Jan 30, 2014

Mark Zandi expects much stronger economic growth

The U.S. economy is set to experience much stronger growth as the middle of the decade approaches. Businesses are highly profitable and very competitive, households have reduced debt and are saving more, and the banking system is well-capitalized and liquid.  The job market is headed in right direction. Broadly speaking the economy is performing steadily better.

~ Mark Zandi, chief economist, Moody's Analytics, "The economy is only going to get stronger: Mark Zandi," The Daily Ticker (Yahoo!Finance), January 30, 2014

(Zandi has a bullish outlook on the U.S. economy: he's forecasting 3% GDP growth this year and 4% growth in 2015.  He says better economic growth will also lead to more jobs. He estimates that 3 million new workers will be hired in 2015, up from 2.25 million in 2013 and 2012. That would mean the economy returns to full employment (a federal jobless rate of 5.5% to 6%) by 2016.)

Jan 29, 2014

Jim Cramer on emerging market jitters

This is what happens and you have to ride it through.

~ Jim Cramer, CNBC, January 29, 2014, 8:54 AM ET

(S&P 500 futures 12 points below fair value as Turkish lira lost initial 3% gains from its central bank rate hike to 12% from 7 3/4%.)

Jeremy Siegel: "There is no bubble here" (2014)

Are we getting too pricey?

(He shows a chart showing the S&P 500”s median PE (for 1954 to 2014) is 16.5.  The latest PE is 17.2.)

There is no bubble here.  All these people that talk about bubbles believe an asset class is in a bubble, if the price is going up and they don’t own it.
(That gets a laugh from the crowd.)

~ Jeremy Siegel, dubbed the “Wizard of Wharton,” delivered a keynote speech at ETF.com’s Inside ETFs conference in Hollywood, Fla., at about 5 p.m. Eastern on January 28, 2014

John Templeton on humility and knowledge

If we become increasingly humble about how little we know, we may be more eager to search.

~ John Templeton

Jan 25, 2014

Ben Bernanke: stock market is fairly valued

[T]he markets currently seem to be broadly within the metrics of market valuation- valuation seems to be broadly within historical ranges. The financial system is strong. The key financial istitutions are well-capitalized.

~ Federal Reserve Board Chairman Ben S. Bernanke, Brookings Institute speech, January 16, 2014

Jan 22, 2014

Carl Icahn: "Apple is a no-brainer"

I think Apple is a no-brainer.  You don't need to be a genius in technology to understand [that it's trading at 9 times 2014 earnings.]

~ Carl Icahn, CNBC, January 22, 2014

(Icahn owns roughly 1% of Apple's shares and wants them to buy back $150 billion in stock.)

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Frank Veneroso on bubble in focusing on operating profits

The market looks only at the operating profits fiction. Last April in preparing a power point for a Ford Foundation Levy Institute conference I asked an assistant to go to the Bloomberg and get me the data on S&P operating profits and S&P reported GAAP profits. She came back and told me she could only find one series. I berated her and told her to contact the Help Desk. She came back and told me the Help Desk could only find one series. I got on the phone with the Help Desk. She was right; they had no notion of S&P GAAP profits. I sent them the data from the S&P web site. They were perplexed. Eventually all six Bloomberg technicians were on the phone with me saying they would find the GAAP series. Two months later they called me and said Bloomberg does not have on its pages the GAAP series.

The message from this story is not that Bloomberg was somehow deficient. It is that years and years had passed and none of the endless Bloomberg subscribers – basically the whole world of market professionals – ever called and drew this to their attention, as I had.

So, operating profits are a fiction, and literally everyone in today’s financial markets ignore generally accepted accounting principles and live and breathe this fiction.

As long as that is the market’s convention its participants can engage in another absurd and dangerous bubble. But some how, some way, reality will eventually surface – as it always does – and such market foolishness will end badly – as it always does.

~ Frank Veneroso, "More on the Unreality of U.S. Corporate Profits," RCM, January 21, 2014

Jim Cramer on the next Berkshire Hathaway (2007)

I think every portfolio has to take the risk/reward here of finding the next Buffett.

A selloff in a healthy environment, where inflation is under control and interest rates are stable ... is a great opportunity to pick up leadership names like a Sears or a Brookfield or a Goldman.  These are asset managements -- that's why I like them. They aggressively manage their assets, and that's what you should be buying.

Eddie Lampert is a terrific investor, and he's the brains behind Sears. ... I am urging patience. I don't want people to quit Sears.

~ Jim Cramer, June 21, 2007

(On TheStreet.com TV's Wall Street Confidential Web video Thursday, he nominated Brookfield Asset Management (BAM) as an international Berkshire Hathaway; Sears (SHLD) is a domestic Berkshire Hathaway, he said.)

Jim Chanos on stock buybacks

Corporate CEOs, with their massive share-buyback programs are in effect investing in the stock market rather than in expanding business opportunities at their companies.  Either they expect higher returns from the market, or lower returns in their business, or some combination of both. Given their questionable track record in timing the market, this may be a cause for concern.

~ Jim Chanos, "Does IBM Love or Hate Itself? Stock Buybacks Make Firms Look Attractive, but Also Deprive Them of Capital for Real Investment," WSJ, January 22, 2014

Jan 20, 2014

Bill Gates on "these Google guys" (2003)

These Google guys (co-founders Larry Page and Sergey Brin), they want to be billionaires and rock stars and go to conferences and all that. Let us see if they still want to run the business in two to three years.

~ Bill Gates, World Economic Forum in Davos, January 2003

(As recalled by DealBook's Andrew Ross Sorkin before the 2013 forum)

Jan 18, 2014

Marc Faber on the Fed: "They are going to bankrupt the world"

Nobody could have a more negative view of the Federal Reserve than I.  It is run by a disastrous group of academics, who have no clue about what is happening in the real world.  They believe money-printing can create jobs.  They are going to bankrupt the world.

~ Marc Faber, Barron's Roundtable, January 13, 2014

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Jan 16, 2014

Bernanke says QE effect, poses no risk of financial instability

We don’t think that financial stability concerns should at this point detract from the need for monetary policy accommodation which we are continuing to provide. Of all the concerns raised about bond buying by the Fed, the risk it could prompt financial instability is the only one I find personally credible. Currently, asset prices are broadly in line with historical norms. Those who have been saying for the last five years that we’re just on the brink of hyperinflation, I think I would just point them to this morning’s CPI number and suggest that inflation is not really a significant risk of this policy. The Fed is extraordinarily sensitive to risks of financial market instability. (Referring to bond purchases by the Fed), It was at least somewhat effective, and given that we were at the limits of what conventional monetary policy could do, we felt that we needed to take additional steps. I’m not yet ready to conclude that very low interest rates are going to be a permanent condition.

~ Ben Bernanke, "Bernanke Says QE Effective While Posing No Immediate Bubble Risk", Bloomberg, January 16, 2014

Jan 15, 2014

Nouriel Roubini: no economic recovery yet

I'll be the first to call a recovery, but I just don't see it yet, and it's getting uglier.

~ Nouriel Roubini, January 2009, World Economic Forum, Davos, Switzerland

Jan 12, 2014

Cicero on treason

A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murder is less to fear. The traitor is the plague.

~ Cicero 56 BC

Jan 7, 2014

Morgan Stanley's Adam Parker: "no worries"

The only thing people are worried about is that no one is worried about anything. That isn’t a real worry.

~ Adam Parker, Morgan Stanley’s market strategist, 2014 outlook report (as quoted by Michael Santoli, "Investors grow confident — or is it overconfident? — as stocks hit record highs," Yahoo!Finance, January 6, 2014)

Time magazine: "The great gold bust" (1976)

To hoarders and speculators, gold has had about as much luster as a rusty tin can.  In the 19 months since gold purchases became legal for U.S. citizens, the price has fallen more than 40% from its peak of $198 an ounce.  In three chaotic days of trading last week, gold fell $14 on the London market, reaching a 31-month low of $105.50 an ounce.  Though the price recovered to $111 by week's end, that is still a dismal figure for goldbugs, who not long ago were forecasting prices of $300 or more.

~ Time, "The Great Gold Bust," August 1976