Domingo Halliburton
Handmade in USA
i couldve sworn the govt cut rates maybe a month ago. Gonna hold on to my RY shares
they did on the January 21st and it was a surprise.
Boiler Room: The Official Stock Market Discussion
they did on the January 21st and it was a surprise.
Domingo Halliburton
Handmade in USA
that $3B buyback by PCLN mattered more than their earnings
Futuristic Eskimo
All Star
February 18, 2015
US Equity Strategy
Is Winning Losing and Losing Winning?
We were at the Boston Celtics vs. New York Knicks game recently (that’s
indoors, and the NBA, or basketball for those of you not in the know) and this
was the question of the night. Let me explain. Both teams really stink, and
therefore both teams have zero chance of winning the championship this year.
The way teams get new players is through a draft, and the worse you are this
year, the higher the probability that you end up getting good draft picks – and
by extension good players - at the end of the year. The sport is supposed to
have integrity, where teams try to win each night, but a dilemma ultimately
faces at least 15-20 teams every year as the season progresses. It becomes
obvious that they really have no chance to win the championship this year, and
they need better players to have a chance of winning in the future. They need
higher draft picks to get better players, and losing more this year increases
their chances for higher draft picks at year-end. Winning now is losing, and
losing now is winning, if your goal is to ultimately win the
championship in the future.
Probably by this point you are already drawing tons of parallels to
monetary and fiscal policy, the economy, and markets. We know the US
can’t run a $500 billion per year deficit every year forever and we know that
creating $4 trillion on a computer to buy our own securities must have some
ultimate repercussions. Something about today’s economy, corporate
earnings, expected obligations, etc., must by definition be overheated. But this
thought process would have prevented you from making any money in
equities in the last few years (it certainly prevented us from being
opportunistic in 2012). (Glossary: “Prevented us from being opportunistic”
means “wrong.”) “We” are winning now (in terms of asset appreciation in
equities, as the S&P 500 is at an all-time high at the time of this writing, and
we will lose later. We all know it. And, we are all, including us, very arrogant in
thinking that we will be able to signal (closer than now) the top of the cycle
and therefore when it is time to reduce exposure to risk assets. Our view is the
expansion here in the US will last for some time. While investors have been
questioning whether the bond market is on to something, the equity market
does not seem concerned. We point out that during the Internet bubble of
2000, credit spreads hit tights in April of 1997. We all know the equity market
peaked in March of 2000. Sample size of one, and perhaps not even relevant –
but that means the party could last until the middle of 2018. Winning now is
better than not winning at all. But winning too much now is losing
later. Welcome to the NBA.
What are we monitoring? We continue to think that hubris and debt define the top of every cycle and that these
are unlikely to become problems this year. Capital spending, hiring, inventory, and M&A are all generally
somewhat below-average-to-average vs. history. Corporates appear to be sober and planning to grow spending
in line with revenue. Few S&P500 companies will have issues paying the interest-bearing portion of their loans
in the next couple of years, and outside of small- and mid-cap energy, very few among the top 1500 US equities
will have this problem. Six months ago we wrote that the cycle could last until 2020 and the S&P500 could near
3000 at cycle end. We reiterate that view at this point. We think the market will go higher for some time.
Winning now and for a while longer, losing later.
Could FDI rise? Over the last few months we have met several investors from overseas who have started to ask
whether their potentially excessive bond cultures are sensible given government bonds offer so little yield. Their
mantras have been similar. They own, due in many cases to mandates, in excess of 80% of their assets in low
yielding government bonds and are now considering moving toward less of a bond culture. We wouldn’t be
surprised to see incremental foreign direct investment in US equities. While we are not overtly embedding this
into a call for multiple expansion, we are thinking that it can’t hurt. The dividend yield of the S&P500 is well
above nearly all government bonds, and payout ratios are quite low versus history. This, combined with
buybacks of more than 2% net of issuance for the S&P500 this year, ought to be a strong positive for equities
relative to government bonds without even factoring in earnings growth.
Where’s the bubble? All of us have been asked in the last couple of years where we think there is a bubble.
The holy grail for our clients would be to time a bubble call perfectly. Our dream scenario is to sniff out the
bubble, wherever it exists, right before everyone else, recommend going against the recent trend with a cogent
and pointed analysis, and advise our clients correctly just a few weeks before the bubble bursts. Right now there
are stretched valuations and variables that don’t appear to be equally discounted across all of our markets, but
at least to us – aspirationally average equity portfolio managers – there is officially a bubble in government
bonds, and it may have started to burst a couple of weeks ago. We don’t know if it is June 1999, to use a TMT
comparison, or if it is January of 2000, or maybe it is only 1995 and this can keep going. All we know is US
equities look much better.
Portfolio advice: Given the move higher in bond yields, we think adding to financials tactically seems prudent.
We are adding 2% to HBAN, which isn’t particularly yield sensitive for a regional bank, but has good cost
controls, is rated Overweight by our mid-cap banks analyst Ken Zerbe, and screens well in our 3-month alpha
model (MOST) and our 24-month return model (BEST). We are reducing by 1% our position in VZ (yield play
that will look less compelling if / as rates rise) and lowering by 1% our position in LVS (following analyst
downgrade). Our current allocation is overweight consumer discretionary and energy, underweight consumer
staples, industrials, and utilities.
US Equity Strategy | February 18, 2015
MORGAN STANLEY RESEARCH
2
Adam Parker the god
US Equity Strategy
Is Winning Losing and Losing Winning?
We were at the Boston Celtics vs. New York Knicks game recently (that’s
indoors, and the NBA, or basketball for those of you not in the know) and this
was the question of the night. Let me explain. Both teams really stink, and
therefore both teams have zero chance of winning the championship this year.
The way teams get new players is through a draft, and the worse you are this
year, the higher the probability that you end up getting good draft picks – and
by extension good players - at the end of the year. The sport is supposed to
have integrity, where teams try to win each night, but a dilemma ultimately
faces at least 15-20 teams every year as the season progresses. It becomes
obvious that they really have no chance to win the championship this year, and
they need better players to have a chance of winning in the future. They need
higher draft picks to get better players, and losing more this year increases
their chances for higher draft picks at year-end. Winning now is losing, and
losing now is winning, if your goal is to ultimately win the
championship in the future.
Probably by this point you are already drawing tons of parallels to
monetary and fiscal policy, the economy, and markets. We know the US
can’t run a $500 billion per year deficit every year forever and we know that
creating $4 trillion on a computer to buy our own securities must have some
ultimate repercussions. Something about today’s economy, corporate
earnings, expected obligations, etc., must by definition be overheated. But this
thought process would have prevented you from making any money in
equities in the last few years (it certainly prevented us from being
opportunistic in 2012). (Glossary: “Prevented us from being opportunistic”
means “wrong.”) “We” are winning now (in terms of asset appreciation in
equities, as the S&P 500 is at an all-time high at the time of this writing, and
we will lose later. We all know it. And, we are all, including us, very arrogant in
thinking that we will be able to signal (closer than now) the top of the cycle
and therefore when it is time to reduce exposure to risk assets. Our view is the
expansion here in the US will last for some time. While investors have been
questioning whether the bond market is on to something, the equity market
does not seem concerned. We point out that during the Internet bubble of
2000, credit spreads hit tights in April of 1997. We all know the equity market
peaked in March of 2000. Sample size of one, and perhaps not even relevant –
but that means the party could last until the middle of 2018. Winning now is
better than not winning at all. But winning too much now is losing
later. Welcome to the NBA.
What are we monitoring? We continue to think that hubris and debt define the top of every cycle and that these
are unlikely to become problems this year. Capital spending, hiring, inventory, and M&A are all generally
somewhat below-average-to-average vs. history. Corporates appear to be sober and planning to grow spending
in line with revenue. Few S&P500 companies will have issues paying the interest-bearing portion of their loans
in the next couple of years, and outside of small- and mid-cap energy, very few among the top 1500 US equities
will have this problem. Six months ago we wrote that the cycle could last until 2020 and the S&P500 could near
3000 at cycle end. We reiterate that view at this point. We think the market will go higher for some time.
Winning now and for a while longer, losing later.
Could FDI rise? Over the last few months we have met several investors from overseas who have started to ask
whether their potentially excessive bond cultures are sensible given government bonds offer so little yield. Their
mantras have been similar. They own, due in many cases to mandates, in excess of 80% of their assets in low
yielding government bonds and are now considering moving toward less of a bond culture. We wouldn’t be
surprised to see incremental foreign direct investment in US equities. While we are not overtly embedding this
into a call for multiple expansion, we are thinking that it can’t hurt. The dividend yield of the S&P500 is well
above nearly all government bonds, and payout ratios are quite low versus history. This, combined with
buybacks of more than 2% net of issuance for the S&P500 this year, ought to be a strong positive for equities
relative to government bonds without even factoring in earnings growth.
Where’s the bubble? All of us have been asked in the last couple of years where we think there is a bubble.
The holy grail for our clients would be to time a bubble call perfectly. Our dream scenario is to sniff out the
bubble, wherever it exists, right before everyone else, recommend going against the recent trend with a cogent
and pointed analysis, and advise our clients correctly just a few weeks before the bubble bursts. Right now there
are stretched valuations and variables that don’t appear to be equally discounted across all of our markets, but
at least to us – aspirationally average equity portfolio managers – there is officially a bubble in government
bonds, and it may have started to burst a couple of weeks ago. We don’t know if it is June 1999, to use a TMT
comparison, or if it is January of 2000, or maybe it is only 1995 and this can keep going. All we know is US
equities look much better.
Portfolio advice: Given the move higher in bond yields, we think adding to financials tactically seems prudent.
We are adding 2% to HBAN, which isn’t particularly yield sensitive for a regional bank, but has good cost
controls, is rated Overweight by our mid-cap banks analyst Ken Zerbe, and screens well in our 3-month alpha
model (MOST) and our 24-month return model (BEST). We are reducing by 1% our position in VZ (yield play
that will look less compelling if / as rates rise) and lowering by 1% our position in LVS (following analyst
downgrade). Our current allocation is overweight consumer discretionary and energy, underweight consumer
staples, industrials, and utilities.
US Equity Strategy | February 18, 2015
MORGAN STANLEY RESEARCH
2
Adam Parker the god
Domingo Halliburton
Handmade in USA
Domingo Halliburton
Handmade in USA
Think I might straddle NBG LEAPS... $$$ to be made there
beta: 3.97
sounds like they might be getting close to a deal though.
Domingo Halliburton
Handmade in USA
DAX (German stock market) went crazy this morning. Rare to see spike like that in an index.
Someone stuck a cattle prong up CERE ass because that slow cow is finally picking up the pace
Someone stuck a cattle prong up CERE ass because that slow cow is finally picking up the pace
Only so long manipulators can manipulate
Wish I would have added more at 18
almost there gimme 210.90 an I'll put in that trailing stop orderneed the SPY to hit 211 tomorrow. ideally not holding these calls over the wknd.
then I expect it will head back down but if it doesnt were back in bull mode IMO
.
pays to be patient