John Paulson Top 10 Holdings

There was an article in the Journal today about hedge fund competitors of John Paulson preparing to capitalize on Paulson’s poor performance by gaming his possible liquidations.  Below are the top 10 holdings of Paulson’s funds as of the end of June.  Some have suggested that this could be the cause of the recent weakness in gold–unlikely but an interesting hypothesis.

YTD Sector Performance

The S&P 500 is down 5.5% YTD including today’s rally.  Perhaps not too surprisingly “defensive” sectors are faring the best in the negative environment.  Utilities are the strongest performers YTD followed by Consumer Staples and Healthcare.  Financials have been the worst performers while Energy, which was the best performing sector by a wide margin earlier in the year has been hit hard by recession fears.

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Gold Near Key Support

Last month I pointed out how Gold has a tendency to spike and then move sideways back toward the 200 day moving average.  After moving sideways for a bit gold has taken a big tumble, but in the context of the run it had before that point, there hasn’t been too much damage to the chart from a technical standpoint.  A big test for gold is approaching though as the trend line that has held for almost 3 year is challenged.

Household Net Worth at 1989 Levels (In Gold)

Last week, the Fed released its flow of funds report, which provides the most comprehensive view of asset and debt holdings within the US economy.  One of the more important tables included is the one which details the balance sheet of the aggregate US consumer, presented below.

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The data shows net worth fell in 2Q11 from $58.6T to $58.4T.  Considering that US consumers hold about 32% of their net worth in the equity markets, it looks like Q3 will show a further contraction in net worth.  Below is a chart showing the evolution of consumer net worth since 1995.  Consumers are not back to the peak realized in 2007, but according to the data the US consumer is wealthier today than he or she was at the turn of the century.
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The Fed presents this data in nominal terms though.  Adjusted for inflation using CPI, household net worth tells a slightly different story.  By this measure, American consumers are no wealthier than than they were in 1999.

However using a less mainstream measure of inflation (gold), the American consumer is actually much poorer today than he or she was in 1999.  Measured in ounces of gold, the US consumer has the same net worth as he or she did in 1989.
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