Posts Tagged ‘Tim Bond’

TIM BOND: EQUITY INVESTORS ARE DANCING ON THE EDGE OF THE VOLCANO

TIM BOND: EQUITY INVESTORS ARE DANCING ON THE EDGE OF THE VOLCANO

Courtesy of The Pragmatic Capitalist

Detail view of the wall of a dam

Tim Bond of Barclays has been remarkably accurate in predicting the strength and length of the global equity rally.  Despite the many signs of weakness over the last 9 months Bond has remained very optimistic (read his bullish note from 2009 here).  He claimed that analyst estimates and high levels of bearishness would lay the foundation for a continuing equity rally.

“Never has a bull market climbed a steeper wall of worry. Despite a proliferation of positive economic indicators, the consensus remains resolutely gloomy. Bullish economists are still rarer than hens’ teeth. The average forecast for Q3 US GDP growth is an anaemic 0.8% increase, which would be by far the slowest first quarter of any recovery on record.”

He couldn’t have been much more accurate.  The economic landscape is quickly changing, however, and Bond’s outlook is turning decidedly less optimistic.  Bond now believes the problem of debt is becoming contagious in Europe and that higher bond yields will accompany the process:

“Fiscal dynamics point towards higher government bond yields in many economies, including the UK and US.  History is unequivocal in linking fiscal deterioration to higher yields.  This point is clearly becoming recognized by investors.  As a result, a contagious process has started, during which risk premia in bonds, equities and currencies adjust higher to reflect the fiscal situation.  This process is unlikely to remain confined to southern Europe, but will eventually embrace all those economies with sizeable budget deficits.”

Bond has argued for much of the last year that low rates and de-leveraging were actually very bullish for equities.  As monetary policy begins to shift and fiscal policy remains imprudent the landscape is shifting.  Like Teun Draaisma, Bond is concerned about the impending higher rate environment that will accompany global rate increases and continuing risks associated with an indebted global economy.  Bond argues the long-term situation remains unfavorable for 3 primary reasons:

  • 1)  The majority of the G20 is a fiscal mess
  • 2)  Demographic trends of the G20 are highly negative
  • 3)  Containing the long-term government debt problem will be painful

Most alarming to Bond, however, is the close relationship between high…
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Don’t Be Fooled

Last week, we posted a couple articles discussing Tim Bond’s bullish arguments favoring a swift V-shaped economic recovery (see PIMCO Versus Barclays: Economic Pessimist – Economic Optimist and You Fools Don’t Get It: This Is A V-Shaped Recovery!)  Our friend Michael Panzner takes issue with Bond and presents the other side. – Ilene

Don’t Be Fooled

don't be fooledCourtesy of Michael Panzner at Financial Armageddon

I was originally going to write about something else, but after a loyal Financial Armageddon visitor alerted me to the following Financial Times commentary, "Insight: Learn to Love the Recovery," by Tim Bond, head of asset allocation at Barclays Capital, I changed my mind. Frankly, I couldn’t believe this piece of propagandistic excretia was written by a senior financial industry executive who makes decisions about where to invest. Because some FT readers might be fooled into thinking Mr. Bond had something useful to say, I felt duty-bound to respond to his "insights" with a few brief comments of my own (interspersed with his italicized text):

Never has a bull market climbed a steeper wall of worry. In spite of a proliferation of positive economic indicators, the consensus remains gloomy. Bullish economists are than hens’ teeth.

The average forecast for third-quarter US gross domestic product growth is a weak 0.8 per cent, which would be by far the slowest first quarter of any recovery on record. Since 1945, the average annualised real US growth rate in the first two quarters of recovery is 7 per cent. History provides abundant evidence that the deeper the recession, the stronger the bounce. Even the recovery from the Great Depression conformed to this rule, real US GDP grew 10.8 per cent in 1934 and 8.9 per cent in 1935.

There are so many inconsistencies and logical fallacies in the above paragraph that it’s hard to know where to begin. Among other things, Mr. Bond assumes that the consensus is correct in seeing a third-quarter uptick in GDP. That may or may not be the case, but given how wrong economists have been about every aspect of this downturn so far, I’d lean towards the latter. Even if they are right, what evidence does he have that a third-quarter rebound will be the turning point, rather than the equivalent of an economic dead-cat bounce? Moreover, his assumption that the postwar time frame is the relevant reference period when…
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PIMCO Versus Barclays: Economic Pessimist – Economic Optimist

PIMCO Versus Barclays: Economic Pessimist – Economic Optimist

Courtesy of Tom Lindmark at But Then What

You couldn’t find a more divergent view of the future of the US economy than those offered up today by Bill Gross of Pimco and Tim Bond from Barclays. Gross is not deviating from his persistent call of chronic low growth while Bond says we have it all wrong, a boom is coming.

Gross spends an interesting first couple of paragraphs in his monthly newsletter castigating other investment managers for the fees they charge. It’s not revolutionary stuff and it’s a bit self-serving, nevertheless he makes a good point about fees.

He then gets into the meat of his presentation which is an argument that we have for decades the country has operated on an assumption that nominal GDP would grow at around 5%. This is in fact what hat has happened and accordingly the structure is geared towards that sort of growth. Now we have slipped below that number and he sees constraints in getting back there.

Gross argues that the economy can not get back to the 5% level on its own due to overcapacity and is destined to wander in either a recessionary spiral or some sort of stagflationary environment. The remedy for this is for government to substitute for the private sector. Gross contends that government this time is limited in its responses. Government leverage, in his view, is less robust than private leverage and thus will not contribute as much to recovery. Additionally, he believes that both domestic and international political constraints exist that prevent government from doing much stimulus over and above what it has already committed to. The bottom line is his expectation for nominal GDP growth of around 3% once a recovery takes hold.

Here is his concluding paragraph:

Investment conclusions? A 3% nominal GDP “new normal” means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model. High risk bonds, commercial real estate, and even lower quality municipal bonds may suffer more than cyclical defaults if not government supported. Stock P/Es will rest at lower historical norms, and higher


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Zero Hedge

The Sports Card Market Is On Fire

Courtesy of ZeroHedge View original post here.

Submitted by Market Crumbs

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Phil's Favorites

SNAP benefits cost a total of $85.6B in the 2020 fiscal year amid heightened US poverty and unemployment

 

SNAP benefits cost a total of $85.6B in the 2020 fiscal year amid heightened US poverty and unemployment

Some states make it possible to use SNAP benefits at farmers markets. AP Photo/Robert F. Bukaty

By Tracy Roof, University of Richmond

The government spent a record US$85.6 billion on the ...



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ValueWalk

World Bank-Cambridge Study Reveals The Impact Of Covid-19 On Financial Regulators

By Jacob Wolinsky. Originally published at ValueWalk.

World Bank and University of Cambridge report highlights increasing digitalisation of financial services has accelerated the pace of regulatory innovation during Covid-19

Q3 2020 hedge fund letters, conferences and more

The World Bank and the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge Judge Business School have today jointly published the results of their Global Covid-19 FinTech Re...



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Kimble Charting Solutions

Tech Bull Trend Could Change, If A Double Top Is Forming!

Courtesy of Chris Kimble

Is the bull trend in tech about to end? What Tech and its volatility index does in the next few weeks will go a long way to answer this question!

This chart looks at the NDX 100 and its Volatility Index (VXN) on a weekly basis over the past couple of years.

The trend for the NDX remains up/bullish. No price action of late has changed this trend! It tested its September highs two weeks ago, and so far those highs look to have held, formi...



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Biotech/COVID-19

In rural America, resentment over COVID-19 shutdowns is colliding with rising case numbers

 

In rural America, resentment over COVID-19 shutdowns is colliding with rising case numbers

Business restrictions early in the pandemic, when rural towns had few cases, triggered a backlash that haunts them now. Johannes Eisele/AFP/Getty Images

Courtesy of Lauren Hughes, University of Colorado Anschutz Medical Campus and Roberto Silva, University of Colorado Denver...



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Politics

How to track your mail-in ballot

 

How to track your mail-in ballot

Make sure you know when your ballot is arriving, and whether it’s been accepted for counting back at your election office. erhui1979/DigitalVision Vectors via Getty Images

Courtesy of Steven Mulroy, University of Memphis

Many voters who want to participate in the election by mail are concerned about when they’ll receive their ballot – and whether it will get back in time to be counted.

The pandemic has caused interest in ...



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Chart School

Dow Gann Angle Update

Courtesy of Read the Ticker

Time to see what happens to the Dow post US elections.

The Dow Gann Angle Target 3 (from 2007 top) is on the table, and what a ride that will be. The FED went BRRRRR is all the fundamental news you need to know. Gann angles are very good tool to see how the masses are pushing price.


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The last two US elections saw Bitcoin and the DOW rally well for 6 months, due to stimulus. The most bearish 2020 US Election case for the markets is a Biden win with the Senate and Congress controlled by the Democrats, somehow this blog feels that is very unlikely. So what could go wrong!


...

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Digital Currencies

Bitcoin: the UK and US are clamping down on crypto trading - here's why it's not yet a big deal

 

Bitcoin: the UK and US are clamping down on crypto trading – here's why it's not yet a big deal

Where there’s a bit there’s a writ. Novikov Aleksey

Courtesy of Gavin Brown, University of Liverpool

The sale and promotion of derivatives of bitcoin and other cryptocurrencies to amateur investors is being banned in the UK by the financial regulator, the Financial Conduct Authority (FCA). It is a...



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Mapping The Market

COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

The crisis has brought to the fore the need for firms to enable flexibility in client engagement – the expectation that providers will communicate to clients on their terms, at their speed and frequency and on their preferred channels, is now a given. This is even more critical when clients are experiencing unparalleled anxiety from both market conditions and their own personal circumstances.

...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Feb. 26, 1pm EST

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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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...

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