"You are looking at the best prices in 20 years, and you should be making 7% to 8% to 9% real (inflation-adjusted) returns. The last time I was this optimistic was in the summer of 1982. A value manager buys too soon and sells too soon. That's the nature of the beast."
-Jeremy Grantham, chairman of Boston-based asset manager GMO
those of us who have looked to the self-interest of lending institutions to protect shareholders' equity... are in a state of shocked disbelief."
We had a problem that turned into a panic, and now the government is running around trying to put out the fires," said James Angel, a finance professor at Georgetown University in Washington. ``If you need capital, it might be the only game in town.''
Brian Bethune, chief US economist at Global Insight, says the US is fighting three battles: an economy in recession, a lockup in financial markets and general deflation.
“It’s certainly historic."
"Right now, the market is being driven by emotion," says David Lutz of Stifel Nicolaus Capital Markets. "The buyers seemed to be awaiting a tidal wave of sellers. They never showed up".
There is no support level in a bear market and there is no resistance level in a bull market.
"Our calculation is one penny on gasoline is equal to about $1 billion in household cash flow," he said. "...A one dollar movement in gasoline is worth about $100 billion in household cash flow. $100 billion in income is worth about three million jobs," said Deutsche Bank chief economist Joseph LaVorgna.
John O'Donoghue of Cowen & Co. says trading is being driven by "the fear of the unknown," adding that the traditional buying and selling of stocks based on value was "out the window."
James Awad, managing director of Zephyr Management, says "we've surpassed the 1973-74 situation", when stocks were engulfed in a brutal bear market and an oil crisis gripped the US economy.
A bull run will begin for the stock market once major financial institutions have deleveraged, Bill Gross, head of bond titan Pimco, said on CNBC. "Bull run, yes, but to what extent in terms of the total return, I don't think it would be typical of prior cycles, because this is a secular delevering," he said. "It's never occurred before—at least it hasn't occurred since the 1930s—and it will carry with it implications for corporate profits, for margins and for ultimately a significantly delevered system not just in the United States but globally."
http://www.cnbc.com/id/27357223
Dennis Gartman, editor of The Gartman Letter, says hedge funds continue to dump stocks, as they try to balance positions and look to raise new capital from lenders.
PIMCO's co-CEO Mohammed El-Erian noted the "big-force redemption" started Thursday and says the repricing is nearing an end along with the massive deleveraging. He also pointed to improvement in the credit markets with "a lot of policy actions coming on stream."
http://www.cnbc.com/id/15840232/?video=902767801
Sam Stovall of Standard & Poor's told clients in a note: "The equity markets are selling off with abandon, worried that a global slowdown will turn into a worldwide recession or worse. In a situation like this you can either sell and hide, or attempt to spot a likely bottom and use it to identify a rapidly approaching buying opportunity. With that in mind, what target do I see? 700 on the S&P."
Art Cashin of UBS, was among those betting on a rebound, saying if a healthy bottom to the market is reached in the next few days, there will be "a jaw-dropping rally. What happens over the next five to eight days will be spoken about for generations."
http://www.cnbc.com/id/15840232/?video=902806671
Ron Baron, of Baron Capital, says investors should take heart in history. "Long term stock have always done better than other asset class."
Art Hogan of Jefferies, who called a market bottom two Fridays ago, says today's action is a retesting of the bottom, which will precede a rebound.
http://www.cnbc.com/id/15840232/?video=902867099
Some market mavens are wondering if this could be the beginning of a takeover mania. The money is there and it looks like it’s having an effect, says CNBC’s Liesman. “But it’s coming out in drips and drabs instead of one big avalanche.”
"Large-cap tech stocks are priced below value," said Rafael Resendes, portfolio manager of the Toreador Large Cap Fund. “There’ve been four periods over the last 20 years where, if you’d been buying stocks below their value or below their intrinsic value, where that didn’t tend to work, the most noticeable was the tech bubble,” he said. “Back then we had a kind of irrational exuberance that we’re kind of seeing today.
Jim Cramer’s point is that we might have already seen the worst crashes that this recent sell-off has to offer, at least in many, many stocks. The de-leveraging process, the unwinding and selling of so many stocks has accelerated a process that took years before into just months now. If we’re not at the bottom yet, Cramer thinks we could be very close to it. So the velocity with which we’ve fallen recently could actually be the silver lining in that black cloud overhead. The decline in the stock over the past five months easily outpaced the decline in business, and X is a much stronger company now .
"We continue to advise our clients that they have to be careful not to be swayed by market volatility and the dramatic changes that have been going on. We have not sold anything and we don't view that our clients are in that position," said Keith Luke, managing director, at CommonFund, a Wilton, Connecticut-based money manager that invests around $40 billion in endowment and foundation money.
-CNBC
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