Enviado: 25/5/2004 13:20Em contraponto com este artigo "bearish", deixo aqui um artigo "bullish" do Doug Kass. Curioso ver opiniões diametralmente opostas de dois analistas que gosto de ler e que têm argumentos muito interessantes.
Finding Silver Linings in the Market
By Doug Kass
Street Insight Contributor
5/24/2004 4:03 PM EDT
"Now I been out in the desert, just doin' my time
Searchin' through the dust, lookin' for a sign.
If there's a light up ahead, well brother I don't know
But I got this fever burnin' in my soul
So lets take the good times as they go
And I'll meet you further on up the road."
-- Bruce Springsteen's "Further On (Up The Road)"
Amid investor apathy that is bordering on despair (reminiscent of the old New York Mets' saying -- "Can't anyone play this game?"), the ingredients for a better-than-expected second half of 2004 for equities and bonds are becoming clearer.
I am now adjusting my expectations for a mid- to high-single-digit negative return year (we are already almost there) to a mildly positive year for the senior averages, with an eye toward an even better year under a set of more optimistic conditions (which The Edge will closely monitor). I also think fixed income can be based on the expectation of a 25-50 basis-point decline in the yield of the 10-year U.S. note.
The recent market dive and the economic pause that I anticipate -- to borrow a phrase from Benjamin Graham -- have provided a margin of safety in the equity markets that we have not had for some time.
To borrow from another Ben -- Benjamin Stein -- who wrote yesterday's New York Times article titled, "Calm Down. That Wolf at the Door Has Been Here Before..."
"Lately, even more than usual, the word of the day is fear. Fear of inflation and rising interest rates. Fear of oil shortages. Fear of rising energy prices, which is closely related. Fear of terrorism. Fear of rising -- and of falling -- commodity prices. Fear of a growth spurt in China -- and of a slowdown in China. Fear of an excessive trade deficit, and of too much debt at both the federal and household levels. Fear that the global climate is changing - and, now, that the earth is growing darker year by year (although it is possible that the glass cases covering the measuring devices became dusty)."
Here are a list of factors that have served to make me more optimistic and have expanded that margin of safety.
Inflationary influences have moderated just when most participants have become scared of the prospect of higher inflation.
The recent drop in the prices of industrial commodities (steel, copper, etc.) will more than offset the rise in prices of the energy complex. As to crude, my view is that the price of oil is not materially different (I do recognize the more unique supply issues) than the aforementioned commodities. From my perch, oil is ready for a fall, and the backward movement in the oil futures market is supportive of this notion. Either way, energy as a percentage of the domestic economy is down to only about 6% of GDP (half of the level of the mid-1970s). Look for bonds to rally as oil falls.
Anti-Federal Reserve/Greenspan rhetoric is overdone as the economy effectively transitions into a slower, though sustainable, rate of growth.
Although I was at odds with a number of Greenspan moves during the bubble, that was then and this is now. Indeed, the markets have already tightened, as de facto jawboning has been successful in producing an economic pause that refreshes (and which Greenspan already sees). As well, the all-important housing sector is about to embark on its own soft landing as compared to my prior expectations of a crash. (Note: I have covered my homebuilder shorts.)
Regarding the market doing the tightening work for the Fed: 2004 is beginning to resemble 1996, not 1994. Some might recall that the fixed-income markets tightened for the Fed eight years ago, and after a period of flat/subdued equity performance, stocks took off in the second half of 1996.
Be greedy when others are fearful.
Share prices have adjusted to a world without stimuli. The time to be bearish was months ago, before interest rates rose and inflation resurfaced, when Phelps Dodge (PD:NYSE - commentary - research) traded at $90, not $64; Citigroup (C:NYSE - commentary - research) traded at $53, not $45; Centex (CTX:NYSE - commentary - research) traded at $58, not $44; and Cisco (CSCO:Nasdaq - commentary - research) at $29, not $21. As I wrote last week, I prefer to anticipate events -- by the time they are on the tape, it's too late to respond.
Several of my prior concerns have either disappeared or moderated.
For example, the "Deficits of Mass Destruction of 2004" seems likely to fall some $100 billion from the previous forecast made by the Office of Management and Budget. As well, the recent unexpected jump in jobs created suggests that some of my concerns regarding the consumer (spent-up, not pent-up) might be delayed, as real wages and disposable incomes will hold up better than I previously thought. This all means that economic growth will decelerate, but to a solid level and not at the accelerated rate I previously thought.
Sentiment conditions are at levels that are typically associated with market bottoms.
Our own analysis of Merrill Lynch's internal put/call ratio (a great measure of retail sentiment) supports this conclusion, as does the weakening mutual fund inflows and other measurements like the renewed popularity of the Rydex short funds. So does the big fat put/call ratio, which hovered around 1.40 on Friday, as well as a very high Trin. As I mentioned previously, sentiment is closing in on despair. If you don't believe me, read Mark Hulbert's persuasive "At Least the Contrarians are Smiling" in yesterday's New York Times business section, in which he writes:
"The three dozen newsletters monitored by The Hulbert Financial Digest that try to time the market's short-term swings have turned remarkably bearish in recent months. They now have a recommended equity exposure, on average, of minus 13.5%. That means that the average market timer in this group is not only recommending that subscribers avoid stocks, but that they allocate about one-eighth of their portfolios to going short the stock market -- a bet that the market will decline."
The spectre of terrorism and worldwide political instability will be with us for some time, but the shift of authority and security in Iraq to the Iraqis will occur in the next few weeks.
Despite some highly visible atrocities and screw-ups in strategy (most recently the Ahmad Chalabi situation), the Middle East has arguably begun to move away from the chaos of the Saddam Hussein regime and toward more stability.
The odds favoring a Bush win appear to be rising (a positive market influence) -- despite the mess in Iraq, higher interest rates and rising inflation.
Surprisingly, Sen. Kerry has not meaningfully improved his lot in the polls despite the recurring and visible difficulties in the Middle East, and he actually appears to be shooting himself in the foot with his recent scheme to delay his acceptance of the Democratic presidential nomination in order to circumvent federal election laws -- and use that additional time to his political/financial advantage. What happens to President Bush's standing when economic statistics continue above trend-line levels, as they likely will, and there is some good news in Iraq, which at some time there almost certainly will be?
The demise of China and Japan -- two important regions at the margin of the world economies -- are greatly exaggerated.
China's growth is slowing, but to a more orderly and sustainable rate. And I remain impressed with the recovery in Japan, particularly bank reform measures.
To summarize, from my viewpoint, there appears to be a number of reasons to be more bullish. To be sure, many of the headwinds I have addressed on The Edge are still in place, but their forces have subsided.
"
(in www.realmoney.com)
Finding Silver Linings in the Market
By Doug Kass
Street Insight Contributor
5/24/2004 4:03 PM EDT
"Now I been out in the desert, just doin' my time
Searchin' through the dust, lookin' for a sign.
If there's a light up ahead, well brother I don't know
But I got this fever burnin' in my soul
So lets take the good times as they go
And I'll meet you further on up the road."
-- Bruce Springsteen's "Further On (Up The Road)"
Amid investor apathy that is bordering on despair (reminiscent of the old New York Mets' saying -- "Can't anyone play this game?"), the ingredients for a better-than-expected second half of 2004 for equities and bonds are becoming clearer.
I am now adjusting my expectations for a mid- to high-single-digit negative return year (we are already almost there) to a mildly positive year for the senior averages, with an eye toward an even better year under a set of more optimistic conditions (which The Edge will closely monitor). I also think fixed income can be based on the expectation of a 25-50 basis-point decline in the yield of the 10-year U.S. note.
The recent market dive and the economic pause that I anticipate -- to borrow a phrase from Benjamin Graham -- have provided a margin of safety in the equity markets that we have not had for some time.
To borrow from another Ben -- Benjamin Stein -- who wrote yesterday's New York Times article titled, "Calm Down. That Wolf at the Door Has Been Here Before..."
"Lately, even more than usual, the word of the day is fear. Fear of inflation and rising interest rates. Fear of oil shortages. Fear of rising energy prices, which is closely related. Fear of terrorism. Fear of rising -- and of falling -- commodity prices. Fear of a growth spurt in China -- and of a slowdown in China. Fear of an excessive trade deficit, and of too much debt at both the federal and household levels. Fear that the global climate is changing - and, now, that the earth is growing darker year by year (although it is possible that the glass cases covering the measuring devices became dusty)."
Here are a list of factors that have served to make me more optimistic and have expanded that margin of safety.
Inflationary influences have moderated just when most participants have become scared of the prospect of higher inflation.
The recent drop in the prices of industrial commodities (steel, copper, etc.) will more than offset the rise in prices of the energy complex. As to crude, my view is that the price of oil is not materially different (I do recognize the more unique supply issues) than the aforementioned commodities. From my perch, oil is ready for a fall, and the backward movement in the oil futures market is supportive of this notion. Either way, energy as a percentage of the domestic economy is down to only about 6% of GDP (half of the level of the mid-1970s). Look for bonds to rally as oil falls.
Anti-Federal Reserve/Greenspan rhetoric is overdone as the economy effectively transitions into a slower, though sustainable, rate of growth.
Although I was at odds with a number of Greenspan moves during the bubble, that was then and this is now. Indeed, the markets have already tightened, as de facto jawboning has been successful in producing an economic pause that refreshes (and which Greenspan already sees). As well, the all-important housing sector is about to embark on its own soft landing as compared to my prior expectations of a crash. (Note: I have covered my homebuilder shorts.)
Regarding the market doing the tightening work for the Fed: 2004 is beginning to resemble 1996, not 1994. Some might recall that the fixed-income markets tightened for the Fed eight years ago, and after a period of flat/subdued equity performance, stocks took off in the second half of 1996.
Be greedy when others are fearful.
Share prices have adjusted to a world without stimuli. The time to be bearish was months ago, before interest rates rose and inflation resurfaced, when Phelps Dodge (PD:NYSE - commentary - research) traded at $90, not $64; Citigroup (C:NYSE - commentary - research) traded at $53, not $45; Centex (CTX:NYSE - commentary - research) traded at $58, not $44; and Cisco (CSCO:Nasdaq - commentary - research) at $29, not $21. As I wrote last week, I prefer to anticipate events -- by the time they are on the tape, it's too late to respond.
Several of my prior concerns have either disappeared or moderated.
For example, the "Deficits of Mass Destruction of 2004" seems likely to fall some $100 billion from the previous forecast made by the Office of Management and Budget. As well, the recent unexpected jump in jobs created suggests that some of my concerns regarding the consumer (spent-up, not pent-up) might be delayed, as real wages and disposable incomes will hold up better than I previously thought. This all means that economic growth will decelerate, but to a solid level and not at the accelerated rate I previously thought.
Sentiment conditions are at levels that are typically associated with market bottoms.
Our own analysis of Merrill Lynch's internal put/call ratio (a great measure of retail sentiment) supports this conclusion, as does the weakening mutual fund inflows and other measurements like the renewed popularity of the Rydex short funds. So does the big fat put/call ratio, which hovered around 1.40 on Friday, as well as a very high Trin. As I mentioned previously, sentiment is closing in on despair. If you don't believe me, read Mark Hulbert's persuasive "At Least the Contrarians are Smiling" in yesterday's New York Times business section, in which he writes:
"The three dozen newsletters monitored by The Hulbert Financial Digest that try to time the market's short-term swings have turned remarkably bearish in recent months. They now have a recommended equity exposure, on average, of minus 13.5%. That means that the average market timer in this group is not only recommending that subscribers avoid stocks, but that they allocate about one-eighth of their portfolios to going short the stock market -- a bet that the market will decline."
The spectre of terrorism and worldwide political instability will be with us for some time, but the shift of authority and security in Iraq to the Iraqis will occur in the next few weeks.
Despite some highly visible atrocities and screw-ups in strategy (most recently the Ahmad Chalabi situation), the Middle East has arguably begun to move away from the chaos of the Saddam Hussein regime and toward more stability.
The odds favoring a Bush win appear to be rising (a positive market influence) -- despite the mess in Iraq, higher interest rates and rising inflation.
Surprisingly, Sen. Kerry has not meaningfully improved his lot in the polls despite the recurring and visible difficulties in the Middle East, and he actually appears to be shooting himself in the foot with his recent scheme to delay his acceptance of the Democratic presidential nomination in order to circumvent federal election laws -- and use that additional time to his political/financial advantage. What happens to President Bush's standing when economic statistics continue above trend-line levels, as they likely will, and there is some good news in Iraq, which at some time there almost certainly will be?
The demise of China and Japan -- two important regions at the margin of the world economies -- are greatly exaggerated.
China's growth is slowing, but to a more orderly and sustainable rate. And I remain impressed with the recovery in Japan, particularly bank reform measures.
To summarize, from my viewpoint, there appears to be a number of reasons to be more bullish. To be sure, many of the headwinds I have addressed on The Edge are still in place, but their forces have subsided.
"
(in www.realmoney.com)