Diary of a Financier

Top Newsstuffs (January 6-12)

In Bookshelf on Sun 12 Jan 2014 at 07:08

P-A-T-S, Pats, Pats, Pats…

Monks in Massachusetts launch brewery | The Boston Globe
Saint Joseph’s Abbey will be the first Trappist beer brewery in the US, aiming for 4,000 barrels (1.3mm bottles) in 2014.

US government formally reviewing energy infrastructure | Market Currents (Seeking Alpha)
US government agencies are starting their first “Quadrennial Energy Review” (QER) due 1/13/2015 & President Obama has specifically requested they review US energy infrastructure.
$TRP #Keystone XL pipeline $AMLP

Video documentary: Stealing J. Edgar Hoover’s secrets | The New York Times
In 1971, thieves stole classified documents from the FBI’s Philadelphia field offices.  They anonymously leaked the files to newspapers, who published them for the public, revealing an explicit plot, “COINTELPRO” (Counter Intelligence Program), to spy on thousands of Americans & actively eradicate “the new left” (i.e. far left extremists ranging from Vietnam protesters to socialists/communists).
Among the FBI/CIA’s covert operations: blackmailing MLK into commuting suicide.
[Has history repeated with the Patriot Act, NSA & drone strikes?]
#Surveillance state #Big brother

The biggest bet ever: “Smart money” turns to the future of US gambling | Forbes
In 11/2013, private equity & hedge funds–including Soros, Cooperman, Black & Paulson–bought the online gambling spinoff from Caesars Entertainment ($CZR).  Since the DOJ reversed its ban on online gambling–turning regulation & taxation over to states–investors & their lobbyists are fighting to fully legalize virtual betting, opposed by Sheldon Adelson, Las Vegas Sands ($LVS) CEO & 5th richest American.
#Unlawful Internet Gambling Enforcement Act (UIGEA) $MGM #Full Tilt Poker #PokerStars

Video documentary: To catch a trader | Frontline (PBS)
Inside the SEC’s ongoing, 7-year crackdown on insider trading, drawing on exclusive video of hedge fund titan Steven A. Cohen (SAC Capital), with incriminating FBI wiretaps of his traders.
The DA settled criminal charges against SAC the firm (a “criminal enterprise”), but can’t yet get charges against Cohen himself to stick, since criminal negligence (for failure to supervise) doesn’t apply in finance.
[Another example that corporations are surrogates there to serve civil/criminal punishments of natural persons who break the law.]
#Regulation

Investor sentiment survey: Bullishness spikes to more extreme highs, welcome to exuberance (January 8, 2014) | American Association of Individual Investors (AAII)
Surveys sentiment for equity performance over next 6 months (through 6/2014):
Bulls +17.5pp @ 60.6% vs 39.0% historical avg (45% considered extremely high)
Bears -6.5pp @ 18.54 vs 30.5 historical avg (25% extremely low); just above postcrisis lows
Bull/Bear ratio >4x, by far an alltime record
[We’re paring risk exposures down to benchmark-weight to play defense, true to my quantitative triggers:
1. When “bulls >60%” & “quantifiable handful of bears capitulate
2. NYSE real gross margin debt & net balances reach records
3. Dumb money goes all-in (see below)
BAML’s sell-side consensus indicator is really the only bullish sentiment survey remaining, and barely so.]
#Bearish #Euphoria

Investor allocation survey: Post-crisis records (December 2013) | American Association of Individual Investors (AAII)
Stock allocations (+4pp @ 68%) reached highest level since 7/2007
Bonds (-2 @ 15) now lowest since 3/2009
Cash (-2 @ 16.5) at lowest since 2000
[The “dumb money” is all-in, but realize that the end of 30-year bond bull market & secular disinflation contributes to the overweight equities/underweight fixed income.]
#Euphoria #Bearish #Contrarian

Picture of the week:

Photo: Lake Michigan frozen from Chicago's North Avenue Beach | ZeroHedge

Photo: Lake Michigan frozen from Chicago’s North Avenue Beach | ZeroHedge
#Polar vortex

–Romeo

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  1. […] sentiment (−)- Bull/bear ratio at alltime highs; dumb money’s equity allocations at 2006 highs with cash & bonds near […]

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