Despite the 6.5%
stock market
rally over the last three months, a handful of billionaires are quietly dumping their American stocks . . . and fast.
Warren Buffett, who has been a cheerleader for U.S. stocks for quite
some time, is dumping shares at an alarming rate. He recently complained
of “disappointing performance” in dyed-in-the-wool American companies
like Johnson & Johnson, Procter & Gamble, and Kraft Foods.
In the latest filing for Buffett’s holding company Berkshire
Hathaway, Buffett has been drastically reducing his exposure to stocks
that depend on consumer purchasing habits. Berkshire sold roughly 19
million shares of Johnson & Johnson, and reduced his overall stake
in “consumer product stocks” by 21%. Berkshire Hathaway also sold its
entire stake in California-based computer parts supplier Intel.
With 70% of the U.S. economy dependent on consumer spending,
Buffett’s apparent lack of faith in these companies’ future prospects is
worrisome.
Unfortunately Buffett isn’t alone.
Fellow billionaire John Paulson, who made a fortune betting
on the subprime mortgage meltdown, is clearing out of U.S. stocks too.
During the second quarter of the year, Paulson’s hedge fund, Paulson
& Co., dumped 14 million shares of JPMorgan Chase. The fund also
dumped its entire position in discount retailer Family Dollar and
consumer-goods maker Sara Lee
….
No investors, let alone billionaires, will want to own stocks
with falling profit margins and shrinking dividends. So if that’s why
Buffett, Paulson, and Soros are dumping stocks, they have decided to
cash out early and leave Main Street investors holding the bag.
…
Google Inc. chairman Eric Schmidt plans to sell up to $2.51 billion of his share in the company, according to a
Securities and Exchange Commission filing late Friday.
http://articles.marketwatch.com/2013-02-08/markets/36990257_1_shares-of-google-stock-eric-schmidt-plans
Venezuela devalued its currency, the bolivar, the country’s Finance
Minister Jorge Giordani said Friday. President Hugo Chavez ordered the
move from Cuba, the minister said
http://articles.marketwatch.com/2013-02-08/markets/36989549_1_finance-minister-jorge-giordani-devalues-venezuela
Could these be the signs of the upcoming market collapse people have
been talking about? I don’t know, but things could start to get
interesting.
Something happened this week that brings back haunting
memories of the 2001 put options of airline stocks, except this “bet” is
against the entire U.S. economy. This week, an anonymous trader bought
100,000 put options on the ETF, which is an acronym for an
exchange-traded fund. One commonly traded ETF is XLF, which, in the most
unscientific and basic terms, is a group of funds that is like a
barometer for the stock market.
Over the last week and a half, high level JP Morgan executives have
dumped over $6 million in shares in what experts have described as
‘unusual activity’.
Anyone believe JPM’s October 12th earnings report which beat
expectations? Looks like accounting BS engineered to dump legacy
positions on the general public.A chorus of high-level executives inside
JPMorgan (JPM) are selling down their stakes in the company, in what
some experts are citing as “unusual” activity within the nation’s
largest bank by deposits.CNBC reports that JPM execs have dumped $6
million in the past 10 days!
Urgent! Hedge Funds Preparing For Market Sell-Off.
Some of the biggest U.S.
hedge-fund investors have made billions betting against the yen,
exploiting Japan’s determination to weaken its currency and boost its
economy.
Wagering against the yen has emerged as the hottest trade on Wall
Street over the past three months. George Soros, who made a fortune
shorting the British pound in the 1990s, has scored gains of almost $1
billion on the trade since November, according to people with knowledge
of the firm’s positions. Others reaping big trading profits by riding
the yen down include David Einhorn’s Greenlight Capital, Daniel Loeb’s
Third Point LLC and Kyle Bass’s Hayman Capital Management LP, investors
say….
The world economy faces a new
threat. Instead of a banking collapse or too much debt, fears are
growing that countries are using their currencies as an economic weapon.
History suggests that’s never a good thing.
If too many countries try to weaken their currencies for
economic gain — sparking a so-called “currency war” — then the fragile
global economic recovery could be derailed and the international
financial system thrown into chaos.
With the disappointing initial
GDP releases for Q42012 from Europe out, the “world” as defined by 41
OECD countries across the globe, has plunged into recession. We
define “recession” through two alternative definitions for our
comparison, either the presence of a single negative quarter-on-quarter
growth or the more traditional two consecutive negative quarterly
growths. Whichever way you look at it, the number of countries in
expansion plunged dramatically between 3Q2013 and 4Q2012.
Now this is a diffusion index, with each country receiving equal
weightings, and so it appears that 60% seems to be a viable threshold
for the definition of “global recession” using the single-quarter
definition (black) and 70% is probably the appropriate threshold for the
2-quarter definition (blue).
…
For a widespread currency war
to occur a large proportion of significant economies must wish to
devalue their currencies at once. This has so far only happened during a
global economic downturn.
An individual currency devaluation has to involve a corresponding
rise in value for at least one other currency. The corresponding rise
will generally be spread across all other currencies
[19] and
so unless the devaluing country has a huge economy and is substantially
devaluing, the offsetting rise for any individual currency will tend to
be small or even negligible. In normal times other countries are often
content to accept a small rise in the value of their own currency or at
worst be indifferent to it. However, if much of the world is suffering
from a recession, from low growth or are pursuing strategies which
depends on a favourable balance of payments, then nations can begin
competing with each other to devalue. In such conditions, once a small
number of countries begin intervening this can trigger corresponding
interventions from others as they strive to prevent further
deterioration in their export competitiveness.
[20]
KWN: Renowned money manager Felix Zulauf told King World News that
despite the rally in stocks, the world economy is still in trouble.
Zulauf, founder of Zulauf Asset Management and 20+ year Barron’s
Roundtable panelist, believes the current euphoria among investors and
optimistic expectations going forward are creating a very dangerous
environment. Zulauf also feels that although there has been a long
consolidation in gold, the fundamentals are still quite bullish.
This is the final part of a three part written interview series which has been released on King World News.
In these interviews the legendary money manager has discussed why he
believes central planners will fail, how this will lead to systemic
collapse, gold repatriation, what investors should be doing with their
money right now, how they can protect themselves going forward, and much
more.
This morning, an email hit our inbox with a big call on
Wal-Mart from a firm called Cleveland Research.
In the note, the firm said it was lowering its Q1 2013 same-store
sales growth estimate for Wal-Mart to 0 percent from 1 percent.
In other words, they expect Wal-Mart’s sales to stagnate in the first quarter.
The reason why, according to Cleveland Research (emphasis added): “A pullback in consumer spending related to 1) payroll/social security tax increase, 2) delayed tax returns, and 3) rising gas prices.”
…
Stocks Look Expensive Relative To Industrial Production
It’s certainly a yellow flag.
No comments:
Post a Comment