Forced into equities…..
Latest from Rosenberg and why we are “forced into equities….”
Presented without comments.
Death of Equities Exaggerated-Explaining Equity Valuation
There has been quite a few articles lately proclaiming the death of the Equities culture.
With PIMCO’s Gross getting full attention with his “extreme” views, below is an in depth explanation of Equities Returns.
Full report below, courtesy of Ben Inker.
June in Charts-Spain’s IBEX soared and much more
Another month, another risk on/risk off chartology presented. Courtesy Thomson Reuters.
The first half of 2012 is over – and the risk on/risk off trade is still alive and well.
There’s nothing like a spot of volatility to keep investors on their toes.
June was marked by a continuation of the markets’ recent obsession with events in Europe, but with a greater dose of unpredictability, both in terms of the news flow and how investors chose to respond to it. For instance, one of the best-performing asset classes was Spanish equities, which benefitted first from some bottom-fishing when that country’s government finally requested bailout assistance for the country’s troubled banks. Spain’s stocks ended the year with a bang, rallying on the final trading day of the year when word came that eurozone political leaders had reached an agreement to funnel financial support to troubled banks without adding to sovereign debt loads.
For all those that still think Spain is just going down, sorry. IBEX put in a stellar performance last month, managing squeezing many of those “smart” new shorts.
7%, Credit Hedge Funds & Goal Seeked Returns
Peter Tchir has been rather spot on regarding the markets lately. Here are some weekend thoughts worth reviewing.
You can read about Europe from a lot of other sources this weekend. I maintain that when a Grexit became a real possibility, they finally looked at what it would mean and became scared of the risk. Since then there has been a change of attitude. I saw it in the Spanish bailout, and I continue to see it. You can debate all day long about what Merkel says, or what the facilities can or can’t do, but if the EU has changed their approach, and has the will, they can find a way to give this one heck of a kick down the road.
High Yield is positive for the year no matter which day you bought it
Why would retail investors switch to equities when they have found a new and underinvested asset class that yields 7%? I’ve pulled up HYG here to show that there is now not a single purchase that would have a negative total return. Even if you top-ticked the market in February, the coupon income has saved you. This is true for the mutual funds I looked at as well.
100% Equities
Blackrock’s Larry Fink makes it easy; Be 100% in Equities. Apart this being his job, listen to the world’s biggest fund manager on just how bullish he is on equities. Ammunition of the governments is sufficent to take equities higher…. Video below.
Gold-Still Bullish, Case Intact
Latest on Gold by BGC’s Purves. The bull story is intact according to Purves. We find the points easy to “believe” in. Only problem is this is the view of many pundits, and the trade is still very crowded….For now, yes the trend is intact, but watch a possible breach of trend carefully.
Gold prices have moved down aggressively in the last five weeks, breaking key support levels. Has this been a selling climax driven by forced selling and profit taking? Or does this mark a key inflection point in the long term gold trend? In the context of the technical damage and against the backdrop of the strong USD, we step back and reassess gold fundamentals. Our conclusion is that the gold story is very much intact, and the recent sell off has been driven by what we presume to be forced selling, profit taking and the indiscriminate pan-asset liquidations we have come to see during very strong “Risk Off” moves. Key support levels have been broken, but gold has thus far held the lows of $1,562/oz, a longer term support level. Nonetheless, there has been some technical damage to the price charts, and the path to new life time highs will likely take more time than it has in the last two years. Accordingly, we are modifying our most recent price objective, $2,000/oz by March, 2012, to an easier reach $1,800 by June, 2012. The clear near term downside risk in to the long gold trade is a further massive risk off move that drives pan-asset selling and does not allow gold to decouple from other assets. Our downside target in this case would be $1,450/oz. This scenario would likely be accompanied by a massive move down in equities and the Euro.
More below;
Risk Off resumes
Precious metals melt down. Silver off by 4%, just breaking the 40 support. Gold is down almost 100 USD from the “pre manipulated” levels at 1890, yesterday. USD catching some bid, as equities drift lower.
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