Birinyi Diverges From Einhorn Short Forecasting S&P 500 at 1,820 – Bloomberg 10-31-13

Salient to Investors:

Laszlo Birinyi at Birinyi Associates said the S&P 500 Index has a 51 percent chance of rising to 1,820 by February 2014 and a 75 percent chance by April 2014.

David Einhorn at Greenlight Re said he has become more conservatively positioned, and continues to be short companies with conventional valuations, rather than speculative story stocks that have caused excessive pain for other short sellers.

The average forecast of 19 Wall Street strategists is for the S&P 500 to reach 1,718 by year-end, with a range of 1,440 to 1,800.

The S&P 500’s P/E ratio is at 16.7.

Read the full article at  http://www.bloomberg.com/news/2013-10-31/birinyi-says-s-p-500-will-rise-3-to-1-820-in-next-three-months.html

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Biggest Danish Pension Fund Girds for End to Crisis Stimulus – Bloomberg 10-30-13

Salient to Investors:

ATP, Denmark’s biggest pension fund said:

  • Unprecedented stimulus from the biggest central banks has supported prices in “risky” markets, including equities, so investors need to brace themselves for potential disruptions when normalization of monetary policy comes, as recent investor reaction to the Fed’s warning of tapering showed market fragility.
  • Monetary policy is not a long-term solution to economic weakness and central banks only buy time as governments, companies and households adjust.

Norway’s sovereign wealth fund, the world’s biggest, is bracing for a correction in stock prices.

Read the full article at  http://www.bloomberg.com/news/2013-10-30/biggest-danish-pension-fund-girds-for-end-to-crisis-stimulus.html

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Vivek Wadhwa Guest on Market Makers – BloombergTV 10-29-13

Salient to Investors:

Vivek Wadhwa at Singularity University said about Twitter IPO:

  • Company long-term has no future – OK for the next 1 to 2 quarters but 1 to 2 years out it is hard to see where their growth will come from as their marketplace is limited, mainly to the US, while Asia has many better competitors.
  • The public will be left holding the bag after the IPO.
  • Board and management all white men with no women which shows company is out of touch with consumer base. Companies do much better with women on the board.
  • Has no profits and unlikely to ever have amazing profits.
  • Social media in general is a fad because it is will be everywhere like electricity and the internet but there is a bubble around a small group of companies.

Watch the video at http://www.bloomberg.com/video/twitter-has-a-limited-marketplace-wadhwa-JdSBgBB_RA~zZEs48Vk8Aw.html

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Buffett Says Gains in Housing Fall Short of Equilibrium – Bloomberg 10-24-13

Salient to Investors:

Warren Buffett said the US housing market is coming back but housing starts are not at an equilibrium point, where they match household formation. Buffett said housing will rebound because of increasing population and limited supply. Buffett said the US has made significant progress since 2009 after being hit by something that has never happened since he was one or two years of age.

Freddie Mac said the average rate for a 30-year fixed mortgage is 4.13 percent.

Read the full article at  http://www.bloomberg.com/news/2013-10-24/buffett-says-gains-in-housing-fall-short-of-equilibrium.html

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US government lies about inflation – Jim Rogers Blog 10-24-13

Salient to Investors:

Jim Rogers writes:

  • Inflation is everywhere, including India, China, Norway, and Australia.
  • However, the BLS is lying about inflation in the US. Since 2001, the cost to go to the top of the Empire State Building has risen to $44 from $9, to the Museum of Modern Art has risen to $25 from $10, and a cab ride from Kennedy airport to Manhattan has risen from $52 from $30 plus tolls.

Read the full article at http://blogjimrogers.blogspot.com/2013/10/us-government-lies-about-inflation.html

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Hamptons Sales Surge Fuels High-End Home Tear-Downs – Bloomberg 10-24-13

Salient to Investors:

Miller Samuel  and Douglas Elliman Real Estate said:

  • Hamptons real estate sales are surging, fueling a boom in knockdowns, expansions and quick resales.
  • Hamptons home purchases in Q3 rose 32 percent from a year earlier to the most for a Q3 since 2005. Luxury homes rose 14 percent in Q3 from a year earlier, ultra-luxury homes rose 21 percent, but the broader market rose less than 1 percent.
  • The supply of Hamptons homes has climbed in each of the last three quarters indicating increased competition among sellers.

Mitchell Pally at the Long Island Builders Institute said Hamptons land is worth more than the house and the bigger the house, the easier it is to sell, unlike most places where the bigger the house, the harder it is to sell. People want mainly new homes and resale of newer homes and not old traditional homes because they want more space, amenities and technological advances.

Jonathan Miller at Miller Samuel said the first stage is just seeing transactions followed by finding opportunities in properties that need significant work. Miller said the jump in quick high-end resales shows that people are confident in taking on risk, making deals before the expected increases in mortgage rates, and spurred on by record stock prices.

Hamptons home prices are up 14 percent from the bottom in Q1, 2009.

Read the full article at  http://www.bloomberg.com/news/2013-10-24/hamptons-sales-surge-fuels-high-end-home-tear-downs.html

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Families Blocked by Investors From Buying U.S. Homes – Bloomberg 10-24-13

Salient to Investors:

RealtyTrac reported:

  • Home purchases by institutional buyers reached a record high of 14 percent of sales in September and all-cash buyers accounted for 49 percent of sales – 10 percent nationwide were properties repossessed in foreclosures, with Las Vegas at 21 percent, Riverside and San Bernardino at 20 percent, Cleveland at 19 percent and Phoenix at 18 percent.
  • Institutional investors accounted for 29 percent of all home purchases in Atlanta, followed by Las Vegas at 27 percent, St. Louis at 25 percent, Jacksonville at 23 percent and Charlotte at 17 percent.
  • The median price of a property in foreclosure or seized by a bank was $112,000 versus the $189,000 median price of a non-distressed property.

Real estate values nationally are 21 percent below their peak.

The median monthly rent nationally was at an all-time high of $735 in Q2, while the rental vacancy rate was at 8.2 percent, the lowest since Q1, 2001.

The S&P/Case-Shiller index of property values in 20 cities increased 12.4 percent in July from a year earlier, the biggest advance since February 2006. Las Vegas increased 27.5 percent and Atlanta increased 18.5 percent.

Michael Hanson at Bank of America said investors and traditional buyers are buying cheap homes before prices go higher, but investors have the advantage of paying cash.

Blackstone and American Homes 4 Rent have together bought 60,000 homes to benefit from low prices and rental demand from millions of former home owners who have lost properties through foreclosures.

Haendel St. Juste at Morgan Stanley said the homeownership rate, which declined to 65 percent in half1 from a peak of 69.2 percent in June 2004, is expected to stabilize around 63 percent, adding more than 2 million households to the rental population.

Daren Blomquist at RealtyTrac said the pendulum is swinging too far from everyone wanting to buy a home in the run-up to the mortgage crisis to qualified people stuck with being renters.

Keith Gumbinger at HSH.com sees tremendous pressure on inventory in areas being dominated by investors – all the homes have been converted into rentals.

Freddie Mac said the average 30-year fixed rate was 4.28 percent last week versus a two-year high of 4.58 percent in mid-October.

Read the full article at  http://www.bloomberg.com/news/2013-10-24/families-blocked-by-investors-from-buying-u-s-homes.html

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Drowning in liquidity – Jim Rogers Blog 10-23-13

Salient to Investors:

Jim Rogers writes:

Japan says it will print unlimited amounts of money, the Fed says it can print a trillion dollars a year, and the ECB says it will do “whatever it takes.”  The people getting the gigantic ocean of liquidity are having a wonderful time but it is totally artificial and will end badly.

Read the full article at http://blogjimrogers.blogspot.com/2013/10/drowing-in-liquidity.html

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Central Banks Drop Tightening Talk as Easy Money Goes On – Bloomberg 10-23-13

Salient to Investors:

Continued stimulus on cooling global growth led by weakening in developing nations amid stagnant inflation and job growth in much of the industrial world risks inflating asset bubbles central bankers will have to face later.

Talk of unsustainable home-price increases is spreading from Germany to New Zealand, while the MSCI World Index of developed-world stock markets is near its highest level since 2007.

Richard Gilhooly at TD Securities said central bankers are wildly pumping liquidity and promising to keep rates down – which is abnormal.

The IMF cut its forecast for global economic growth to 2.9 percent in 2013 and 3.6 percent in 2014, and says inflation across rich countries is short of the 2 percent rate favored by most central banks.

Michala Marcussen at Societe Generale said central banks are concerned we are seeing another false start in their economies, and we need to see 2 to 3 months of better numbers before they are will to contemplate an exit.

The median economist expects the Fed to wait until March before tapering.

Gary D. Cohn at Goldman Sachs said we are economically in the exact same place as a year ago, so if QE made sense a year ago, it probably makes sense today.

Derek Holt at Bank of Nova Scotia said tightening before the Fed is ready to tighten would drive up currencies against the dollar, to the detriment of exports. Holt said the easy-money bias across global central banks will persist until March or April 2014 as the Fed complicated the exit strategies for many central banks.

Joachim Fels at Morgan Stanley said we are at the cusp of another round of global monetary easing, and if the Fed’s delay extends the decline in the dollar, then the BoJ and ECB are also more likely to add fresh stimulus.

Citigroup said the ECB is likely to offer banks another round of cheap, long-term loans in Q1, and the BoJ may ease more to offset a 2014 consumption tax increase.

Thierry Wizman at Macquarie Group said the much weaker dollar will cause central banks to ease because they can be less worried about capital flight if the Fed is not tightening and the strength in their currencies is imparting some disinflation into their economies, giving them a window to cut rates.

David Hensley at JPMorgan Chase forecasts the average interest rate in developed economies to hold close to the current 0.40 percent for another year as it hard to see much changing on the rate front.

The Bundesbank said that apartments in Germany’s largest cities may be overvalued by as much as 20 percent. The BoE is rebutting suggestions of a housing bubble. Rightmove said London asking prices jumped 10.2 percent in October from the prior month.

Michael Ingram at BGC Partners said bubble conditions will remain.

Karen Ward at HSBC sees no rapid withdrawal of global liquidity any time soon as whatever their official mandates, central bankers are supposed to safeguard a nation’s real income.

Read the full article at  http://www.bloomberg.com/news/2013-10-23/central-banks-drop-tightening-talk-as-easy-money-goes-on.html

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Dollar Drops Amid Bets Fed Won’t Slow Stimulus Soon – Bloomberg 10-17-13

Salient to Investors:

Richard Fisher  at FRB of Dallas said fiscal discord has undermined the case for tapering bond purchases, which tend to debase the dollar.

Richard Franulovich at Westpac Banking said tapering is looking less and less likely, and sees an opportunity in the next few months for currencies and risk assets to rally across the board against the dollar.

The Bloomberg US Dollar Index breached its lower 20-day Bollinger band, signaling prices may have fallen too far, too fast.

David Bloom at HSBC said the market is getting grumpy with the dollar and is thinking, can the Fed taper this year, which looking less likely.

Kathleen Brooks at Forex.com said there is a lot of bullish sentiment toward the pound, driven by a weak tone in the dollar combined with the UK data.

Simon Smith at FxPro said the government deal was not good for the dollar as uncertainties over the debt ceiling and government shutdown are only delayed – it will be dollar-negative in the next 3 months.

Ric Deverell at Credit Suisse said all the silliness has pushed tapering out until at least Q1, meaning you don’t get a clear direction from the dollar until at least 2014.

Read the full article at http://www.bloomberg.com/news/2013-10-17/dollar-slides-amid-bets-fed-will-maintain-stimulus-franc-rises.html

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