The collision of global markets and social mood

Tuesday, December 4, 2012

News News News

In between commercials during The Layover with Anthony Bourdain last night, I checked in on Bloomberg to see how the futures were doing. I've never seen so many juicy headlines -- so many that I had to take notes.

1) Norway's sovereign wealth fund, now up to $660 billion, plans to invest $11b in the US real estate market. With so many crooning about how the real estate market is BACK, I wonder if their timing will match their foray into Greek, Spanish, Italian, and Portuguese bonds back in 2010. Back then, their finance minister said "One could say we're investing for infinity." They lost $52b on the trade. The TV reporter last night said they lost $100b in fixed income investments in 2008.

I covered it here.

2)  Pine River’s Steve Kuhn Sees ‘Golden Age’ for Mortgage Hedge Funds. This almost the exact same thing that KKR chief Henry Kravis said back in 2007 just before the market topped. Kravis said then that Private Equity was about to experience a "golden age."

His pals agreed. "I don't think it's a bubble," David M. Rubenstein of Carlyle Group told the Financial Times. "I think really what's happening now is that people are beginning to use a different investment technique, and this investment technique, private equity, adds real value." Okay.

Now Kuhn, who manages a hedge fund that’s gained 32 percent this year, is joining the party saying “It’s the golden age of the relative value hedge fund.”

3) French President Francois Hollande said "We have settled the Greece question." Ha, this is the juiciest of them all, and I can't find the story anywhere.

4) The most chilling was IMF Officially Endorses Capital Controls in Reversal.

The International Monetary Fund endorsed nations’ use of capital controls in certain circumstances, making official a shift, which has been in the works for three years, that will guide the fund’s advice.

In a reversal of its historic support for unrestricted flows of money across borders, the Washington-based IMF said controls can be useful when countries have little room for economic policies such as lowering interest rates or when surging capital inflows threaten financial stability. Still, it said the measures should be targeted, temporary and not discriminate between residents and non-residents.

Sounds like it may be coming here someday soon. That said, I like Brazilian reals anywhere over 2/USD, Indian rupees anywhere over 55/USD, and Japanese yen hopefully below 76/USD in the not so distant future.

Speaking of futures, they're flat, which is good. I'd like to see the S&P cash test 1405 today and reverse. 1405 is a 38% Fibonacci level and coincides with a Fib extension target. Lower prices could happen as well, but under 1400 the reversal potential would be in question I think, at least for a day or two.

Yesterday reached 1423.73, shy of the 1425 lower level I was looking for. There is still a shot at it and higher as well. But below 1400, 1385.43 would start to loom.










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