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Posts tagged ‘Investment management’

The Stock Market Is Overvalued, Caution Is Warranted

buffett indicator variant

Back in 2001, Buffett said in an interview with Fortune Magazine that “the single best measure” of stock market valuation is by taking the total market cap (TMC) and dividing it by the total gross domestic product (GDP). Today, TMC is equal to 114.5% of total GDP.

At the market top in 2007, just prior to a -54% crash in stocks, TMC was equal to 104.9%. According to Buffett’s “favorite” market timing indicator, stocks are more overvalued today than in 2007.

[Must Read: Shelley Moen: Pullback Ahead]

What’s more, since the market low in 2009 (when the ratio was at 56.8%–the first time in 15 years that stocks were truly “undervalued”), the ratio has climbed for six consecutive quarters and is now nearly two standard deviations above the mean.

However, just because a market is overvalued does not mean that a crash or even a significant correction is immediately imminent. Given the unprecedented negative 2.9% adjustment to US first quarter GDP figures, I expect this earnings season is going to be quite volatile. As usual, there will be good days and bad days but overall, barring any unexpected shock, I expect the current trend to be maintained.

That being said, Dow Theory is giving us some mixed signals.

The Transports are far stronger than the Industrials. There is no divergence as such but the flat-lining of the Dow 30 index is giving me cause for concern and I will be paying particular attention over the next 3 weeks for early signs of technical breakdown.

[See Also: A Second Quarter GDP Bounce-Back May Not Be Bullish]

The bell-weather consumer staples ETF: XLP is also giving mixed signals. While the overall ETF is technically strong, T J Max, Proctor & Gamble, Wal-Mart, Costco and Visa are showing early signs of price deterioration.

Thus, all in all, I think the July earnings season will tell us a lot regarding whether the bull is going to last. I am beginning to have my doubts. Caution is warranted.

Dow Transports: Daily
dow jones transportation avg.

Dow Industrials: Daily

ETF: XLP: Daily
consumer staples

TJ Max Corp: Daily.
tjx cos., inc.

Proctor & Gamble Corp: Daily.
procter & gamble

Wal-Mart Corp: Daily.

Costco Corp: Daily.

Visa Corp: Daily.


Charts Courtesy of SharpCharts.Com.

© Christopher M. Quigley 1st. July 2014.



We must stand up and say no way we wont pay.

The  Irish government’s attempt to re-invent the toxic banks as “Pillar community friendly banks” is just a farce. The Banks latest advertisement that floods our TV screens is insulting and an attempt to dumb down the citizens of Ireland. These toxic corrupt dens should be closed down and the directors should be doing jail time. But there is a more sinister problem here on our door step and it is in the IFSC in Dublin.

Did you know that there is approximately 1.4 trillion Euros on deposit and under Management in the various Fund management companies in the IFSC? Now I myself have two bank accounts one in Bank of Ireland and one at Allied Irish Bank and I estimate I am paying about 2.5% in costs every year (taxes) for the privilege of having these two bank accounts. I suspect that everybody else in Ireland is paying the same through the dirt tax
and penal bank charges, but what taxes are the super rich paying to hide the billions in the ISFC off shore tax haven? “Nothing”. Not a single penny, No Taxes!

With the appointment Matthew Elderfield  as the new financial regulator I doubt very much that any changes have taken place to the tax position of these massive funds. According to my information there is no and I repeat no taxes been paid on this enormous managed hot funds that are parked in the IFSC. If the Irish Government were to charge say a .5% tax on these funds (Fee if you will) for providing a safe haven for
these “Funds” the government would raise billions at a stroke .Why don’t they
do this??? Answer the banks are the bosses and the government do as they are
told and that is go elsewhere take it from the Unemployed the pensioners, and  the youth. Those people in our society who do not have the power to stand up against the vested interests .lets face it we are the easy targets .What is all this austerity for why are we willing to pay for the private debts of these banks who in turn owe these huge sums to Deutsche Bank .These debts are odious debts and as such the Irish citizen is not libel for the gambeling debts of gansters in Deutsche bank and our own Irish corrupt Banks.

We must stand up and say no way we wont pay.

Who is State Street ???

A leading provider of financial services to institutional investors worldwide

Since our entry into the European market in 1970, State Street has built a strong presence in the region to better serve our clients. Today, with more than 8,200 employees* throughout Europe, we offer local investors a complete range of financial services across the investment spectrum, including investment servicing, investment research and trading, and investment management.

In Ireland, we’ve grown our staff to over 2,000 employees* since first entering the market in 1996. With offices in Drogheda, Dublin, Kilkenny, and Naas, State Street in Ireland services more than US$500 billion* in assets for our clients and employs approximately 20 percent* of the workforce in the Irish funds industry — making us one of Ireland’s leading fund services companies. Recently, our investment management business State Street Global Advisors, completed its acquisition of Bank of Ireland Asset Manangement adding more than 110 employees in Dublin.

When you work with us, you have access to the local market knowledge of our experienced professionals, as well as capabilities and services that are highly scalable and truly global. More importantly, you benefit from our unwavering client focus and commitment to your success. Plus, with our strong local industry representation through the Irish Funds Industry Association, Financial Services Ireland, Institutional Money Market Funds Association and the Investment Company Institute, you’ll constantly be at the forefront of industry trends.

Investment Servicing

To help you keep up with the sweeping changes taking place in the financial industry — both worldwide and in Ireland — State Street brings you an array of flexible and customizable investment servicing solutions, including:

  • Global custody
  • Trustee services
  • Multi-currency valuation
  • Financial statement preparation
  • Fund administration
  • Global transfer agency/share registration
  • Regulatory compliance monitoring
  • Establishment and support services from our legal, tax and corporate secretariat groups
  • These services are provided to a wide range of investment funds, including:

  • Money Market Funds
  • Tax Transparent Funds
  • Exchange Traded Funds
  • Emerging Market Funds
  • Complex Structured Funds
  • Derivatives Funds
  • Property Funds
  • Liability-Driven Investment Funds
  • Loan Funds
  • Specialist Commodity Funds
  • Our breadth of servicing capability, combined with our expertise and local knowledge, bring transparency to the investment process and enable the owners or managers of invested assets to measure, evaluate and objectively interpret their investment performance.

    Alternative Investment Administration

    Globally, we service more than US$660 billion in alternative assets. In Ireland we offer a complete suite of fund accounting, fund administration, corporate administration, risk, and credit services to a wide range of clients, including institutional investors, hedge fund managers, private equity fund managers and real estate fund managers.

    Our comprehensive hedge fund services span the entire investment support process – from full integration with the fund manager’s front office, through middle office operations, collateral management, portfolio accounting, tax, investor servicing and all the way through to back office accounting and administration. Our private equity services support every stage of the fund life cycle and provide extensive expertise in private equity accounting, reporting, investor services and portfolio investment analysis.

    Real estate fund administration is a core area of our business and we provide a complete back-office service to enable the effective and efficient operation of fund structures across a range of jurisdictions. In addition we are a leading provider of corporate administration services for debt capital markets and structured finance vehicles, repackaging programs, specialist fiduciary products and bespoke corporate structures for large banks and institutional clients.

    Investment Research and Trading

    We provide specialized research, trading, securities lending and innovative portfolio strategies with the goal of enhancing and preserving the value of your portfolio. We do this through proprietary portfolio and risk management technologies, trading optimization and global connectivity across multiple asset classes and markets. Through our integrated global network, we offer diverse liquidity and crossing to facilitate cost-effective solutions that meet your needs.

    You can also take advantage of our industry-leading securities finance services. In the fast-changing, volatile global markets, you need to partner with a proven lending agent — one that is focused on the pursuit of strong and consistent returns in the context of conservative risk management, committed to program transparency and best practice oversight, and dedicated to maintaining scale and global reach. With approximately US$2.2 trillion in lendable assets* and a team of 340 dedicated professionals* worldwide, State Street is a market leader in securities finance.

    Investment Management

    Through our investment management business, State Street Global Advisors, we provide you with the disciplined, systematic investment strategies you need to achieve your investment goals.

    As one of the world’s largest managers of institutional assets, Global Advisors manages more than US$2.0 trillion in assets worldwide.* We leverage this in-depth expertise and decades of experience to create highly customized investment solutions that align with your distinct risk parameters.


     US State Street agreed terms for the second-biggest office letting in Ireland back in 2007and this is it. The global fund management firm occupies the   170,000 sq ft at the site, which was developed by X billionaire developer Liam Carroll here in the Sir John Rogerson’s Quay which is in the south docklands area, Dublin 2.
    State Street is using this office as its HQ . Savills HOK advised the financial services company, while CB Richard Ellis acted for Liam Carroll.
    Carroll’s company, Dunloe Ewart,is the company uses by Carroll and we the taxpayers of Ireland are now  the landlords of these guys. What brought my attention to this company is the sheer amount of Cameras on the building there is in all 17 and I can’t help wonder what it is that these guys want to protect so much in there? No other building along Sir John Rogerson’s Quay has as many cameras, most have a camera at the front door as you go into the buildings but this building is like Fort Knox, it  has cameras everywhere! Are these Boys managing Colonel Gaddafi’s hidden Billions??

    Step by Step Guide to the Largest String of Sovereign Defaults in Recent History

    The Anatomy of a Portugal Default: A Graphical Step by Step Guide to the Beginning of the Largest String of Sovereign Defaults in Recent History

    By  Reggie Middeleton

    of http://boombustblog.com

    There are more and more “professionals” in the mainstream media stating that they expect European defaults. What is interesting is that as there is at least a minority of pundits that are facing this inevitable event. European (and American) equity markets are still chuggling the global liquidity elixir awash in the markets and moving ever higher. From Bloomberg: Shrinking Euro Union Seen by Creditors Who Cried for Argentina

    Nine months before Argentina stopped paying its obligations in 2001, Jonathan Binder sold all his holdings of the nation’s bonds, protecting clients from the biggest sovereign default. Now he’s betting Greece, Portugal and Spain will restructure debts and leave the euro.

    Binder, the former Standard Asset Management banker who is chief investment officer at Consilium Investment Management in Fort Lauderdale, Florida, has been buying credit-default swaps the past year to protect against default by those three nations as well as Italy and Belgium. He’s also shorting, or betting against, subordinated bonds of banks in the European Union.

    “You will probably see at least one restructuring before the end of the next year,” said Binder, whose Emerging Market Absolute Return Fund gained 17.6 percent this year, compared with an average return of 10 percent for those investing in developing nations, according to Barclay Hedge, a Fairfield, Iowa-based firm that tracks hedge funds.

    He’s got plenty of company. Mohamed El-Erian, whose emerging-market fund at Pacific Investment Management Co. beat its peers in 2001 by avoiding Argentina, expects countries to exit the 16-nation euro zone. Gramercy, a $2.2 billion investment firm in Greenwich, Connecticut, is buying swaps in Europe to hedge holdings of emerging-market bonds, said Chief Investment Officer Robert Koenigsberger, who dumped Argentine notes more than a year before its default.

    No disrespect intended to these fine gentlemen and distinguished investors, but the default of several of these states is simple math. You cannot take 8 from 10 10 from 8 and come up with a positive number. It really does boil down to being just that simple in the grand scheme of things. I actually released a complete road map of Portugal’s default yesterday (see ), and today I will walk those who are not adept in the area through it with simple graphs and plain vanilla explanations.This is done as a preview for our subscription only Ireland, Spain and Greece default scenarios. These scenarios, while still denied by most, are actually just the tip of the iceberg, for they will do much more damage together than they could ever do separately. As a group, they will make the Argentina event look like a bull rally. That is where the contagion models come into play (see Introducing The BoomBustBlog Sovereign Contagion Model: Thus far, it has been right on the money for 5 months straight!). Any institutions or professional investors who are interested in accessing our research should subscribe here. To my knowledge, I believe BoomBustBlog is the only source on the publicly available web for such information.

    This is what the Argentinian referenced in the article above did to investors…


    Price of the bond that went under restructuring and was exchanged for the Discount bond


    That’s right! Ouch! Imagine this times 10! That is what we are looking forward to. Let’s jump straight into Portugal’s situation, and remember that many of these countries have deliberately mislead and misrepresented their fiscal situations for years (see Once You Catch a Few EU Countries “Stretching the Truth”, Why Should You Trust the Rest? and Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!).

    This is the carnage that would occur if the same restructuring were to be applied to Portugal today.

    Yes, it will be nasty. That 35% decline in cash flows will be levered at least 10x, for that is how much of the investors in these bonds purchased them. A 35% drop is nasty enough, 35% x 10 starts to hurt the piggy bank! As a matter of fact, no matter which way you look at it, Portugal is destined to default/restructure. Its just a matter of time, and that time will probably not extend past 2013. Here are a plethora of scenarios to choose from…

    This is Portugal’s path as of today.

    Even if we add in EU/IMF emergency funding, the inevitability of restructuring is not altered. As a matter of fact, the scenario gets worse because the debt is piled on.

    Let it be known that there are larger sovereign states that are worse off. There are other states that are not in as bad a shape but are poised to do much more damage,  and then there are a plethora of states that will get dragged down through contagion. Yet, the natural manner of pricing risk in the equity markets does not transmit these facts because of the unprecedented amount of liquidity stemming from central bankers around the world doing the Bernanke/Japanse QE thing.

    Anyone interested in seeing the entire scenario analysis for Portugal should look here, you will find it nowhere else:

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