Wednesday, January 02, 2013


With the VIX at lows, and central banks across the globe printing money at breakneck pace, it seems a great time to be long equities. Not that I think this is good for the long run, but for at least a couple years this should be great for equities.

Specifically, Apple has decline 25% from its peak in September, probably due to investors with large gains taking their capital gains before 2013 when such capital gains rates will go up.

Given so many interest groups have an interest in asset prices rising, and the central banks across the world have this as their priority, I think once bank get some of their final legacy lawsuits off their backs they will start lending again, M2 will explode, and prices will rise. First in assets. 


KK said...

Is the common trope that banks currently aren't lending actually accurate? In vanilla commercial lending, all indications are that competition is fierce, spreads are under pressure, and banker compensation is going up. True, genuine subprime mortgage lending is basically nonexistent, but government programs like HARP are driving heavy refinance volumes anyway (whatever one thinks of the legitimacy of such programs), in particular among borrowers with high mark-to-market LTVs. So I really wonder if there's as much pent-up lending as you suggest.

J said...

Why do you think that the bull market will be good only for a few years? The world seems to be stable and growing steadily. No snakes in view. I am optimist.

Anonymous said...

it depends if you consider the money printing started with Q1. if you do, history is not too kind with the next few years outlook.

cig said...

So we should buy Apple because it's been volatile (for its size) lately? :-)

@KK, fierce competition in commercial lending is compatible with tight lending standards.

@J, markets offshoot regularly, regardless of what happens to the underlying economy.

pvm said...

The money supply - inflation link has been studied at greater depth than any other topic in econometrics.

As a statistical predictor of CPI changes, money supply and credit are totally useless, as even the Bundesbank was shamed into admitting at its own conference on that topic five years back.

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