Howdy,
I've been very busy and will remain so through the weekend, so a short blip. I have a bit of time this Friday morning to place a few thoughts regarding our portfolio and the markets in general.
Yesterday, Thursday, June 7 found a little time to hear Mr. Larry Fink (CEO, Blackrock). I would have preferred to listen in on the whole two hour period, as well as Mr. Bernanke's testimony.
A few notes from what I was able to gather, and please correct me or add to, if I am mistaken.
1. Mr. Fink is an equity person based upon yesterday's, as well as previous public comments. I would like to view his asset allocations. More or less, when Mr. Fink was asked about could (pointing at the individual/retail investor) one expect investors be to be drawn back into the equity investing sector; as over the past 12 years, the returns in this area have not been stellar. He replied that he hoped so, and that the longer term equity return records were more favorable.
>>>>> I will maintain that while longer term data for equity or any other areas may hold some clues about a rosy past in the U.S.; the past is the past, and not the world of today.
2. My only take from Mr. Bernanke's testimony from yesterday, is that I suspect he would like to place a most simple line of words to these congressional committees; stand up and leave the room......"no further questions and have a nice day." He would provide a simple statement to the congressional folks, that at this point in time, the Fed and Treasury have nothing left to alter this economic condition and that if you folks can not come to an agreement to a functional plan that has nothing to do with politics and your getting re-elected, that I will advise for yourselves, your children and your grandchildren to obtain the best financial planner that you are able to afford; because the water is getting deeper and colder, and I don't think you'll make it to the shoreline in enough time, when your boat has overturned.
3. So what? The big traders were looking for the big punch of more QE something or other. They also seemed to be happy that China's central bank reduced their rate .25%, the Bank of England kept their rate in place and blah, blah. Talking heads also explained the recent equity rally, in some part; to better data. Ya, okay. Last week and last month were all poopie for various data and now somehow there is better/positive data. Ah, where is that; please?
China's CB rate change was not for a good reason; nor was B of E holdings its rate. The reasons remain as they have been for some time now; growth and other related prospects remain a bit edgy. I do believe there are and will remain any number of cheerleaders, from the big traders to the central bankers who will continue to attempt to reassure the masses that things are improving. Moving along sideways in some areas does exist; but I have not yet unrolled the banners of "equity joy".
While global equities had a few days of rally based upon something; at the same time French 10 year and German 2 year gov't. issues set new record low yields. Hmmmmm......... Also, last week; and I can't recall the names, a major insurance company that issues insurance in the shipping industry announced that it will no longer (July 1) issue insurance against goods moving by ship to Greece. Another well known, large company (again can't recall the name) also noted that when their received payments cleared in Greece, the money was moved overnight into British banks.
Obviously, everyone has to be their own judge as to conditions that may affect their portfolios. When we find a sustained period (1-3 months) of rising yields on high quality global, government debt; other signs of a true global recovery should also be in place. Our house would prefer a much happier global environment; but do not find this, at this time. Reality bites, is still in place.
If our house is wrong in our current assessment and/or we miss the shift; we will get our bond wings clipped somewhat; and those who hold the proper equity sectors will run past us on the road to profits.
'Course, and sadly; we all have to deal with the slow motion train wreck that is the greatly divided congress who remain in the total selfish mode of operation. I suspect their are a few who really try to work for a better plan, too.
Lastly, Europe is 2-3 years behind the fix/unwind/debt problems or whatever one chooses to guage; versus the U.S. Europe has to deal with a central bank and related that can not currently properly provide the same functions as our Fed. and Treasury; and this is compounded by all of the political ramifications, too.
From a previous Funds Boat statement:
The below is on the radar; and is not totally inclusive, as other trinkets of news and data must be watched and attempt to draw some conclusions to either support or negate any given investment area.
--- continuing to monitor the broad based insdustrial commodity sectors...energy, copper and related
--- the $US broad basket value, and in particular against the Euro and Aussie dollar (EU zone and China/Asia uncertainties).
--- yield/price directions of U.S. treasury's, German bunds, U.K. gilts and Japanese bonds.
--- what we are watching to help understand the money flows: SHY, IEF, TLT, TIP, STPZ, LTPZ, LQD, EMB, HYG, IWM & VWO; all of which offer insights reflected from the big traders as to the quality/risk, or lack of quality/risk; in various bond sectors. These areas may also reflect towards directions of various equity sectors; as if some bond types get the cold shoulder, so will some equity areas, regardless of perceived quality or value.
Take care,
Catch
Comments
You mean the guy who said that retail investors should be 100% equities a few months back? I think it's reckless and upsetting for someone to suggest 100% in equities to the average retail investor. However, I wouldn't suggest 100% in bonds, either. There is a middle ground that is appropriate for everyone, but I don't think anyone should be 100% in anything. Hmmm.... I wonder why Blackrock permabull Bob Doll is suddenly retiring.
"More or less, when Mr. Fink was asked about could (pointing at the individual/retail investor) one expect investors be to be drawn back into the equity investing sector; as over the past 12 years, the returns in this area have not been stellar. He replied that he hoped so, and that the longer term equity return records were more favorable."
It's not just the little person, but wealthy individual investors are leaving, as well. What I thought was also interesting, however, was that there was a CNBC story that wealthy retail investors were moving some money overseas, which may explain why there were inflows to overseas funds during many weeks in the last year while domestic funds had outflows, which I thought was very curious.
"Mr. Bernanke's"
You know, there is a degree of Bernanke telling politicians that they have to do what they were put there to do, but they don't care and they don't want that (well, some don't want Bernanke to do QE3 - Kevin Brady was very good the other day, but people like that are the minority. Technically, that's very right - the politicians have to work on the issues, as well. They are not and have not been for quite some time.
Still, Bernanke isn't without blame. For someone who wrote a doctrine that that sounded like a modern day Von Havenstein, he can tell politicians this, that and the other on one hand, but - anyone ever see anything that would indicate that Bernanke wouldn't have a problem at all with running the printing presses 24/7? I didn't think so. What he says to a bunch of senators - most of whom appear clueless on modern day finance - is one thing and what he does is another.
" I do believe there are and will remain any number of cheerleaders."
It's the real estate agent model. A real estate agent is never going to tell you it's a bad time to buy a house and a CNBC anchor is never going to tell you it's a bad time to buy stocks. That's why they look like they're going to crap their pants whenever someone acts negative. Yet, the problem with that is that the retail investor is going and so are their ratings. Honesty and information rather than being cheerleaders would actually - I think - have worked in their favor. Oh well. I almost forgot their running an hour-long hype special on Facebook in the middle of the trading day the day before Facebook opened, then scolding retail investors that called in in the days after.
"Lastly, Europe is 2-3 years behind the fix/unwind/debt problems or whatever one chooses to guage; "
We've been given time and some breathing room in this country to fix some of our problems, but instead we are pointing fingers at Europe. That's not to say that Europe doesn't have problems, but blaming them for everything while nothing gets fixed here is a tremendous waste.