I rely on a variety of resources, including newsletters, blogs, and the mainstream media, to try and figure out what the future holds.
One publication that has always been helpful in this regard is Barron’s, the investment weekly, which I’ve been reading for several decades. Among the features I enjoy are Alan Abelson’s Up and Down Wall Street column and the Q&As with experts who, in many cases at least, seem to have been selected because they actually know what they are talking about (unlike many of those who are regularly quoted or profiled elsewhere).
What I especially look forward to, however, are the "Roundtable" issues, which feature articles drawn from moderated discussions between a select group of old hands, many of whom I respect a great deal.
Luckily enough (for those who don’t subscribe, at least), the financial weekly seems to be running a promotion whereby some of the material from the January 10th issue, which includes the first installment of the Annual Roundtable discussion, is available for free to nonsubscribers (though I’m not sure how long that will last).
Anyway, here is an excerpt from the article, entitled "Hang on Tight!" which includes a welcome sampling of the always straight-shooting and thought-provoking insights of Marc Faber and Fred Hickey.
Our go-to group of investment experts sees tough times for the economy — but good fortune for stockpickers.
ONCE UPON A TIME, WE LIVED IN A WORLD where asset-price inflation begat leverage, which begat more asset inflation, in a virtuous circle known as the great bull market. We bought bad art, good wine and vacation homes (many), and stocks "on the dips," which made us rich. And geniuses, of course.
Then the big, bad wolves — greed and excess — came and popped our bubble, and the markets’, and all the pretty assets fell to earth. The fairy god-mother — bearing a strange name for a godmother, Uncle Sam — tried to clean up the mess with great gobs of money, but little success. The
Having earned been paid $115 million since 1999 for taking lunch and, on a busy day, pontificating, former Treasury secretary Bob Rubin capped his payoff for helping debauche Glass-Steagall, without which intervention Citi might still be a functional financial institution rather than a ward of state.
Not forgetting, of course:
Inside and outside the bank, Mr. Rubin is blamed by some for pushing Citigroup to rev up risk-taking as the housing and derivatives bubbles expanded — a move that has saddled Citigroup with tens of billions of dollars in write-downs and necessitated a sweeping government bailout of the financial giant…Citigroup’s share price is down 70% since he came on board.
In the next turn of the revolving door, NakedShorts has the over/under on Hank Paulson joining the board of JP Morgan Chase (or similar) at Sep. 2009. And is taking the under. (Related links after the jump).
Bailing on another Ponzi
The eponymousJ. Ezra Merkin resigned as chairman of GMAC LLC, slipping over the gunwales of the Cerberus-GM joint venture under cover of a “board restructuring” triggered by a TARP-funded bailout that, but for the fact that TARP has no rules other than whatever Hank & Neel say they are, seemed to have broken every rule in the book.
Mr Merkin stands at an intersection of two of the largest current business stories — the federal bailout of the auto companies and the Madoff financial scandal.
In addition to being chairman of GMAC, Mr Merkin is a hedge fund operator who invested more than $1.8 billion of his clients’ money with Mr Madoff. Mr. Merkin’s three private investment funds — Ascot, Ariel and Gabriel — are among the largest of the so-called feeder funds that placed investors’ money with Mr Madoff without their knowledge, according to the investors. Mr Merkin collected millions of dollars in management fees annually for his work.
Among all the allegedly professional money managers hit by the Madoff fraud, Merkin has been
Here’s another EW analysis, making it clear that EWers in general believe that the market is approaching a turn from a corrective move up (wave 4) to a final move down (wave 5) to complete an Elliott Wave cycle. Differences between analyses are in the details of current wave 4, with the consensus being that wave 4′s end will result in another significant leg down in the markets.
Three updated charts of the S&P 500 index as of Friday’s close. In descending order, the Weekly, the Daily and a 60 minute chart.
The chart above is our main compass, a Weekly S&P 500 chart that is in the midst of a five wave sequence down from the 2007 highs. There are three clearly designated completed waves and by implication, a Wave 4 that has been sliding and slinking its way sideways to up against the major downtrend. A previously drawn wedge is placed earmarking this 4th Wave with the hope of isolating either an extended Wave 4 by a break upwards out of the wedge, or a completed Wave 4 by a breakdown below the wedge. As is obvious, neither an up or down breakout has yet occurred. By zeroing in on a couple shorter time frames, maybe we can glean some clues as to which way prices are headed.
Above is a Daily chart with a broader view of the 4th Wave. I’ve drawn in a channel that encompasses all price action since the November 21, 2008 low. Superimposed on that price action is a simple ABC sequence culminating with a Wave 4 top as of the close on Tuesday, January 6, 2009. What isn’t clear on this chart is whether or not Friday’s decline broke the bottom of that upward rising channel. For some clarity, let’s look at the 60 minute chart below.
Whoa, Nellie (not an orthodox Elliott observation), this chart shows a break of that lower trend line clear as a bell.
The phrase means simply "very clear." A bell is used as a model of clarity because the sound of a bell
Citigroup signaled a breakup of its unwieldy financial supermarket model with a possible deal to sell a share of its prized retail brokerage business to Morgan Stanley, said several people with knowledge of the discussions, underscoring the enormous problems the bank continues to confront even after receiving taxpayer bailout funds.
The new chapter of wrenching change came as former Treasury Secretary Robert E. Rubin, who came under fire for his strong support of that model in an advisory role that helped fuel the bank’s troubles, said he would resign.
The developments highlight how badly Citigroup has been damaged by the global financial crisis. Deepening losses, declining confidence in its leadership and a desperate need to raise capital have forced the bank to rethink the strategy it has clung to for years.
“This is either a one-off or the first inkling of a dismantlement of the company, taking apart of what John Reed and Sandy Weill did,” a senior executive with ties to the company said, referring to the two leaders who forged the landmark deal to bind Citicorp and Travelers Group in 1998.
With pressure mounting on Vikram S. Pandit, Citigroup’s chief executive, the company’s executives say the decision to split off Smith Barney, the “crown jewel” brokerage business he said he loved a few months ago, suggests the bank’s troubles are so deep that he is looking to reshape the company in a former image of itself.
While a deal is not yet final, such a change would position Citigroup to look more like Citicorp — a global franchise with strengths in trading, corporate and investment banking, and international consumer banking — than the bloated and unwieldy company it has become.
It also could lead to yet another shift in power on Wall Street. A joint venture with Morgan Stanley would create the nation’s largest brokerage network of 20,000 advisers, edging out Merrill Lynch’s thundering herd of brokers that Bank of America snapped up in September. Citigroup and
Securities regulators have done a lot of stupid things over the past year, but the SEC’s temporary ban on short selling financial stocks was probably the biggest. SEC chairman Chris Cox called it the biggest mistake of his tenure and the unintended consequences to Hedgistan, combined with the downfall of Lehman Brothers, unleashed a 1-2 punch that decimated the gang that probably deserved a medal, as opposed to the enema they received.
My take is that Hank Paulson (after being goaded by brokerage CEOs) strong-armed Cox into the move; intimidation seems to be a big part of Paulson’s management style. Bernanke does not seems to stand up to him either and will finally crawl out from under his desk as Paulson leaves town in two weeks.
But one of the more asinine proposals regulators have been floating is to restrict communication between money managers. Dan Loeb of Third Point LLC is never one to back down from a scrap, and penned a response to regulators who were seeking to blame shorts for talking amongst themselves and driving down the stocks of brokers:
Such conversations permit us to test our hypotheses and refine our thinking and, as a result, we believe that participating in give-and-take with other managers is in the best interest of our investors. Our outside counsel has examined this matter thoroughly and assured us that our position is consistent with the securities laws and that we have not violated any law in connection with these communications.
Now an industry group is rallying behind Loeb and the BuySide. Great news, but what took so long?
The hedge fund industry is concerned that a proposed FINRA rule designed to prevent the intentional circulation of rumors for the purpose of manipulating the market will interfere with the beneficial free flow of investment ideas. In a letter to FINRA, the Managed Funds Association said that proposed Rule 2030 would impair the ability of money managers to receive and investigate the validity of market information and have a negative impact on the overall efficiency of the marketplace. The MFA urged FINRA…
ROBIN HIT THE BULLSEYE AGAIN THIS WEEK!! THE FOLLOWING IS THE NARRATIVE FROM LAST SATURDAY’S 1/3/2009 BLOG WHEN ANALYZING THE DOW AFTER IT HAD CLOSED THE WEEK AT 9035:
“My bet is that the index may flirt with higher levels but very briefly and then will retrace to test 8348.”
THE DOW CLOSED AT 8599 ON FRIDAY [...]
-The INDU closed Friday right on its’ lower trendline. The bearish move of this past week could begin to falter at this level, however, the index is more likely to continue its’ retracement to retest recent lows at 8348. We are moving in a 700 point range between 8348-9065. From a longer-term perspective, we have been making a [...]
In the beginning of our series on Risk Graphs, we talked about each of the individual trading instruments. Among those discussed was the short call. The short call is a marvelous tool when used in tandem with other instruments. However when used alone, it is known as a ‘Naked [...]
Any way that you measure it, we’re in for some rough sledding ahead. We are about to see the result of a disastrous 4th quarter 2008 in the upcoming earnings season. Already, we’ve gotten some ‘Same Store Sales’ figures on several retailers and they weren’t pretty. Jobs numbers indicate further job losses. We ended the [...]
From a US equities perspective, the Brexit drama has been shifted to the back burner. Our benchmark S&P 500 hit its modest 0.47% intraday high in the first 90 minutes of trading and then drifted lower to a narrow afternoon trading range. The index closed the session with a 0.19% gain in the 12th smallest intraday range of the 126 market days so far in 2016. The flight to treasuries, however, remains in play. The yield on the 10-year note closed at 1.46%, down three BPs and only three BPs above its record closing low.
Here is a snapshot of past five sessions in the S&P 500.
Here is a daily chart of the S&P 500. Volume was light in advance of the 4th of July holiday weekend.
Citing serious irregularities in the counting of postal votes, Austria’s constitutional court issued an unprecedented rule mandating a rerun of the presidential election in which Green party candidate Alexander Van der Bellen narrowly beat Freedom Party and anti-immigration candidate Norbert Hofer.
Austria’s Constitutional Court ordered a rerun of the final round of the country’s presidential election, giving Freedom Party candidate Norbert Hofer a second chance of becoming the first right-wing populist head of state in postwar We...
In September of 2012, when Silver was trading at $28, the Power of the Pattern shared the chart below. The patterns suggested that even though Silver had already declined a great deal ($50 to $28), patterns called for it to fall nearly another 50%, to the $15 level.
Chart below was from 2012, see original post HERE.
By Jacob Wolinsky. Originally published at ValueWalk.
John DeVoy, a long time analyst at Seth Klarman’s Baupost Group has left the hedge fund for a position at Loomis Sayles. Devoy formerly worked at Loomis before spending close to ten years at the Boston based hedge fund. The news was announced via a press release from Loomis. The statement says that DeVoy will be returning to the company “as a dedicated credit strategist for the flagship full discretion team.”
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I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.
For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....
One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...
After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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