Month: January 2016

2015 was the hardest year in US to make money in 78 years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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It’s been a really, really tough year for returns.

According to data from Societe Generale, the best-performing asset class of 2015 has been stocks, whose meager 2 percent total return (that is, including dividends) still surpasses those of long-term bonds, short-term Treasury bills and commodities.

These minimal gains make 2015 the worst year for finding returns since 1937, when the cash-like 3-month Treasury bill beat out other major asset classes with a return of 0.3 percent.

Larry McDonald, head of US macro strategy at Societe Generale, said the all-encompassing lag in performance is one reason why major money managers have done so badly this year. 2015 has been particularly troublesome for hedge funds, the average of which is down about 4 percent this year according to Hedge Fund Research.

“It’s been an absolute meat grinder of a year,” McDonald said. “Hall-of-fame legends, [Warren] Buffett, David Einhorn, Carlos Slim, those are my favorite investors of all time and they all had bad years.”

Famed investor Warren Buffett is seeing his worst year since 2008, with Berkshire Hathaway shares down more than 11 percent year to date. Bill Ackman of Pershing Square Capital sent a letter to investors in December that said 2015 may be the fund’s worst year since it was founded in 2004.

In other years, even bad ones, McDonald noted that investors have tended to find substantial yield in some major assets.

“2008 was a terrible year in the stock market, but bonds were up 22 percent. But this year, not one major asset class had a good year, and that’s what’s made it so difficult across the board,” he said Wednesday on CNBC’s “Power Lunch.”

Comparatively, this year the US 30-year Treasury note returned negative 2 percent, the 3-month Treasury bill returned 0.11 percent and the CRB commodities index fell more than 23 percent according to Societe Generale.

With one day left in 2015, the S&P 500 closed down on Wednesday, nearly flat on the year. But despite lackluster gains in stocks, Dennis Davitt of Harvest Volatility Advisors recommends sticking with the relative outperformer.

Out of all major asset classes, “we feel that’s where the opportunity’s going to be,” he said Wednesday on “Power Lunch.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Blaze engulfs Dubai tower near fireworks display

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Fire engulfed a luxury building Thursday near where tens of thousands of people gathered for Dubai’s massive New Year’s Eve fireworks display.

It was not immediately clear what caused the fire, which ran up at least 20 stories of the building. The blaze broke out at the five-star Address Downtown, a 63-story hotel and residential building.

Burning debris rained down from the building as firetrucks raced to the scene. The building was evacuated, and Dubai’s media office said 14 people suffered minor injuries.

Fireworks went off as the celebration started shortly after midnight while the fire continued to burn.

Dubai officials said reports suggest the blaze started outside the 20th floor of the building, but they maintain the fire has not spread inside the structure. Four squads of firefighters responded and were working to stop the fire’s spread.

About 15 minutes before midnight local time, large explosions could be heard from inside the burning building. It was not clear what caused the blasts.

Officials said the fire was 90 percent contained. But shortly before midnight, flames still laced the side of the building as smoke billowed around it.

The building sits near the Burj Khalifa, the world’s tallest skyscraper at 828 meters (2,716 feet).

US officials do not yet know what caused the blaze, though they have been cautious about potential threats to celebrations, a senior counterterrorism official told NBC News.

The fire broke out about two hours before midnight local time, when the fireworks display was set to begin. The display ended up starting shortly after midnight.

Tens of thousands of people whistled and cheered at the show taking place at the Burj Khalifa. Organizers had installed 400,000 LED lights on the Burj Khalifa and used some 1.6 tons of fireworks for the seven-minute extravaganza.

From there, the fireworks were to light up the sky around the sail-shaped Burj Al Arab and later down near the Dubai Marina. Fireworks also will be on display in Abu Dhabi, the capital of the country of seven emirates.

Nearly an hour after the fire began, some onlookers began to leave while others stood, pressed against crowd barricades, watching the blaze. Among them was Chris Browne, a tourist from London, who watched the blaze with her husband, Stephen, standing behind her. They said they hoped no one was injured.

“It’s pretty scary stuff,” she said.

Standing nearby, Stuart O’Donnell, a British intensive care nurse who works in Dubai, said he was worried for those inside the building.

“You feel sad for the people inside. … It spread so quickly when it started,” he said.

He and others in the crowd wondered what had started the blaze. “I do feel suspicious of when a fire breaks out on New Year’s Eve,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Apple turns in first negative year since 2008

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Apple, one of the best-performing tech stocks in recent memory, snapped a six-year winning streak on Thursday.

The company’s shares finished the year down 4.64 percent, at USD 105.26. Apple had previously closed lower for the year in 2008; it shed 56.91 percent that year.

2015 was a roller-coaster ride for Apple, as the company’s shares hit an all-time closing high of USD 133 on Feb. 23, and an all-time intraday high of USD 134.54 on April 28. Apple was even added to the Dow Jones industrial average in February, replacing AT&T.

However, the stock fell 21.76 percent since hitting the April 28 mark, as possible iPhone market saturation and China growth concerns contributed to its troubles. Apple’s plunged has wiped out about USD 57 billion of its market cap, about as much as fellow Dow component DuPont is worth.

Apple could face another tough year in 2016, according to Dan Ives, tech analyst at FBR Capital Markets.

“I think the blooms are coming off the rose a bit for Apple. Not just in terms of the multiple, or in terms of what investors want to pay, but in terms of products,” Ives told CNBC’s “Squawk Box” on Tuesday. “It’s a make-or-break, white-knuckle period for Apple.”

However, Erin Gibbs, equity chief investment officer of S&P Investment Advisory, said Dec. 23 that the company’s products should add to its profitability next year.

“Right now we’ve seen a big hit because there’s been some news of slowing iPhone sales,” she told CNBC’s “Trading Nation.” “But we’ve known that even though iPhone sales make up about two-thirds of the revenue, a lot of the future growth is expected to come from non-iPhone products like the Apple Watch and the iPad.”
Apple unveiled a slew of new products this year, including the iPhone 6S and 6S Plus, the Apple Watch, the streaming service Apple Music and the iPad Pro.

The stock has also gained more than 90 percent since CEO Tim Cook took over.

Clarification: Erin Gibbs spoke about Apple on Wednesday, Dec. 23.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

This will be key factor in future Fed decisions

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Don’t expect the Fed to have any big surprises in 2016, no matter what current conditions might suggest.

As a history-making year comes to a close for the US central bank, investors continue to try to read the tea leaves as to what to expect in the 12 months ahead.

A divergence in expectations between where the market expects rates to be and where Fed officials have placed their own estimates has convinced some that the Fed may take on a more hawkish tone.

On one hand, there was the so-called dot plot, or the diagram where Federal Open Market Committee members indicate where they think the fed funds rate will be in the years ahead. According to the chart released along with the rate hike, the FOMC expects four moves in 2016 — presumably one at each of the meetings where Chair Janet Yellen holds a news conference afterward.

On the other hand, there are market participants — namely the traders who place their own bets on when the Fed will move on the rate banks charge each other to borrow money. Futures are indicating the likelihood of just two or three increases in the year ahead, with a 60 percent chance the first will come in March.

This conflict, the thinking goes, could rattle markets that have come to depend on the Fed for a historically high level of accommodative monetary policy.

In some quarters, the allegedly hawkish tone of the central bank statement was even welcome news to those who think the FOMC should be more aggressive now that the Dec. 16 rate hike is behind it.

“If the backdrop unfolds as we expect (we will stress again for emphasis: the hurdles are lower than most people seem to appreciate) not only will the market be wrong to think that the Fed will hike only twice next year, but the Fed’s forecast of four hikes could actually prove too conservative,” Tom Porcelli, chief US economist at RBC Capital Markets, said in a note to clients.

The problem with that view is that the Fed — the Yellen Fed in particular — has shown absolutely no appetite for upsetting markets. After months of promising to hike rates before the end of the year, the FOMC waited until futures had priced in the near certainty of a move, despite a year that featured, if anything, a steadying at best and an outright weakening at worst in economic data.

With the past as prologue, the idea that the Fed would surprise markets with a rate increase seems far-fetched.

“I’m sort of in a dump-the-dots mode,” Diane Swonk, chief economist at Mesirow Financial, told CNBC after the December FOMC meeting. “I think that could be the Achilles’ heel that they will have to deal with in communications going forward.”
Indeed, the dots have seemed increasingly irrelevant as time has gone by through the days of zero interest rate policy. For the better part of the past two years FOMC members have been well ahead of market expectations for the pace of hiking.

It’s become clear that the financial markets win that argument every time.

“They’ve been pretty transparent so far as to what they’re going to do. I don’t see them wavering from that,” said JJ Kinahan, chief market strategist at TD Ameritrade. “Think back to October. The futures market was pricing in a pretty big probability for a while, then shifted. At the end of the day, they matched up pretty well.”

What’s ahead, then, likely is a Fed that professes data dependency but which will continue to be market dependent as well.

“People should expect from this new Fed a level of direct and frankly honest communication about the complexity of the world we’re in and the futility and mistake of looking for easy and simple patterns,” said Zachary Karabell, head of global strategy at Envestnet. “This is clearly a Fed … that is determined to treat the world like grown-ups.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Trump’s immigration plans would ‘rip our country apart’: Clinton

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow