Guest Post by Doug Noland
With about three weeks to go until year-end, things are turning more interesting.
December 6 – Bloomberg (Saijel Kishan and Kelly Bit): “The $2.5 trillion hedge-fund industry, whose money managers are among the finance world’s highest paid, is headed for its worst annual performance relative to U.S. stocks since at least 2005. The funds returned 7.1% in 2013 through November… That’s 22 percentage points less than the 29.1% return of the Standard & Poor’s 500 Index, with reinvested dividends, as markets rallied to records. ‘It has been difficult for hedge funds on the short side,’ said Nick Markola, head of research at Fieldpoint Private, a $3.5 billion… private bank and wealth-advisory firm… Hedge funds, which stand to earn about $50 billion in management fees this year based on industrywide assets, are underperforming the benchmark U.S. index for the fifth year in a row … Billionaire Stan Druckenmiller, who produced annual returns averaging 30% for more than two decades, last month called the industry’s results a ‘tragedy’ and questioned why investors pay hedge-fund fees for annual gains closer to 8%.”
Now can we please start to move along to what come next? Dear Mr. Bernanke and Ms. Yellen… pretty please will you take decisive action? If not literally at this month’s FOMC, would you at least put some language in there?
PMI courtesy of ISM
By Doug Noland
Another week another record high.
“To understand the Great Depression is the Holy Grail of macroeconomics. Not only did the Depression give birth to macroeconomics as a distinct field of study, but also—to an extent that is not always fully appreciated—the experience of the 1930s continues to influence macroeconomists’ beliefs, policy recommendations, and research agendas. And, practicalities aside, finding an explanation for the worldwide economic collapse of the 1930s remains a fascinating intellectual challenge.” Ben. S Bernanke, Essays on the Great Depression, 2000
#266 had this going on for the first few pages and then proceeded to refine a solid view of the financial markets.
Talking My Book
While awaiting important turning points in the markets it makes no sense to deny current realities. We get it; the Fed is inflating, manipulating and promoting greater moral hazards down the road. NFTRH has done its share of illustrating reasons why what is happening is unsustainable and most likely, very unhealthy.
 I can think of a few others (money supply to Corp. profits to S&P 500, GDP to S&P 500, etc.) as you have seen posted repeatedly at Biiwii.com.
By Tom McClellan
November 21, 2013
A quick snapshot of the sector that is mirroring the drunken party going on in the US stock market.
So this week a writer comes to the realization that he sometimes beats up readers with the ultimate truths (as he sees them) on the big picture macro view. Meanwhile, there are interim views like a cyclical stock bull market that may be entering a mania phase. Why not play that (as rationally as possible) as well? Personally I do, with certain sound equity holdings. Why not talk about those more often, eh dour writer boy?
Why beat everyone up with the big macro all the time? We are human and sometimes we need to lighten up a little right? So NFTRH 265 institutes change on the interim while not altering the big picture, because one thing I do not want to alter is the truth as I interpret it. So we’ll be ready for the mania’s end as well, of that I can assure.