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STOCK MARKET WATCH -- Tuesday, 7 April 2015
[font size=3]STOCK MARKET WATCH, Tuesday, 7 April 2015[font color=black][/font]
SMW for 6 April 2015
AT THE CLOSING BELL ON 6 April 2015
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Dow Jones 17,880.85 +117.61 (0.66%)
S&P 500 2,080.62 +13.66 (0.66%)
Nasdaq 4,917.32 +30.38 (0.62%)
[font color=red]10 Year 1.89% +0.05 (2.72%)
30 Year 2.55% +0.06 (2.41%) [font color=black]
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[font size=2]Market Conditions During Trading Hours[/font]
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(click on link for latest updates)
Market Updates
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]
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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
Wall Street on Parade
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[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
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Matt Taibi: Secret and Lies of the Bailout
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
[/center][font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts
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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]
13 replies
= new reply since forum marked as read
= new reply since forum marked as read
Not I.
http://www.marketwatch.com/story/should-you-follow-mohamed-el-erian-and-move-your-investments-to-cash-2015-04-06?siteid=YAHOOB
Mohamed El-Erian, the former chief executive officer at PIMCO, revealed an interesting personal asset allocation in a recent interview: He’s holding mostly cash. Here’s the excerpt:
This is something I run into quite a bit these days. Investors are convinced that stocks are overvalued and excessively risky, and they also believe that bond yields can only go up and will therefore result in principal loss. This leaves the investor paralyzed and unable to feel comfortable doing anything except sitting in cash. And the years go by, and they find themselves simply losing out to purchasing-power erosion.
The simple reality of the financial markets is that someone somewhere always ends up holding cash. Someone always feels like they’re falling behind. So don’t feel so bad about that part. But a 100% cash position is entirely irrational most of the time because it leaves you totally unprotected against inflation. For most investors, even the most conservative, we should be protecting against two risks:
1. The risk of purchasing-power loss.
2. The risk of permanent loss.
Let’s make an extreme point for emphasis. Stocks might be risky, but that risk can be largely offset inside of a diversified portfolio. We all want the high return of stocks, but we don’t want the rollercoaster ride that comes with it. The reason we try to own uncorrelated asset classes is so we can hedge the risk of high-volatility assets like stocks. And if we look at the performance of an extremely bond-heavy portfolio, we can see just how much stocks help boost a portfolio. Historically, a 20/80 stock/bond portfolio (comprised of 20% U.S. stocks and 80% 10-year Treasury notes) has never generated a negative return on a rolling five-year basis (a reasonably long, but still fairly conservative, holding period):
You’ll notice something glaring in that performance: The first 50 years look pretty different from the last 30 years. That’s because bonds have been in an unprecedented bull market over that period. And as I’ve stated before, this creates a very tricky environment for anyone who holds bonds — returns are going to be lower in the years ahead than many people are comfortable with.
In addition, the 1970s are a terrible proxy for a bond bear market despite the common comparison of the rising interest rate environment. The better comparison is the 1940s, when interest rates on the 10-year were comparable to today’s environment. And what we saw over the course of the 1940-1980 period was a persistent period of rising interest rates. But here’s the kicker: Even during this period, a 100% 10-year note portfolio generated a 2.17% average annual return. Adding even a small slice of stocks in a 20/80 portfolio lifted that return to 4.64%, helping us beat the average rate of inflation of 4.51% over the same period. Not great, but not terrible. Better yet, not going backward by 4.51% a year, as you would if you were holding T-bills and cash equivalents.
Let’s stress-test this even further and assume that a 20/80 will generate the average return of the rising rate environment from 1940-1980 at 2.17%. And let’s take the five-year rolling return of stocks and combine them across the entire history of stock market returns including the nightmarish 1930s. This portfolio generates very low historical returns, but again generates zero negative rolling five-year periods. And every single period beats a 0% all-cash return. Importantly, this includes the early 1930s, when stock returns were minus 8.25% on a five-year rolling basis. This shows that even in a rising rate environment with very volatile stock returns, the rolling five-year returns of a diversified portfolio can be better than cash.
Of course, history is not a perfect guide to the future. In fact, the future will look little like the past. We have to make some projections about the future. But the one thing we know for certain is that cash will lose purchasing power. And while bonds might not generate good returns, we can be somewhat creative about how we put together an asset-allocation plan so that we generate a high probability of earning a return that is better than a 100% cash portfolio earning 0% and helps us reduce the risk of purchasing-power loss. Unfortunately, the periodic market crashes of the past 15 years, combined with low interest rates, continue to scare people out of the markets, which leaves their savings excessively exposed to purchasing-power loss. With a little bit of intelligent portfolio construction, the future need not look like the scary environment that so many might think.
This is not intended to imply that I endorse a 20/80 stock/bond portfolio. I would certainly prefer adding layers of diversification and uncorrelation in here. But, rather, it is intended as a simple exercise in showing how our asset-allocation plans can be implemented in such a manner that maintain fairly low risk portfolios while also beating a cash portfolio.
Cullen Roche is the founder of Orcam Financial Group LLC. Orcam is a financial-services firm that offers asset management, private advisory, institutional consulting and educational services. He is the author of “Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance” and “Understanding the Modern Monetary System.”
Mohamed El-Erian, the former chief executive officer at PIMCO, revealed an interesting personal asset allocation in a recent interview: He’s holding mostly cash. Here’s the excerpt:
Q. Where is your money? Stocks? Treasuries? Bonds?
A. “It is mostly concentrated in cash. That’s not great, given that it gets eaten up by inflation. But I think most asset prices have been pushed by central banks to very elevated levels.”
Q. So we’re nearing a bubble?
A. “Go back to central banks. Central banks look at growth, at employment, at wages. They are too low. They don’t have the instruments they need, but they feel obliged to do something. So they artificially lift asset prices by maintaining zero interest rates and by using their balance sheet to buy assets.
“Why? Because they hope that they will trigger what’s called the wealth effect. That you will open your 401(k), see it has gone up in price, and you’ll spend. And that companies will see their shares are going up and they will be more willing to invest. But there is a massive gap right now between asset prices and fundamentals.”
A. “It is mostly concentrated in cash. That’s not great, given that it gets eaten up by inflation. But I think most asset prices have been pushed by central banks to very elevated levels.”
Q. So we’re nearing a bubble?
A. “Go back to central banks. Central banks look at growth, at employment, at wages. They are too low. They don’t have the instruments they need, but they feel obliged to do something. So they artificially lift asset prices by maintaining zero interest rates and by using their balance sheet to buy assets.
“Why? Because they hope that they will trigger what’s called the wealth effect. That you will open your 401(k), see it has gone up in price, and you’ll spend. And that companies will see their shares are going up and they will be more willing to invest. But there is a massive gap right now between asset prices and fundamentals.”
This is something I run into quite a bit these days. Investors are convinced that stocks are overvalued and excessively risky, and they also believe that bond yields can only go up and will therefore result in principal loss. This leaves the investor paralyzed and unable to feel comfortable doing anything except sitting in cash. And the years go by, and they find themselves simply losing out to purchasing-power erosion.
The simple reality of the financial markets is that someone somewhere always ends up holding cash. Someone always feels like they’re falling behind. So don’t feel so bad about that part. But a 100% cash position is entirely irrational most of the time because it leaves you totally unprotected against inflation. For most investors, even the most conservative, we should be protecting against two risks:
1. The risk of purchasing-power loss.
2. The risk of permanent loss.
Let’s make an extreme point for emphasis. Stocks might be risky, but that risk can be largely offset inside of a diversified portfolio. We all want the high return of stocks, but we don’t want the rollercoaster ride that comes with it. The reason we try to own uncorrelated asset classes is so we can hedge the risk of high-volatility assets like stocks. And if we look at the performance of an extremely bond-heavy portfolio, we can see just how much stocks help boost a portfolio. Historically, a 20/80 stock/bond portfolio (comprised of 20% U.S. stocks and 80% 10-year Treasury notes) has never generated a negative return on a rolling five-year basis (a reasonably long, but still fairly conservative, holding period):
You’ll notice something glaring in that performance: The first 50 years look pretty different from the last 30 years. That’s because bonds have been in an unprecedented bull market over that period. And as I’ve stated before, this creates a very tricky environment for anyone who holds bonds — returns are going to be lower in the years ahead than many people are comfortable with.
In addition, the 1970s are a terrible proxy for a bond bear market despite the common comparison of the rising interest rate environment. The better comparison is the 1940s, when interest rates on the 10-year were comparable to today’s environment. And what we saw over the course of the 1940-1980 period was a persistent period of rising interest rates. But here’s the kicker: Even during this period, a 100% 10-year note portfolio generated a 2.17% average annual return. Adding even a small slice of stocks in a 20/80 portfolio lifted that return to 4.64%, helping us beat the average rate of inflation of 4.51% over the same period. Not great, but not terrible. Better yet, not going backward by 4.51% a year, as you would if you were holding T-bills and cash equivalents.
Let’s stress-test this even further and assume that a 20/80 will generate the average return of the rising rate environment from 1940-1980 at 2.17%. And let’s take the five-year rolling return of stocks and combine them across the entire history of stock market returns including the nightmarish 1930s. This portfolio generates very low historical returns, but again generates zero negative rolling five-year periods. And every single period beats a 0% all-cash return. Importantly, this includes the early 1930s, when stock returns were minus 8.25% on a five-year rolling basis. This shows that even in a rising rate environment with very volatile stock returns, the rolling five-year returns of a diversified portfolio can be better than cash.
Of course, history is not a perfect guide to the future. In fact, the future will look little like the past. We have to make some projections about the future. But the one thing we know for certain is that cash will lose purchasing power. And while bonds might not generate good returns, we can be somewhat creative about how we put together an asset-allocation plan so that we generate a high probability of earning a return that is better than a 100% cash portfolio earning 0% and helps us reduce the risk of purchasing-power loss. Unfortunately, the periodic market crashes of the past 15 years, combined with low interest rates, continue to scare people out of the markets, which leaves their savings excessively exposed to purchasing-power loss. With a little bit of intelligent portfolio construction, the future need not look like the scary environment that so many might think.
This is not intended to imply that I endorse a 20/80 stock/bond portfolio. I would certainly prefer adding layers of diversification and uncorrelation in here. But, rather, it is intended as a simple exercise in showing how our asset-allocation plans can be implemented in such a manner that maintain fairly low risk portfolios while also beating a cash portfolio.
Cullen Roche is the founder of Orcam Financial Group LLC. Orcam is a financial-services firm that offers asset management, private advisory, institutional consulting and educational services. He is the author of “Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance” and “Understanding the Modern Monetary System.”
http://www.reuters.com/article/2015/04/07/eurozone-greece-imf-idUSL6N0X421420150407
(Reuters) - The International Monetary Fund assured Greece it is willing to be "flexible" with the reforms Athens has proposed to its creditors before much-needed bailout funds are disbursed, the Greek finance ministry said on Tuesday.
Greece has not received bailout funds since last August and has resorted to measures such as borrowing from state entities to tide it over. A new package of reforms offered last week has yet to be approved by its European Union and IMF lenders.
"
IMF Chief Christine) Lagarde ... stressed that, in Greece's case, the Fund is willing to show utmost flexibility in the way in which the government's reforms and fiscal proposals will be evaluated," a ministry statement said.
It follows a meeting between Greek Finance Minister Yanis Varoufakis and Lagarde in Washington on Sunday.
The statement said U.S. Treasury officials who also met with Varoufakis expressed the willingness of the U.S. government to play the role of "honest broker" in helping Greece strike a deal with its lenders as soon as possible.
"U.S. officials conveyed the importance the Obama administration places on an honest agreement between Greece and its partners and on preserving the unity of the euro zone."
Greece has its hopes set on another meeting of euro zone deputy finance ministers on April 8-9, although it is unlikely that a deal could be reached by then. The next meeting of euro zone finance ministers will take place on April 24. (Reporting by George Georgiopoulos, Lefteris Papadimas and Karolina Tagaris; Editing by Mark Heinrich)
Greece has not received bailout funds since last August and has resorted to measures such as borrowing from state entities to tide it over. A new package of reforms offered last week has yet to be approved by its European Union and IMF lenders.
"
IMF Chief Christine) Lagarde ... stressed that, in Greece's case, the Fund is willing to show utmost flexibility in the way in which the government's reforms and fiscal proposals will be evaluated," a ministry statement said.
It follows a meeting between Greek Finance Minister Yanis Varoufakis and Lagarde in Washington on Sunday.
The statement said U.S. Treasury officials who also met with Varoufakis expressed the willingness of the U.S. government to play the role of "honest broker" in helping Greece strike a deal with its lenders as soon as possible.
"U.S. officials conveyed the importance the Obama administration places on an honest agreement between Greece and its partners and on preserving the unity of the euro zone."
Greece has its hopes set on another meeting of euro zone deputy finance ministers on April 8-9, although it is unlikely that a deal could be reached by then. The next meeting of euro zone finance ministers will take place on April 24. (Reporting by George Georgiopoulos, Lefteris Papadimas and Karolina Tagaris; Editing by Mark Heinrich)