either roubini is about to be humbled or gross is trying to reduce withdraws from his funds http://www.cnbc.com/id/15840232?video=903159424&play=1
Found this on Charlie Munger (as alluded to in the video): Munger View On The Environment By: Sami Thursday, October 23, 2008 10:38 AM (http://www.istockanalyst.com/article/viewarticle+articleid_2732543.html) - The longest recession ever was 16 months. He thinks best case we entered into a recession in November of 2007 or worst case January 2008. This would put us well into the later half of the cycle, which will be painful but short. - We are setting the base for a 10 - 15 year bull run. The stock market has never performed worse in the last 10 years, yet corporate profit expansion has never been better. - The market will not rally until bond yields come down on the long end. Right now you should be in munis of solid states that are yielding 7% - 8% risk free. - TARP will make money. Historical yields on toilet quality mortgage packages are well above the prices people are contemplating buying them. Really smart vulture guys are buying at the 50% - 60% levels. He and Buffet are also buying at these levels. - We will see a healthy level of deflation before we see inflation. He predicted $50/barrel oil. Demand has been slowing for a year. As long as money velocity turns to favorable, government can pull out the excess liquidity before it becomes inflationary. - The dollar has turned the corner and will rally from here against the Euro. - Governments will drive LIBOR down to force interbank lending. Europe is much worse off than the U.S. in terms of bank health. - Cash on the balance sheets or corporates has never been higher. If they all bought back there stock their P/Es would be trading at a 50% discount to the historical market average. - He and Buffet are buying U.S. equities for their personal accounts.
I think this kind of argument is dangerous. by now it seems that this time really is different. Gross says US is in for secular delevering ala 30's so the economy wont have the 'ponzi scheme' of debt expansion. The record profits he refers to mainly were the result of debt fueling the world economy but now we got that in reverse and the profits % of gdp were bound to mean revert. if gross is right profits and margins will take it on the chin, then one might make the same money with less volatility buying C bonds. In fact I think I will buy some of that
These guys definitely are NOT market timers. Not much use to short term oriented traders. Fortunes will be made and lost on the next several months being agnostic.
I agree. I just figure I need to do something with cash sitting around my IB account. MS debt is yielding 10% for 6 years, super savings account
WTF! The market will not rally until bond yields come down??? - 30 years are yielding 4%, what more does he want We will see a healthy level of deflation w/oil coming down to $50/barrel - oil has gone from $145 to $65, predicting $50 now is really stepping out on a limb; the prices of pretty much every commodity has gotten destroyed already The dollar has turned the corner against the Euro??? - its gone from 1.60 to 1.25, do you really think its turned the corner? Nothing new here. Move along.