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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Phil's Favorites

How CEOs, experts and philosophers see the world's biggest risks differently

 

How CEOs, experts and philosophers see the world's biggest risks differently

Activist Greta Thunberg was among attendees who want the world’s leaders to prioritize fighting climate change. AP Photo/Michael Probst

Courtesy of Christopher Michaelson, University of St. Thomas

We live in a world threatened by numerous existential risks that no country or organization can resolve alone, such as climate change, extreme weather and the coronavirus.

...

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Zero Hedge

Coronavirus Kills Man In Shanghai As China Confirms Nearly 2,000 Cases

Courtesy of ZeroHedge View original post here.

Summary
  • First nCoV death reported in Shanghai
  • South Korea confirms third case
  • Toronto health officials to announce first 'presumptive case' of coronavirus in Canada
  • 1975 Cases Worldwide; 56 deaths (still about a 3% mortality rate)
  • 18 Chinese cities - 56 million people - quarantined
  • President Xi said China faces a 'grave situation' as the spread is 'accelerating'
  • US and Russia plan...


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Insider Scoop

10 Medical Instruments & Supplies Stocks Moving In Monday's Session

Courtesy of Benzinga

Gainers

Antares Pharma, Inc. (NASDAQ:ATRS) stock surged 3.4% to $4.12 during Monday's regular session.

Losers

NeuroMetrix, Inc. (NASDAQ:NURO) stock decreased by 29.0% to $3.37 during Monday's regular session.

Akers Biosciences, Inc. (NASDAQ:AKER) stock declined 7.8% to $2.95.

Staar Surgical, Inc. (NASDAQ:STAA) shares declined 4....



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Chart School

Top Patterns for Retail Investors

Courtesy of Read the Ticker

Retail investors are last in line for market leading research, no matter, the retail investor can profit from these secret sauce patterns..

Well not so secret now, the main point is you do not have to climb Mount Everest to be called a mountain climber, there are many other hills to climb to make your mark. Just like stocks.

You do not have to battle with the high frequency traders to win in the markets, there are long and slow methods to do just as well.  

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The Technical Traders

The Wuhan Wipeout - Could It Happen?

Courtesy of Technical Traders

News is traveling fast about the Corona Virus that originated in Wuhan, China. Two new confirmed cases in the US, one in Europe and hundreds in China. As we learn more about thispotential pandemic outbreak, we are learning that China did very little to contain this problem from the start. Now, quarantining two cities and trying to control the potential
outbreak, may become a futile effort.

In most of Asia, the Chinese New Year is already in full swing.  Hong Kong, China, Singapore, Malaysia, India and a host of other countries are already starting to celebrate the 7 to 10 day long New Year.  Millions of people have already traveled hundreds of thousands of miles to visit family...



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Kimble Charting Solutions

Bad News For Crude Oil Should Come From This Pattern, Says Joe Friday

Courtesy of Chris Kimble

It’s a good idea for investors to be aware of key indicators and inter-market relationships.

Perhaps it’s watching the US Dollar as an indicator for precious metals or emerging markets. Or watching interest rates for the economy. Experience, history, and relationships matter. And it’s good to simply add these to our tool-kit.

Today, we look at another relationship that has signaled numerous stock market tops and bottoms over the years, and especially the past several months, Crude Oil.

When crude oil tops or bottoms, it seems that ...



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Biotech

Snakes could be the original source of the new coronavirus outbreak in China

Reminder: We are available to chat with Members, comments are found below each post.

 

Snakes could be the original source of the new coronavirus outbreak in China

Chinese cobra (Naja atra) with hood spread. Briston/Wikimedia, CC BY-SA

Haitao Guo, University of Pittsburgh; Guangxiang “George” Luo, Univers...



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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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