Courtesy of Jesse’s Café Américain
Monday Morosity – “Hard Times Ahead” says Rajoy
by phil - November 21st, 2011 6:41 am
Mariano Rajoy won the biggest majority in a Spanish election in almost 30 years, and told Spaniards to brace for hard times as the nation fights to avoid being overwhelmed by the debt crisis. Bonds continued to drop. Rajoy’s People’s Party swept the ruling Socialists from power after eight years, winning 186 of the 350 seats in Parliament, compared with 110 for the Socialists’ candidate Alfredo Perez Rubalcaba.
“Hard times lie ahead,” Rajoy, 56, told supporters outside the PP’s headquarters in Madrid, giving no new details of his plans. “We are going to govern in the most delicate situation Spain has faced in 30 years.”
Spanish borrowing costs continued rising toward euro-era records (6.6% this morning) even as the PP won a mandate to slash the budget deficit, overhaul the stagnant economy and reduce the 23 percent jobless rate. Rajoy, who hasn’t given details of his proposals, won’t take over for a month, prompting him to say on Nov 18th he hoped Spain wouldn’t need a bailout before he’s sworn in. Miguel Arias Canete, head of the PP’s electoral committee and a former minister, said today markets need to give the party time, as ministers won’t be appointed until Dec. 21 and Spanish law doesn’t allow Parliament to resume any sooner than Dec. 13.
So NO QUICK FIX IN SPAIN IS POSSIBLE – let’s face that fact now so we’re not endlessly surprised by it as the rumor-mongers can now have a field day attacking the lame-duck outgoing Government ahead of the transition. Meanwhile, our own do-nothing Congress looks to be heading towards certain disaster as we have what appears to be a TOTAL FAILURE of the US Deficit Reduction Committee to do anything to actually reduce our deficit.
Now I don’t want to point fingers (cough, Republicans, cough, cough) ahead of our National Holiday that celebrates unity and goodwill and crap like that. Let’s just say "they" couldn’t agree, so now it’s going to be Hard Times for America as we, in theory, will kick in $1.2Tn of automatic cuts including (gasp!) over 5% of our nation’s Trillion-Dollar annual Defense budget. Oh, not until 2013, of course because our Government doesn’t really have the balls to cut anything under any circumstances.
EXCEPT, of course, aid to the poor. THAT they can cut and cut and cut and cut. Payroll tax cuts –…
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GURU OUTLOOK: PAOLO PELLEGRINI
by ilene - March 2nd, 2010 6:33 pm
GURU OUTLOOK: PAOLO PELLEGRINI
Courtesy of The Pragmatic Capitalist
This week’s Guru Outlook brings you Paolo Pellegrini. Although he is not the most well known of investment gurus Pellegrini has built quite a name for himself in recent years. Before founding his own hedge fund PSQR (a play on PP Squared) Pellegrini was John Paulson’s right hand man at Paulson and Co (see Paulson’s guru outlook here & most recent strategy comments here). Of course, Paulson and Co. made waves during the sub-prime crisis when they made billions shorting the
So where does Pellegrini see the market going now? In a recent letter to shareholders he said:
“the structural problems that precipitated the Great Recession around the globe remain unresolved”
He says we are essentially papering over the problems with more debt. We are simply adding more debt to a debt-laden world while
Pellegrini’s favorite trades in 2010 are the following four:
- Short US fixed income
- Short US equities
- Short US dollar
- Long commodities
The short trade on fixed income is a reflection of the likelihood for higher yields as investors grow increasingly fearful of the U.S. as a steward of its debt. Pellegrini believes demand for treasuries will decrease in the coming years.
In terms of equities Pellegrini says valuations are becoming stretched as organic growth fails to match expectations. He also believes higher taxes could ultimately be a net negative for equities.
Pellegrini is short the dollar based on the expectation of more stimulus. He predicts that policymakers will come back to the taxpayer asking for another handout as they explain their first stimulus plan was not a failure, but simply too small. He says the dollar will “plunge” if this occurs.
The one sector of the market Pellegrini likes is commodities. He says they…
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Karl Denninger’s 2010 Outlook
by ilene - January 7th, 2010 11:22 am
Interview with Karl Denninger, courtesy of Miss Trade – Ilene
Karl Denninger’s 2010 Outlook
Karl Denninger recently made his annual Where Are We, Where We’re Heading Post. We invited him on MissTrade TV to give us his input on the year ahead.
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Steve Meyers: Market Outlook and Analysis for 2010
by ilene - December 17th, 2009 10:51 pm
Steve Meyers: Market Outlook and Analysis for 2010
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PRUDENTIAL’S 2010 MARKET OUTLOOK
by ilene - December 17th, 2009 2:32 pm
PRUDENTIAL’S 2010 MARKET OUTLOOK
Courtesy of The Pragmatic Capitalist
Strategists at Prudential are among the most bullish on Wall Street (for more very bullish outlooks please see RBC’s outlook, Merrill’s outlook & JP Morgan’s outlook). They see further government stimulus, low interest rates and the inventory rebuild driving the S&P up to 1,350 by the end of 2010 for a full 23% rally from current prices.
They believe inflation is likely to remain low as slack in the economy, high unemployment and low capacity utilization keep prices under wraps.
They remain very bullish on equity markets for 5 primary reasons:
1) GDP rebound sustaining in Q4 and into 2010, and growth expectations being revised higher.
2) Q3 earnings surprising on the upside outlook and earnings recovering further in Q4 and 2010 with solid GDP growth, widening margins and improved pricing power.
3) Inflation moving from disinflation to low inflation with excess capacity and high unemployment.
4) Global central banks holding interest
rates at crisis lows levels, long-term rates remaining low, and plenty of liquidity.5) Continued stabilization in financial
market conditions and risk appetite improving further.
How to play it? They want to be overweight stocks and underweight bonds. More specifically, they prefer emerging market and UK equities with a modest overweight in the Eurozone while being underweight Japan and the U.S.
In terms of sectors they prefer energy, info. tech, and materials with a modest overweight in financials and industrials. They are neutral consumer discretionary with modest underweights in consumers staples and healthcare. They underweight utilities and telecomm.
In the bond market they like emerging markets and Japanese debt with a modest overweight in UK debt. They are neutral on the Eurozone and underweight US debt.
The tend is much the same in terms of forex. They like the Euro and emerging market currencies, remain neutral on sterling & Yen with an underweight on the dollar.
Source: Prudential
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site