f4f
翠鸟科
http://www.corriere.it/Primo_Piano/Cronache/2007/02_Febbraio/03/aviaria.shtml
aviaria
numero uno della lettera di Dan agli hedge .... fatto !!
aviaria
numero uno della lettera di Dan agli hedge .... fatto !!
Bund, Tbond of the Hot Hand fine del Capitalismo(vm98)
- Creatore Discussione dan24
- Data di Inizio
gipa69
collegio dei patafisici
Central Bankers Cry Wolf
This post will take a look at the Brave New World of derivatives, what the Fed and central bankers are saying about that world, and what the world believes they both can do. Let's start off with a look at the GSEs.
Sallie Mae
Bloomberg reported, "Sallie Mae 4th-Quarter Net Falls on Derivatives Losses":
"SLM Corp., the nation's largest provider of college-student loans, said fourth-quarter profit tumbled 96% because of a decline in the value of financial contracts it uses to protect against swings in interest rates.
Net income fell to $18.1 million, or 2 cents a share, from $431 million, or 96 cents, a year earlier, the Reston, Va.-based company said today in a statement. Earnings excluding the derivatives rose 15%, less than analysts expected. Sallie Mae had a loss of $244.5 million related to derivatives and hedges, compared with a gain of $70.2 million in the prior year."
GSEs: Where Do We Stand?
On Jan, 17, 2007, William Poole, president of the Federal Reserve Bank of St. Louis, gave a speech on the topic "The GSEs: Where Do We Stand?":
"Not long after coming to the St. Louis Fed in 1998, I became interested in government-sponsored enterprises, or GSEs. My interest arose when I began digging into aggregate data on the financial markets and discovered how large these firms are. The bulk of all GSE assets are in the housing GSEs -- Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks. Using information as of Sept. 30, 2006 -- the latest available as of this writing -- these 14 firms have total assets of $2.67 trillion; given their thin capital positions, their total liabilities are only a little smaller. Just two firms -- Fannie Mae and Freddie Mac -- account for $1.65 trillion of the assets, or 62% of all housing GSE assets. Moreover, Fannie Mae and Freddie Mac have guaranteed mortgage-backed securities outstanding of $2.82 trillion. Thus, the housing GSE liabilities on their balance sheets and guaranteed obligations off their balance sheets are about $4.47 trillion, which may be compared with U.S. government debt in the hands of the public of $4.83 trillion...
"My initial curiosity about the GSEs was stoked simply by the size of these firms. As I investigated further, I became concerned about their thin capital positions and the realization that if any of them got into financial trouble, the markets and the federal government would look to the Federal Reserve to deal with the problem...
"I continue to believe that the nation would be well served by turning the GSEs into genuinely private firms, without government backing implied or explicit. If they bolster their capital, they can function perfectly well as purely private firms...
"Financial firms throughout the economy ought to have an intense interest in reforming the GSEs. One reason is simply that banks and other financial firms, and many nonfinancial firms, hold large amounts of GSE obligations and GSE-guaranteed mortgage-backed securities. I believe that many risk managers simply accept that GSEs are effectively backstopped by the Federal Reserve and the federal government without ever thinking through how such implicit guarantees would actually work in a crisis. The view seems to be that someone, somehow, would do what is necessary in a crisis. Good risk management requires that the 'someone' be identified and the 'somehow' be specified. I have emphasized before that if you are thinking about the Federal Reserve as the 'someone,' you should understand that the Fed can provide liquidity support, but not capital. As for the 'somehow,' I urge you to be sure you understand the extent of the president's powers to provide emergency aid, the likely speed of congressional action and the possibility that political disputes would slow resolution of the situation...
"At present, there is no process and no one knows what would happen if a GSE is unable to meet its obligations.
"Freddie Mac and Fannie Mae both got into trouble with accounting irregularities in part because of the complexities under GAAP rules of accounting for derivatives positions and rules determining which assets should be reported at market and which should be reported at amortized historical cost. Sound risk management practices require that GSE managements base decisions on market values, or estimates as close to market as financial theory and practice permit. The reason is simple: Fannie Mae and Freddie Mac pursue policies that inherently expose the firms to an extreme asset/liability duration mismatch. They hold long-term mortgages and mortgage-backed securities financed by short-term liabilities. Given this strategy, they must engage in extensive operations in derivatives markets to create synthetically a duration match on the two sides of the balance sheet. These operations expose the firm to a huge amount of risk unless the positions are measured at market value...
"Since the GSE accounting scandals emerged in mid-2003, one thing has remained rock-solid: The GSEs have continued to borrow at yields only slightly higher than those of the U.S. government, and noticeably lower than those available to any other AAA-rated private company or entity. In other words, despite the vast recent accumulation of knowledge about the significant risks run by the GSEs, as well as their inability (or unwillingness) to manage these risks, investors in GSE debt securities appear unmoved. Upon reflection, the lack of market discipline evident during this crisis period is striking -- like a dog that did not bark. This fact indicates to me that there still is a significant problem with the GSEs that needs to be fixed.
"The obvious answer to why the dog did not bark is that the so-called 'implicit guarantee' -- that is, the belief by investors that the U.S. government would not allow the GSEs to default on their debt obligations -- has not been removed...
"I began this speech noting that the Federal Reserve has a responsibility to maintain financial stability. That responsibility includes increasing awareness of threats to stability and formation of recommendations for structural reform. I do not believe that a GSE crisis is imminent. However, for those who believe that a GSE crisis is unthinkable in the future, I suggest a course in economic history."
Key GSE Points
Size and leverage of Fannie Mae and Freddie Mac is enormous
The Fed does not want to be responsible for a blowup at either company
Both pursue policies that inherently expose the firms to an extreme asset/liability duration mismatch
Both hold long-term mortgages and mortgage-backed securities financed by short-term liabilities forcing them to synthetically create a duration match via massive amounts of derivatives
The stocks act as if there are implicit government guarantees. There are no such guarantees
The lack of market discipline is striking
The Fed can provide liquidity, not capital
A crisis is not unthinkable. Those who think so need a course in economic history.
Liquidity Support
Let's review one key excerpt: "The Fed can provide liquidity support, but not capital." For all this talk of "helicopter drops," Poole seems to be calling Bernanke's bluff. I have pointed out many times before that the Fed has no authority to do "a drop," and probably would not even if it could. No doubt it would act to slash interest rates in a crisis, but depending on the exact nature of Fannie Mae's hedges, it is conceivable that the opposite play might be needed. Is this what has the Fed spooked over Fannie Mae?
Federal Reserve Emergency Powers
In the panel on government-sponsored enterprises, Poole spoke on the emergency powers of the Fed:
"I am acutely aware that should there be a market crisis, the Federal Reserve will have the responsibility to manage the problem. Just as many market participants apparently believe that GSE obligations have the implicit backing of the federal government, they may also believe that the Federal Reserve has all the powers necessary to manage a crisis. The Fed's successful efforts to handle the stock market crash in 1987, the near-insolvency of Long Term Capital Management in 1998, and the financial effects of the Sept. 11 tragedy all justifiably increase market confidence in the Federal Reserve. In the interest of a full understanding of the Federal Reserve's powers in the event of a crisis in the market for GSE obligations, I'll outline the Fed's powers as provided by the Federal Reserve Act...
"The Federal Reserve has ample power to deal with a liquidity problem, by making collateralized loans as authorized by the Federal Reserve Act. The Fed does not have power to deal with a solvency problem. Should a solvency problem arise with any of the GSEs, the solution will have to be found elsewhere than through the Federal Reserve."
Because of all the past Fed interventions, no one believes the Fed. Is this the case of the boy who cried wolf one time too many? Is the Fed finally issuing a legitimate warning that no one believes? Let's go across the Atlantic and check out things in Europe.
A Warning From Trichet
The Financial Times is reporting, "Prepare for Asset Repricing, Warns Trichet":
"Current conditions in global financial markets look potentially 'unstable,' suggesting that investors need to prepare themselves for a significant 'repricing' of some assets, Jean-Claude Trichet, president of the European Central Bank, warned at the weekend in Davos.
"The recent explosion of structured financial products and derivatives had made it more difficult for regulators and investors to judge the current risks in the financial system, Mr. Trichet said.
"'We are currently seeing elements in global financial markets which are not necessarily stable,' he said, pointing to the 'low level of rates, spreads, and risk premiums' as factors that could trigger a repricing."
Did anyone care about Trichet's warning? I think not. The following news headline says it all: "Davos Elite Rebuffs Risk Warnings From Policymakers":
"Bankers, investors, and executives last week arrived at the Swiss resort of Davos giddy about record profits and bonuses. After five days of hectoring by policymakers that they are too complacent, they left just as happy.
"'The mood has been totally upbeat,' Sunil Mittal, the billionaire chairman of Bharti Airtel Ltd., India's largest mobile phone operator, said of the 37th annual meeting of the World Economic Forum. 'I've never seen a mood like this.'
"Warnings by central bankers such as Jean-Claude Trichet were batted away by dealmakers like Michael Klein, co-president of Citigroup Inc.'s investment banking unit, and David Rubenstein, managing director at the Carlyle Group Inc. buyout firm. They were confident in their ability to cope with the inevitable slowdown of the world's strongest economic growth in three decades.
"'The consensus here in Davos is everybody's thinking it'll be another booming year,' Morgan Stanley chief global economist Stephen Roach said."
On Jan. 26, Bloomberg reported, "ECB's Weber Says Markets Shouldn't Expect Central Bank Bailouts":
"European Central Bank council member Axel Weber said investors shouldn't expect central banks to bail them out in the event of an 'abrupt' drop in financial markets.
"'If you misprice risk, don't come looking to us for liquidity assistance,' Weber said in an interview in Davos, Switzerland, at the annual meeting of the World Economic Forum. 'The longer this goes on and the more risky positions are built up over time, the more luck you need'...
"'It is time for financial market to move back to more adequate risk pricing and maybe forego a deal even if it looks tempting,' said Weber. There's a danger of a 'rush to the exit' if investors wait too long, he said...
"The catalyst may come in Japan, as the central bank there raises benchmark borrowing costs from the current 0.25%, he said."
Are Central Bankers Crying Wolf?
Is this the case of the Fed that cried wolf one time too many? Oddly enough, I do not believe Trichet or Weber, or Poole, either. Like everyone else, I think the Fed will be there and willing to lend a hand to attempt to bail out the speculators. But unlike everyone else, I think that credit expansion and risk taking have reached such astronomical proportions that when it all implodes, the central bankers will be powerless to stop it.
As for the catalyst...there seems to be too much consensus on the catalyst. "The catalyst may come in Japan, as the central bank there raises benchmark borrowing costs from the current 0.25%," Weber said.
I am not sure what will pop this global credit bubble, but I suspect it will not be higher U.S. interest rates or a rising yen. More than likely, it will be either pure exhaustion, something totally off everyone's radar, or simply the reverse of some scenario that everyone expects.
In 1980, it took $1 of new debt to create $1 of GDP; in 2000, it took $4; and today, it takes $7. All of that extra credit is serving no productive means. It is pure speculation and it will be unwound. Nonetheless, the sheep are still grazing.
There is a lot of unjustified faith in this Fed for what little power it has relative to where things stand in the current credit expansion cycle. Whether or not the central bankers are purposely crying wolf is now irrelevant.
Regards,
Mike Shedlock ~ "Mish"
This post will take a look at the Brave New World of derivatives, what the Fed and central bankers are saying about that world, and what the world believes they both can do. Let's start off with a look at the GSEs.
Sallie Mae
Bloomberg reported, "Sallie Mae 4th-Quarter Net Falls on Derivatives Losses":
"SLM Corp., the nation's largest provider of college-student loans, said fourth-quarter profit tumbled 96% because of a decline in the value of financial contracts it uses to protect against swings in interest rates.
Net income fell to $18.1 million, or 2 cents a share, from $431 million, or 96 cents, a year earlier, the Reston, Va.-based company said today in a statement. Earnings excluding the derivatives rose 15%, less than analysts expected. Sallie Mae had a loss of $244.5 million related to derivatives and hedges, compared with a gain of $70.2 million in the prior year."
GSEs: Where Do We Stand?
On Jan, 17, 2007, William Poole, president of the Federal Reserve Bank of St. Louis, gave a speech on the topic "The GSEs: Where Do We Stand?":
"Not long after coming to the St. Louis Fed in 1998, I became interested in government-sponsored enterprises, or GSEs. My interest arose when I began digging into aggregate data on the financial markets and discovered how large these firms are. The bulk of all GSE assets are in the housing GSEs -- Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks. Using information as of Sept. 30, 2006 -- the latest available as of this writing -- these 14 firms have total assets of $2.67 trillion; given their thin capital positions, their total liabilities are only a little smaller. Just two firms -- Fannie Mae and Freddie Mac -- account for $1.65 trillion of the assets, or 62% of all housing GSE assets. Moreover, Fannie Mae and Freddie Mac have guaranteed mortgage-backed securities outstanding of $2.82 trillion. Thus, the housing GSE liabilities on their balance sheets and guaranteed obligations off their balance sheets are about $4.47 trillion, which may be compared with U.S. government debt in the hands of the public of $4.83 trillion...
"My initial curiosity about the GSEs was stoked simply by the size of these firms. As I investigated further, I became concerned about their thin capital positions and the realization that if any of them got into financial trouble, the markets and the federal government would look to the Federal Reserve to deal with the problem...
"I continue to believe that the nation would be well served by turning the GSEs into genuinely private firms, without government backing implied or explicit. If they bolster their capital, they can function perfectly well as purely private firms...
"Financial firms throughout the economy ought to have an intense interest in reforming the GSEs. One reason is simply that banks and other financial firms, and many nonfinancial firms, hold large amounts of GSE obligations and GSE-guaranteed mortgage-backed securities. I believe that many risk managers simply accept that GSEs are effectively backstopped by the Federal Reserve and the federal government without ever thinking through how such implicit guarantees would actually work in a crisis. The view seems to be that someone, somehow, would do what is necessary in a crisis. Good risk management requires that the 'someone' be identified and the 'somehow' be specified. I have emphasized before that if you are thinking about the Federal Reserve as the 'someone,' you should understand that the Fed can provide liquidity support, but not capital. As for the 'somehow,' I urge you to be sure you understand the extent of the president's powers to provide emergency aid, the likely speed of congressional action and the possibility that political disputes would slow resolution of the situation...
"At present, there is no process and no one knows what would happen if a GSE is unable to meet its obligations.
"Freddie Mac and Fannie Mae both got into trouble with accounting irregularities in part because of the complexities under GAAP rules of accounting for derivatives positions and rules determining which assets should be reported at market and which should be reported at amortized historical cost. Sound risk management practices require that GSE managements base decisions on market values, or estimates as close to market as financial theory and practice permit. The reason is simple: Fannie Mae and Freddie Mac pursue policies that inherently expose the firms to an extreme asset/liability duration mismatch. They hold long-term mortgages and mortgage-backed securities financed by short-term liabilities. Given this strategy, they must engage in extensive operations in derivatives markets to create synthetically a duration match on the two sides of the balance sheet. These operations expose the firm to a huge amount of risk unless the positions are measured at market value...
"Since the GSE accounting scandals emerged in mid-2003, one thing has remained rock-solid: The GSEs have continued to borrow at yields only slightly higher than those of the U.S. government, and noticeably lower than those available to any other AAA-rated private company or entity. In other words, despite the vast recent accumulation of knowledge about the significant risks run by the GSEs, as well as their inability (or unwillingness) to manage these risks, investors in GSE debt securities appear unmoved. Upon reflection, the lack of market discipline evident during this crisis period is striking -- like a dog that did not bark. This fact indicates to me that there still is a significant problem with the GSEs that needs to be fixed.
"The obvious answer to why the dog did not bark is that the so-called 'implicit guarantee' -- that is, the belief by investors that the U.S. government would not allow the GSEs to default on their debt obligations -- has not been removed...
"I began this speech noting that the Federal Reserve has a responsibility to maintain financial stability. That responsibility includes increasing awareness of threats to stability and formation of recommendations for structural reform. I do not believe that a GSE crisis is imminent. However, for those who believe that a GSE crisis is unthinkable in the future, I suggest a course in economic history."
Key GSE Points
Size and leverage of Fannie Mae and Freddie Mac is enormous
The Fed does not want to be responsible for a blowup at either company
Both pursue policies that inherently expose the firms to an extreme asset/liability duration mismatch
Both hold long-term mortgages and mortgage-backed securities financed by short-term liabilities forcing them to synthetically create a duration match via massive amounts of derivatives
The stocks act as if there are implicit government guarantees. There are no such guarantees
The lack of market discipline is striking
The Fed can provide liquidity, not capital
A crisis is not unthinkable. Those who think so need a course in economic history.
Liquidity Support
Let's review one key excerpt: "The Fed can provide liquidity support, but not capital." For all this talk of "helicopter drops," Poole seems to be calling Bernanke's bluff. I have pointed out many times before that the Fed has no authority to do "a drop," and probably would not even if it could. No doubt it would act to slash interest rates in a crisis, but depending on the exact nature of Fannie Mae's hedges, it is conceivable that the opposite play might be needed. Is this what has the Fed spooked over Fannie Mae?
Federal Reserve Emergency Powers
In the panel on government-sponsored enterprises, Poole spoke on the emergency powers of the Fed:
"I am acutely aware that should there be a market crisis, the Federal Reserve will have the responsibility to manage the problem. Just as many market participants apparently believe that GSE obligations have the implicit backing of the federal government, they may also believe that the Federal Reserve has all the powers necessary to manage a crisis. The Fed's successful efforts to handle the stock market crash in 1987, the near-insolvency of Long Term Capital Management in 1998, and the financial effects of the Sept. 11 tragedy all justifiably increase market confidence in the Federal Reserve. In the interest of a full understanding of the Federal Reserve's powers in the event of a crisis in the market for GSE obligations, I'll outline the Fed's powers as provided by the Federal Reserve Act...
"The Federal Reserve has ample power to deal with a liquidity problem, by making collateralized loans as authorized by the Federal Reserve Act. The Fed does not have power to deal with a solvency problem. Should a solvency problem arise with any of the GSEs, the solution will have to be found elsewhere than through the Federal Reserve."
Because of all the past Fed interventions, no one believes the Fed. Is this the case of the boy who cried wolf one time too many? Is the Fed finally issuing a legitimate warning that no one believes? Let's go across the Atlantic and check out things in Europe.
A Warning From Trichet
The Financial Times is reporting, "Prepare for Asset Repricing, Warns Trichet":
"Current conditions in global financial markets look potentially 'unstable,' suggesting that investors need to prepare themselves for a significant 'repricing' of some assets, Jean-Claude Trichet, president of the European Central Bank, warned at the weekend in Davos.
"The recent explosion of structured financial products and derivatives had made it more difficult for regulators and investors to judge the current risks in the financial system, Mr. Trichet said.
"'We are currently seeing elements in global financial markets which are not necessarily stable,' he said, pointing to the 'low level of rates, spreads, and risk premiums' as factors that could trigger a repricing."
Did anyone care about Trichet's warning? I think not. The following news headline says it all: "Davos Elite Rebuffs Risk Warnings From Policymakers":
"Bankers, investors, and executives last week arrived at the Swiss resort of Davos giddy about record profits and bonuses. After five days of hectoring by policymakers that they are too complacent, they left just as happy.
"'The mood has been totally upbeat,' Sunil Mittal, the billionaire chairman of Bharti Airtel Ltd., India's largest mobile phone operator, said of the 37th annual meeting of the World Economic Forum. 'I've never seen a mood like this.'
"Warnings by central bankers such as Jean-Claude Trichet were batted away by dealmakers like Michael Klein, co-president of Citigroup Inc.'s investment banking unit, and David Rubenstein, managing director at the Carlyle Group Inc. buyout firm. They were confident in their ability to cope with the inevitable slowdown of the world's strongest economic growth in three decades.
"'The consensus here in Davos is everybody's thinking it'll be another booming year,' Morgan Stanley chief global economist Stephen Roach said."
On Jan. 26, Bloomberg reported, "ECB's Weber Says Markets Shouldn't Expect Central Bank Bailouts":
"European Central Bank council member Axel Weber said investors shouldn't expect central banks to bail them out in the event of an 'abrupt' drop in financial markets.
"'If you misprice risk, don't come looking to us for liquidity assistance,' Weber said in an interview in Davos, Switzerland, at the annual meeting of the World Economic Forum. 'The longer this goes on and the more risky positions are built up over time, the more luck you need'...
"'It is time for financial market to move back to more adequate risk pricing and maybe forego a deal even if it looks tempting,' said Weber. There's a danger of a 'rush to the exit' if investors wait too long, he said...
"The catalyst may come in Japan, as the central bank there raises benchmark borrowing costs from the current 0.25%, he said."
Are Central Bankers Crying Wolf?
Is this the case of the Fed that cried wolf one time too many? Oddly enough, I do not believe Trichet or Weber, or Poole, either. Like everyone else, I think the Fed will be there and willing to lend a hand to attempt to bail out the speculators. But unlike everyone else, I think that credit expansion and risk taking have reached such astronomical proportions that when it all implodes, the central bankers will be powerless to stop it.
As for the catalyst...there seems to be too much consensus on the catalyst. "The catalyst may come in Japan, as the central bank there raises benchmark borrowing costs from the current 0.25%," Weber said.
I am not sure what will pop this global credit bubble, but I suspect it will not be higher U.S. interest rates or a rising yen. More than likely, it will be either pure exhaustion, something totally off everyone's radar, or simply the reverse of some scenario that everyone expects.
In 1980, it took $1 of new debt to create $1 of GDP; in 2000, it took $4; and today, it takes $7. All of that extra credit is serving no productive means. It is pure speculation and it will be unwound. Nonetheless, the sheep are still grazing.
There is a lot of unjustified faith in this Fed for what little power it has relative to where things stand in the current credit expansion cycle. Whether or not the central bankers are purposely crying wolf is now irrelevant.
Regards,
Mike Shedlock ~ "Mish"
gipa69
collegio dei patafisici
Market Monitor"-Michael Metz, Chief Investment Strategist for Oppenheimer & Co.
Friday, February 02, 2007
PAUL KANGAS: My guest market monitor this week is Michael Metz, chief investment strategist for Oppenheimer and Company. Welcome back to NIGHTLY BUSINESS REPORT, Mike.
MICHAEL METZ, CHIEF INVESTMENT STRATEGIST, OPPENHEIMER & CO.: Thank you, Paul.
KANGAS: What are your thoughts on today's January employment report and do you think it supports all this talk about how we're in the midst of a Goldilocks economy?
METZ: First of all, Paul, you know those figures are notoriously unreliable. They'll probably be revised. But on balance, I think almost all the evidence indicates we're going to have a soft landing and a renewed growth in the second half of next year.
KANGAS: So you're a believer in the Goldilocks theory, is that correct?
METZ: More or less yes. There are problems out there and one of the problems with the market is to a large extent has been discounted but the economic outlook does look OK.
KANGAS: On your last visit with us in early August, you said of the major asset classes, real estate was too expensive. Bonds were not at all attractive, but stocks were about the only thing to own. Have you changed your mind or do you still feel that way?
METZ: I still feel that way. Actually, you're having sort of a bubble in commercial real estate which makes it even more overpriced. Unfortunately, stocks are the only place to go, in my judgment.
KANGAS: What about the housing slump? Do you believe that's over?
METZ: No, I don't, but it looks like it won't really upend the economy. I think it's going to be a little worse than expected, more durable, but it doesn't look like it brings about a recession.
KANGAS: How about the energy situation? Do you think oil is going to stay in the 50s or go higher or lower?
METZ: I think long-term supply-demand is in pretty good balance and there are all sorts of geopolitical risks. I think energy is a great investment here.
KANGAS: The other thing we have to cover of course, is interest rates. You didn't find bonds attractive back in August. How about now?
METZ: If you have to have income by the two-note, I think long rates will be going up. Look, we've had a bull market, that is declining rates for about 25 years. I think that period is over. To me there's no value in the long bond.
KANGAS: OK, you had only one buy recommendation back in August. Let's see how it's done since then. It was an energy stock and that was Anadarko. It's down about 5.5 percent from where it was. It's been over 50. Did you take profits when you were in a profitable position?
METZ: No, I still like it. I think it's a great candidate to be taken over at a very large premium. It has reserves already proven, most in North America. To me it's a real value stock with the chances for considerable upside excitement. I own it and I'd buy it here.
KANGAS: But you think that the major attraction is a takeover candidate, not earnings, the projection there?
METZ: Well, it's the value underlying the stock/ That is proven reserves I think are worth more than the market price of the stock and I think the big integrated companies have no alternative but to buy companies like this one.
KANGAS: We'll keep our eye on that one. Do you have any new recommendations for our viewers?
METZ: Well, DBA, doing business as, it's actually sort of an ETF, which represents four different grains.
KANGAS: Now this, judging by the chart, has not been public for even, what, a half a year or so?
METZ: No, it's a new invention by Wall Street. If you want to play the grains and frankly I think we have a real risk of very serious inflation in food prices, this is soybeans, corn, wheat and sugar. To me, it's a great speculation on rising prices there. I think it's a very good vehicle.
KANGAS: So it's a commodity play, basically, then.
METZ: That's right, without the leverage that you normally get with commodity plays.
KANGAS: OK, let's have another of your recommendations.
METZ: The other one is OEF, which really reflects the 100 biggest capitalization stocks in the S&P. The great paradox today is that the big quality multinationals have been the laggards. They're the real bargains in the market. Everybody is concentrating on small and midcaps. I think it's a great buy.
KANGAS: Quickly now, we have time for one more.
METZ: EWJ, which represents the Japanese market. It's done nothing for a year. I think it's the most attractive of the developed markets. I think it will have a big move upward this year.
KANGAS: Yes, you recommended it on the program about a year and a half ago and it was around 13. So if you still have it, you've got a profit, right?
METZ: Yes, but I think it has a lot of room on the upside for the year.
KANGAS: Mike, do you personally own any of these securities that we've mentioned?
METZ: Yes I do. I own EWJ and I own DBA and Anadarko.
KANGAS: OK, so you're confident of your choices?
METZ: I've been wrong on occasion, Paul, but I think they're very attractive.
KANGAS: OK. My thanks for being with us.
METZ: My pleasure, Paul.
KANGAS: My guest Michael Metz of Oppenheimer and Company.
Friday, February 02, 2007
PAUL KANGAS: My guest market monitor this week is Michael Metz, chief investment strategist for Oppenheimer and Company. Welcome back to NIGHTLY BUSINESS REPORT, Mike.
MICHAEL METZ, CHIEF INVESTMENT STRATEGIST, OPPENHEIMER & CO.: Thank you, Paul.
KANGAS: What are your thoughts on today's January employment report and do you think it supports all this talk about how we're in the midst of a Goldilocks economy?
METZ: First of all, Paul, you know those figures are notoriously unreliable. They'll probably be revised. But on balance, I think almost all the evidence indicates we're going to have a soft landing and a renewed growth in the second half of next year.
KANGAS: So you're a believer in the Goldilocks theory, is that correct?
METZ: More or less yes. There are problems out there and one of the problems with the market is to a large extent has been discounted but the economic outlook does look OK.
KANGAS: On your last visit with us in early August, you said of the major asset classes, real estate was too expensive. Bonds were not at all attractive, but stocks were about the only thing to own. Have you changed your mind or do you still feel that way?
METZ: I still feel that way. Actually, you're having sort of a bubble in commercial real estate which makes it even more overpriced. Unfortunately, stocks are the only place to go, in my judgment.
KANGAS: What about the housing slump? Do you believe that's over?
METZ: No, I don't, but it looks like it won't really upend the economy. I think it's going to be a little worse than expected, more durable, but it doesn't look like it brings about a recession.
KANGAS: How about the energy situation? Do you think oil is going to stay in the 50s or go higher or lower?
METZ: I think long-term supply-demand is in pretty good balance and there are all sorts of geopolitical risks. I think energy is a great investment here.
KANGAS: The other thing we have to cover of course, is interest rates. You didn't find bonds attractive back in August. How about now?
METZ: If you have to have income by the two-note, I think long rates will be going up. Look, we've had a bull market, that is declining rates for about 25 years. I think that period is over. To me there's no value in the long bond.
KANGAS: OK, you had only one buy recommendation back in August. Let's see how it's done since then. It was an energy stock and that was Anadarko. It's down about 5.5 percent from where it was. It's been over 50. Did you take profits when you were in a profitable position?
METZ: No, I still like it. I think it's a great candidate to be taken over at a very large premium. It has reserves already proven, most in North America. To me it's a real value stock with the chances for considerable upside excitement. I own it and I'd buy it here.
KANGAS: But you think that the major attraction is a takeover candidate, not earnings, the projection there?
METZ: Well, it's the value underlying the stock/ That is proven reserves I think are worth more than the market price of the stock and I think the big integrated companies have no alternative but to buy companies like this one.
KANGAS: We'll keep our eye on that one. Do you have any new recommendations for our viewers?
METZ: Well, DBA, doing business as, it's actually sort of an ETF, which represents four different grains.
KANGAS: Now this, judging by the chart, has not been public for even, what, a half a year or so?
METZ: No, it's a new invention by Wall Street. If you want to play the grains and frankly I think we have a real risk of very serious inflation in food prices, this is soybeans, corn, wheat and sugar. To me, it's a great speculation on rising prices there. I think it's a very good vehicle.
KANGAS: So it's a commodity play, basically, then.
METZ: That's right, without the leverage that you normally get with commodity plays.
KANGAS: OK, let's have another of your recommendations.
METZ: The other one is OEF, which really reflects the 100 biggest capitalization stocks in the S&P. The great paradox today is that the big quality multinationals have been the laggards. They're the real bargains in the market. Everybody is concentrating on small and midcaps. I think it's a great buy.
KANGAS: Quickly now, we have time for one more.
METZ: EWJ, which represents the Japanese market. It's done nothing for a year. I think it's the most attractive of the developed markets. I think it will have a big move upward this year.
KANGAS: Yes, you recommended it on the program about a year and a half ago and it was around 13. So if you still have it, you've got a profit, right?
METZ: Yes, but I think it has a lot of room on the upside for the year.
KANGAS: Mike, do you personally own any of these securities that we've mentioned?
METZ: Yes I do. I own EWJ and I own DBA and Anadarko.
KANGAS: OK, so you're confident of your choices?
METZ: I've been wrong on occasion, Paul, but I think they're very attractive.
KANGAS: OK. My thanks for being with us.
METZ: My pleasure, Paul.
KANGAS: My guest Michael Metz of Oppenheimer and Company.
Fernando'S
Forumer storico
nessuna debolezza nella forza dalla advanced decline line
Fernando'S
Forumer storico
è un amico tuo ??f4f ha scritto:adx ancora debole
Leo's
Forumer storico
buona domenica a tutti intanto
allora, tanto per partecipare (se no ho la senzazione che chiedo e basta, o mi lamento e basta ), vi posto il mio grafico giornaliero del russel
E' arrivato alle bande superiori, da qui penso debba scendere (chiaramente farà il contrario ...
), così almeno sembra
cosa ne pensate?
per quanto riguarda chi è short (come me), non credo sia il momento più adatto per chiudere, io almeno a questo punto tengo e attendo uno storno quantomeno fino alla media centrale per limitare le sanguinose perdite....
allora, tanto per partecipare (se no ho la senzazione che chiedo e basta, o mi lamento e basta
), vi posto il mio grafico giornaliero del russelE' arrivato alle bande superiori, da qui penso debba scendere (chiaramente farà il contrario ...
), così almeno sembracosa ne pensate?
per quanto riguarda chi è short (come me), non credo sia il momento più adatto per chiudere, io almeno a questo punto tengo e attendo uno storno quantomeno fino alla media centrale per limitare le sanguinose perdite....
Fernando'S
Forumer storico
leo-kondor ha scritto:buona domenica a tutti intanto
allora, tanto per partecipare (se no ho la senzazione che chiedo e basta, o mi lamento e basta
E' arrivato alle bande superiori, da qui penso debba scendere (chiaramente farà il contrario ...
cosa ne pensate?
tu, come tanti, usate le bande di bollinger in un modo che non capisco.
Il raggiungimento della banda superiore non ha un significato di iper comprato come per esempio con l'Rsi
in quanto le bollinger sono costruite sulla volatitlita del titolo
e significa solo che il titolo, salendo, ha aumentato la sua vola.
Infatti quando le bollinger si restringono è perchè la volatilita diminuisce e quando si aprono è perchè la volatilità aumenta
e la loro rottura è solo un indice della volatilità raggiunta e ovviamente dipende dalla taratura
...quindi, a parer mio, le bande, da sole, non dicono quando comperare e quando vendere, spero di essermi ben spiegato
un saluto
