Administrator

**HOUSING SHOWDOWN: Housing bear Gary Shilling and housing bull Mark Kiesel of PIMCO debated the state of the U.S. housing market on Bloomberg Television’s “Street Smart” with Trish Regan and Adam Johnson. Shilling said that housing prices will decline 20% this year because “there are 2 million inventories, both visible and shadow inventories, over and above normal working levels”, which is “a tremendous overhang.”  He went on to say that “excess inventories are the mortal enemy of prices.” Kiesel justified his bullish stance on the market, saying that, “all inventories you look at, whether new existing or shadow, they are coming down” and “there is only 144,000 new home sales for sale. That’s at a 49-year low.” Kiesel on purchasing a home in California and whether he’s having buyer’s remorse: “No.  I will say it is a little chaotic because there are a lot of boxes around. I think after renting for six years, my view is that housing prices have fallen about 35% and the inventories are coming down and banks are starting to lend again gradually. U.S. housing looks very cheap relative to international housing.  I feel good about putting some money into housing right now.” Shilling on why
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After just two trading days since the Facebook Inc (NASDAQ:FB) IPO , many are wondering what is the value of The Social Network’s common stock. A new study from published by internet marketing software company WordStream, offers a unique perspective into the matter by comparing the Facebook’s advertising vs. the Google Display Network. The Google Display Network is just the banner advertising component of Google Inc (NASDAQ:GOOG)’s business, consisting of ads served on Google’s own websites like Blogger, Gmail, and Youtube, as well as a network of about 2 million other websites – It’s about 25% of Google’s total revenues (the rest of Google’s revenues come from their search engine business, which was excluded from their study). Since 86% of The Social Network’s revenues last year were derived from banner advertising, we think this research is worth a look. Both Google Display Network and Facebook got top marks for Advertiser Adoption and Advertiser Reach. But Facebook advertising was seen lagging in several key areas, such as ad targeting options, support for ad formats, and overall ad performance. (Scroll to the bottom of the page for the full research) Some of the Study Highlights include: Facebook and Google both have huge potential reach,
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Michael Platt of BlueCrest Capital Management spoke with Bloomberg Television’s Stephanie Ruhle and Erik Schatzker today and said that “Greece will never give back” money that has been lent to it by Europe.  He also said that a Greek exit from the euro would prompt more departures and that Spanish banks are probably “evergreening” their mortgage books. On JPMorgan Chase & Co.(NYSE:JPM)’s $2 billion trading loss, Platt said, “I think it’s a trading loss. They deliberately put the positions on” and “they’re not out of those positions.”   On Europe’s crisis and whether the euro is a failed experiment: “I think we need to look at the situation country by country. If you take the situation of Greece, in the opinion of the markets, Greece should have should never have been allowed into the euro in the first place. They have already defaulted on their debts. They nearly defaulted again on a whole currency bond last week. They are not in a position to pay their bills. They have a primary deficit still. They will continue to be excluded from the funding markets. I think at this point in time, as the market increasingly calls into credibility the Troika, they
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  Many shall be restored that now are fallen and many shall fall that now are in honor. - Epigraph by Horace in Security Analysis (1934) by Graham & Dodd -Introduction In our May contribution we discussed the danger related to valuation risk, i.e. the danger of overpaying for the hope of growth (Montier, 2009). We documented that the expectations concerning long-term earnings growth rates of glamour stocks are overly optimistic and how this overoptimism results in inferior returns as well as (relatively) strong price drops following the publication of disappointing results. We concluded that (a) in their quest for successful growth stories investors should be careful before relying too heavily on long-term earnings growth forecasts made by financial analysts and (b) investors should avoid stocks with significantly above average valuation multiples. In this contribution we will add a new, third warning to the list: we warn to take care when using past earnings growth rates as a reliable precursor for future growth. It so happens that firms with high past earnings growth rates cannot be counted on to repeat their strong relative performance in the future; at the same time companies that over the past years have dangled round the growth group are
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    PC Housing, a short term housing provider based in San Diego, has released an infographic showing how travelers are becoming increasingly dependent on their smartphones and other mobile devices to the point of addiction. Part of a growing trend among business travelers, the average mobile worker is carrying 3 to 4 devices while they work from the road and is spending over 16 hours per day within range of Wi-Fi. The graphic also brings to light how travelers are exercising less and feeling distraught without their phone which can cause health issues but they still believe they are better off with their devices. This disparity in perception and reality can most likely be attributed to the fact that most workers are now able to handle more tasks and larger to-do lists with the help of mobile devices which only pushes them to rely on them more and more. In fact, 65% of the travelers surveyed believed they were able to be more productive as a result of multitasking with multiple devices. However, this caused lower levels of concentration on a single task and resulted in tasks taking longer to be finished. This and the growing to-do list equated
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A Financial Times video, posted below, gives insight into cross national analysis of income and prosperity. It focuses on the differences between earnings in the United States and the BRICS countries and analyzes what those differences are as things stand. Posing the question, “What is the dollar in your pocket really worth?”, the piece uses several measurements to ascertain the answer. Information is sleekly presented on the price of cinema tickets in each country, the comparative GDP per person and the age-old question of who drinks the most (it’s the USA). This is a great introduction to the problem of measuring incomes across countries to figure out which is the most prosperous. It’s a problem economists have been working on for years and one still not aptly solved. The United States is still the largest economy by far a surprising fact when exposed to a media repetitively announcing China’s economic supremacy. The video quite cleverly shows the economies of the five BRICS nations as boxes neatly fitting inside the United State’s box with room to spare. A more difficult pill to swallow is the fifth place of the United States in education despite its first place in education spending. The bubble in
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UPDATE: Whitney received the below presentation from VIC. Below is the partial text from the Presentation (we have obtained) of VIC on American International Group, Inc. (NYSE:AIG) Full link to the presentation is shared at the end.  Investment Overview We recommend establishing a long position in the equity of AIG, which is in the later stages of its exit from government assistance and making progress in improving the profitability of its core insurance franchises. With the sale and equity buyback announced following Q1 2012 results,US government ownership fell to 61% of outstanding shares in May 2012. We estimate that by the end of the year AIG, through disposal of noncore assets, will generate $15 $ 20b in cash, which it can use to repurchase significant additional shares from the Treasury. At the current pace of share disposal by the government and repurchase by AIG, we believe AIG will be less than 50% owned by the government later this year, and completely free of Treasury ownership by end of 2013. We believe that once Treasury ownership falls to 30%, this will remove a significant overhang on the share performance, as the market turns its attention to its derisked and gradually improving business model. We expect AIG to hit $40 by the
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The global economy today isn’t in the best shape it’s ever been. With the on-going financial crises taking place both in the US and around the world, people are losing their faith in the financial system as the cost of living keeps rising higher and higher and the value of their savings continues to fall. However, beyond the justified concerns about the way the big banks are conducting business, there is an underestimated threat to the economy to which we often don’t pay a great deal of attention: currency counterfeiting. Currency counterfeiting is and has for a long time been a major problem in the US and abroad, and anyone who’s had their money declined at the point of sale will tell you of the troubles forgeries can cause. At the present time of writing, it is estimated by some economists that as much as $220 million of forged bills could be in circulation in America right now. Suffice it to say, for certain unscrupulous fraudsters, the counterfeiting game is big business. In this eye-opening infographic from IronFX, we’ll see what the story really is behind currency counterfeiting. Where and when did the war against forged cash in the US
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  JPMORGAN CEO JAMIE DIMON TELLS FOX BUSINESS “THIS IS A MANAGEMENT ISSUE. SOMEONE SCREWED UP AND THEY ARE NOW PAYING” JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon gave a phone interview to FOX Business Network’s (FBN) Charlie Gasparino about the $2 billion trading loss suffered from a failed hedging strategy they disclosed today. Dimon said “we screwed up” and “this is a management issue. Someone screwed up and they are now paying.” Gasparino added that Dimon “sounded confident” and that “he’s prepared for the full monty onslaught about his reputation, how he screwed up.”   On Dimon telling Gasparino “we screwed up”: I had a brief conversation with him a few minutes ago…he said listen, ‘we screwed up.’ There was a group in London. What was interesting about it, he said it was not the trade itself that really caused it. The sort of trade that they do, it was hedges, the stuff that they thought was going to mitigate losses. It made a bad situation really bad. He also pointed out, and this is common sense. What do you think banks are going to do. Banks have a pool of money. If they put all that money into treasury
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Cisco Systems, Inc. (NASDAQ:CSCO) CEO John Chambers spoke with FOX Business Network’s (FBN) Liz Claman about Cisco’s third quarter earnings and what’s driving lower guidance. Chambers discussed what issues lie ahead in the future saying, “The first and most major is uncertainty in Europe” and “the second part is uncertainty on CEOs, not in the mid-size companies, but in the very large companies.” Video and excerpts from the interview are below.: Watch the latest video at video.foxbusiness.com Watch the latest video at video.foxbusiness.com   On what’s driving lower guidance: “There are two issues. The first and most major is uncertainty in Europe and the fact that Southern Europe some of the challenges have spread to central and northern Europe and is that going to affect the rest of the global issue. The second part is uncertainty on CEOs, not in the mid-size companies, but in the very large companies that until they see more predictability in terms of what will happen in Europe and more predictability on some of the government policies, you see them not putting on the breaks, but you see them lifting their foot off the gas pedal to watch. It’s that uncertainty that we are sharing with
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We are pleased to present our interview with Jason Scharfman, the author of a new book titled on Private Equity. Jason was kind enough to sit down and talk about his experience, his book, and views on the industry. His full bio is at the bottom of this article. What inspired you to write the book? While both individual and institutional investors had performing due diligence on their hedge fund investments before frauds such as Bayou and more recently Madoff, after the Madoff crisis a number of investors started to refocus their efforts around operational issues such as traditional back office procedures such as trade processing and cash management, as well as valuation, custody, compliance, business continuity and disaster recovery and service providers. Many investors were seeking guidance in this area as to what items were standard to cover during an operational due diligence review. That was the impetus behind my first book of Hedge Fund Operational Due Diligence. Although there has been no similar Madoff like major fraud in recent years in the private equity world, many investors have seen the merits of performing operational due diligence reviews on all fund managers. While some investors may have viewed hedge
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