Thu, Apr 24, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: How ironic – economic growth may be the poison pill to the 2012 bull market

Tuesday, March 27, 2012

amb
Steven Michael
The author, Steven Michael, is the Founder, Principal & Chief Investment Officer of Stonehenge Asset Management. He has over 25 years experience in the alternative management space. His extensive financial career began in 1985 on the trading floor of the Chicago Board of Trade (CBOT). He is also a member of the Chicago Mercantile Exchange (CME).

The S&P is up 10% already it the first quarter of 2012. We have had steady growth in the economy and in employment. The markets and the fed have discounted 2.5%-3% growth for 2012.

Although, we are still bullish on US equities, there are risks to this strategy. Ironically, the largest risk may be growth that is beyond the expectations of the Fed and the markets. Before I explain, I would like to discuss the some of the other risks to this.

It seems that oil prices are of much concern to the continued equity rise. Getting beyond the politics and rhetoric of news coverage, oil is probably underpriced relative to geopolitical risks which currently exist. What affects the equity markets are “oil shocks” not just generally higher oil prices. What is an oil shock? Oil would need to rally 80-100% in less than a year to create an oil shock. Higher oil prices alone, will not cause equity price break downs alone. Europe has learned to live with much higher gasoline prices. The fact is that without this type of shock, equity prices will remain ambivalent and the trend of oil consumption relative to GDP and the oil cur......................

To view our full article Click here

Banner
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. …And Finally – Flight attendant has passengers rolling in aisle[more]

    From Orange.co.uk: A video of a US flight attendant turning her safety talk into a comedy routine is proving a huge hit online. More than five million people have watched the clip of Marty Cobb which has her passengers rolling with laughter on a Southwest Airlines flight to Salt Lake City.

  2. Niche Investing – Wealthy investors flock to fine art funds[more]

    From Clickorlando.com: Wealthy investors looking to diversify beyond stocks and bonds are now turning to an unusual money-making vehicle -- the art investment fund. The name says it all: These funds invest in fine art and seek returns by acquiring and selling high-end pieces for profit. Growth

  3. Opalesque Exclusive: Rainwater and Blue Sky - an Australian water fund emerges[more]

    Bailey McCann, Opalesque New York: Financial reporters often tout new funds and investments as uncorrelated investments, but few can say they are uncorrelated to everything but weather. Enter Blue Sky Alternative's water fund which invests in the permanent rights to Australia's water. Sev

  4. University of Michigan allocates $242m to six managers[more]

    From PIonline.com: University of Michigan, Ann Arbor, invested or committed a total of $242 million to one traditional equity manager and five alternative investment funds from its $9 billion endowment. University regents approved the hire of Mittleman Investment Management to run $35 million in act

  5. Performance – Odey flagship hedge fund suffers brutal March as shorts rise, Blackstone first-quarter profit rises 30% on higher fees[more]

    Odey flagship hedge fund suffers brutal March as shorts rise From Valuewalk.com: The tide has turned for the worse for one of Europe’s best performing hedge funds. Crispin Odey’s flagship hedge fund, Odey European has suffered a 4.63% decline for the year after slipping 7.2% in March, ac