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  • Yellen is likely to err on the side of raising rates later than earlier

    Posted by Larry Berman

    Yellen is likely to err on the side of raising rates later than earlier and the language of “considerable time” is not removed today. At least that is what she has implied since taking over. Is there ...

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  • Yellen is likely to err on the side of raising rates later than earlier
    Posted by Larry Berman on 
    Wednesday, September 17, 2014 8:45 AM

    Yellen is likely to err on the side of raising rates later than earlier and the language of “considerable time” is not removed today. At least that is what she has implied since taking over. Is there enough evidence that the labour market has reached escape velocity that tighter policy would not slow it down? Most economists think it is still fragile, but a 1% funds rate by the end of 2015 is stil...

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  • The post Lehman world has not been kind to hedge funds
    Posted by Larry Berman on 
    Tuesday, September 16, 2014 8:53 AM

    CALPERS is pulling out of hedge funds. They are too expensive and they have not generated returns equal to the world markets for the past decade. It just goes to show that even a sophisticated company like CALPERS, does not look at risk adjusted returns or perhaps hedge funds are simply leveraged long funds and have lost their edge. SAC can’t cheat with insider information, they have lost their ed...

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  • The stealth bear market is getting very uncomfortable
    Posted by Larry Berman on 
    Monday, September 15, 2014 3:24 AM

    We have been noting the stealth bear market (weakening breadth readings) that has been taking place in recent months and that it is getting very uncomfortable. There has been a massive rotation into the winners and the winners keep getting stronger while 47% of the NASDAQ composite and 40% of the Russell 2000 are in a technical bear market (20% off 52-week highs). So how can the averages overall b...

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  • Consolidation of the energy sector is expected to play out for the next year or so
    Posted by Larry Berman on 
    Friday, September 12, 2014 8:55 AM

    The consolidation of the energy sector is expected to play out for the next year or so. We are not bearish on the sector, in fact quite positive on Canada relative to the world over the next decade because of the pickup in market share once distribution channels and infrastructure is developed. You can’t ship LNG and crude by rail to Japan last time I checked, who desperately needs to buy from Can...

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  • Global conflict is a notably noise factor for stocks
    Posted by Larry Berman on 
    Thursday, September 11, 2014 11:04 AM

    9-11 is a sad day, not only because we lost family, friends and colleagues, but to know that in this day and age, terrorists and war is still a major component of life for so many. Obama said last night that if you threaten America, you will have no safe haven—the Republican response says he did not go far enough. Policing the free world is expensive and while fiscally the US cannot afford the sam...

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  • AAPL was wholly unimpressive in the iPhone 6 and the Apple Watch
    Posted by Larry Berman on 
    Wednesday, September 10, 2014 12:17 PM

    AAPL was wholly unimpressive in the iPhone 6 and the Apple Watch in particular. It added to the heavy tone yesterday, but it is not about AAPL or Alibaba, it is global bond yields and the stability of the euro relative to the dollar and yen. Barclays has a bold new forecast out for 1.10 dollar-euro within 12 months and we have been thinking more like 1.20-1.25 is value. The depths of the Lehman or...

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  • The widening chasm between Main Street and Wall Street
    Posted by Larry Berman on 
    Tuesday, September 09, 2014 10:15 AM

    Multi-billionaire Donald Trump is filling for bankruptcy again (5th time is a charm) for his Atlantic City hotels. That means nothing for markets, but it does speak to the widening chasm between Main Street and Wall Street. Personally, I straddle the line, while I make my living on Wall Street, I live on Main Street (actually John Street, but it was the main street in Thornhill Village some 200 ye...

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  • Goldman Sachs upgraded their short-term outlook for stocks
    Posted by Larry Berman on 
    Monday, September 08, 2014 5:23 PM

    Goldman Sachs upgraded their short-term outlook for stocks and now see a 12-month return of about 12% (in line with expected earnings growth so no multiple expansion) and a 3-month return of about 3%. They had previously seen a short-term risk to equities from rising bond yields. Our view is similar, however, we still see the Sept-Oct seasonals suggest we should look to buy weakness, but not chase...

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  • The test and hurdle of S&P 2000 was off again yesterday
    Posted by Larry Berman on 
    Friday, September 05, 2014 11:35 AM

    The test and hurdle of S&P 2000 was off again yesterday. Today is a new day and perhaps the strength or weakness of the employment picture will change that? In Europe, Draghi’s efforts to push on a string are admirable. More negative interest rates and a promise to buy bonds neither of which can address the aging demographic and the deflationary forces it ushers in. We need only look at Japan ...

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  • Our call to avoid the euro has been a good one
    Posted by Larry Berman on 
    Thursday, September 04, 2014 12:05 PM

    AAPL caused a major reversal day in the NASDAQ yesterday and today the ECB reversed that. Somehow more negative interest rates are supposed to be a good thing for the markets. One day investors will wake up and realize that the primary reason there is any growth beyond natural population expansion is that money is not only free, you have to pay to hold it. Swiss 5 years are at 4bps followed by Ger...

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