Diary of a Financier

Top Newsstuffs (January 5-11)

In Bookshelf on Sun 11 Jan 2015 at 07:46

Top reads from the week that was…

Macro

Charts: Canada is in serious trouble | Deutsche Bank
Canadian credit boom is stalling & debt levels look unsustainable, per 7 charts.
Worst of all, housing bubble appears to be deflating.
[Previously: The rise of Canadian subprime, Canada’s real estate bubble & How Canadian regulation avoids crises]
$EWC $FXC $CAD #Mortgages #Deleveraging

Credit

Bull market for US Treasury bonds to continue in 2015 | Jeff Gundlach (DoubleLine Funds)
Expects rally in long-end of Treasury curve to continue this year, even as Fed raises rates:
10y yield target: 1.38% (-79bps)
Sentiment: unanimously bearish
Relative value: nominal premium to German Bunds, Italy, Spain, Japan & UK sovereigns
Curve flattening due to:
Deflation: commodity/oil prices crashing ($DBC $USO)
ZIRP-end: Fed will raise Fed Funds Rate
[Previously: Gundlach’s 2014q4 presentation]
$TNX $TLT $TLH $IEF $IEI $AGG

Technicals

Technical study: S&P 500 long term regression & standard deviation (inflation-adjusted, 1871-2014) | Doug Short (dshort)
SPX trading over 2 sigmas from its LT trend, which has historically marked a top — a sign of excess where bull markets turn into bears:SPX LT real regression 2014.12
– Mean: +1.75% (average annual real return)
Standard deviation (σ): ±40.6%
Variances:
    Currently: +96%, reversion to trend is -49% @ 1050
    Panic of 1907: +85%
    Great Depression: +81%
    Tech Bubble: +149%
    Great Recession: +88%
#Bearish #Mean reversion #Secular

Sentiment

Investor sentiment survey (2015.01.07) | American Association of Individual Investors (AAII)
Plummets back down from exuberant levels to historical norms; may be the start of an unwind from months’ worth of alarming complacency and uncharacteristic countercyclicality that weathered multiple market events in 2014 (e.g. 2 internal corrections & energy bear market):
Bull/Bear ratio: -120bps wow @ 1.48 (over 1.28 historical average, but under 1.8 extreme high)
Bullish: -10.7pp @ 41.0% (over 39.0 avg, but under 45 extreme high)
Bearish: +8.4 @ 27.7% (under 30.5 avg, but above 25 extreme low)
Neutral: +2.3 @ 31.3% (over 30.5 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 6/2015).
[Previously: Fund managers report average risk exposures, Strategist sentiment remains a bullish signal & Recent volatility increases retail’s willingness to buy]
#Neutral #Contrarian

Asset allocation survey (December 2014) | American Association of Individual Investors (AAII)
Asset class allocations remain at neutral levels, but a drop in cash below its extreme contributes to equities near their extreme overweight:
– Stocks: +1.3pp @ 68.5% (between 60% average & 70% extreme high); remains above average for 21st consecutive month (longest post-crisis streak)
Bonds: +0.8 @ 16.8% (above 16 avg & 10 extreme low); 5th consecutive month back above average
Cash: -2.0 @ 14.8 (below 24 avg & 15 extreme low); below avg for 37th consecutive month
#Neutral $AGG #QE tapering

Interests

Three things Warren Buffett asks of his “All-Stars” | Motley Fool
Berkshire Hathaway’s founder and CEO gives his portfolio companies’ business leaders the following priorities, in order of importance:
1. Protect our reputation (branding)
2. Report bad news quickly (bad apples)
3. Identify the next rock stars ASAP (succession)
#Management $BRKB

List: 57 notable & unique content marketing ideas | Writtent
Includes basic and groundbreaking strategies, most of which leverage cheap/free resources:
“The average marketer uses 12 different content marketing tactics.”

Four steps to launching a mobile app (even if you don’t know how to build it) | Entrepreneur.com
Interviews Puzzable founder, using their startup as an example:
1. Validate the initial idea: why would people want to use it? why wouldn’t it work? who’s competition?
2. Design it yourself: use any tools at your disposal (e.g. Powerpoint/paint/Balsamiq) to refine user interface (#UI), graphics, and user experience (#UX)
3. Test & retest: using friends & family as alpha/beta testers, use feedback to fix bugs
4. Launch: via app stores

OpEd: Why Bitcoin matters | Marc Andreessen (DealBook)
Highlights:
1. Blockchain solves Byzantine General’s Problem: establishes trust between otherwise unrelated parties on an untrusted network like the internet
2. No overhead: enabling peer-to-peer exchanges without a third party intermediary lowers transaction fees to (almost) zero; there is algorithmic inflation built-in, with new $BTC being release to pay the miners who maintain Blockchain
3. Decentralized, open ledger: think of BTC as buying/selling slots (IP addresses) in the ledger
4. Enables transfer of digital property: digital signatures, digital contracts, digital keys (for physical locks or online lockers), digital title of physical assets such as cars and houses, digital stocks and bonds, and digital money
5. Value of BTCs: based on volume of payment flows & speculation on future proliferation (i.e. network effect)
6. Usage cases: international remittances, content micropayments, spam reduction, public payments/charity fundraising
[Previously: Blockchain’s promise for “tokenization” of digital property & The opportunity for mobile payments in unbanked consumers]

–Romeo

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  1. […] expectation for equity performance over next 6 months (through 6/2015). [Previously: Retail asset allocations neutral with equities nearing extremes, Fund managers report average risk exposures, Strategist sentiment remains a bullish signal & […]

  2. […] expectation for equity performance over next 6 months (through 6/2015). [Previously: Retail asset allocations neutral with equities nearing extremes, Fund managers report average risk exposures, Strategist sentiment remains a bullish signal & […]

  3. […] expectation for equity performance over next 6 months (through 6/2015). [Previously: Retail asset allocations neutral with equities nearing extremes, Fund managers report average risk exposures, Strategist sentiment remains a bullish signal & […]

  4. […] expectation for equity performance over next 6 months (through 6/2015). [Previously: Retail asset allocations neutral with equities nearing extremes, Fund managers report average risk exposures, Strategist sentiment remains a bullish signal & […]

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