Category Archives: Investment outlook

Ilargi: Deflation, A Stock Market Crash And Then Christmas

Yves here. I know I should write about Janet Yellen’s confirmation hearing, but I can’t stand to do it. Plus I am confident you’ll enjoy this piece more.

Wolf Richter: NSA Spying Crushes US Tech Companies in Emerging Markets (“An Industry Phenomenon,” Says Cisco’s Chambers)

Cisco CEO John Chambers had a euphemism for it during the first quarter earnings call: the “challenging political dynamics in that country,” that country being China. But then there was India and others, including Russia where NSA leaker Edward Snowden is holed up, and where sales outright collapsed.

Wolf Richter: The Day The Bubble Became Official, And Everyone Was Happy (Except Twitter Casualties)

A new era has dawned: there is now a consensus that this is a stock market bubble. We’re back where we were during the last bubble, or the one before it, though the jury is still out if this is February 2000 or October 1999 or sometime in 2007.

Has QE Stimulated Credit?

Yves here. As much as the post below is a very useful recap of data in terms of the impact of QE, I need to hector “Unconventional Economist” for being pretty conventional. His headline question, whether intentionally or not, reinforces the notion that it was reasonable to think that QE, or super low rates generally (as in ZIRP) would lead to increase lending….

Markets Enter Blowoff

You know something is going wrong when the heads of the largest fund manager in the world and the largest bond management firm simultanously scream ”bubble”.

Stranded Fossil Fuels? Institutional Investors Concerned About “Unburnable Carbon” Fallout

Yves here. Given the almost innate bullish bias of equity investors, when they start worrying about something, that means it actually has non-trivial odds of happening. So the idea that investors think it’s possible that a lot of current proven fossil fuels won’t be lifted is an unexpected bit of good news on the climate change front. Whether this comes to pass soon enough to save our collective bacon is another question entirely.

Us Versus Them

By Gerald Minack, a former global equity strategist for Morgan Stanley. Cross posted from MacroBusiness

Rising political polarisation in the US has gone hand-in-hand with rising income inequality, falling top-end tax rates, lower taxes on business, rising leverage and higher asset prices. These trends may be coincidental, but they seem to reinforce each other.

Democrats and Republicans Pedal to the Metal in Debt Ceiling/Shutdown Game of Chicken

You know it’s bad when Grover Norquist is playing elder statesman.

David Dayen: Mysterious Study Backs Financial Adviser Thieves Who Want To Keep Bilking Small Investors

At the risk of self-promotion, allow me to point you in the direction of a piece by me running today in The New Republic. It’s about a proposed update to the Department of Labor’s fiduciary rule, and how the financial services industry, along with members of both parties, are working to stop it. An excerpt:

Wolf Richter: Bubble Trouble: Record Junk Bond Issuance, A Barrage Of IPOs, “Out Of Whack” Valuations, And Grim Earnings Growth

When Blackstone’s global head of private equity, Joseph Baratta, said Thursday night that “we” were “in the middle of an epic credit bubble,” the likes of which he hadn’t seen in his career, he knew whereof he spoke.

Junk bond issuance hit an all-time record of $47.6 billion in September, edging out the prior record, set in September last year, of $46.8 billion, according to S&P Capital IQ/LCD. Year to date, issuance amounted to $255 billion, blowing away last year’s volume for this period of $243 billion. The year 2012, already in a bubble, set an all-time record with $346 billion. This year, if the Fed keeps the money flowing and forgets about that taper business, junk bond issuance will beat that record handily.

Will the Fed Ever Taper?

Overnight market action shows that nobody really has a clue about the Fed taper any longer.

All Eyes on the Fed Taper

By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness

It’s all about the FOMC meeting at 04:00 AEST tomorrow morning and to be honest nothing else really matters. Ben Bernanke speaks 30 minutes later at 04:30 AEST and the chairman’s speech will also be highly watched, potentially increasing volatility across the board.

Has the Shale Bubble Already Burst?

Just like the famous Gold Rushes of the 19th century, US shale gas development is turning out to be a limited and regional market opportunity. Across the Atlantic, the high financial and human costs to fracking also mean that Europe should forget any fantasies about repeating the US shale boom.

Many US shale companies that have been beating the drums of shale “revolution” are now facing oil and gas well depletion. In February 2013 the US Energy Information Administration (EIA) warned that “diminishing returns to scale and the depletion of high productivity sweet spots are expected to eventually slow the rate of growth in tight oil production”. It was a cautious but intriguing statement.

Mr. Market is Having Another Fit Over the Fed’s Taper

Asian markets got off to an only mildly down start, so I busied myself on a post that took some concentration, along with some nagging tech matters. As I’m about to turn in, it appears that Asian markets decayed during the trading day and Europe is off to a wobbly start.

Wolf Richter: Cisco CEO Reports Record Sales And “Lumpy” Demand, Just Like In November 2007, A Month Before Stocks Began To Crash

As Wolf Richter argues, Cisco has been a harbinger of market turns, and he describes an earnings call which struck him as eerily similar to another inflection point, that of fall 2007.