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Did Credit Suisse CEO Dougan Commit Perjury?

Posted by Larry Doyle on March 3rd, 2014 8:55 AM |

Perjury is a very serious offense or at least it is supposed to be.

If our system of justice and Congressional oversight do not uphold the law against those who commit or may have committed perjury, what does that say about the rule of law in our nation?

In my opinion, a situation in which perjury occurs and goes unpunished is another nail in the coffin holding the American ‘rule of law.’

To this end, let’s navigate and look a little deeper into a high profile case centered on Wall Street in which the immediate question begs whether Credit Suisse CEO Brady Dougan committed perjury in providing Congressional testimony last week. (more…)

What Are Credit Suisse Clients Doing and Saying?

Posted by Larry Doyle on October 9th, 2009 11:30 AM |

High five to a good friend for sharing with us tremendous insights just released by Credit Suisse. While individuals can and should develop opinions on the economy and markets, the global flow of capital from investors (obviously central banks now count as investors given massive quantitative easing programs) will determine overall market levels. Let’s navigate and assess how Credit Suisse’s client base has positioned themselves and decipher what it all means.

Credit Suisse research analysts report the following:

We are close to finishing our marketing trip in the US and Continental Europe—and take a look at the main issues our clients are focused on at the moment.

1. Caveated bullishness: Hedge funds appear optimistic (focusing on Q3 earnings as the next catalyst). Long-only funds seem cautious, while retail investors are buying bonds rather than equity. We feel there is enough scepticism to leave us bullish.

LD’s comment: CS means bullish on equities.

2. Many asset allocators still prefer credit (bonds) to equity, so there is switching potential.

LD’s comment: Asset allocators are money managers, investment advisors, et al. This comment translates into the fact that money which has been allocated to the bond market could move into equities causing a move higher in equities and a move down in bonds.

3. Investors’ main dilemma: Why have margins stabilised at such high levels? Most feel the reason is cyclical (leaving limited upside in earnings), but we suspect it could be more structural.

LD’s comment: Margins refer to corporate profit margins. The fact that CS believes that profit margins are being supported by structural developments in companies and the economy is a VERY positive assessment as it indicates a change in the foundation of the global economy which would drive equities higher.

4. Economy: Very few clients are positioning themselves aggressively on a macro view. There is little confidence on final demand given the level of excess household leverage. A third of investors are bearish on US housing (too many, in our view). Clients still see inflation, not deflation, as the main risk.

LD’s comment: investors would appear to be more cautious than optimistic with concerns that there is excess liquidity from central banks which will ultimately lead to inflation.

5. Consensus catalyst for next leg down is severe dollar weakness (LD’s highlight), leading to a US bond funding crisis or government tightening fiscal policy too early. Two areas of worrying consensus: 99% of investors appear to be dollar bears and nearly everyone believes the Fed will be very slow to raise rates.

LD’s comment: if 99% of investors are dollar bears and are positioning themselves that way in one way, shape or form, then the dollar will find support. Why? When too many people are on one side of a boat, that boat tips. If the dollar does rally, then many ‘dollar carry trades’ may enter the ‘pain chamber’ and risk-based assets would likely sell off.

6. Regions: Strong consensus to be long of emerging markets (NJA is felt to have large upside potential if US retail sales recover and the dollar remains weak). Clients are more positive on Europe than they have been for the past two years. Investors have quickly capitulated on a tactically positive call on Japan. Renewed focus on domestic plays in dollar-linked countries (especially the Middle East).

LD’s comment: NJA is non-Japan Asia

7. Sectors: We believe most clients have a bar-bell type strategy. Consensus longs are tech and commodities/gold. We found far too many oil bulls for our liking. There is a huge variance of views on banks. Sectors where there is still doubt: life companies (too opaque), media, telecoms, steel and pharma. There were very few questions on defensives.

8. Style: Clients are looking for quality growth, shifting away from the credit-related plays.

Overall, I view this report as decidedly constructive on the economy and markets, albeit with plenty of reasons for caution.

Thoughts, comments, questions always appreciated.


Credit Suisse on the Markets and Economy

Posted by Larry Doyle on June 3rd, 2009 4:10 PM |

Hat tip to my good friend TA for sharing insights from Credit Suisse. Having worked at Credit Suisse, albeit awhile ago, they have always had outstanding research and analysis. I am happy to share their macro view of the markets and economy.

I. More Cautious on Equities: Why?

-the recent rise in bond yields makes bonds look that much more attractive versus their equity counterparts.

-implied corporate default rates have declined. This decline implies that equities at current valuations are at best reasonably priced.

-equity issuance has picked up considerably. The recent net issuance equates to 2% of the total market capitalization. That figure is an all-time high!!

insider buying is extremely low.

market breadth is deteriorating.

-stocks with high beta are not attractively priced.

-concerns over the economic backdrop: fear of a double dip as green shoots fade or do not grow.

-downside and upside risks to equities are now evenly balanced.  Upside risk to equities is further aggressive quantitative easing

-Overall Assessment of Equity Market: a range trading market similar to the 1970s. 

II. More Values Appearing in Bonds: Why?

-with interest rates moving higher in the government space, bonds look increasingly attractive.

III. Federal Reserve Policy:  the Fed will risk a dollar crisis (declining value of greenback given excessive money supply) than a funding crisis due to insufficient capital and liquidity in the system.  

IV. Inflation Outlook: if anything inflation will surprise on the downside, especially in Continental Europe. 

Sense on Cents generally concurs with the Credit Suisse outlook, with the exception of their call on inflation. I believe we will experience an uptick in inflation.  As I had written in the May 2009 Market Review, I am looking for the following:

Add it all up and I think the following will occur:
   – equity markets will now move sideways in range bound fashion;
   – the bond market will move lower in price, higher in rates; 
   – the dollar will gradually decline;
   – our economy will be filled with more stops than starts.

Overall I believe I am much more in agreement than disagreement with both Scott Black and Credit Suisse. Please feel free to share your thoughts and assessments on the economy and markets.


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