Gary Shilling interview on Bloomberg
Gary is talking about his usual deflationary theme. He sees the 30y retreating to the 2.5% level it hit in 2008. He's also identified many types types of deflation: financial assets, tangible assets, commodities, wages, goods, and services deflation. He likes medical office buildings and rental apartments as safe havens, but thinks copper will go a lot lower. He continues to be bearish on China, and pooh pooh's their primitive monetary tools.
Commodities: What's next for oil given the explosion in global demand, and just how high can gold go, with Peter Gilbert of Lehigh University, Jeff Scott of Wurts & Associates, and Paul Touradji of Touradji Capital.
The "End of America" panel includes Larry Fink of BlackRock, Pierre Lagrange of GLG Partners, Jim Leech of OTPP, and Meredith Whitney. The panel discusses America's place in the world as new economic powers rise in the East.
Bill Ackman of Pershing Square in CNBC's Delivering Alpha Conference on his Hong Kong dollar investment thesis. Here's a link to his presentation slides. (Ed:I think Ackman's a smart guy but he's way out of his depth here and should stick to picking stocks)
Beleaguered fund manager Bruce Berkowitz was on Consuelo Mack's WealthTrack recently. As is well known, Berkowitz has a huge bet on financials (Bank of America, AIG) and real estate (St. Joes), and his fund has been severely hammered this year.
Berkowitz is Morningstar’s "Fund Manager of the Decade"
Operation Twist: As
more-or-less expected by market forecasters, the FOMC announced it would buy
$400B of Treasuries , but stocks plunged to session lows and
Treasuries rallied. The FOMC emphasized "significant downside risks"
to the economy and investors may have latched on to this statement along with
the usual “sell on the news” trading. And there was no asset purchase surprise
either. IOER (Interest on Excess reserves) was left unchanged, but the Fed
announced plans to reinvest prepayments of agency debt and MBS back into agency
MBS (support for the housing sector and hints of coordinated action on housing
with the Whitehouse?).
30y yield fell over 20 bps to below 3% at one point. 10y yields
slid 8bps to 1.86%. The VIX, Yen, and DXY were up. Gold finished down below
$1800. The Canadian dollar closed below parity for 1st time since January 31,
2011. The financial sector closed at 2011 lows after its 4.94% decline.
·Jeremy Grantham was interviewed in Marketwatch. “If we adjust earnings to normal and apply an average P/E, you can finally build a decent portfolio today of global equities at a respectable long-term return”
·Barron’s interviews Jim Grant of Grant’s Interest Rate Observer. He is still bullish on Gold, gold stocks and blue chips, bearish on China, thinks the Euro will break up, and has given up on Japanese stocks.
Jim Grant of Grant’s Interest Rate Observer. He is still bullish on Gold, gold
stocks and blue chips, bearish on China, thinks the Euro will break up, and has
given up on Japanese stocks.
The great Paul A. Volcker had a must-read op-ed on inflation in the New York Times on Sept 18. He talks about the appeal of "just a little" inflation for an indebted country struggling with weakening aggregate demand. Inflation seems like just the thing to cure this malaise, right? Definitely not. And Volcker should know since he battled the high inflation of the 70s and early 80s and succeeded in breaking its back (and to the mind of many, in also setting off the great dis-inflationary asset boom of the 80s and 90s).
The thing is, once you let the inflation genie out of the bottle, it's hard to control. Fighting deflation is fun - cut rates, cut taxes, pour liquidity into the system, bump up spending, and so on. Fighting inflation requires much of the opposite - hiking rates and choking off liquidity. This is strong medicine that we have not had to take for decades. And it could seriously harm the patient.
I am extremely worried about the potential for inflation down the road because I think the Fed will have trouble sterilizing its $2T+ balance sheet. Moreover, unlike Germany that was haunted by the Weimar inflation, our greatest fear is deflation, which is why we seem so complacent about it. And given our astounding debt levels, we could not deal with even a slight deflation. We need high nominal wages and asset prices, and we need negative real yields. All this tells me, we have high inflation in our future. And probably in the next 5 years.