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from Unstructured Finance:
Jim Chanos and the bears come out of hibernation
By Matthew Goldstein
The year is young, but so far its been a rough one for bearish stock investors with the S&P 500 is up 7.25% The surge in equity prices has left a lot of short sellers--traders who bet on a stock sliding in value--with glum looks on their faces. And it's with that bullish backdrop that several dozen of Jim Chanos' closest friends gather in Miami for the noted short seller's annual meeting of the bears.
The gathering of 40 or so people from Wednesday through Friday is a chance for Chanos and other like minded investors to kick around their best short ideas. A year ago, there was a lot of talk about shorting companies in the natural gas space.
The annual event at a resort in West South Beach is one where the invited guests are sworn to secrecy. That's why there's almost never any press coverage of the event, and even less coverage of the short ideas presented by Chanos & Co.
In light of that "code of silence," we can't guarantee any foll0wups on what gets discussed or any better insight into what Chanos' Kynikos Associates hedge fund is doing in the market--other than continuing to be short all things China. (We do know for a time last year Kynikos was short Herbalife and he was bearish on Hewlett Packard before it took a big write-down over the ill-fated Autonomy transaction).
from Anatole Kaletsky:
2013: When economic optimism will finally be vindicated
Will the world economy be in better shape in 2013 than 2012? The Economist asked me to debate this question with Mohamed El-Erian, chief executive officer of PIMCO, the world’s biggest bond fund. El-Erian is the author of When Markets Collide, a brilliant book that coined the term “New Normal” to describe the world’s inevitable descent into a Japanese-style era of stagnation after the 2008 financial crisis. I was delighted by the invitation because I wrote a book at about the same time, taking a very different view of the crisis – and many of my predictions finally look like they will be realized in 2013.
In Capitalism 4.0, I argued that the crisis would create a new model of global capitalism, one based neither on the blind faith in market forces that followed the Great Inflation of the 1970s nor on the excessive government intervention inspired by the Great Depression of the 1930s. While this new species of capitalism would doubtless go through a painful period of evolution, its character would be fundamentally optimistic because it would be driven by four historic transformations. Those transformations helped trigger the 2008 crisis, but their roots are in the demolition of the Berlin Wall in 1989.
from Unstructured Finance:
Obama hearts El-Erian
By Sam Forgione and Matthew Goldstein
OK, so it's not a big gig like being nominated to head the Treasury Dept. But President Obama's decision to tap PIMCO's Mohamed El-Erian to head the President's Global Development Council is no insignificant matter.
As the co-chief investment officer of the giant bond shop founded by Bill Gross, El-Erian is seen as the eventual heir apparent to run the Newport Beach, Calif firm. And El-Erian increasingly has become one of PIMCO's most visible faces---maybe even more than Gross himself these days--when it comes to talking about what ails the U.S. and global economies.
from Unstructured Finance:
UF Weekend reads – The PIMCO edition
Jenn Ablan likes to tell me that people are always writing about PIMCO and Bill Gross, the long reigning "king of bonds." And when you think of it there's a lot of truth to that assertion.
Gross' mammoth $263 billion Total Return Fund gets endless coverage because--by its very size--it really is the bond market. It's one reason why so much ink is spilled whenever the Total Return Fund has a month where investors pull more money out of the fund than put in. And it's why there's so much analysis of what Gross & Co. are doing with Treasuries and mortgage-backed securities--and whether they are using lots of leverage and derivatives to boost exposures.
from Expert Zone:
Egypt’s unfinished revolution will succeed
By Mohamed A. El-Erian (The views expressed in this column are the author's own and do not represent those of Reuters)
NEWPORT BEACH - A year ago, Egyptians of all ages and religions took to the streets and, in just 18 days of relatively peaceful protests, removed a regime that had ruled over them with an iron fist for 30 years. Empowered by an impressive yet leaderless movement – largely of young people – the country’s citizens overcame decades of fear to reclaim a voice in their future.
While much has been achieved since those euphoric times, Egypt’s revolution today is, unfortunately, incomplete and imperfect – so much so that some now doubt whether it will fully succeed. I believe that the doubters will be proven wrong.
from Anthony De Rosa:
The Davos Rookie
I'm going to level with you. I have little more than a vague idea of what I've gotten myself into here. An assembly of heads of state, titans of industry, the cliched 1%. I feel a bit like a fish out of water. What on earth is someone like me going to do among these power brokers?
I've got questions, for sure. What, if anything, has been accomplished as a result of the World Economic Forum since its inception? Going by Mohamed El-Erian's assessment, it seems not much. I don't say this out of malice. It seems like a well-intentioned idea to bring together people who have the power to effect change in the world. Nobody is expecting them to solve the euro zone crisis over the course of a week, but have they seized that opportunity because of coming here? I arrive with an open mind but a skeptical pair of eyes.
from Chrystia Freeland:
Watch Chrystia on ABC’s This Week
Yesterday Chrystia sat down with PIMCO CEO Mohamed El-Erian, Washington Post columnist George Will, and former Council of Economic Advisors Chairman Austan Goolsbee on the set of ABC's This Week with Christiane Amanpour. Here's the video of their discussion about the latest developments in the European debt crisis, China's economic slowdown, and other dangers facing the global economy today:
video platformvideo managementvideo solutionsvideo player
Also, be sure to check out El-Erian's op-ed on Europe's crisis that Reuters published today.
from Tales from the Trail:
Washington Extra – Cattle prod
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As market maven Mohamed El-Erian told us today "The medium term has a way of creeping up on you." That's why everyone needs a cattle prod from time to time and today it was Washington's turn to get a goading.
It came in the form of Standard & Poor's decision to slap a negative outlook on America's top-notch credit rating because of Washington's plodding pace on deficit reduction. The White House and Congress need to get in gear and start making meaningful plans to cut the deficit or else be responsible for a dreaded downgrade in debt. The chances? One-in-three over two years.
from The Great Debate:
El-Erian on the S&P’s negative outlook for US debt
JEN ROGERS, REUTERS INSIDER: S&P sending a shock through the markets after the credit rating agency cut its long term outlook for the US to negative from stable saying it believes there's a risk US policymakers may not reach an agreement on how to address the country's long term fiscal pressures. PIMCO has also had serious concerns about the US fiscal outlook, shifting to a short position in US government-related debt in March. PIMCO's CEO Mohamed El-Erian joins us now. So Mohamed, can you help us make sense of the bond market reaction to this news. Treasuries by and large now higher on the day; equities seem to be the one's taking it on the chin. What do you make of this?
MOHAMED EL-ERIAN, PIMCO: So on the treasury market, you're seeing a steepening; you're seeing the front end doing better and the long end doing relatively worse. And the reason for this is simple: people now recognize that you're gonna have to have some sort of fiscal tightening which means that the outlook for growth is less bright than it was before the announcement and therefore, short term treasuries are gaining. However, long term treasuries which reflect the fiscal risk premium are doing less well. As regards to other assets, it's very simple. You cannot be a good house in a deteriorating neighborhood. So, be it equities, be it credit, they're all being hit because people are realizing that the neighborhood itself is deteriorating.
from Chrystia Freeland:
Readers’ questions for El-Erian
As Chrystia threatened at the end of her interview with Mohamed El-Erian today, we've compiled all the questions our readers submitted via the Newsmaker blog and Twitter and e-mailed them to him. El-Erian will be flying to Europe tonight after he finishes up his business in New York, and while we do hope he gets a little sleep, we also hope he stays up long enough to answer all of your questions. We'll post his answers right here once we receive them.
Global Markets
Are the current “mixed signals” by the various markets similar to the ones you said were being transmitted before the financial crisis, and do you think that the current stock market trading activity signals caution, confidence or complacency? (from i8emallup)
