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Traders and investors have a lot to think about these days. Debt issues in southern Europe continue to flare up, the rate of China’s economic deceleration remains in question, and economic data in the U.S. has been disappointing. Meanwhile, we’re experiencing one of the best earnings seasons in years.
Most analysts, economists, and strategists offered research and analysis that was boring and predictable and provided little guidance.
But some went out on a limb to offer insight that investors actually found useful.
'News coverage seems to suggest that the markets are panicking about the deficits themselves. I think this is wrong. The investors I know are worried that austerity may destroy the Spanish economy, and that it will drive Spain either out of the euro or into the arms of the European Stability Mechanism.'
'The market's actual price -- brought to us by the workings of wild and wooly individuals -- is within plus or minus 19% two-thirds of the time. Thus, the market moves 19 times more than is justified by the underlying engines!'
''I sold because I'm very uncomfortable with the other people who are holding Apple shares right now. The new investors of Apple scare me. They're momentum investors. They've shifted the game.
'Once stocks become a momentum play, intrinsic value goes out the window,' he said.'
'Dalio believes that EU policymakers remain committed to ill-fated attempt to 'save almost everyone' by using under-capitalised bailout funds like the European Financial Stability Facility.
But they will also have to act in much more of a hurry than they previously believed, given Spain's predicament. This will show the inadequacy of currently budgeted resources to deal with the problem, and could pain EU leaders' abilities to deal with crisis problems in a negative light.
Ultimately, Dalio thinks, trying to save Europe without restructurings will prove too costly, and EU leaders will have to accept that more restructurings will be necessary.'
'Throughout most of 1968 and into the early part of 1969, real GDP in the US was expanding at about a 5% pace and the unemployment rate was below 4%. But, by the end of 1969, the US economy had entered into a recession. No doubt, a series of Fed rate hikes starting in early 1969 contributed to the deterioration in economic activity, but most economists agree that the tightening on the fiscal side was probably the major factor that tipped the economy into recession.'
'It is income, not job growth, that really matters: The March employment report was not as negative as the headline payroll print suggested-in large part because household income growth retained its momentum. Aggregate income creation was flat between February and March, but for the quarter as a whole it rose at the second fastest pace since the recession ended. We see little reason to believe the March jobs report represented the beginning of a sustained slowdown in the pace of hiring, so the prospects for further, solid income growth through the current quarter and into the back half of this year remain intact.'
'As was true six years ago, treasuries are the only major asset class that has negative correlation to equities. As such, we continue to maintain larger-than-consensus weights in treasuries in our asset allocation strategies to help reduce portfolio volatility.'
JIM O'NEILL: Everyone Overlooked One 'Especially Encouraging' Data Point In China's Disappointing GDP Number
'What was especially encouraging though the Q1 data was a comment a spokesperson said about the contributions to the 8.1 pct growth. 6.1 came from consumption (more than 75 pct), 2.8 from investment, and -0.8 pct from net trade. Who said China can't rebalance? It's already done it! We reckon (or James Wrisdale does) that private consumption is now nearly 39 pct of GDP, up 4 pct points in the past couple of years.'
'Improving labour markets -- and income growth -- while not great for corporate profitability, do support a continued recovery in consumer spending and stronger business confidence. These are critical features for a more sustainable economic backdrop that can translate to lower risk premia and higher valuation multiples and support equity returns in the face of slower growth.'
'So looking for the S&P straight down into the low 1,300s, high 1200s. Later in June or July a Fed twist -inspired rally which I think could take us higher than people expect into the election. But beyond that, bearing in mind the fact that global growth, including U.S. growth, is not self-sustaining, and the fiscal cliff ahead of us, my longer term secular bearish calls still hold: S&P around 800 target and DOW-gold ratio down at 1.'
'His theory: Productivity was high in the early phase of the recovery because large, capital-intensive companies were able to meet rising demand, without hiring, by working their machines harder. But now the expansion has spread to companies that are less capital-intensive and have to hire as soon as demand for their goods and services picks up. Shepherdson fears that if the Fed's low rates stimulate strong growth in output, companies will quickly run out of people to hire and the competition for labour will drive up wages, leading to inflation.'
'The market is following a pathway similar to other bull markets that occurred after a nonrecession bear market. We had a nonrecession bear market from April 29, 2011 to Oct. 3. If we track the median outcome of the past World War II periods, this bull market is only half over. It could take another 10 to 30 months to gain the other half.'
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