Thursday, September 17, 2015

Bridgewater's Ray Dalio Interview on Bloomberg

Bridgewater Associates founder Ray Dalio recently appeared on Bloomberg to share his thoughts.  He said he doesn't care whether the Federal Reserve raises by 25 basis points, but he doesn't see the reason for it.

Dalio notes that quantitative easing has a diminishing scale of returns as it will work less than it did last time.  He goes on to say, "We will have a downturn" and that it will be worrisome because the Fed won't really have the tools to fight it.

He says the environment we're in means that if you can't have interest rate moves, you'll have currency moves.

Dalio says that, "What worries me is what the next downturn looks like with asset prices where they are and the lesser ability of central banks to ease monetary policy."

He feels the Fed is too worried about the short-term debt cycle and not enough about the long-term debt cycle and he doesn't get it.  Dalio notes,

"The United States is in the midpoint of its short-term debt cycle.  Capacity utilization, GDP gap and, so as a result, we're talking about whether the Fed should tighten or not.  That's what central banks do in the middle of it.  And we're near the end of a long-term debt cycle.  Because that cycle of being able to raise -- you have interest rates going to zero.  You have spreads that are -- have come down.  So the spreads that have come down means that asset prices have gone up.  In other words, so now the expected return of asset classes is -- are all very low.  Cash, we know that bonds are going to two and a quarter percent.  You know that you're going to get for the next 10 years two and quarter percent on your bonds.  The equity price premiums look like three and a half or four percent on that.  So all of the asset classes now are aligned in normal risk premiums, that kind of thing.  That's why if interest rates rise faster than it's discounted in the markets, those markets are discountable."

On China, he says "they have to rebuild a new economy to replace the old economy."  He says China had the equity bubble as speculators rushed in, but he says this is normal for emerging economies.  He says China is going to be "just fine."

Over the next 10 years, Dalio says you're gonna have returns that are probably gonna average around 3-4% and it's a major pension fund problem.

Embedded below are videos of Dalio's interview on Bloomberg:

Video 1

Video 2

Video 3

Video 4

Video 5

Video 6

Video 7

Video 8

For more from this manager, head to Ray Dalio on how the economic machine works.

Wednesday, September 16, 2015

What We're Reading ~ 9/16/15

The most dangerous trade: How short sellers uncover fraud [Richard Teitelbaum]

5 common mental errors that sway your decision making [James Clear]

Forecasting a global recession [Economist]

Avoiding the certainty trap [A Wealth of Common Sense]

What's not to like about wireless towers? [Morningstar]

Alibaba: Why it could fall 50% [Barrons]

Alibaba's response to that article [Alizila]

On the size and scope of Alibaba [Bronte Capital]

A look at fund manager current asset allocations [Fat Pitch]

Why the internet won't be the next TV for advertising [WSJ]

The US economy is just starting to tap into a big source of dry powder [Bloomberg]

Cheniere: America's most unlikely energy project [Bloomberg]

The Bloomberg Terminal faces upstarts [NYTimes]

Why Wall Street loves to hate Mylan's CEO [Fortune]

Nine of the world's biggest banks form blockchain partnership [Recode]

Monday, September 14, 2015

Howard Marks' Latest Memo: It's Not Easy (Oaktree Capital)

Oaktree Capital's chairman Howard Marks is out with his latest memo.  Entitled "It's Not Easy," Marks this time around focuses on lessons from Charlie Munger, the concept of second level thinking and how important it is.

Marks also addresses the recent market volatility and highlights some lessons learned.

Embedded below is Marks' latest memo, "It's Not Easy:"

You can download a .pdf copy here.

For more from this investor, be sure to check out Marks' book as well, The Most Important Thing.

And if you missed it, check out Marks' previous memo: Risk Revisited Again.

Eminence Capital Increases Men's Wearhouse Stake

Ricky Sandler's hedge fund firm Eminence Capital has filed an amended 13D regarding their position in Men's Wearhouse (MW).  Per the filing, Eminence now owns 8.3% of the company with over 4 million shares.

This is up from the 3.19 million shares they owned at the end of the second quarter.  The new filing was made due to activity on September 9th.  They purchased the bulk of their recent shares at $52.43 and $51.10.

If you missed it, Ricky Sandler also recently appeared on Wall Street Week and talked about many of their other positions.

Per Google Finance, Men's Wearhouse is "a specialty retailer of men's suits and a provider of tuxedo rental product in the United States and Canada. It operates in two segments: retail, which offers its products and services through its four retail merchandising brands and Internet Websites. The Company's corporate apparel segment provides corporate clothing uniforms and work wear to workforces."

Lee Cooperman Boosts PennyMac Mortgage Investment Trust Stake

Omega Advisors' founder Lee Cooperman has filed a 13G on shares of PennyMac Mortgage Investment Trust (PMT).  Per the filing, Cooperman now owns 5.17% of the company with over 3.86 million shares.

This is up from the 2.6 million shares Cooperman owned as of the end of the second quarter.  The new filing was made due to activity on September 4th.

For more from Omega, head to Steve Einhorn's interview on Wall Street Week.

Per Google Finance, Pennymac Mortgage is "a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company conducts all of its operations, and makes all of its investments, through PennyMac Operating Partnership, L.P. and its subsidiaries. The Company operates through two segments. The correspondent production segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of mortgage-backed securities (MBS), using the services of PNMAC Capital Management and PennyMac Loan Services, LLC. The investment activities segment represents the Company’s investments in mortgage-related assets, which include distressed mortgage loans, real estate acquired in settlement of loans, MBS, mortgage servicing rights and excess servicing spread.."