Thursday, December 15, 2011

What happens if nothing occurs?

Or more importantly, what happens if something untoward does occur, and stocks rise after the news? Many times, the reaction to news is more important than the news itself....

Hayman Capital Management's Kyle Bass' negative views have received a lot of exposure. He is bright, thoughtful in analysis and committed of view.

Investor sentiment is far worse than the surveys in my view.

And disgust and distrust, so apparent today, are necessary reagents of a better market.

I continue to believe that 2012 will be a year in which investors rotate out of bonds and into stocks and that U.S. equities rise above the rest of the world.

IMF's Lagarde on the news wires saying that the European situation is escalating and near-term action is now required by countries outside the EU.

Last night there was a successful Spanish auction, selling 6 billion euro, above the expected 3.5 billion. Spanish two-year yields have fallen to a two-month low. Italy's two-year yield is down by 25 basis points. French yields are below 1% for the first time in three months.


BofA cites a 50% discount to book value, 9.5% return on equity next year and the manageable impact from low interest rates as rationale. In addition, the analysts expect Lincoln National to distribute more than 40% of net income to shareholders in 2012. Their price target is $38 (more than 100% above today's levels).

I get it. The world is flat. I read Tom Friedman.

I recognize that no nation is an island and we are all economically interconnected, but, seriously? A bunch of Europeans are upsetting a stabilized-to-very slowly improving situation in the United States' economy, creating a real threat of a worldwide economic double-dip and hurting our stock market.

Like I give a rat's you know about a bunch of German leaders who are intransigent and dogmatic in policy and are dangerously bullying the rest of the EU?

As for the French, they are governed by a bunch of socialists in the Senate -- they don't believe in capitalism to begin with.

German and French leaders and central bankers should all be given an ultimatum by our leaders: Immediately reverse your "tame and timid" approach to your debt crisis and replace it with "shock and awe" before the debt contagion spreads to others' shores.

Barton's list regarding US primacy:

* U.S. vs. fractured eurozone: unity, one language, Constitution
* Good demographics: growing population
* Mobility of labor markets
* Cheap energy sources: natural gas fracking
* Undervalued currency
* Entrepreneurial culture: Silicon Valley, availability of funding for startups
* Best universities
* Many of best companies: multinationals
* Deep liquid capital markets: fairest markets, insider trading convictions
* Rule of law in commerce and investment
* America will be biggest oil and gas producer by 2020