Investment Check List 2009 Nota: There are four key economic indicators that comprise the recession call — production, employment, real sales and organic personal income 1/10/2009 Hedge contra caida do dolar: 1. Commodities 2. Gold 3. Canadian dollar 4. Resource sectors of the stock market 5. U.S. sectors that have high foreign exposure (materials, tech, staples, health care) 6.Canadian sectors that benefit from lower import costs (consumer stocks) but lose export competitiveness ( manufacturers) 7.Canadian bonds (a higher Canadian dollar will keep inflation low, hence reinforcing positive fixed-income returns 23/12/2009 John Paulson’s Paulson & Co. has begun shorting U.S. government bonds, believing that inflation will lead to higher yields, which will drive down the price of the securities, the Financial Times reports. “It will be difficult for the government to withdraw the economic stimulus,” Paulson said in a recent speech. “An increase in the monetary base leads to an increase in the money supply, which leads to inflation.” 17/12/2009 David R. HOW TO PLAY INFLATION? There is no sense in being dogmatic. But just in case inflation were to stage a comeback, this is how one would prepare for it: We don’t have a big inflation view, but you never score brownie points by being dogmatic •Precious metals (while gold grabs the spotlight, silver has surged 52% this year and has far outpaced the 27% runup in gold; and the gold/silver ratio, while down from a peak of 84 to 66, is still above the average of 54 over the past three decades). •An even steeper U.S. yield curve! •TIPS (or real return bonds) — the 5-year TIPS breakevens right now point to an inflation expectation of just over 1.7%, whereas consumer expectations are closer to 2.6%. •Short-term duration corporate bonds (and go out the credit curve). •Commodity currencies — Canadian Loonie, New Zealand Kiwi Aussie dollar, Brazilian Real, and Norwegian Kroner. •Basic material stocks (including energy) as well as consumer staples (tobacco, food/beverage). 17/12/2009 David Rosemberg :But one conclusion I think we can agree on is the need to maintain defensive strategies and minimize volatility and downside risks as well as to focus on where the secular fundamentals are positive such, as in fixed-income and in equity sectors that lever off the commodity sector. 08/12/2009 (Reuters) - Billionaire hedge fund manager John Paulson said on Tuesday he still sees compelling long-term returns in equities even after their sharp run-up this year, while holding no short positions in the credit markets. "Today our net long exposure is perhaps the highest it has ever been in our portfolio," Paulson said during a luncheon presentation at the Japan Society. "We still find a lot of compelling long investments on the equity side," he said, citing specifically Bank of America (BAC.N), U.S. cable-television giant Comcast Corp (CMCSA.O), and Germany's HeidelbergCement AG (HEIG.DE). Also bullish in Gold 02/12/2009 David Rosember : We remain long-term gold bulls So, we could get a meaningful gold correction at any time, and we are talking about a correction in what is still a secular bull market — the 200-day moving average is $970/oz, which means we could get as much as a 20% pullback and no fundamental trendline would be violated., 25/11/2009 Em avaliação publicada ontem, o Barclays Capital destaca um relatório da embaixada dos Estados Unidos em Pequim, estimando queda na produção chinesa de milho, trigo, algodão e de soja no período 2009/2010. No caso da soja, a estimativa é de que a produção seja 11 milhões de toneladas menor, enquanto as importações vão ser moderadas, ficando em 39 milhões de toneladas, em razão dos altos estoques acumulados este ano. A produção de trigo cairia 6%, a de milho, 9% e a de algodão, 15%, segundo os americanos. E tudo o que acontece na China tem efeito no mercado internacional. 19/11/2009 Hedge fund firm, Paulson & Company, is betting that Bank of America’s(BofA) stock will almost double in the next two years, Bloomberg reports. The firm’s founder, John Paulson, is betting that BofA may rise to $29.81 by December 2011, after he earned an estimated $2.5 billion betting against the U.S. housing market. 17/11/2009 David Rosemberg : S&P 500 is currently trading as if the economy is going to expand at nearly a 5.0% rate in the coming year. If the consensus is right, then fair-value in the S&P 500 is closer to 900 than it is to 1,100. This by no means suggests that the speculative run is over; it only means that the folks allocating their capital to the stock market today do not adhere to the adage of ‘buying low and selling high’ and are very likely the same folks who were buying at the top back in 2007 when “excess liquidity” themes were all the rage. Nov. 4 (Bloomberg) -- New York University Professor Nouriel Roubini said that the dollar may reverse its slump six months from now by jumping as much as 20 percent. Roubini, who warned about the coming financial crisis in 2006, said in a television interview on CNBC today that investors are executing the “mother of all carry trades” by borrowing dollars to buy commodities and emerging-market assets for higher returns. When the boom turns to bust, the U.S. currency will quickly reverse losses, he said. “It’s eventually going to occur, but it’s going to be six months from now, a year from now,” Roubini said. “When that snap back of the dollar is going to occur, it’s not going to be 2 percent or 3 percent, it’s going to be more like 15 or 20 percent.” Jim Rogers, chairman of Singapore-based Rogers Holdings, said today that he’s “pessimistic” on the dollar and disagreed with Roubini’s view that commodities and emerging-market stocks have developed into a bubble. The dollar has dropped 13 percent since the start of March against a trade-weighted basketof currencies. Roubini said that U.S. interest rates will probably stay close to zero for a while, allowing the “carry trade” to continue. Federal Reserve officials may today indicate their $1 trillion injection into the economy is helping to revive growth without requiring an increase in interest rates, economists say 4/11/2009 Rogers countered Roubini’s arguments by saying that Chinese stocks and sugar, silver, coffee and cotton have all dropped from their historical highs by at least 50 percent. When asked if gains made this year pointed to a bubble, he said: “It’s not a bubble if something is up 100 percent this year, but down 70 percent from its high. That’s not a bubble, that’s a good year. That’s a great year. Maybe it’s too high for this year, but that’s not a bubble.” Gold climbed to a record $1,095.40 an ounce in London today, a 24 percent gain this year. Gold also reached a record in New York as the dollar fell and India’s central bank added to its bullion reserves. “I suspect it’s going to go over $2000 some time in the bull market, but depending on what happens in the world it could go much, much higher,” Rogers said. “The old high, back in 1980 adjusted for inflation, would be over $2000 now, just to get back to the old high. So we’ll certainly get there some time in the next decade.” 4/11/2009 Roubini : With the Fed unlikely to change its monetary stance following the close of its Open Market Committee meeting today, the dollar carry trade will grow through next year and continue to boost the prices of commodities and global equities, he said. "It's going to eventually occur but it's going to be six months from now, a year from now," Roubini said. "In the meanwhile the bubble's going to become bigger globally and the bigger the bubble the bigger is going to be the crash." 22/10/2009 In terms of sectors that were reported to be either strong or improving, the Beige Book made mention of the f ollowing: Technology (especially semiconductors); health care services, low-end housing, apparel retailing, steel, telecom services, food production, petrochemical manufacturing and staffing firms (this is new). 14/10/09 (Bloomberg) -- Rice and cotton prices are likely to soar in the coming decade as prices of agricultural commodities boom because of declining inventories and production disruptions, said investor Jim Rogers, chairman of Rogers Holdings. 29/09/2009 value price for the S&P 500, based on ROEs, P/Es and price-to-book ratios, would place the “equilibrium” level for the S&P 500 right now to be 867, which means we do have potential for a 20% correction here. 16/09/2009 Doug Kass: The S&P 500 is now almost 20% above its 200-day moving average. That's close to the level achieved in November 1938 at 22.6%. 15/09/2009 David R. : Commodities are a group that, at this stage, is also discounting a reasonable global growth trend of 3%. We see them as fair-value right now, but are clearly in a secular bull market. While China may have already stockpiled enough raw materials for the year, as long as the Asian economy does not relapse, basic materials are likely to remain on their long-term uptrend. That is principally why we favor the Canadian equity market over the U.S. equity market and the Canadian dollar over the U.S. dollar (note that since the secular bull market in commodities began eight years ago, the TSX composite index has outperformed the S&P 500 by 8,200 basis points in Canadian currency-adjusted terms). 15/09/2009 David Rosemberg :The S&P 500 is trading north of a 26x P/E multiple on trailing operating earnings and history shows that at these high valuation levels, the market declines in the coming year 60% of the time. S&P 500 would correct towards the 850 area 06/07/2009 David Rosemberg: So what works best during the retest? Health care, staples, utilities, high-quality bonds and the U.S. dollar. Nota - Valuation: investors should uncover those value stocks. The shares of a company whose operations earn only the cost of capital isn't adding any value and should sell no higher than book value. A stock should trade at a discount to book if its operations return less than the cost of capital because it is destroying value. And a stock of a company with a very high return on equity should see that high return capitalized by the market at a premium to book value. 22/06/2009 "I see even the risk of a double-dip, W-shaped recession… towards the end of next year," 2010 Roubini told "Squawk Box Europe." 25/10/2009 (Bloomberg) -- Stocks may have already peaked for this year and might drop 20 percent amid renewed deflation fears, said Marc Faber 24/05/2009 Krugman: We can't all export our way to recovery. There's no other planet to trade with. So the road Japan took is not available to us all," Krugman said. Global recovery could come about through more investment by major corporations, the emergence of a major technological innovation to match the IT revolution of the 1990s or government moves on climate change 20/05/2009 Nouriel Rubini - Conclusion: significant triple risks to global economic recovery. In conclusion, there are three major sources of downside risk to early and sustained global economic recovery. First, in the short run the evidence suggests that rather than green shoots there are plenty of yellow weeds. So this severe global recession may not end in the middle of 2009 – as the optimists claim – but rather towards the end of 2009 or some time in 2010. Second, global recovery after this recession may not be V-shaped (as the optimists claim) with rapid return to potential growth. Structural vulnerabilities and the legacy of over-leverage of households, corporate firms, financial institutions and now governments may lead to several year of below potential growth with additional real risks that even potential growth may fall in advanced economies. Third, the wings of global recovery could be clipped towards the end of 2010 or 2011 - and result in a double dip W-shaped recession - if rising oil and commodity prices, rising tax burdens and rising concerns about medium term fiscal sustainability and inflation lead to an early crowding out of private consumption, capex spending and residential investment. The outlook for the global economy may turn out to be better than the one described in this analysis if appropriate policies – to be discussed in a separate note – are adopted to limit these short term and medium term risks and vulnerabilities. And as discussed above one cannot rule out a couple of quarters of rapid growth as the effects of the massive policy stimulus take hold and as firms that have sharply destocked inventories start to ramp up production once final sales start to bottom out and recover. But such short run recovery risks to be warped by the medium term structural vulnerabilities that wil lead to low actual and potential growth in 2010-2011. And the risk of a double dip W-shaped recession towards 2011 cannot be ruled out either. Thus, the detailed analysis in this paper suggests that downside risks to sustained global growth recovery appear to be greater than to the upside risks. Over time the global economy will mend its excesses and potential growth in emerging market economies remains high especially if domestic demand growth - rather than sole reliance on net exports - becomes the new source of growth for emerging market economies. The sluggish medium term actual and potential growth of the US, Europe and Japan (unless a new technological revolution boosts potential growth) suggests that emerging market economies cannot rely any more on advanced economies growth as a major source of their own growth. So the medium and long term sustainability of emerging markets growth will partly depend on their ability to develop a new model of domestic demand and/or South-South trade and growth. 19/05/2009 China se protege do dólar com commodities A China está estocando commodities, como cobre e minério de ferro, como parte de uma redistribuição de sua riqueza, em meio à preocupação de que o valor de seus ativos em dólar possa cair, segundo o Royal Bank of Canada (RBC). Segundo Brian Jackson, estrategista sênior da instituição financeira, esse movimento é parte do desejo geral de diminuir a exposição a ativos relacionados à moeda norte-americana. Ele afirmou que a China teme que as centenas de bilhões de dólares que os Estados Unidos estão gastando em operações de socorro a bancos e pacotes de incentivo vão gerar "mais inflação e um dólar mais fraco". O primeiro-ministro da China, Wen Jiabao, disse estar preocupado com a segurança dos mais de US$ 767 bilhões investidos pelo seu país em bônus do Tesouro dos EUA e conclamou-os a "garantir a segurança dos ativos chineses". O presidente do BC chinês, Zhou Xiaochuan, propôs uma nova moeda mundial que reduzisse a dependência em relação ao dólar. A China, maior consumidora mundial de minério de ferro, aumentou suas importações do produto para um recorde de 57 milhões de toneladas em abril. As compras de cobre e de produtos feitos desse metal atingiram o recorde de 399 mil toneladas no mês passado, comparativamente às 375 mil toneladas de março. Outra commodity que sentiu os efeitos desse movimento da China foi o petróleo, que subiu para seu maior preço de seis meses no último dia 12 depois que aquele país, segundo maior consumidor de combustíveis, aumentou suas importações do tipo bruto em 14% em abril. Segundo a Comissão Nacional de Desenvolvimento e Reforma, a China ampliará seus estoques. 19-02-2009 Nouriel Rubini: but two key elements are key to avoid a near-depression and still seriously missing: a proper clean-up of the banking system that may require a proper triage between solvent and insolvent banks and the nationalization of many banks, even some of the largest ones; and a more aggressive and across-the-board reduction unsustainable debt burden of millions of insolvent households (i.e. principal reduction of the face value of the mortgages, not just mortgage payments relief). Nota: market is bottoming is when money starts flowing into Financials, Consumer Cyclicals, and Technology 14-01-2009 N. Roubini Our research at RGE Monitor suggests that the US and global recession will continue at least all the way until Q4 of 2009 (a nasty 24 months U-shaped recession) and that the recovery in 2010-11 will be very weak with growth in the 1% range that is well below a potential of 2.75%. And we cannot rule out that a more severe L-shaped stag-deflation So while our benchmark scenarios sees a severe U-shaped global recession with very weak growth recovery in 2010 we cannot exclude the possibility of a worse outcome, i.e. an L-shaped recession that – in our view – has at least a one third probability. So the worst is ahead of us rather than behind us for the real economy and for financial markets. With my forecast of 2009 earnings per share for S&P500 firms being in the 50 to 60 dollars range and with P/E ratio likely to be in the 10 to 12 range given a severe global recession the S&P500 could bottom – at some point in 2009 – at best at a level of 720 and, in a worse scenario, as low as 500 or 600. So, the worst is indeed still ahead of us 17-12-2008 Nouriel Roubini : I see another 15 to 20 per cent down side risk for US and global equities because in the next few months macro news and earnings news is going to be much worse than expected... I don’t see this as being the bottom of the market. There is a bear market rally, but like the previous ones it’s going to fizzle out. So I’m concerned about equities, I’m concerned about credit, I’m concerned about commodities falling another 15-20 per cent given a severe recession. I’m still concerned about emerging market asset classes. I think that cash and cash like instruments like safe government bonds are still the safer bet for the next few months. Down the line towards the end of 2009 if we see the light at the end of the tunnel of economic recovery, if and when we see it maybe it’s time to go back into risky assets, but not in the short term. 17-12-2008 N Rubini: In the US, recession started last December 07, and will last at least 24 months until next December 08 — the longest and deepest US recession since World War II, with the cumulative fall in GDP possibly exceeding 5 percent. 01-12-2008 The NBER announced that a recession started in the U.S. in December 2007 !!! Confirmacao de recessao nos USA!!! That makes the current recession nearly 12 months old. The longest post-war recessions (1973-1974 and 1980-1981) lasted 16 months. I suspect this one will last longer than either of those. Given all of the recent comparisons to the Great Depression, one market observer suggested calling the current downturn the Great Recession. I like that better. The downturn during the 1930s lasted 34 months 04-11-2008 Sinal de compra segundo Teun Draaisma !!! 24-10-2008 The earliest this recession started was in December, which means the earliest it ends if this is a “normal historical recession” is June/09. Considering that the stock market tends to bottom 4 months before the recession ends, even if the market is in a bottoming process, we are unlikely to get any clarity that this bear market is over until we are into February, perhaps longer. If you ask us what a major capitulation point we could see that will really part the clouds, we think it is when the NBER finally makes the recession call – because when it does, on average, we are within a month of the recession being over. That has been a true blue barometer. 28/09/2008 With the plan, we will have four large, solvent, well-capitalized banks: JPMorgan Chase JPM , Bank of America BAC , USBancorp USB and Wells Fargo WFC We might also be able to add Goldman Sachs GS 19-09-2008 The SEC ban on short sales, issued early on Friday, ends on October 2 but can be extended beyond 10 days if deemed necessary. On Thursday, Britain's Financial Services Authority imposed a four-month ban on short selling financial stocks. 22-07-2008 - Nouriel Rubini : The economist sees a "severe recession" that will last 12-to-18 months, but does not foresee the U.S. sliding into a prolonged Japan-like economic malaise. Similarly, while further 20% declines for major averages isn't pretty, it won't be as bad as the bursting of the tech bubble or the Great Depression for stocks, which Roubini sees starting to recover later this year/early next year. 15-06-2008 Greenspan said market watchers would know the crisis was coming to an end when the gap between three-month London interbank offered rates, or Libor rates, and Overnight Index Swap rates narrowed to about 50 basis points. 08-05-2008 Mr. Roubini said further interest rate cuts will enable the United States to emerge from recession by mid-2009, by which time the benchmark U.S. federal funds rate could be 1% or lower. 30-04-2008 Q1 GDP : The official headline for U.S. Q1 GDP growth says a positive 0.6% growth but the details are ugly and confirm that we are in a recession. First of all, if you exclude the increase of inventory of unsold goods (that moved positive after a negative figure in Q4) the Final Sales of Domestic Product were a negative 0.2%. In other terms, inventories of unsold goods added an artificial 0.8% to Q1 growth boosting it from a negative 0.2% to a positive 0.6%. So actual aggregate demand (Final Sales of Domestic Product) – the actual measure of growth of true demand - fell in Q1. And this build-up of inventories in Q1 means that the fall in GDP in Q2 will be larger than otherwise as firms will have to reduce that large inventory of unsold goods via a further reduction in production and employment. 11-04-2008 GE earnings - 6% Those declines overshadowed a 17 percent rise in profit at the infrastructure unit, which has been boosted by emerging-market demand for heavy equipment like electricity-producing turbines. NBC Universal's profit rose 3 percent. 25-3-2008 Goldman Sachs forecasts global credit losses stemming from the current market turmoil will reach $1.2 trillion, with Wall Street accounting for nearly 40 percent of the losses. U.S. leveraged institutions, which include banks, brokers-dealers, hedge funds and government-sponsored enterprises, will suffer roughly $460 billion in credit losses after loan loss provisions, Goldman Sachs economists wrote in a research note released late on Monday. 19/03/2008 Solução para crise financeira por Nouriel Roubini ver em Artigos interessantes na Area de Consulta 02/03/2008 (Reuters) - Oil prices won't fall below $60 to $70 a barrel as this is the minimum level at which alternative fuels are economically viable, Saudi Oil Minister Ali al-Naim 25/02/2008 Jim Rogers, 65, has previously said he is betting on a long- term decline in the dollar and said in November investors should sell the currency. He said today he has been buying the Swiss franc, the yen and agricultural commodities, including cotton, sugar and coffee. 21/02/2008 This amounts to roughly $670 billion, which is not far from our own internal estimates. To put that number into perspective, it is equivalent to a full year’s worth of GDP growth! The banks so far have written down $150 billion http://www.usamercado.com/arquivos/Total Credit crunch.doc 30/01/2008 Russia's low exposure to the subprime crisis puts it in a strong relative position as U.S. and European markets struggle to work out the damage to banks and insurers. 17/12/2007 Yardeni the recession scenario will become increasingly less likely after mid-2008 S&P 500 1776 06/12/2007 – Previsao 2008 Charles Nenner Right now, he is calling for a year end rally, with more to go, roughly to mid-Dec. His price target on the Dow is around 14,300. - In terms of 2008, he predicts a tough February and March, and a very volatile year overall, with 3 to 4 roughly 15% corrections. He believes 2008 will be a very difficult year to make money in. - He believes we are right on the edge of a deflation scare. 4/12/2007 Noriel R - recession will depend on how aggressive the Fed is. I.e. the Fed will not at this point be able to prevent a recession – for the same reasons why it did not prevent one (in spite of very aggressive easing) in 2001 – but it would be able to put a floor on the depth and length of such a recession. Europa x USA: Euro e taxas de juros devem cair para evitar forte recessao The same holds for the ECB: the ECB has so far deluded itself that the liquidity and credit crunch was a temporary phenomenon and that, once that crunch was eased, it could continue on its policy rate hike campaign. Time to get real euro Libor spread are signaling near panic in Eurozone financial markets: the Eurozone economy risks a serious hard landing as the credit/liquidity crunch is as severe as in the US hurting corporate borrowing and capex spending, the euro is going through the roof and severely hurting export competitiveness, housing bubbles around Europe are deflating, economic activity and demand are slowing, and the US hard landing will hurt Europe’s exports even further. The ECB should avoid the mistake made in 2001-2002 when it eased too little too late with the cost that the European economic downturn was as bad as the US one and the growth recovery is 2002-2005 pathetically dismal. 4/12/2007 I am confident that the dollar will have a significant rally next year, especially against the euro and the pound,'' said Stephen Jen, the London-based head of currency research at Morgan Stanley, who expects the U.S. currency to strengthen to $1.35 by December 2008. ``The deficits are shrinking fast.'' Jim O'Neill, chief economist in London at Goldman Sachs Group Inc., the most profitable securities company, said last week the narrowing trade deficit will help revive the dollar's allure. 8/11/07 Fed: We think that by the spring of early 2008, as these credit problems resolve and as, we hope, the housing market begins to find a bottom ... 31/10/2007 Nouriel Rubini: Consensus for GDP Q4 is for a growth of 1.8% ...1.0%