Monday, July 18, 2011

Gundlach Has 10% In Cash, Hussman Sees Topping Process, Taylor Sees EURCHF At Parity, Rosenberg...

Wall Street (Source: Jpellgen on Flickr)
Links for 7/18/2011

Gundlach Leads Bond Funds Boosting Cash (Bloomberg)

"“We are looking for a more severe down move in prices, for a better level to buy,” said Jeffrey Gundlach"

“Gundlach, the chief executive officer of Los Angeles-based DoubleLine Capital Inc., said in a telephone interview that he has 10 percent of the fund’s assets in cash, about five times what it usually holds. He views a move in the 10-year Treasury yield above 3.5 percent as a buying opportunity."

David Rosenberg (Gluskin Sheff) Explains "Why We Should Be Worried" (Zero Hedge)

Rosenberg on CNBC: We Are One Small Shock Away From a New Recession (Pragmatic Capitalism)

Swiss Franc Is Most Expensive Currency as Taylor Sees Euro Parity (BusinessWeek)

“The Swiss franc looks like it will go to par with the euro,” said John Taylor, founder of FX Concepts LLC in New York, the world’s largest currency hedge fund." (hat tip ZH)

"Dabbling With Support" by John Hussman (HussmanFunds.com)

"Very little change in market conditions this week; stock valuations imply expected 10-year S&P 500 total returns of about 3.8% annually, based on our standard estimation methodology, market action remains mixed, and advisory bearishness remains too low for comfort in the context of current valuations. The overall set of conditions implies a slightly negative expected return/risk profile for stocks, which would turn sharply negative on a broad decline much below about 1280 on the S&P 500 (particularly if that sort of decline had broad participation from industries, sectors, and security types). By contrast, a further pullback toward that level, sufficient to generate oversold conditions and more bearish sentiment, but not much deeper and not coupled with broad further deterioration in market internals, might be associated with a brief improvement in the expected return/risk profile. 
The overall market picture continues to have the look of a broad topping process, in which it's very common to see the market confined to a trading range of about 5-7% for 6-8 months." (read more)

Italy: Too Big To Bail (Pragmatic Capitalism)

Bank of America Tumbles To Paulson's Cost Basis Following Report Bank Will Need $50 Billion More In Capital Cushion (Zero Hedge)

BofA Mortgage Settlements Magnify Capital Strain as $50 Billion Gap Looms (Bloomberg

Goldman: Lower Inflation Risk Creates Higher Odds Of QE3 (Pragmatic Capitalism)

Riksbank Members Fear Greek Failure Could Spark Real Crisis (iMarket News) h/t ZH

Sigma X (Goldman Dark Pool) Trading Suggests European Contagion May Be Shifting From Italy To The UK (Zero Hedge)

David Levy from the Jerome Levy Forecasting Center says "in 6 months there will be a lot of worry that the economy's barely growing". Levy likes Treasuries for capital appreciation. He says the U.S. won't default on its debt, but the economy won't be able to handle budget cuts. Also, the European's sovereign debt crisis is a "monstrous threat" to private sector balance sheets in both Europe and the U.S. if there is contagion (BloombergTV, July 14, 2011)

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