Tue, Sep 23, 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

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. SEC charges 19 investment firms and one trader for breach of Rule 105[more]

    Benedicte Gravrand, Opalesque Geneva: The Securities and Exchange Commission (SEC) started a push to enhance the enforcement of Rule 105 of Regulation M last year to uncover hedge funds and private equity firms that have illegally participated in an offering of a stock after short selling it duri

  2. Fund managers, bullish on Europe, anticipate monetary policy separation of Fed and ECB[more]

    Komfie Manalo, Opalesque Asia: At least 202 fund managers with $556bn of assets under management said that while the European Central Bank (ECB) has eased its monetary policy that sent sentiments towards Europe to pick up, the Fed is expected to hike its rate in the spring of 2015. Investor

  3. Institutions - North Carolina workers call on state pension to dump up to $6bn in hedge funds, UK pension fund criticizes hedge fund fees[more]

    North Carolina workers call on state pension to dump up to $6bn in hedge funds From Forbes.com: The State Employees Association of North Carolina this afternoon called on state Treasurer Janet Cowell to withdraw all investments in hedge funds, which appear to amount to approximately $6 b

  4. News Briefs - Limited partners of investment managers may be subject to self-employment taxes, Just one week left until NYC's Rocktoberfest[more]

    Limited partners of investment managers may be subject to self-employment taxes On September 5, 2014, the Internal Revenue Service (“IRS”) issued Chief Counsel Advice 201436049, concluding that members of an investment manager were subject to self-employment taxes with respect to their e

  5. Institutions - Adviser's faith in hedge funds unshaken by CalPERS' move Advisers weigh in on CalPERS’ decision, Gina Raimondo sees no reason to follow California’s lead, exit hedge funds, Danish pension funds step up 'alternative investments'[more]

    Adviser's faith in hedge funds unshaken by CalPERS' move From WSJ.com: Financial advisers who use hedge funds in their clients' portfolios say they aren't rethinking that approach after a huge California pension fund announced plans to exit the hedge-fund market. The decision by the Cali