Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

[bill]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

a u.s.-chinese cold war would do wonders for both countries.

I did a trade few weeks before your post.
http://www.itulip.com/forums/showthr...78805#poststop

[ProdigyofZen]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

As I have been anticipating the last Bears who have thrown in the towel were shellacked in January. One of the managers I mentioned was Hugh Hendry in London:

His overall returns since 2010 have been deplorable. Why does he get to run money? Oh yea he is on UK tv all the time, a great salesman.

http://www.zerohedge.com/news/2014-0...loss-inception

Having thrown in his bearish towel in December, the self-proclaimed "last bear standing" has had a tough January. His plan, to "just be long pretty much anything" appears to have back-fired (for now) as Eclectica reports a 3.6% loss in January - the worst month since the Fund's inception.



His largest loss was on a long Japan theme (leveraged) and that was somewhat offset by gains in his short emerging markets and short China themes.


It appears nothing hs changed from Hendry's December perspective of the inexorable melt-up in developed markets thanks to central bank largesse (247% of NAV exposed to stocks) though he does note "renewed turmoil" which, we suppose, merely supports his thesis longer term.

Via Eclectica,
January witnessed renewed turmoil in emerging market equities and currencies. The Fund profited from positions within our Short Emerging Markets and Short China themes (+0.9%).
FX positions within these themes generated a positive return of +0.3% as our “good versus bad EM” FX basket posted gains, largely driven by shorts against the Turkish lira and the Russian ruble. Equities provided an additional +1.4%, led by short exposure to Chinese and EM indices. These gains were partially offset by losses on curve steepeners in Australia and Korea, which were closed out during the month.
Developed market equities suffered sharp sell-offs over the course of the month as emerging market woes spilled over into global risk assets. The Fund’s core Long Developed Markets theme suffered as a result (-2.0%). Developed market equities cost the fund -1.7%, led by weakness in internet and robotic stocks. Additional call option exposure to US and European indices cost a further -1.3%. Equity losses were partially offset by gains in front-end rates in the Euribor and Short Sterling curves, generating a positive contribution of +0.8%.
The largest detractor to performance came from our Long Japan theme (-3.0%). Losses on Nikkei call options were the single biggest drag on performance during January (-2.2%), as the underlying index fell -8.5%. Cash equity positions in Japanese brokers and property shares cost a further -0.8%.



From Hendry's December letter...
Last bear standing? Not any more...
I know what you are thinking. You are thinking that the last bear is capitulating. It isn't a good sign. Maybe it is that simple. But I think it is a little more complicated. We, and I accept we aren't the first here, sense that US monetary officials may now be willing to subordinate the demands of their own economy to the perils confronting emerging market economies. If that is the case, the great peril is not that the Fed finally tightens monetary policy and US stock prices suddenly tumble from what are very obviously overpriced levels. Would that it were – our curmudgeonly portfolio structure (think dynamic volatility targeting and stop losses) works well with big stock market reversals. Instead the greater peril is that the current backdrop will turn out to mark a rapid acceleration in the ongoing move to the upside. A hint that this might be the case comes from looking back through the 113 years of price data for the Dow Jones Industrial Average. We have done this (so you don't have to), searching along the way for the comparable periods that fit most tightly to the last 500 trading days. What is clear is that periods of trading similar to the one we have seen over the last two years don't often seem to end quietly: they boom big time or they crash. Which is it to be this time? Looking at the markets of 1928, 1982 or even 1998, all of which have scarily similar looking historical charts to today's, we wonder if it won't be both. Starting with the boom bit.

Let's look at what happened in 1998. All sorts of market moving events were shifting the sands. There was the fall out from the Asian Tiger crisis. There was Russia's local currency default. And there were the event risks of the collapse of LTCM and the Y2K scare. Together these things ensured that US monetary policy was set far too loose for the US economy itself. And the result? A parabolic trend to the upside in equities that destroyed anyone who chose to stand in its way. This is what I fear most today: being bearish and so continuing to not make any money even as the monetary authorities shower us with the ill thought-out generosity of their stance and markets melt up. Our resistance of Fed generosity has been pretty costly for all of us so far. To keep resisting could end up being unforgivably costly.

As a reminder, here is Hendry's conclusion from his December letter:

Just be long. Pretty much anything.

So here's how I understand things now that I am no longer the last bear standing. You should buy equities if you believe many European banks and their sovereign paymasters are insolvent. You should buy shares if you put a higher probability than your peers on the odds of a European democracy rejecting the euro over the course of the next few years. You should be long risk assets if you believe China will have lowered its growth rate from 7% to nearer 5% over the course of the next two years. You should be long US equities if you are worried about the failure of Washington to address its fiscal deficits. And you should buy Japanese assets if you fear that Abenomics will fail to restore the fortunes of Japan (which it probably won't). Hey this is easy...

And then it crashed

I have not completely lost my senses of course.

[lektrode]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

As I have been anticipating the last Bears who have thrown in the towel were shellacked in January. One of the managers I mentioned was Hugh Hendry in London:

Just be long. Pretty much anything...... Hey this is easy...

heh.... where have we heard that line (about the shiny stuff(s) in particular) before...

oh, yeah... right

[photon555]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

The Alice in Wonderland logic of the current economic scene makes my head hurt. But could some of the inflows into the present overpriced market be coming from people who anticipate a period of inflation ahead and believe equity exposure will hedge against cash and bond positions?

[Fox]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

Ya the "weather blather" is giving me a bit of a masochistic laugh as well. Looks like we got a nice little "buy the dip" bear trap to suck in the last bit of money sitting on the side lines.

But everyone just insists on blaming the continuous bad reports on the weather. With heavy snowfall, we'll probably be seeing more bad news on the the flooding front for spting. We're also looking like an el nino year so hot and dry. hmm, people don't shop, work, or get hired when it's too cold. Do they also not do so when it's too hot?

And still, gravity patiently waits to be acknowledged. ;P

[vinoveri]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

Ya the "weather blather" is giving me a bit of a masochistic laugh as well. Looks like we got a nice little "buy the dip" bear trap to suck in the last bit of money sitting on the side lines.

;P

Did you mean bull trap?

I've watched as prognosticators called for highs at SPX, 1220, and then all the geniuses calling a Triple Top at 1550 and now this is it (or maybe just another 20%) and then it is surely to crash. Someone will eventually be right.

[Fox]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

Did you mean bull trap?

Bull trap, bear trap, whatever the sucker play is called before the next leg down. ;P

Ukraine about to give the middle finger to Russia and 3% of Russia's GDP in loans (and 30% of Europe's Nat Gas).
Another negative Housing report (So how's those REITs working out boys? XD )
Consumer Confidence also falling.

And that's just this morning!

What's the good news to invest on? Zuckerberg throwing around Billions in paper again?

And yet I haven't seen any bear calls? "Sell in May and go away" is going to be fun to watch this year

[lektrode]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

.....

And yet I haven't seen any bear calls? "Sell in May and go away" is going to be fun to watch this year

am wondren if its going to be: sell in march and go get parched...
to pump up the Q1 bonus pool.

[ProdigyofZen]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

There is no Q1 bonus pool . Wall Street bonuses are paid out end of Jan/Feb time frame from the previous year.

[verdo]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

I wonder what kyle bass has been up to these days.

[Milton Kuo]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

I wonder what kyle bass has been up to these days.

Besides losing money shorting Japanese government bonds, I seem to recall seeing an article where he said he was long Argentine bonds. I don't know anything about the bond markets but I think he's going to lose money on his Argentine bond investment.

[lektrode]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

There is no Q1 bonus pool . Wall Street bonuses are paid out end of Jan/Feb time frame from the previous year.

oh - thot they all were focused on making the quarterlies..
what i get fer thinkin.

[ProdigyofZen]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

I wonder what kyle bass has been up to these days.

Notes from a recent Kyle Bass speech:

Kyle Bass Hayman Capital:

Yellen has a difficult choice ahead. She may be forced to taper and/or raise Fed funds due to hitting employment target even though some of the other economic factors may not support it. Will rhetoric now change to de emphasize employment?

Kyle does not expect or believe the Fed funds rate should increase. It is definitely not going to 4% again.Revolution of hydrocarbons in US is a game changer ‑ balance trade is getting better while we are tapering. US dollar is in a position of strength.
Production peak for US crude oil may come in 2018 based on feedback from industry sources.

Japan on the verge of printing its first current account deficit (structural). Abenomics is starting to shift. BOJ has created a paradox where
it needs to buy JGBs to convince population to spend (or at least sell bonds and not save) and believe their will be 2% inflation. Double
monetary base in two years.

The more that people believe in monetary policy, the larger the policy has to be in scope. They may have to double the plan to meet their objectives.

Yen devaluation relative to the dollar will continue.

China is clearly slowing down and you dont have to look at their official statistics to know that ‑ just look at demand for imports, particularly commodities.

EM issues are related to current account issues. Those much better positions from an FX reserve perspective should recover now that investors are differentiating between those that are healthy and those that are not. They like Brazil given response to inflation and ability to deal with capital flows.

Argentina has huge upside potential though the current problems are very severe. But debt to GDP is much more favorable than the
PIIGs had in the crisis, GDP and population are much higher, and yields on debt are excessive at current levels (13.5% ‑ can go much lower if they restructure exchange bond holders and bring back ability to utilize capital markets). Great potential there for YPF and develop out reserves (FDI going in and very resource rich). Balance of trade will strengthen. Lawsuit will be won or settled by next year.

Kyle is very confident that we will not see a crisis like 97/98 in EM. While Yen devaluation is concerning for these countries, it is well telegraphed linear movement and all of the central banks in ASEAN nations are preparing for it. China slowdown can also have an impact on certain sectors. Canadian mining and particularly housing could be a casualty.

[jk]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

from roger cohen in the ny times:

A bon mot doing the rounds in post-commodities-boom South America is that Brazil is in the process of becoming Argentina, and Argentina is in the process of becoming Venezuela, and Venezuela is in the process of becoming Zimbabwe.

[Southernguy]

Re: Has anyone been paying attention to the Nasdaq? It's at a 13 year high...

from roger cohen in the ny times:

A bon mot doing the rounds in post-commodities-boom South America is that Brazil is in the process of becoming Argentina, and Argentina is in the process of becoming Venezuela, and Venezuela is in the process of becoming Zimbabwe.

Argentina has the second shale gas reserves in the world. After it settled (yesterday) it's differences with REPSOL about expropiation for YPF it is possible that a massive inflow of capital to exploit thar reserves happen.
If they effectively curtail subsidies (mainly natural gas and electricity) of better off population and settle Club of Paris creditors (negotiations have been going for years but at some point they are going to end) things could well go up fast.
Bear in mind that yields from debt are (if I am not mistaken) higher than those for Ukrania which is a banrupt country.
I have long stated here the undervalued condition of Argentina's debt (with the company of PofZ) and I think that after latest political reaccomdation after Cristina's illness and cabinet reshuffling things seem to be coming on better. To sum it up I agree with Kyle Bass.
Of course, should commodities suffer a big shift in prices (soy beans losing 40% value, for example) things for Argentina could go very bad. I don't see that probable to happen soon.