May 29, 2014

Jeffrey Saut: Not worried that 1st Quarter GDP growth was revised down to -1%

The headline figure was weaker than expected, but it was mainly due to slower inventory growth, which bodes well for future growth, future orders, new orders.  [Unless a decline materializes this week, the S&P 500 is] probably not going to come back below [the] 1,890 – 1,900 [level], which is where the near-term support is.

~ Jeffrey Saut, chief investment strategist at Raymond James Financial, "S&P 500 sets another record closing high on growth bets," Reuters, May 29, 2014

(The S&P 500 gained 10.25 points or 0.54 percent, to 1,920.03 - a record close and a lifetime intraday high.)

May 28, 2014

Michael Santoli on the stock market's warning signs

Risk taking is filtering into other parts of the investment world.  I know people present these things as kind of warning signs.  Eventually they become warning signs when they become pervasive, when they get extreme.  But right now I'm looking at it as the kinds of things that occur when markets are at an all-time high, when they've been going up mostly for five years...  I don't think it's a key problem yet.

~ Michael Santoli, "The bull market is acting like... a bull market," The Daily Ticker, May 28, 2014

May 8, 2014

Value manager Bob Goldfarb does not see a repeat of the 1930s thanks to Bernanke

I do not believe we are going to revisit the 1930s. Bernanke is a student of the '30s and his policy responses are a reflection of his deep knowledge of the '30s.  So I do not think we are going to see a replay of the 1930s.

~ Bob Goldfarb, Lead Manager of Sequoia Fund, Ruane, Cunniff & Goldfarb Investor Day, St. Regis Hotel, New York City, May 17, 2013

May 5, 2014

William White on the global central banking experiment

The honest truth is no one has ever seen anything like this.  Not even during the Great Depression in the Thirties has monetary policy been this loose.  And if you look at the details of what these central banks are doing, it's all very experimental.  They are making it up as they go along.  I am very worried about any kind of policies that have that nature...  Plus, the Fed has moved to a completely different motivation.  From the attempt to get the markets going again, they suddenly and explicitly started to inflate asset prices again.  The aim is to make people feel richer, make them spend more, and have it all trickle down to get the economy going again.  Frankly, I don't think it works, and I think this is extremely dangerous.

I see speculative bubbles like in 2007.  It all looks and feels like 2007.  And frankly, I think it's worse than 2007, because then, it was the problem of the developed economies.  But in the past five years, all the emerging economies have imported our ultra-low policy rates and have seen their debt levels rise.  The emerging economies have morphed from being a part of the solution to being a part of the problem.

I've met so many people who are in the markets, thinking they are absolutely brilliantly smart, thinking they can get out in the right time.  The problem is, they all think that.  And when everyone races for the exit at the same time, we will have big problems.

~ William White, former chief economist for Bank of International Settlements, speech given in Switzerland, April 2014