Barton Biggs

Barton Biggs

Postby winston » Thu Nov 27, 2008 9:01 pm

by millionairemind on Thu Nov 27, 2008 4:38 pm

Insight: We are in for the mother of all bear market rallies
By Barton Biggs


Published: November 24 2008 16:16 | Last updated: November 24 2008 16:16

Before we all are swept away into total despair, let’s take a step back and imagine what could get stocks around the world going up for a while. Bear in mind that I am hedge fund manager, have been wrong on the severity and duration of this panic, and that at this moment I am close to shore. In other words – I have little risk on.

First, let me point out that by definition the bottom of a bear market has to be the point of maximum bearishness. Thus sentiment becomes a crucial indicator.

The systematic work that we do on measuring sentiment (and we monitor about twenty indicators for the US and a dozen or so for other equity markets) show very extreme and in many cases record levels of bearishness. Obviously not every indicator is at an all-time high, and in some the history is short, but the message is powerful. Furthermore there is compelling evidence that investors, hedge funds, pension and mutual funds, and the public are not just talking bearish, they have raised astounding amounts of cash.

I am chastened by the fact that all the data we look at are from the last forty years which was really just one great magnificent secular bull market of wealth creation marked by periodic bears that were buying opportunities. No one knows what levels of pessimism were necessary to spawn the 40 per cent 1929 rally during a massive secular bear market. Nevertheless I’ve never seen capitulation and despair like this. We must be pretty close to maximum bearishness.

Second, valuations are cheap. There’s no point in going into an elaborate dissertation; it’s an inexact science. Using the best historic measures, normalised earnings, book value, and free cash flow, stocks around the world are very cheap, but not as cheap in absolute terms or versus interest rates as they were in the 1930s or at the 1974 bottom. Nevertheless, the 4 per cent dividend return on the S&P 500 exceeds the yield on the ten and thirty year Treasury bonds for the first time in fifty years. If emerging market equities, where the growth is, at six to eight times earnings are not cheap I don’t know what is.

Third, stock markets have been obliterated and are deeply oversold. Even dead cats bounce. The Dow has had the steepest decline since the 1930s, and the spread between the price and the 200 day moving average at 34 per cent is the greatest since July 19, 1932. The US market is down almost 50 per cent from its highs, Europe is off 55 per cent, and emerging markets, 65 per cent with some unfortunates like Russia off 70 per cent. History shows that even in enduring, secular bear markets there are not just 20 per cent bounces but usually one 30 to 50 per cent rally. We should be due.

As far as the economic fundamentals are concerned, investor and consumer confidence have been ravaged by the sudden violence of the global recession. It is going to be deep and it may be long lasting. The bears say at best it will be like Japan’s on-going slow death. At worst, it will be a replay of the 1930s.

I think both these outcomes are highly unlikely. The so-called authorities have learned from the policy errors of the past, and the response this time, while not perfect, has been faster and far bigger. The effects are just beginning to be felt. In fact the stimulus has been unprecedented and there is almost sure to be more on the way beginning with the new Obama Administration. The authorities seem to understand that they have to risk overkill.

And the fabric for economic healing is developing. In the US average hourly earnings are rising at a 3 per cent annual rate and the CPI is probably declining at a 5 per cent rate thanks to the fall in gasoline, fuel, and food prices, so real average hourly earnings are rising at an 8 per cent pace. The savings rate is rising. The sharp collapse in the price of oil while hurtful to parts of the world, is very beneficial to the US, Europe, and Asia. The consumer spending collapse we are experiencing may be short-lived but that doesn’t mean a boom is coming either.

Finally, my guess, and it’s nothing more than a guess, is that the deleveraging that has caused such heavy selling is two thirds done. In listed equities it may be 80 per cent finished. Hedge fund redemptions are substantial and will continue into next year, but hedge fund liquidity is at a record high and hedge funds’ gross exposure and net long is at a record low. Conversely investor liquidity is at a record high. All good contrary indicators.

If I’m bullish why aren’t I in there now? Because I would like to see the credit markets unclog and spreads come in more. At the bottom of a panic, the news doesn’t have to be good for stocks to rally, it just has to be less bad than what has already been discounted. I want the markets to stop going down on bad corporate and macro-economic news. The fact that it still does shows the bad news has not yet been fully discounted. I have no idea when the next bull market starts, but I do think we are setting up for the mother of all bear market rallies.

The writer is managing partner at Traxis Partners, a New York based hedge fund, and the author of Hedgehogging.
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Re: Barton Biggs

Postby winston » Sun Jan 11, 2009 10:51 am

Improving Economy May Keep Stock Rally Alive, Say Biggs, Doll By Matt Miller and Jeff Kearns

Jan. 9 (Bloomberg) -- U.S. investors are looking ahead, and they like what they see, say Barton Biggs and Robert Doll.

The 21 percent rally in the Standard & Poor’s 500 Index since Nov. 20 reflects speculation the worst of the recession is over, according to Biggs, managing partner at hedge fund Traxis Partners LLC, and Doll, chief investment officer for BlackRock Inc. Equities will probably keep rising, they said yesterday on Bloomberg Television.

Airline shares may gain after crude oil fell 71 percent from its July record, said the New York-based Biggs. Stocks with the biggest price swings will climb as the recession ends, according to Doll. BlackRock is based in Plainsboro, New Jersey.

“Sometime around the middle of the year there’s going to be pretty conclusive evidence that the economy has stabilized,” Biggs said. “That’s what the stock market is now looking forward and seeing, and that’s why I think that this rally carries further.”

The Standard & Poor’s 500 Index rallied after dropping to an 11-year low on Nov. 20. The benchmark plunged 38 percent in 2008, its worst yearly loss since 1937. Biggs was wrong in February 2008 he said the U.S. stock market is “at or very close to an important bottom.”

Winston's Comment: If he was wrong once, can he be wrong twice ? "Close to a very important bottom" is a very wrong call !

Biggs said airlines “make some sense” because they are cutting costs and getting a boost from lower fuel costs. The S&P 500 Airlines Index tumbled 29 percent in 2008, its fifth straight annual decline.

Winston's Comments: Airlines does not make sense if no one is flying. In addition, their hedging cost could be when oil was at US$150

He also favors companies in less-developed countries. “The growth opportunities will be in emerging markets,” he said. “They are considerably cheaper then developed markets.”

Recession Nadir

Doll said the worst of the recession is probably over after more than $1 trillion of bank losses froze credit markets in 2008. U.S. gross domestic product may have contracted 4.35 percent in the last three months of 2008, according to the average estimate of economists surveyed by Bloomberg.

“The fourth quarter that just ended is likely to be the worst of the recession,” said Doll. He said Nov. 20 probably was the bottom for the stock market.

Companies reliant on consumer spending to increase earnings led the advance in the S&P 500 since Nov. 20, rising 36 percent. Banks and commodity producers rallied 29 percent.

“Risky assets will outperform safe assets this year,” he said. “There are going to be horrible earnings but markets have a way of discounting that.”

Biggs said that it’s too early to tell how the alleged fraud by Bernard Madoff will affect hedge funds and the fund-of- funds industry. Prosecutors say Madoff’s investment company may have cost clients as much as $50 billion through a “Ponzi scheme.” The impact will be seen in the first and second quarters of this year, Biggs said.

WInston's Comments: Too early to tell means they are very scared of heavy redemptions before Feb 15

Hedge funds lost 18.3 percent in 2008, their worst year on record, according to Hedge Fund Research Inc.’s HFRI Fund Weighted Composite Index. The decline was the largest since the Chicago-based firm began tracking data in 1990.
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Re: Barton Biggs

Postby winston » Thu Mar 26, 2009 8:50 pm

Biggs: Stocks Could Jump 50 Percent By: Dan Weil Article Font Size

Barton Biggs, who manages the New York hedge fund Traxis Partners, sees a big-time rally under way for stocks.

The former chief global strategist for Morgan Stanley told Bloomberg TV that the Standard & Poor 500 Index may soar 30 percent to 50 percent from its 12-year low of 676.53 reached March 9.

A 50 percent gain from that level would mean 1,014.80. The S&P 500 closed Wednesday at 813.88.

We're in the midst of a major rally, but to say we're in a bull market is way premature, Biggs says.

I'm confident we'lll see a better tone for the economy by the end of the second quarter and into the rest of the year. The economy may still decline, but it wont fall off a cliff like it has been doing.

Biggs also views the Obama administration's plan to help rid bank balance sheets of toxic assets as an important first step in the right direction.

Emerging markets will benefit from the fact that economic growth in them is stronger than in the United States and Europe, Biggs says. He also sees large technology stocks as a buy because they have fallen to such low levels.

However, financial shares aren't so appealing thanks to the tremendous volatility and uncertainty in the financial sector.

2009 Newsmax. All rights reserved.
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Re: Barton Biggs

Postby LenaHuat » Mon Apr 20, 2009 8:36 am

Biggs is still bullish abt the market :
http://www.cnbc.com/id/30266944
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Re: Barton Biggs

Postby winston » Wed May 06, 2009 8:21 am

Biggs: Bull Market Ahead, GDP Set to Recover By: Julie Crawshaw

Contrarian investor and Traxis Partners hedge fund manager Barton Biggs says we're in a cyclical bull market within a broad trading range and for good reasons.

Equity markets are looking ahead, not behind, Biggs writes in Newsweek, adding that the bad economic news has already been factored into stock prices.

Remember, this brutal bear market began in the summer of 2007, when the world still appeared to be booming.

"My prediction is that we'll see a broad trading range somewhere between the March (S&P) lows of 700 and the 2000 and 2007 highs in the area of 1,450 to 1,500 over the next few years."

Biggs believes that real GDP growth could be positive in the second half of the year, maybe even sooner.

Leading indicators, including new orders and the purchasing managers survey, are rising, he points out.

New home sales, the best leading indicator of the price of existing homes, seem to be stabilizing. Historically, the steeper the GDP decline, the stronger the rebound.

Add to that the facts that credit and money markets have improved dramatically and spreads on everything from high-grade corporate credit to junk bonds have narrowed and you have a recipe for recovery this year, Biggs says.

Construction spending increased by 0.3 percent in March, the best showing since a similar rise last September, according to Commerce Department reports.

Economists surveyed by Thomson Reuters had expected spending to drop 1.5 percent for a sixth straight monthly decline.

http://moneynews.newsmax.com/economy/bi ... 10429.html
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Re: Barton Biggs

Postby winston » Tue Jul 14, 2009 8:24 pm

Biggs Says U.S. Recovery in Place, Recommends China (Update3) By Eric Martin and Matt Miller

July 13 (Bloomberg) -- Chinese stocks are among the world’s best investments because the nation’s economic growth is poised to exceed forecasts, according to Barton Biggs, who runs New York-based hedge fund Traxis Partners LP.

Biggs said the U.S. economic rebound is “in place” and may take the form of a so-called U-shape recovery, which may help the Standard & Poor’s 500 Index climb 11 percent to 1,000 or higher this year. Shares in Asian markets including China and Hong Kong are also attractive after having retreated from their highs this year, he added.

“As you go through these various countries and these various markets, the surprises are going to be on the upside,” Biggs, the former chief global strategist for Morgan Stanley, said in an interview with Bloomberg Television. “The emerging markets, particularly Asia, are the growth area of the world and they’re emerging from the financial crisis faster than any other part of the world.”

The S&P 500 climbed as much as 40 percent from a 12-year low on March 9 on speculation that government efforts to end the first global recession since World War II were working. The MSCI Emerging Market Index has gained 50 percent over the same period, according to data compiled by Bloomberg.

China Growth

China’s economy is expected to grow 8 percent this year, compared with a 2.5 percent contraction in the U.S., according to economist forecasts compiled by Bloomberg. “In terms of China, GDP growth is going to be 2 to 3 percentage points higher than the consensus,” he said.

In a May 29 interview, Biggs said Chinese stocks were the most attractive worldwide as the global economy recovers, while U.S. 10-year Treasury notes were a “buy” because inflation would remain subdued. China’s Shanghai Composite Index has since climbed 17 percent.

In the U.S., data on new jobless claims and the purchasing managers index may signal that “we are getting close to the peak in the raw unemployment numbers,” Biggs said. Employers eliminated 467,000 jobs in June, the Labor Department reported July 2.

Treasuries no longer provide buying opportunities following a “good move,” Biggs added. Ten-year notes rose from May 29 through last week with yields falling 4.5 percent.

U.S. technology shares may be a better bet given the prospect of an economic rebound, Biggs said.

The MSCI Emerging Markets Index is valued at 15.3 times reported earnings, according to weekly data compiled by Bloomberg, compared with 14.3 for the Standard & Poor’s 500 Index. When developing nations last commanded a premium, in October 2007, the 22-country benchmark sank 54 percent in the next year, according to data compiled by Bloomberg.
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Re: Barton Biggs

Postby winston » Thu Aug 06, 2009 7:39 am

Biggs: S&P Will Climb Another 22 Percent By: Forrest Jones

The Standard & Poor's 500 Stock Index will climb by 22 percent as the global economy emerges from its recession buoyed by improving consumer spending and housing markets, according to investor Barton Biggs.

( Improving consumer spending & housing markets ? )

Japanese stocks will also be attractive buys also on expected improved consumer spending there as well as increased exports to China.
( Improving consumer spending in Japan ? Increased exports to China - what ? )

I'm still bullish, Biggs, who runs New York-based hedge fund Traxis Partners, told Bloomberg radio.

We are going to have a pretty strong recovery in earnings both this year and next year.
( It's above expecatation but was weak yoy )

In the United States, cost cuts at companies will eventually lead to better earnings. In Japan, elections are scheduled to take place next month and the new government will inherit an economy that is ripe for recovery.
( US earnings are above expectation becuz of cost-cutting not increase in Sales )

They are going to really try to stimulate consumer spending, Biggs said of the new Japanese government.
( And what have they been doing for the past decade ? )

While the next administration in Japan may look forward to growth real soon, the current administration in the United States is doing so today.

President Barack Obama said the country is witnessing the "beginning of the end of the recession" as he defended his economic policies at a town hall meeting in North Carolina.

"The market is up and the financial system is no longer on the verge of collapse. We're losing jobs at nearly half the rate we were when I took office six months ago,Obama said.

© 2009 Newsmax.

http://moneynews.newsmax.com/streettalk ... 44252.html
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Re: Barton Biggs

Postby winston » Sat Oct 10, 2009 8:10 am

Markets Are Only Halfway Through Rebound: Barton Biggs
By: Krystina Gustafson
Special to CNBC.com

The market is only about halfway through what is historically typical of a bear-market recovery—and this time around, the rebound is likely to be even bigger, said Barton Biggs of Traxis Partners.

Traxis analyzed 14 past bear markets—ranging from gold to US stocks—and found that when markets dipped more than 40 percent, the average rally off the lows was about 72 percent, he said.

Since the Dow is up only about 45 percent and the S&P about 52 percent, the market still has a lot of room to the upside, Biggs said.

"We've had a tremendous, an unbelievable decline in both the economy and the stock market, and so I just think we're going to have a bigger than normal bounce," Biggs said. "I just think we've got further to go."

To take advantage of the runup, Biggs recommended investing in the following areas:

Large-Cap Technology

Pharmaceuticals, Oil Services — These two areas were very depressed and are due for a powerful recovery, he said.

Emerging Markets, particularly Asia — Asia stopped outperforming in the middle of June, allowing room for European countries to grow, Biggs said. Led by China, Asia will make its comeback in the fourth quarter.
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Re: Barton Biggs

Postby LenaHuat » Thu Feb 18, 2010 10:17 pm

BB hit the jackpot in the 16 March 2009 issue of Newsweek. I'm awaiting his take :lol: on the equities market right now.
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Re: Barton Biggs

Postby LenaHuat » Wed Mar 10, 2010 8:51 am

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