Whew. And I was worried the wealthy wouldn't be able to weather these storms.
QuoteBest Stock Market Since 1997 Seen With S&P 500 Momentum
By Lu Wang and Whitney Kisling - Nov 4, 2013
Bloomberg.com
The broadest equity rally on record will pick up speed through year end and lift the Standard & Poor's 500 Index to the biggest annual increase in 16 years, if history is any guide.
Shares have climbed in the final two months 82 percent of the time since 1928 when the benchmark gauge advanced at least 10 percent through October, data compiled by S&P and Bloomberg show. The mean November and December increase of 6 percent would boost the index to 1,862.79, an all-time high that is about 20 percent above the record 1,565.65 set in 2007.
Instead of selling shares to lock in profits during rallies, investors almost always add them in the final quarter, convinced that gains built up over the first 10 months will expand. The S&P 500's return has been positive over November and December every year since the bull market started in 2009. While earnings growth is slowing and the Federal Reserve is planning to curtail stimulus, Jeff Mortimer, director of investment strategy for BNY Mellon Wealth Management, says it usually doesn't pay to fight the trend in stocks.
"You have to pay attention to momentum in markets and that's what this calendar year is showing," Mortimer, whose firm has about $180 billion in client assets, said in a phone interview on Oct. 30. "Clients asked me, 'Why don't I take profit now?' My theory is you can sell a lot higher later."
Weekly Advance
U.S. stocks have risen for four straight weeks. The S&P 500 increased 0.1 percent to 1,761.64 last week as earnings at companies from Pfizer Inc. to General Motors Co. beat analyst estimates and the Fed said it needs more evidence of economic growth before reducing its stimulus program. Futures on the index gained 0.1 percent at 8:19 a.m. in London today.
The benchmark gauge for American equities gained 23 percent from January to October as companies such as Boston Scientific Corp. and Netflix Inc. advanced. A total of 447 stocks in the index are up this year, the most since at least 1990, and 80 percent traded above their 50-day moving averages last week, data compiled by Bloomberg show. That compares with 58 percent over the past 20 years.
The last time the S&P 500 recorded bigger returns for the first 10 months was in 1997, when stocks were in the middle of a bull market in which the index quadrupled over eight years. The gauge advanced 6.1 percent in November and December of that year, pushing the annual rally to 31 percent.
Missing Out
"People that are not in the market feel they're missing out and therefore want to join everybody else," Omar Aguilar, the San Francisco-based chief investment officer of equities at Charles Schwab Investment Management, said in an interview on Oct. 29. The firm had $229 billion in assets under management as of Sept. 30.
December has had the second-best returns of any month, with the S&P 500 climbing an average 1.5 percent since 1928, data compiled by Bloomberg show. For the final two months of the year, the index rose 68 percent of the time, more often than any two-month period except March to April. The mean 2.1 percent gain for the end of the year is almost double the 1.1 percent average for similar periods.
The S&P 500 is up more than 160 percent since 2009 after earnings expanded for four years and the Fed bought $2.3 trillion of bonds, keeping interest rates low to spur growth. Worse-than-estimated September payrolls and a government shutdown last month fueled speculation that the central bank will delay paring its monetary stimulus until March, according to a Bloomberg News survey of economists. Fed policy makers decided last week to maintain the $85 billion in monthly bond purchases.
Bubble Market
BlackRock Inc. Chief Executive Officer Laurence D. Fink, whose company is the world's largest money manager with $4.1 trillion in assets, said Fed policy is contributing to "bubble-like markets," such as the surge in stock prices.
"We've had a huge increase in the equity market," Fink said on Oct. 29 at a panel discussion in Chicago. "We have issues of an overzealous market again."
Equity valuations have increased 18 percent this year to 16.7, near the highest level in more than three years, even as U.S. gross domestic product is projected to expand 1.6 percent, almost half the rate of 2012, data and estimates compiled by Bloomberg show.
Economists this month cut their growth forecasts for the fourth quarter to 2 percent from an earlier projection of 2.5 percent. GDP hasn't expanded faster than 3 percent a year since 2005 and won't achieve that pace until 2015, they say.
Embedded Gains
"I just don't see the market having a reason as a whole to really go up a lot," David Pearl, co-chief investment officer at Epoch Investment Partners Inc. in New York, said in an Oct. 31 phone interview. His firm manages about $35 billion. "Generally if you're looking at a year where markets are up that much, it's usually a good economy. This year, it's not that great of an economy."
Even with this year's rally and increase in valuations, the S&P 500's price-earnings ratio is below the 15-year average of 19.3, data compiled by Bloomberg show. Profit growth will pick up this quarter, increasing to 6.8 percent or almost twice the 4.1 percent rate in the previous three months, according to more than 11,000 analyst estimates compiled by Bloomberg. It will rise more than 10 percent next year and in 2015.
"How can the market do so well? Because the market started the year inexpensive, the P/E ratios were too low," Abby Joseph Cohen, a senior investment strategist at Goldman Sachs Group Inc., said in an Oct. 31 Bloomberg Radio interview. "We still think the market is underpriced on a 12- to 18-month period."
Shares Double
Pfizer, the world's biggest drugmaker, is up 24 percent so far this year after earnings beat analyst estimates the last two quarters. The New York-based company had gained 71 percent in the first 10 months of 1997, before advancing another 5 percent by the end of the year.
Home Depot rallied 67 percent up to this point in 1997, going on to rise 5.6 percent more in November and December. The Atlanta-based home-improvement retailer has gained 24 percent in 2013, as earnings beat estimates every quarter this year. Per-share profits will rise 19 percent this fiscal year, which ends in January, according to analyst projections compiled by Bloomberg.
MGIC Investment Corp. extended a 59 percent rally another 10 percent by the end of 1997, data compiled by Bloomberg show. The home-loan guarantor based in Milwaukee reported Oct. 16 its second straight quarter of profits. The shares have risen 203 percent in 2013.
"Once you have an uptrend market throughout the year, there is enthusiasm for running up the return even further," Wayne Lin, a portfolio manager at Baltimore-based Legg Mason Inc., which oversees about $656 billion, said by phone on Oct. 31. "There is a momentum factor in markets, and right now the momentum factor is fairly strong."
Now see, this is how it's done on the S&P 500. Need profits to cut future checks for negotiated settlements from currency probes? Eliminate jobs. The employees can pay to keep people out of jail. Cheaper that way.
QuoteHSBC Profit Rises 30% on Cost Cuts as Currency Trades Probed
By Howard Mustoe - Nov 4, 2013
Bloomberg.com
HSBC Holdings Plc (HSBA), Europe's largest bank by value, said third-quarter pretax profit rose 30 percent as the lender cut costs and focused on its most lucrative markets.
Pretax profit climbed to $4.53 billion from $3.48 billion in the year-earlier period, the London-based lender said in a statement today. That missed the $5.54 billion median estimate of 10 analysts surveyed by Bloomberg.
HSBC also said it's being investigated by regulators, along with other firms, with regard to trading in the foreign-exchange market. Costs as a proportion of revenue, excluding gains and losses in the value of the bank's own debt, fell to 61 percent from 64 percent, approaching the goal of about 55 percent set by Chief Executive Officer Stuart Gulliver.
"In a subdued revenue environment, management continues to take out costs," Bernstein analysts including Chirantan Barua said in an e-mailed note after the results.
HSBC shares rose 16.6 pence, or 2.4 percent, to 703.90 pence at 11:41 a.m. in London. They have gained 8.8 percent this year, trailing the 18 percent advance for the 44-member Bloomberg Europe Banks and Financial Services Index.
Taking Charges
Gulliver said in May that he will cut an additional $3 billion of expenses after beating an earlier target. He has closed or sold 60 businesses and eliminated 46,000 jobs since the start of 2011. The bank has struggled to boost revenue crimped by the sovereign-debt crisis in Europe, the winding down of its U.S. consumer-finance operation and slower growth in China this year.
Pretax profit in Hong Kong rose 16 percent to $2.07 billion, boosted by a "stabilizing" economy in China, HSBC said today.
The lender booked a $428 million charge to repay customers wrongly sold loan insurance, hedging products and wealth advice, as well as a $575 million revaluation of the bank's debt. That contributed to the company missing analysts' estimates, and the earnings were positive otherwise, Ian Gordon, an analyst at Investec in London, wrote in a note to clients today.
Hong Kong was "a stand-out performer" in the quarter, Gordon wrote.
British lenders have been taking charges over the payment-protection insurance mis-selling and other scandals for the past year. HSBC set aside $147 million in the quarter for consumers sold loan insurance they either didn't want, need or understand, $132 million for businesses wrongly sold interest-rate hedging products and $149 million to investigate sales practices in its U.K. wealth business.
Currency Probe
HSBC hasn't suspended anyone over probes into foreign-exchange manipulation, Gulliver said on a conference call today. Foreign exchange accounts for the most revenue in the bank's global markets business, generating $660 million in the quarter.
U.K. and Swiss regulators are probing the $5.3 trillion-a-day foreign-exchange market after Bloomberg News reported in June that dealers in the industry said they had been front-running client orders and attempting to rig benchmark rates. Banks including Barclays (BARC) Plc and Citigroup Inc. have put staff on leave amid the probes.
"We are cooperating with the investigations, which are at an early stage," HSBC said today.
Investment Bank
Pretax profit at HSBC's investment-bank, led by Samir Assaf, fell to $1.85 billion from $2.25 billion, hurt by its corporate fixed-income business.
Weaker bond trading has hurt banks including Barclays, which said last week that that revenue from fixed income, currencies and commodities dropped 44 percent to 940 million pounds, the lowest since 2011. The five biggest U.S. investment banks' combined revenue from FICC trading slid 25 percent from a year ago, data compiled by Bloomberg Industries show.
Standard Chartered Plc (STAN), the other U.K. bank that gets most of its profit in Asia, last week posted lower revenue as growth slowed in its corporate banking business.
Gulliver said today that HSBC has consulted with shareholders on the European Union's bonus cap, which has prompted banks including Barclays to plan changes to their compensation structure.
The bank will decide how it will respond to the proposed rules in "the next few months," he said.
I like making money.
Making money while you sleep is nice.
Whore.
I enjoy contributing to shareholder value.
Quote from: Admiral Yi on November 04, 2013, 10:04:19 AM
Making money while you sleep is nice.
I hate that spend money while I sleep. :(
Well the "investments" driving it is the make-believe money the Fed is "printing". Why on Earth should that be affected by, well, stuff? :huh:
Quote from: Tamas on November 04, 2013, 11:10:58 AM
Well the "investments" driving it is the make-believe money the Fed is "printing". Why on Earth should that be affected by, well, stuff? :huh:
:huh:
What does this mean?
It means that easy money is inflating asset prices.
Quote from: Admiral Yi on November 04, 2013, 12:09:02 PM
It means that easy money is inflating asset prices.
Then why not say that?
As to the proposition, the first step is to establish the premise. In what sense is money "easy"?
Interest rates? Short term rates and key benchmarks have been steady. Long term rates are up.
Money supply aggregates? M1/M2 growth has been slow in recent months.
The one relevant datum that has shown significant growth is the quantity of reserves kept at the Fed.
One could call that easy money. But the next question is how does the fact that member banks are stockpiling reserves at the Fed increase asset prices?
Quote from: The Minsky Moment on November 04, 2013, 02:02:08 PM
Then why not say that?
Dude, he's Hungarian and learned English on the fly. Let's see you do better on a Hungarian site.
Quote from: Admiral Yi on November 04, 2013, 02:05:01 PM
Quote from: The Minsky Moment on November 04, 2013, 02:02:08 PM
Then why not say that?
Dude, he's Hungarian and learned English on the fly. Let's see you do better on a Hungarian site.
Yeah, quite a few of us forget this, due to how good their English is; probably puts them in the top decile of those learning it as a second language.
Quote from: Admiral Yi on November 04, 2013, 02:05:01 PM
Quote from: The Minsky Moment on November 04, 2013, 02:02:08 PM
Then why not say that?
Dude, he's Hungarian and learned English on the fly. Let's see you do better on a Hungarian site.
His English is quite good, good enough to know the difference between "easy" and "make believe"
But if Tamas wants to clarify, he is welcome to do so.
Quote from: The Minsky Moment on November 04, 2013, 02:24:44 PM
Quote from: Admiral Yi on November 04, 2013, 02:05:01 PM
Quote from: The Minsky Moment on November 04, 2013, 02:02:08 PM
Then why not say that?
Dude, he's Hungarian and learned English on the fly. Let's see you do better on a Hungarian site.
His English is quite good, good enough to know the difference between "easy" and "make believe"
But if Tamas wants to clarify, he is welcome to do so.
That's not an assumption I would make with an Eastern European.
Quote from: Admiral Yi on November 04, 2013, 02:05:01 PM
Quote from: The Minsky Moment on November 04, 2013, 02:02:08 PM
Then why not say that?
Dude, he's Hungarian and learned English on the fly. Let's see you do better on a Hungarian site.
Beets! Turnips! Gypsies!
Seedy, how can you be surprised?
http://dealbook.nytimes.com/2013/10/28/house-set-to-vote-on-2-bills-is-seen-as-an-ally-of-wall-st/?ref=politics&_r=3&
QuoteTo Wall Street, this town might seem like enemy territory. But even as federal regulators and prosecutors extract multibillion-dollar penalties from the nation's biggest banks, Wall Street can rely on at least one ally here: the House of Representatives.
The House is scheduled to vote on two bills this week that would undercut new financial regulations and hand Wall Street a victory. The legislation has garnered broad bipartisan support in the House, even after lawmakers learned that Citigroup lobbyists helped write one of the bills, which would exempt a wide array of derivatives trading from new regulation.
The bills are part of a broader campaign in the House, among Republicans and business-friendly Democrats, to roll back elements of the 2010 Dodd-Frank Act, the most comprehensive regulatory overhaul since the Depression. Of 10 recent bills that alter Dodd-Frank or other financial regulation, six have passed the House this year. This week, if the House approves Citigroup's legislation and another bill that would delay heightened standards for firms that offer investment advice to retirees, the tally would rise to eight.
Both the Treasury Department and consumer groups have urged lawmakers to reject the bills, warning that they could leave the nation vulnerable again to excessive financial risk taking. The House proposals stand little chance of becoming law, having received a much chillier reception in the Senate and at the White House, which on Monday threatened to veto the bill on investment advice for retirees.
But simply voting on the bills generates benefits for both House lawmakers and Wall Street lobbyists, critics say. For lawmakers, it comes in the form of hundreds of thousands of dollars in campaign contributions. The banks, meanwhile, welcome the bills as a warning to regulatory agencies that they should tread carefully when drawing up new rules.
In other corners of the nation's capital, Wall Street has received a decidedly less cordial reception. The Justice Department recently struck a tentative $13 billion settlement with JPMorgan Chase over the bank's mortgage practices. Federal regulators are also increasingly demanding that JPMorgan and other financial firms admit to wrongdoing when settling enforcement actions.
"The House is the odd man out in terms of doing Wall Street's bidding," said Marcus Stanley, policy director of Americans for Financial Reform, a nonprofit group critical of the financial industry. "They're letting Wall Street write the law to its own benefit in ways that harm the public."
The lawmakers who support the bills say the legislation is good for the nation, not just the bank's bottom lines.
Still, in the case of the derivatives trading bill, Citigroup's lobbyists redrafted the proposal, striking out certain phrases and inserting others, according to documents reviewed by The New York Times. The House Financial Services Committee, a magnet for Wall Street campaign donations, adopted the bank's recommendations in 2012 and again this May.
Wall Street's support from the House extends beyond favorable votes. When bank executives are called to testify before Congress, industry lobbyists distribute proposed questions to lawmakers and their staff, seeking to exert some control over the debate, according to emails written by staff members on the House Financial Services Committee that were reviewed by The Times.
One House aide, in an email exchange among House Financial Services staff members last year, warned that lawmakers should not mimic the talking points from lobbyists.
"I know that some of our members are inclined to whore, but we cannot be apes," the Republican aide said.
Wall Street is not the only industry that lobbies the House to shield it from tougher regulatory oversight. House Republicans have also come to the defense of energy companies, seeking to beat back rules for shale gas drillers and coal-powered electricity plants.
But the recent financial legislation, critics say, illustrates how the House has become one of Wall Street's last strongholds in Washington
The Wall Street-backed legislation has attracted broad support from lawmakers in both parties in the House, including prominent Democrats like Representative Carolyn Maloney of New York and Representative Jim Himes of Connecticut.
The lawmakers who support the derivatives trading bill say that it reins in a Dodd-Frank rule that could prove costly for Wall Street and Main Street businesses alike.
"New Dodd-Frank regulations that supposedly targeted Wall Street have the unintended consequence of limiting the options of farmers and manufacturers," said Representative Randy Hultgren, Republican of Illinois, who introduced the legislation.
The legislation, Mr. Himes said in an interview, poses no financial risk to the country. And while he is the second-largest recipient among House Democrats of financial sector donations, that is not what is compelling his vote, he said.
"It hardly determines, thank goodness, how legislators think about these issues," said Mr. Himes, a former Goldman Sachs executive.
With the House scheduled to vote on the derivatives bill on Wednesday, the lobbying campaign has heated up once again.
A top Wall Street lobbying group, the Securities Industry and Financial Markets Association, recently sent Congressional aides a seven-page document advocating passage of the bill. The document, a copy of which was reviewed by The Times, argues that the bill will modify the derivatives trading rule that "has been opposed by senior prudential regulators" and "increase the cost to banks." The document goes on to cite public statements from Ben S. Bernanke, the chairman of the Federal Reserve, criticizing the rule.
But Mr. Bernanke has never endorsed the Citigroup-backed bill. And Sheila C. Bair, the former head of the Federal Deposit Insurance Corporation, who was also referred to in the document, said on Monday that "I do not support efforts to repeal" the rule.
Despite the lobbying, some of the committee's top Democrats are resisting the bills.
Representative Maxine Waters opposes Wall Street-backed legislation.
Monica Almeida/The New York Times
Representative Maxine Waters opposes Wall Street-backed legislation.
"After inflicting so much pain and suffering on the American people, now is not the time to let the largest banks back into the casino," Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, said in a statement.
The pro-Wall Street House bills are unlikely to gain much traction in the Senate. While some of the measures have companion bills supported by some Senate Democrats, those bills have little chance of passing the Senate so long as the Obama administration continues to oppose changes to Dodd-Frank.
But it is possible that lawmakers will quietly tuck the provisions into a broader budget deal at the end of the year. And even if the Senate balks, the House bills can still send a powerful message to regulators drafting new rules under Dodd-Frank: slow down.
The bills, advocacy groups say, have a chilling effect on regulators, who have completed only about 40 percent of the rules required by the law.
Some House bills have the explicit purpose of delaying new regulation. One bill scheduled for a vote this week could temporarily restrain the Labor Department from imposing a new rule requiring some financial advisers to take on a fiduciary duty to clients when providing retirement investment advice. Such a duty would demand that the advisers act in the best interest of the client.
The bill that Citigroup helped draft takes aim at one of the more contentious provisions in Dodd Frank, a requirement that banks "push out" some derivatives trading into separate units that are not backed by the government's insurance fund. The goal was to isolate this risky trading and to prevent government bailouts.
A main culprit in the 2008 financial crisis, derivatives are contracts that allow companies to either speculate in the markets or protect against risk. Such contracts helped push the insurance giant American International Group to the brink of collapse in 2008.
The House bill scheduled for a vote Wednesday would significantly curb the requirement that banks separate their derivatives trading operations, a plan that was created as a compromise by Citigroup lobbyists. In essence, the compromise exempted a wider array of derivatives from the push-out rule. As it now reads, Citigroup's recommendations are reflected in more than 70 of the 85 lines of the House bill.
The lobbyists also outlined their arguments to lawmakers in a three-page briefing that sounded alarms about the push-out rule. The rule, Citigroup said, would ultimately impede "the safety and soundness of financial institutions."
In a past statement, a Citigroup spokeswoman noted that the bank "has been a strong supporter of financial reform, including Dodd-Frank." But when it comes to the push-out rule, she said, it is "widely agreed" that it "does absolutely nothing to create a safer financial system."
House aides, when asked why Democrats would vote for this proposal even though the Obama administration opposes it, offered a political explanation. Republicans have enough votes to pass it themselves, so vulnerable House Democrats might as well join them, and collect industry money for their campaigns.
"It is a free vote," one aide explained Monday.
An overview of money contributions by groups for/against the bill:
http://maplight.org/us-congress/bill/113-hr-992/1124077/total-contributions
Also: House Finance Chair Hensarling Goes on Ski Vacation with Wall Street (http://www.propublica.org/article/house-finance-chair-goes-on-ski-vacation-with-wall-street)
Quote from: mongers on November 04, 2013, 02:18:37 PM
Quote from: Admiral Yi on November 04, 2013, 02:05:01 PM
Quote from: The Minsky Moment on November 04, 2013, 02:02:08 PM
Then why not say that?
Dude, he's Hungarian and learned English on the fly. Let's see you do better on a Hungarian site.
Yeah, quite a few of us forget this, due to how good their English is; probably puts them in the top decile of those learning it as a second language.
If you can't speak the language of Earth, maybe you should go somewhere else.
Quote from: mongers on November 04, 2013, 02:18:37 PM
Quote from: Admiral Yi on November 04, 2013, 02:05:01 PM
Quote from: The Minsky Moment on November 04, 2013, 02:02:08 PM
Then why not say that?
Dude, he's Hungarian and learned English on the fly. Let's see you do better on a Hungarian site.
Yeah, quite a few of us forget this, due to how good their English is; probably puts them in the top decile of those learning it as a second language.
Hungarians?
Quote from: Syt on November 05, 2013, 12:24:07 AM
Seedy, how can you be surprised?
The only thing that will surprise me, when Wall Street crashes the global economy with even more exotic financial devices next time to the point that even the US taxpayer can't save it, will be that it took as long as it had.
Admiral Yi's Invisible Strap-On Dildo of the Free Market will win in the end. LOLZ GREED IS GUD
3/10 :zzz
Riding bareback increases shareholder value and hemorrhoidal bleeding.
Wrong. Condoms are the quintessential consumer product, a demand created entirely by advertising. OBEY CONSUME DON'T PROCREATE