETFs To Hedge Rising Rates [View article]
iShares Launches Target-Date Corporate Bond ETFs To Hedge Rising Rates [View article]
USG (USG +2%-) gets a boost today after Credit Suisse ups the shares to Neutral on valuation and raises its price target from $22 to $27. The firm says recent checks of the wallboard market indicate that price increases appear to be sticking with no significant impact to sales volume, although distributors who deal more with commercial/non-residential markets have yet to see meaningful volume improvement. It's anticipating stronger trends as the year progresses, with wallboard pricing of +20% in FY13 and +8% in FY14. [View news story]
Mortgage REITs (MORT) catch the eye of D.C., with the Financial Stability Oversight Council reportedly set to cite the industry as a potential source of market vulnerability. The companies have seen assets quadruple to over $400B since 2009, but Annaly (NLY) CEO Wellington Denahan notes their capital bases have risen as well. A Two Harbors (TWO) presentation (page 8) shows mREITs are relatively small players in the MBS market. Maybe the Fed and the GSEs just don't like the competition. Annaly and American Capital (AGNC) are the 2 biggest mREITs, with Two Harbors a distant 3rd. [View news story]
Unfortunately, the same forces that caused TMA's demise also hit others including GE but the later was deemed to big to fail and was offered access to the Fed. as a bank holding company. Recall CIT was also deemed to important to small business but still failed despite TARP funds and easy access to credit.
3 Moves To Make On The Verge Of Market Panic [View article]
The Biggest Housing Bubble Of Them All [View article]
If you are willing to accepts the challenges associated with investing in residential real estate including property management, cheap capital combined with strong rental demands make it compelling.
U.S. stocks are overbought, says reknown perma-bear Marc Faber, and any more near-term gains are going to be big trouble for the market. As we continue to move higher, the probability of a crash becomes higher as well. The next crash, he says, could be worse than the one that crushed world markets in 2008. "The next crisis could lead to a deflationary bust. And a bust in governments. In other words, we may have a total collapse in confidence in the system." [View news story]
While many believe the global economy is stable and recovering, "permabear" economist David Rosenberg sees "a car being driven by a drunk, lurching from side to side on the road, narrowly avoiding the ditches each time." While the car is in the middle of the road right now, "is that because the driver has sobered up, or is it because the car is just passing through the middle on its way to the ditch on the other side?" [View news story]
Shares of Ross Stores (ROST +6.9%) soar after the retailer beats the estimates of analysts with its December sales report and increases its guidance for Q4. Amidst a tough environment, the retailer's management team executed well to help the company show an improvement in margins. [View news story]
Rethinking Gold Asset Allocations For 2013 [View article]