Is Steve right this time>? Hedge fund billionaire Steve Cohen tells investors to ride the 'big wave' of artificial intelligence and stop focusing on recession odds Hedge fund billionaire Steve Cohen told investors to ride the "big wave" of artificial intelligence. Focusing too much about a recession may cause investors to miss AI opportunities, he added. "I'm actually pretty bullish," Cohen said at a private event, according to Bloomberg. Hedge fund billionaire Steve Cohen reportedly urged investors not to miss the "big wave" of artificial intelligence and to stop fixating on a recession. The founder of Point72 Asset Management and owner of the New York Mets said at a private SALT conference event Tuesday that focusing too much on recession odds may lead investors to overlook AI investing opportunities, sources told Bloomberg. And while he acknowledged concern about the types of jobs that AI would displace, he added that the technology will likely create new jobs. Cohen also expressed optimism more broadly, noting profit margins should improve, which will allow the Federal Reserve to be less aggressive on rate hikes and boost markets. "I'm making a prognostication — we're going up," he said, according to Bloomberg. "I'm actually pretty bullish."
Many on Wall Street predict lawmakers will ultimately reach an agreement, likely averting a devastating debt default, even if it goes down to the wire. But that doesn’t mean the economy will escape unscathed, not just from the bruising standoff but also as a result of the Treasury’s efforts to return to business as usual once it can ramp up borrowing. Ari Bergmann, whose firm specializes in risks that are hard to manage, says investors should hedge for the aftermath of a Washington resolution. What the market veteran is getting at is that Treasury will need to scramble to replenish its dwindling cash buffer to maintain its ability to pay its obligations, through a deluge of Treasury-bill sales. Estimated at well over $1 trillion by the end of the third quarter, the supply burst would quickly drain liquidity from the banking sector, raise short-term funding rates and tighten the screws on the US economy just as it’s on the cusp of recession. By Bank of America Corp.’s estimate it would have the same economic impact as a quarter-point interest-rate hike. Higher borrowing costs in the wake of the Federal Reserve’s most aggressive tightening cycle in decades have already taken a toll on some firms and are slowly crimping economic growth. Against this backdrop, Bergmann is especially wary of an eventual move by Treasury to rebuild cash, seeing potential for a massive reduction in bank reserves. “My bigger concern is that when the debt-limit gets resolved — and I think it will — you are going to have a very, very deep and sudden drain of liquidity,” said Bergmann, founder of New York-based Penso Advisors. “This is not something that’s very obvious, but it’s something that’s very real. And we’ve seen before that such a drop in liquidity really does negatively affect risk markets, such as equities and credit.” The upshot is that even after Washington gets past the latest standoff, the dynamics of the Treasury’s cash balance, the Fed’s portfolio-runoff program known as quantitative tightening and the pain of higher policy rates all stand to weigh on risk assets as well as the economy. After a debt-cap resolution, the US cash stockpile — the Treasury General Account — should soar to $550 billion as of the end of June from the current level of about $95 billion — and hit $600 billion three months later, according to the department’s most recent estimates. A rebound will affect liquidity across the financial system because the cash pile operates like the government’s checking account at the Fed, sitting on the liability side of the central bank’s balance sheet. When the Treasury issues more bills than it technically needs during a certain period, its account swells — pulling cash out of the private sector and storing it in the department’s account at the Fed. Another important piece of the puzzle is the Fed’s reverse repurchase agreement facility — dubbed the RRP — which is where money-market funds park cash with the central bank overnight at a rate of just over 5%. $2 Trillion Stashed That program — currently over $2 trillion — is also a liability at the Fed. So if the Treasury account increases, but RRPs drop, then the drain on reserves is lower. But Matt King at Citigroup Inc. says money funds’ tendency to keep cash in RRPs will most likely persist, which could mean a sizable drain in bank reserves when the Treasury’s cash jumps. And that would come as major central banks have already been siphoning off liquidity through aggressive tightening campaigns and efforts to unwind their balance sheets. “We are shifting from a very significant tailwind of global central bank liquidity over the last six months to probably a significant headwind,” said King, a global markets strategist. “What we really care about is reserves, which should be falling. So I’m strongly leaning to risk-off at this point.” For Priya Misra at TD Securities, the concern is that reserves will become scarce, upsetting funding markets that are at the heart of many trades on Wall Street. Such scarcity “matters a lot because it moves up repo rates,” said the firm’s head of global rates strategy. “High repo rates typically result in a big risk-off. If I’m a hedge fund, my entire business model is based on borrowing money. And what will happen is not only will the rate go up, but I might not be willing to lend to you.” That sort of impact on funding markets is essentially what was seen after the 2017-2018 debt-ceiling episode — when the Treasury issued $500 billion of bills in roughly six weeks. Of course, the Treasury knows a deluge could roil markets and queried primary dealers on the topic in the latest refunding period. The firms encouraged the department to monitor markets for potential stress, to ensure it doesn’t restock its cash balance too quickly. The US remains dangerously near the current federal debt limit of $31.4 trillion, at which point it could lose the ability to meet all its payment obligations. Treasury Secretary Janet Yellen says that critical moment — the X-date — could arrive by June 1. Since mid-January, her department has been using so-called extraordinary measures to keep paying debts — such as reducing benchmark bill auction sizes. “The Treasury has to rebuild their slush fund,” which “removes liquidity from the system,” Jerome Schneider, head of short-term portfolio management and funding at Pacific Investment Management Co., said on Bloomberg Television. For Barclays Plc strategist Joseph Abate, there could even be consequences for Fed policy. If money funds don’t pull cash from RRPs to buy some of the newly issued bills, it would “drain proportionally more bank reserves” and force the Fed to reconsider its roughly year-old program of quantitative tightening.
Well they beat by .15, so they raised equivalent to the beat. I had an order in at $154 to short it. No fill. Close though. I should have stuck with $153. Cancelled it now. Regarding PSTG... Stoney if I say yes and it goes up on earnings, I'll never hear the end of it. But if you want an honest answer, you know I like this company (stock) as tech goes, but they're all overpriced imo. That said, sometimes whales are wrong. I'll put it to you this way, as it stands right now, I'll not have an open position over earnings. If that changes or I see any more bearish activity, I'll let you know. The atm June $24 calls/puts are only $1.50ish, so a 12% move is currently being priced in. Tough call Stoney. You're the "chart god" ---do your Papa Johns thing. Btw, it's no where's near $68... still $72. No follow thru yet on that 1.5M share dump by Starboard. Oh, and that $68 level... even the most rookie TA trader could see that on a multi year chart. Far from some god-like skill there Stoney.
Once you just decide to keep something through all these downdrafts you give up The Chart God thing! I fall in love with some names. It's a weakness. If I had a great idea to replace....
Van how does it feel to be No1-? Yup you can tell the wife tonight-- it's time for a little RV fun... You are ranked number one and deserve a little Yullia time.
Heck with that, I'm taking the RV to come and get you. We're going to Vegas to stay in Calhoun's penthouse while he's gone. I think he left the maids there for us... all our great picks, he said it was the least he could do. Can you teach how to handicap horses at Caesar's sports book?
GBA Presents: Summer Roadtrip '23 ---"Live reports from across America" I schedule us to visit some of these dog companies and we'll do the Peter Lynch analysis. Speaking of... Muttley comes too. Yulia would be too lazy to cook for her, she'll feed her from some nasty $20 50lb bag of Ol' Roy.