Pathlight Investors’ Top Recommended Reads - September 2014

Pathlight Investors’ Top Recommended Reads - September 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for September 2014:

Obama to use “economic patriotism” push to bid to keep Democrats in control of the Senate.  Democrats, inc. the White House, plan to sustain a campaign against inversions into the Nov mid-term as they feel this is an issue that can help them retain control of the Senate.  Polls suggest the anti-inversion argument may resonate.  The Hill. http://goo.gl/9NZTzm   

Fed update from J Hilsenrath in the WSJ; the Fed is confident it isn’t “behind the curve” and will raise rates at the appropriate time w/o stoking inflation or imperiling the nascent economic recovery.  The Fed acknowledges improving labor trends but when it scans the horizon doesn’t see signs of overheating.  The PCE continues to track below the Fed’s 2% target while wage increases stay tepid.  Yellen “and other top Fed officials believe they have been served well keeping the money spigots open in an economy that keeps disappointing. They will need some more proof before they heed the warnings of those who say they're falling behind the curve” – WSJ   http://goo.gl/cNXNyn   

 

Obama to use “economic patriotism” push to bid to keep Democrats in control of the Senate.  Democrats, inc. the White House, plan to sustain a campaign against inversions into the Nov mid-term as they feel this is an issue that can help them retain control of the Senate.  Polls suggest the anti-inversion argument may resonate.  The Hill. http://goo.gl/9NZTzm   

 

Immigration – White House considering executive action on immigration.  Soon after Labor Day, Obama is expected to announce business-friendly executive actions aimed at addressing immigration.  The moves could refine deportation priorities and expand a program that gives safe harbor and work permits to qualifying illegal immigrants.  In addition, in a move that would favor the tech industry, the White House may exclude dependents from the cap on employment-based green cards, a decision that would effectively double the amount of green cards available.  WSJ  http://goo.gl/8Pwgwx   

 

Hagel sounds the alarm on ISIS, calling the group “beyond anything we’ve seen” and “an imminent threat to the US”.  Gen. Dempsey, the chairman of the JCOS, added that ISIS was “possible to contain” and said the group’s momentum had been stopped.  USA Today.  http://goo.gl/RSqxeS   

 

Europe faces "lost decade" or worse unless the ECB becomes more aggressive; the Eurozone economy is still smaller than it was prior to the Lehman Bros collapse.  "QE by the ECB looks almost an inevitability. But it would probably have to be massive. And having left it so late, with low-growth expectations now embedded; with deflation an increasing spectre; and with only a limited availability of financial instruments to buy, the ECB may well have missed the boat."  FT    http://goo.gl/KAfKNj  

 

France – Hollande gave an interview to Le Monde in which he talks about wanting to accelerate reforms in France; Hollande pledges to launch a plan to boost home building in France and says he will reform taxes/welfare benefits to help lower-income households.  Hollande reiterated his view that the EUR remains overvalued (despite the recent decline) – Reuters   http://goo.gl/sZxcLS

 

China stimulus speculation – the WSJ says China faces an “uphill” battle to hit its ’14 growth targets, raising pressure on Beijing to step up fiscal or monetary stimulus – WSJ    http://goo.gl/6P8C38    

Economists increasingly sanguine on the US eco outlook; according to a WSJ survey, ~90% of economists anticipate US growth improving in H2 vs. H1.  None foresee deteriorating economic momentum.  However, respondents increasingly are worried about int’l markets.  Just 1/3 think Europe’s outlook has improved.  Most economists don’t expect the Fed to hike before June of ’15.  WSJ   http://goo.gl/6oX81Y

 

 

Obama address Wed night very consistent w/media previews.  The President pledged to attack and destroy ISIS in Iraq and Syria.  The US will be leading an int’l coalition (inc. European and Middle Eastern countries) but won’t use ground troops.  Obama also said Washington would be expanding training/arming program for moderate Syrian rebels.  The President welcomed Congress to vote on his plan but believes he has the authority already to move forward.  NYT  http://goo.gl/xRvdml

 

Washington to move forward w/fresh Russian sanctions (announcement expected Friday).  According to Reuters the US will sanction Sberbank (Russia’s largest bank) and further limit other Russian banks’ access to US capital.  Reuters   http://goo.gl/octRrZ   

 

Why Aren’t More Renters Becoming Homeowners?  NY Fed research.  “We see that the main reasons preventing renters from becoming owners are weak balance sheets (low savings or high debt), low income, and lack of access to credit. Some cite inherent advantages of being a renter (such as low upkeep and more flexibility), but notably few say that they do not want to own because they are concerned that house prices might fall”.  NY Fed.  http://goo.gl/tpZ0Wl

 

And On A Lighter Note…

Oakland Reverses 80-Year Ban on Pinball Machines, Celebrates With Monthlong Tournament: http://goo.gl/XqcyPp

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Update: Hedge Funds, Retail Investors & The Great Lie

Update: Hedge Funds, Retail Investors & The Great Lie

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our August piece, Update:  Hedge Funds, Retail Investors & The Great Lie, which can be found HERE

With the current bull market in stocks now in its sixth year, investors in hedge funds of all types are probably wishing they had simply bought an S&P 500 index fund.  Hedge fund performance continues to lag the general equity markets as the self-proclaimed “smart money” attempts to intellectually defend their investment styles.  But, in the high-fee world of hedge funds, where managers amass huge fortunes, we are beginning to see investors in the form of public sector pension funds balk.

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Pathlight Investors’ Top Recommended Reads - August 2014

Pathlight Investors’ Top Recommended Reads - August 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for August 2014:  

 
US corporate taxes – why is there so much indignation over inversions when other tax evasion techniques (such as REITs, MLPs, etc) are much costlier?  Reuters Breakingviews.  http://goo.gl/wejc6t   

 

 

Auto sales – cautious comments in a Reuters article.  Caution is beginning to set in among some auto experts who feel the current pace of sales is being artificially inflated.  “a combination of cheap loans with extended terms, deep incentives from some dealers, and unsustainably high values for used cars, is making it far too easy for many Americans to buy new vehicles” – Reuters  http://goo.gl/ktID6Q    

 

US companies + int’l cash – US firms have kept int’l earnings overseas tax-free and took advantage of record low rates to borrow against the money and return capital to shareholders.  However, w/rates heading higher, this strategy’s days could be numbered.  WSJ.    http://goo.gl/XM1McN   

 

Crude exports – Commerce Department halts US crude export considerations according to Reuters.  “The Commerce Department has put on hold at least three companies' requests for permission to sell lightly processed crude abroad” – Reuters   http://goo.gl/kMHjNO

 

China regional GDP numbers are latest encouraging eco data point from the country.  Of the 30 regions and provinces that released their local GDP data, 23 reported first-half economic growth accelerated from the first quarter.  About three-quarters posted growth that was higher than the national average of 7.4 percent in the first six months.  Reuters  http://goo.gl/FFNi1c  

 

Border bill vote scuttled by GOP revolt; an emergency meeting by Boehner and his new leadership revealed they didn’t have anywhere near the amount of votes needed to pass the legislation.  House Republicans will meet again Fri morning to discuss the matter.  The Senate also was unable to pass a bill.  NYT   http://goo.gl/uN0a33   

 

Fed officials increasingly beginning to signal the possibility of rates being hiked sooner than anticipated – Hilsenrath article in the WSJ – a number of regional Fed presidents, inc. San Francisco’s John Williams, have acknowledged a more rapid improvement in the country’s jobs market and as a result appear more comfortable w/the prospect of rate “normalization” taking place sooner than previously expected.  Williams had previously seen this process occurring in H2:15 but now feels rate increases should begin a “touch sooner”.  Williams was clear however that his new view wasn’t a “game changer” and that he still foresees “quite a bit” of slack in the economy.  The Fed’s more hawkish members meanwhile are growing more vocal in expressing their views that rate increases need to begin sooner than many realize.  WSJ.  http://goo.gl/qc3qk1  

 

Taxes – will Congress take near-term action?  Probably not but the public “shaming” from Congress will likely intensify.  The inversion scrutiny is heating up as more deals get announced.  Any solution needs to come through Congress – it seems hard for action to be taken outside of legislation (i.e Treasury can't unilaterally impose new rules according to most tax experts).  It had been looking like Congress wouldn’t do anything this year (as both sides focus on the mid-terms) and given the GOP wants to have the whole inversion issue considered as part of a broader tax code overhaul, this topic wasn’t really anticipated to be addressed until '17.  That being said Congress increasingly is taking notice and there may be some shifting in how people are viewing the topic (see the comments from Sen. Wyden http://goo.gl/Po66M2).  That being said, Congress is “deeply divided” and getting any law passed looks very unlikely for now (http://goo.gl/UeAEMC).  Regardless of if legislation happens, an aggressive public "shaming" process is underway and this could have an effect on sentiment (and may make companies hesitant to pursue these types of deals).  If/when WAG "inverts" (many think it will) that could be an important tipping point (as it will be the first name brand US retail firm to pursue this move).  The Senate will be holding a hearing to discuss tax inversions on Tues Jul 22. 

 

 

And On A Lighter Note…

 

Driver stops to help ducklings, gets ticket: http://goo.gl/ZYBwmy

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Pathlight Investors’ Top Recommended Reads - July 2014

Pathlight Investors’ Top Recommended Reads - July 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for July 2014:  

 
 

Congress is very focused on the mid-terms and prob. won’t accomplish much in the coming months.  The GOP increasingly thinks it is just months away from recapturing control of the Senate.  The Hill   http://goo.gl/uZz21k    

 

Inversion scrutiny – data from the Congressional Research Service showed that 47 US firms have reincorporated overseas over the last 10 years and another 12 such deals in the pipeline.  WSJ   http://goo.gl/zKfHEl   

 

Trucking industry can’t find enough workers; the WSJ discusses how certain industries can’t find enough employees and the trucking sector in particular is experiencing an acute problem.  “Businesses with openings across the pay and education spectrum are struggling to hire house cleaners, registered nurses, engineers, software developers and other workers. Employers say suitable candidates aren't raising their hands and individuals who do apply lack the right skills and experience”.  If this mismatch persists, wage pressures will increase.  WSJ.  http://goo.gl/4wUQDc   

 

US companies are conducting more business in yuan, looking to secure a cost advantage over US$ transactions – WSJ  http://goo.gl/JJ4FXC    

 

Washington internet surveillance – the Washington Post discusses how the NSA captured information and communications from more innocent individuals than they did specific targets.  90% of account holders found in a large cache of interceptions were not the intended surveillance targets according to a Washington Post study. http://goo.gl/lhFuaq   

 

China remarks suggest the country is comfortable w/decelerating growth (this was out Wed morning); China’s finance minister said the 7.5% GDP target for ’14 “wasn’t a floor” – WSJ    http://goo.gl/N1X3SM   

 

China rate/FX reform plan on track; the head of China’s PBOC said the country remained on track to liberalize interest rates within the next two years.  WSJ.  http://goo.gl/kJBB6P  

 

China property market – a developer bought a plot of land in Shanghai and paid what is thought to have been a record-high price per square meter – WSJ   http://goo.gl/xrI9os   

 

And On A Lighter Note…

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Second Quarter Investment Review 2014

Second Quarter Investment Review 2014

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our July piece, Second Quarter Investment Review 2014, which can be found HERE
 

Another quarter has passed without the long-awaited and oft-predicted equity market correction.  It has been more than 1,000 days since U.S. stock markets experienced an intra-year -10% or greater decline, leading many pundits and investors patiently waiting for the markets to tumble. 

 

The Investment Team at Pathlight continues to marvel at the lack of belief in global investment markets, job creation, and economic growth.  To us, it’s almost as if many want to have something go wrong just to be correct about their misplaced views.  The television outlets continue to spotlight the same people who consistently call for the pending collapse of stocks, surging inflation around the corner, skyrocketing gold prices, and climbing interest rates.  Fortunately for investors, four years..

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Pathlight Investors’ Top Recommended Reads - June 2014

Pathlight Investors’ Top Recommended Reads - June 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for June 2014:  

 
 
US housing + HELOCs – the WSJ discusses how US homeowners are tapping into their home equity at a fast pace.  HELOCs jumped ~8% in Q1 Y/Y to $13B – that was the highest amount since ’09 (although the figure remains far below the pre-crisis peak of $113B).  WSJ.  http://goo.gl/sjmccY   

 

 

Obama to unveil new carbon emission rules this Mon; will use his executive authority to cut carbon emissions from the country’s coal fired plants by up to 20%.  “People familiar with the rule say that it will set a national limit on carbon pollution from coal plants, but that it will allow each state to come up with its own plan to cut emissions based on a menu of options” – NYT  http://goo.gl/3TF1yu  

 

Electric vehicle plan to be announced by 8 states – leaders of 8 large US states plan on unveiling details of a plan aimed at spurring the purchase of ~3.3M “zero emission vehicles” by ’25 – WSJ   http://goo.gl/pcrE9J     

 

China asks local governments to accelerate spending in an effort to boost growth.  The government is threatening to take back federal money if local municipalities don’t spend it by the end of Sept.  "[Local governments] must speed up spending on infrastructure construction projects and make spending materialize as soon as possible” – WSJ   http://goo.gl/cUSmhL    

 

China + social media – the government will step up its monitoring of Tencent’s WeChat and other social media.  The leadership is concerned about some of the information that is being circulated on social media platforms – WSJ   http://goo.gl/z8Ybh0 

Japan - Shirai said that aggressive monetary stimulus should remain in place well into 2016; she said it would take longer than the BOJ’s current 2-year timeframe to achieve its inflation goal – Reuters  http://goo.gl/S6NKM r   

 

And On A Lighter Note…

 

 
Texas man still buzzing from 60 espresso shot Starbucks drink: http://goo.gl/DCU2Ix

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