93% of adults report paying more for groceries now than they did a year ago, the highest finding to date. O
the current level is pricing in an 80% probability of a fullblown contraction in GDP, and a 100% chance of a mild recession."
S home prices have fallen below "fair value" in one-third of nearly 130 housing markets examined in a study by real-estate firm Zillow Inc.
Read more: Survey: Many US Homes Are Undervalued http://www.myfoxtwincities.com/dpps/money/survey-many-us-homes-are-undervalued-dpgonc-20110816-ch_14594396#ixzz1VHEYNkJm
At a broad level, it is helpful to understand that if people in certain markets paid three times their average income in housing before the bubble, those markets are probably going to get back to that level,
Read more: Survey: Many US Homes Are Undervalued http://www.myfoxtwincities.com/dpps/money/survey-many-us-homes-are-undervalued-dpgonc-20110816-ch_14594396#ixzz1VHEjsaQT
For the US as a whole, home prices were around 2.9 times incomes from 1985 to 2000. But during the housing boom, values increased at a much faster rate than incomes. The price-to-income ratio peaked at around 5.1 in 2005. Home prices have since fallen so that prices are around 3.3 times incomes,
Read more: Survey: Many US Homes Are Undervalued http://www.myfoxtwincities.com/dpps/money/survey-many-us-homes-are-undervalued-dpgonc-20110816-ch_14594396#ixzz1VHErfg33
Next Chinese prime minister
new investment tools in china
Un PER de 9 este atractiv pentru investiţii. Cred că prin anii 2003 - 2004 mai aveam oportunităţi din acestea la bursă când economia mergea bine şi aveam creştere economică. Ştim cu toţii ce a urmat după anul 2004, adică trei ani de creşteri susţinute ale acţiunilor. Un multiplu al profiturilor mai mic de 10 înseamnă un randament anual binişor peste 10%, chiar spre 15%,, ceea ce nu este rău, mult peste dobânzile bancare", spune Panait.
Two key metrics watched by MS: i) The unsustainable DM credit super-cycle may be approaching a difficult dénouement, and ii) based on long-term P/E valuation measures, US and UK equities are still expensive.
· Expect continued EUR weakness from sovereign risk concerns
· JPY remains supported as only G4 currency not in debt spotlight
Commodities stay resilient if growth does
· Expansionary monetary policy bullish for gold
· If growth holds up, commodity balances will tighten
40
M O R G A N S T A N L E Y R E S E A R C H
Credit Strategy
August 15, 2011
A concentrated investor base, particularly in the senior tranches, hascontributed to a significant illiquidity premium in CLOs.
Illiquidity premiumconsiderations
The prevalence of LIBOR floors in CLO portfolios augurs very well forCLO equity distributions, if LIBOR stays lower for longer.
LIBOR and CLO equitydistributions
In a world where the AAA universe is shrinking dramatically, CLOs offera growing supply of bonds rated AAA both by S&P and Moody’s. YTD,there have been 2,389 upgrades and 66 downgrades in the CLO space(796 upgrades and 32 downgrades in July). ~ 25% of 2005-08 vintageUS CLOs are currently rated AAA by both agencies.
Upgrades and notdowngrades are the story inCLOs
Fundamentals of US leveraged loans remain strong both in leveragemultiples and in coverage ratios. There are no significant near termmaturities.
A significant pick up inleveraged loan defaults isunlikel
high oil
prices are a drag on global economic activity. Brent crude oil prices only stayed
above $100/bbl for 6 months in 2008 and now Brent has held closing prices
above $100/bbl since February 9th 2011. In fact, the last two times that energy as
a share of global GDP neared 9%, basically the current level, the world economy
experienced severe crises: the double dip recession of the 1980s and the Great
Recession of 2008.
the Saudi government budget requires $95/bbl to break even this
year, and $85/bbl next year. For landlocked North American producers, any drop
in WTI crude oil prices below $70/bbl could lead to production shut-ins in Canada
In a mild recession, Brent stabilizes at $80, WTI at $60/bbl
Thus, in a mild recession, we would expect to see Brent crude oil prices briefly
breaking below $80/bbl, only to gain back that level as OPEC turns the taps off
With shale output still projected to increase
substantially over the next few months, we believe that WTI crude oil prices could
briefly drop to $50/bbl under a recession scenario only to recover back up towards
$60/bbl as shale oil output is scaled back
BOA – oil
This is one reason we
maintain that gold prices could rise to $2,000/oz in the medium-term
Although central banks are tightening, by and large they maintain loose
monetary policies; negative real rates are positive for gold and they should
persist through 2012 in the US. Investors will likely remain net gold buyers.
�� Reserve diversification into gold is set to continue, for instance by central
banks.
�� Gold demand from countries like China is set to increase.
�� D: Deterioration of investor sentiment.
�� D: Gold could take a backseat in asset allocation if the global
economy continues to expand at a steady pace.
�� D: High gold prices deter buyers of physical gold.
�� D: Increased scrap supply.
�� U: More monetary easing from central banks.
BOA – gold
http://rcr.ml.com/Archive/11072425.pdf?q=d165jn15nDflMqE9lv6vNg&__gda__=1313582094_26b5bfdc2b406ef3494fe157f8642f50
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