Last MacroTwits Episode

Below is the last MacroTwits Hour episode with Gregor Macdonald (Gregor.us/@gregormacdonald) on Stocktwits.tv. I learned a lot watching MacroTwits over the past two years. It was like getting an MBA in Economics (on top of Dvol's MSF, that's right). See the archive here and video after the jump (12/19/2010).

Ben Thompson Reacts to Meredith Whitney's Muni Call (CNBC)

Ben Thompson, who managers $6 billion+ in municipal bonds (or fixed income) at Samson Capital, thinks Meredith Whitney is way off on her muni call (see her on 60 Minutes/CNBC). Does anyone agree with her besides Charles Biderman of TrimTabs? Keep an eye on this space. Municipalities across the Nation have massive budget shortfalls (google news) with an already stressed tax base, high unemployment and $3 trillion in muni debt outstanding.

U.S. Population Growth Interactive Map (Census Data 2010), Nevada +35.1%, Michigan -0.6%

Results from the U.S. Census Bureau are in. Check out the interactive map after the jump. During the 2000-2010 decade:



Nevada 35.1%
Arizona +24.6%
Utah +23.8%
Idaho +21.1%
Texas +20.6%
North Carolina +18.5%
Georgia +18.3%
Florida +17.6%
Colorado +16.9%
South Carolina +15.3%
Delaware +14.6%
Wyoming 14.1%
Washington +14.1%
Alaska +13.3%
New Mexico +13.2%
Virginia +13%
Oregon +12%
California +10%
----
Michigan -0.6%
Puerto Rico -2.2%


Tweets Can Predict Stock Market Days In Advance (IU Informatics)

According to Johan Bollen at Indiana University's Informatics Department, mood on Twitter can predict stock market moves 4 days in advance, 87.6% of the time. Here is the research paper by Johan Bollen, Huina Mao, Xiao-Jun Zeng (University of Manchester). According to Bloomberg, the Derwent Absolute Return Fund just raised $39 million to capitalize on this. Read more at Bloomberg.com and IDS (Indiana Daily Student). *I embedded a Bloomberg clip featuring Bollen from 10/20 after the jump.

SPY Rally From 2009 Low Looks Like 1996-1998, LTCM Moment Coming? (Chart)

I saw that the trend looked similar on the 15 year chart. These events led to the market panic and Long Term Capital Management's demise. From PBS Frontline:

"The Asian financial crisis that was triggered in July 1997 was a shocker. Even two years after it ended, anxiety still loomed over global financial markets. What was at the time perceived to be a localized currency and financial crisis in Thailand, soon spread to other Southeast Asian countries--including Malaysia, Indonesia and the Philippines. By the fall of 1997, the contagion extended its reach to South Korea, Hong Kong and China. A global financial meltdown had been ignited. In 1998, Russia and Brazil saw their economies enter a free-fall, and international stock markets, from New York to Tokyo, hit record lows as investors' confidence was shaken by the volatility and unpredictability in the world's financial markets."

Meredith Whitney Talks Munis On CNBC After 60 Minutes Interview (12/21/2010)

Meredith Whitney was on CNBC yesterday responding to all of the ruckus over her 60 Minutes appearance. She put more fuel on the fire. She thinks the U.S. sees "social unrest" as Governments "lay off 1-2 million people over the next 18 months" and municipal bonds see "indiscriminate selling" as major credits default (reorganize). On a positive note, Meredith thinks a sell off will provide buying opportunities for quality muni credits. S&P and $7 billion municipal bond fund manager Ben Thompson disagrees with her bearish views. Watch the CNBC clip after the jump. Thoughts?

Doug Kass: Gold Briefly Trades Under $1,050 In 2011 (CNBC Video, GLD Chart)

Doug Kass (Seabreeze Parters) believes Gold will be volatile in 2011 and "briefly trades under $1,050 per ounce (-25%), ending the year at roughly between $1,100-1,200 per ounce". $1,000, or $100 on $GLD, is a strong support level. I could see $GLD pulling back to trend support or the 200 day moving average in the near term. Kass gave potential catalysts for weaker Gold: Real interest rates rise, world stock markets surprise to the upside, U.S. Government addresses deficit and GLD is a crowded trade in the hedge fund community.

Tim Seymour mentioned that Central Banks increased their gold reserves by 30-40% YoY. Read "China Should Consider Increasing Gold Reserves, Central Bank Adviser Says" (Bloomberg). See the CNBC Fast Money video after the jump (hat tip pragcap.com).


GLD (SPDR Gold ETF) - Stockcharts.com

Gary Shilling, Dan Fuss, Jeffrey Gundlach on Treasuries (Dec/2010, TNX, TYX Charts)

Bond Forecast Arbitrage: Jeffrey Gundlach of DoubleLine Funds thinks it is time to buy bonds (not stocks) on upside yield exhaustion. From Reuters on 12/14/2010:
He said the rapid rate rise will hit "exhaustion" in the weeks to come and that investors should now purchase Treasuries and bond funds.

"I don't think the economy can take much of a rate rise above 3.5 percent," Gundlach said on a conference call with investors.

Also see Gundlach's bearish December presentation "Independence Day" at Zerohedge.com (12/14/2010).

Dan Fuss of Loomis Sayles bought the 30-year bond at 4.61%, thinks fair value is 4.2%, but believes the 30 year secular bull market in Treasuries is over (Reuters: Loomis' Fuss bought 30-year Treasuries at 4.61 pct, 12/20/2010). Hat tip Jennifer Ablan.

Gary Shilling is still sticking with his 3% call on the 30-year bond. See him debate with Brian Wesbury (who sees 5% $TYX) on the CNBC video below. I also drew the long term downtrend in yields. I agree that yields are in the process of bottoming out, but when does the 30y yield officially break that descending structure? David Rosenberg of Gluskin Sheff on where the 10-year bond bases out:
"I’m kind of thinking that the secular bull market in bonds will be a basing period of rolling lows near the 2% level on the 10-year Treasury note yield." (Business Insider, 12/15/2010)

$TNX 10 Year Treasury Yield Index 3.349


$TYX 30 Year Treasury Yield Index 4.598

Marc Faber: Emerging Markets To Fall 20-30% In Next 6 Months (Video, $EEM Chart)

Marc Faber on CNBC TV18 - India (12/10/2010). He talked about emerging markets vs. developed markets, India, U.S. Dollar Index, Crude Oil and China interest rates. Video after the jump.

EEM (iShares MSCI Emerging Markets ETF)
StockCharts.com

David Stockman on Dylan Ratigan Show (Impact of Tax Cut Extension)

David Stockman, former Budget Director under President Reagan, thinks the U.S. can't afford the tax cut extension.

Meredith Whitney: 50-100 Municipalities Could Default (60 Minutes Video)

Watch this must see 60 Minutes video "State Budgets: Day of Reckoning" featuring analyst Meredith Whitney, New Jersey Governor Chris Christie, Illinois state Comptroller Dan Hynes etc.
"How accurate is the financial information that's public on the states? And municipalities," Kroft asked.

"The lack of transparency with the state disclosure is the worst I have ever seen," Whitney said. "Ultimately we have to use what's publicly available data and a lot of it is as old as June 2008. So that's before the financial collapse in the fall of 2008."

There's not a doubt in my mind that you will see a spate of municipal bond defaults," Whitney predicted.

Asked how many is a "spate," Whitney said, "You could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults."

I've been covering the municipal financial crisis for 2.5 years now. Click: Municipalities or Municipal bonds for the archive. Watch the 60 minutes video from 12/19/2010 after the jump.

Marcus Millichap: Cap Rate/Treasury Spread Means Buy Commercial Real Estate (CNBC Video, 12/15/2010)

According to Hessam Nadji at Marcus & Millichap, commercial real estate is a buy based on valuation. The spread between Cap Rates (Net Operating Income/Purchase Price) and Treasury Yields is at 480 basis points (4.8%), which has historically been a "buy" signal for commercial real estate. So higher CRE prices will close the Cap Rate/Treasury gap. I see that the ten most active markets in the U.S. have cap rates between 6.35%-7.79% (avg = 7.19%) at Real Capital Analytics. The 10-year yield is at 3.33%. I found a chart of the NCREIF Cap Rate to Treasury spread in a September blog post. Also read this Bloomberg article. Is NCREIF cap rate data available anywhere?

I'm curious how CRE analysts factor in the Federal Reserve subsidizing Treasury yields and the risk of bond vigilantes, at some point in the future, abruptly ending the 30 year bull market in bonds. What happens if Treasury Bond volatility spikes (MOVE Index) and Treasury Yields/Cap Rates invert? Would that affect CRE prices? Reggie Middleton of the BoomBustBlog mentioned this not too long ago on Bloomberg TV (video below).

CSPAN Interview With Rep. Ron Paul On The Federal Reserve (Newsmakers)

Rep. Ron Paul, incoming Chairman of the Financial Services Subcommittee on Domestic Monetary Policy (who "will have Congressional oversight of the Federal Reserve"), was interviewed by CSPAN's Newsmakers for thirty minutes. Video after the jump.

"On C‑SPAN's Newsmakers, he shares his concerns regarding the agency's monetary policies. In the past, the representative has been very vocal in his criticism of the way the Fed is handled and has gone so far as to propose that it be eliminated in his latest book, "End the Fed." Source: Newsmakers

2011 S&P Forecasts (1250 to 1450), 10y Yield, EPS and GDP (Links)

It looks like the expert consensus for 2011 is to own stocks. Buy Buy Buy? The S&P closed at $1,243 on 12/17/2010 and the 10y Note Yield closed at 3.33%.

From Barron's 2011 Outlookpic source

Brian Belski - Oppenheimer Asset Management
2011 S&P 500 Target 1,325, SPX EPS 88.5, 15x, GDP 3%, 10y yield 3.75%

David Bianco - B of A Merrill Lynch
2011 S&P 500 Target 1,400, SPX EPS 93, 15x, GDP 2.8%, 10y yield 4%

*Douglas Cliggot - Credit Suisse
2011 S&P 500 Target 1,250, SPX EPS 91 (2012 91), 13.7x, GDP 2.8%, 10y yield 3.5%

Barry Knapp - Barclays Capital
2011 S&P 500 Target 1,420, SPX EPS 91, 15.6x, GDP 3.1%, 10y yield 3.5%

David Kostin - Goldman Sachs
2011 S&P 500 Target 1,450, SPX EPS 94 (2012 104), 15.4x, GDP 2.7%, 10y yield 3.25%

Michael Ryan - UBS Wealth Management
2011 S&P 500 Target 1,350, SPX EPS 90, 15x, GDP 2.7%, 10y yield 3.25%

James Paulsen - Wells Capital Management
2011 S&P 500 Target 1,425, SPX EPS 95 (2012 103), 15x, GDP 4%, 10y yield 4%

Henry Mcvey - Morgan Stanley Investment Management
2011 S&P 500 Target 1,362.5, SPX EPS 93.5, 14.57x, GDP 4%, 10y yield 4%

Jeff Knight - Putnam
2011 S&P 500 Target 1,350, SPX EPS: 95 (2012 105), 14.21x, GDP 3.5%, 10y yield 4.25%

David Kelly - JPMorgan Funds
2011 S&P 500 Target 1,400, SPX EPS: 98 (2012 103), 14.28x, GDP 3.7%, 10y yield 4.25%

More:

Nicholas Snowden vs. Josh Brown on Copper (CNBC Video)

Copper Outlook: Josh Brown of Fusion Analytics (and TheReformedBroker.com) and Nicholas Snowden of Barclays Capital had a debate over Copper on CNBC. Both had interesting views. They talked about supply/demand fundamentals, mines, new physical copper ETFs, China demand, and market psychology. Copper is up 230% from the January 2009 low and is testing the 2008 high (reflation trade). Watch the debate after the jump and read Josh's article at CNBC.com - Brown: The Financialization of Copper.

High Grade Copper HG (courtesy of CMEgroup.com)