SALT Conference Notes

Reade Griffith Founder of Polygon

“It’s nice to hear people talking about Europe in a positive way. We’re really seeing growth in a broad way you haven’t seen in 5 or 10 years. The political risk in Europe is coming down. Europe is in the 3rd inning of a recovery. The US, depending on Trump, is somewhere between the 7th and 9th inning.”

 

Doug Rachlin of the Rachlin Group – Neuberger Berman:

“For the first time in years, petrochemical plants are coming back. Seven new plants are coming along the southeast coast. We’re very excited about these petrochemical plants coming online. It’s pretty obvious coal is declining and no matter what Trump says, coal is not coming back. Their share of power generation is going to continue to decline. Nuclear is also going to decline. Solar and wind will continue to gain share, but the energy source that stands to gain the most is natural gas. With oil trading between $45 and $50, the leading MLPs are highly profitable today and will continue to make a lot of money.”

 

Bruce Richards of Marathon Asset Management:

“Europe has been the most uncertain region. That’s all put to rest right now. All of a sudden we have stability in France, in Germany, in the Netherlands—and more political uncertainty in the United States. Europe is the place to invest, because it’s been very much underinvested.

 

Former Fed chair Ben Bernanke

On inflation:

“The reflation trade was probably overdone…Inflation has been below target for a while. It’s been unexpectedly difficult to get inflation up.””

On political risk

“It always puzzles me a little bit that markets are very blase about political risk until the last moment.”

On tax and infrastructure

“I’m not counting on major changes in the tax code or infrastructure.”

Troy Gayeski of Skybridge Capital

“Europe has been a long stretch of either disaster or disappointment….You’ve finally got attractive growth, better inflation data, reasonable valuations and much better earnings prospects.

Sources: 

https://finance.yahoo.com/news/rolling-update-salt-conference-172501205.html

https://finance.yahoo.com/news/big-money-pros-predict-next-big-trade-223834609.html

 

Miscellaneous Quotes for Week to 19th May 2017

The Swedish Central Bank 

They are considering a variable target for inflation

“The Riksbank is considering changing the target variable for the inflation target to the CPIF. As inflation will always vary around 2 per cent, a variation band of +/- 1 percentage point is being also considered to illustrate this uncertainty. The changes are expected to be able to be implemented at the monetary policy meeting in September 2017.”

 

“It’s a big deal as it means accounting policies will change for all contracts, and profits could be more volatile than today…More of the profit from a contract will be deferred over the contract period, which could mean increased volatility in earnings. Market reaction to this will depend on how companies manage the message to investors as a company’s fundamentals have not changed,”

 

G7/8 Finance Meeting Communiqué

Moderate global growth

“Global recovery is gaining momentum, yet growth remains moderate and GDP is still below potential in many countries, with the balance of risks tilted to the downside.”

Sohn Conference Quotes

Courtesy of Fortune, Market Watch, Market Folly, and Zero Hedge

Jeffrey Gundlach

“The valuation of emerging markets is half the valuation of the S&P 500 when you look at things like price to sales, price to book…Europe is more popular, I just think EM has more potential upside than ever.”

Larry Robbins, Glenview Capital Management

“A lot of stocks were left for dead because they were in regulatory purgatory, they were in Armageddon land and no one wanted to touch them…Those losers can become winners. Those winners have far to run.”

Clifton Robbins of Blue Harbour Group.

“Companies with high ESG scores just do better,”

Stan Druckenmiller of Duquese Family Office

“….with unemployment below 5% and inflation close to 2%, the Fed’s radical dovishness continues. If the Fed was using an average of Volcker and Greenspan’s response to data as implied by standard Taylor rules, Fed Funds would be close to 3% today….this is the biggest and longest dovish deviation from historical norms I have seen in my career. The Fed has borrowed more from future consumption than ever before. If we have borrowed more from our future than any time in history and markets value the future, we should be selling at a discount, not a premium to historic valuations.”

Miscellaneous Quotes from week to 5th May 2017

Mario Draghi – ECB President Q&A at press conference

Solid and broad economic growth in the Eurozone. 

“growth is improving. Things are going better. And you remember in 2013 we were speaking of a recovery which was fragile and uneven, and now it’s solid and broad. Just let me give you a few numbers. Growth has averaged 0.4% quarter after quarter since 2013. But the important point is also that this recovery has broadened, which wasn’t the case before. … we have a dispersion index of value-added growth, showing value-added growth in different countries and now it’s at a historical minimum. It’s at the same level as in 1997. The PMI is the highest since 2011. So is the Economic Sentiment Index. The unemployment rate is at the lowest since May 2009…The risks of deflation have virtually disappeared.”

Political uncertainty affects medium term outlook

“We don’t do monetary policy on the likely outcomes of elections, but of course we ask ourselves how political uncertainty can affect our monetary policy decisions. Of course we ask ourselves this question. And the answer is, to the extent and only to the extent that – we don’t react to political uncertainty by itself, but we certainly internalise the information that comes from the fact that political uncertainty may affect our medium-term outlook for price stability. So to the extent that political uncertainty has this effect, we internalise this information – together with lots of other information – in taking our monetary policy decisions.”

 

Stephen Mnuchin – U.S. Treasury Secretary at the Milken Institute Global Conference 

Optimistic Projections for growth

“In our projections it will probably take two years to get up to three percent growth and then we can have a sustained level. That’s what we’re projecting,” Mnuchin said. “Obviously the sooner we can pass taxes, the sooner we can get regulatory relief the better we’re going to be….I think we can create what’s incredible economic growth in this country.”

 

David Solomon, president and co-chief operating officer of Goldman Sachs at the Milken Institute Global Conference and on Bloomberg

Conviction is more muted. 

“This quarter it feels like conviction for tax and regulatory reform is more muted.”

Conviction is fading

“This was a quarter defined by lower client activity and the firm not maximizing the revenue opportunity….This was a quarter that was defined by low volatility, a lack of conviction with our clients. One of the things I would say is our business is definitely weighted, or levered, to times when our clients have a lot of conviction. One of the things that happened is that conviction sort of ebbed.

 

Miscellaneous Quotes from week to 9th December

Wolfgang Schaeuble – German finance minister  on Bloomberg

No reason to worry about Italy

“I don’t think there is reason to talk about a euro crisis. The Italians have a lot of experience dealing with such situations and that’s why I’m not concerned.”

 

Michel Barnier – the European Commission’s top Brexit negotiator on Business Insider and Reuters

Bloomberg: On Brexit

“Frankly I do not know what a hard or soft Brexit are. I can say what a Brexit is: clear, ordered, and we will work within the council’s guidelines on the content of the negotiation. We want a clear agreement, we want to reach this agreement within the limited time that we have available”

There are time frames

“Time is short. Should the UK notify the European Council by the end of March 2017 … it is safe to say negotiations could start a few weeks later and an Article 50 agreement reached by October 2018…Keep calm and negotiate”


SK Addition:

Donald Trump is happy the stock market is up

“What happens is they’re so unnerved that the stock market is at an all time record since I’ve been elected…after I won the election, you see what happened. In the history of our country, there’s never been an up this big after an election, so I don’t know how somebody says that people are unnerved, it’s just the opposite. And frankly I think we’re going to go up. We have tremendous room, tremendous margin in our country, but we have to do things right.”