John Hussman: Not Concerned About Inflation

John Hussman:

“The bottom line is that we can expect real wages to stagnate for several years, as a predictable reflection of slack capacity in the labor market. While credit concerns will be helpful in augmenting the demand for U.S. government liabilities as a default-(food poisoning)-free alternative to other assets, there is a continued prospect for significant price inflation beginning in the second half of this decade. With the ECB surrendering monetary discipline for the sake of short-term expedience, that prospect has become even more hostile. Continue reading

Airline Prices Could Go Up 25% Says Industry Spokesman

Airline prices are set to rise this summer, says an industry spokesman:

“Airline capacity and routes flown are still down compared to recent years,” said Mark Koehler, Priceline’s senior vice president, Air. in a statement.

“We haven’t experienced the widespread, aggressive airfare sales seen a year ago. In general, travelers will find that summer airfares could be as much as 25% more expensive than last year, on average, and that’s before factoring in extra fees for baggage, pillows, food and such. Travelers who want to save on air travel will need to plan ahead, be flexible and try different approaches to booking their trips,” he said.

Airlines have started to see increased traffic as travelers returned after cutting back during the recession. The International Air Transport Association recently cut its full-year loss forecast for the airline industry by half to $2.8 billion.

Shares of airlines stocks jumped this morning.”

So, for anyone planning to become a stateless globe-trotter – and we’re all for it if your wallet can take it – here’s another monkey-wrench tossed into your plans.

Not only are fees and security at airports increasing, as I’ve blogged before, but prices and services on airlines are going up too. They even have a lavatory fee coming up at budget airline Ryanair. And they’re thinking of reducing the number of lavatories to make room for more seats.

Personally, I don’t think budget airlines – unless you fly often – are much of a saver. I’d rather pay $100 more and feel free to carry as much luggage as I want, get fed regularly with something other than $5 bags of pretzels, and have wait-staff paid enough not to glower at you.

Not long before you’ll be asked to bring your own seats or stand all the way….

What David Einhorn’s Holding

From Market Folly comes a break down of controversial hedge-fund manager David Einhorn’s portfolio:

Top 15 holdings by percentage of assets reported on his 13F filing

Pfizer (PFE): 7.64%
CareFusion (CFN): 7.32%
Cardinal Health (CAH): 6.86%
Teradata (TDC): 6.56%
URS (URS): 5.78%
Gold Miners ETF (GDX): 5.58%
Wyeth (WYE): 5.35%
Einstein Noah Restaurant (BAGL): 4.97%
EMC (EMC): 4.75%
Aspen Insurance (AHL): 4.22%
Travelers (TRV): 4.04%
Microsoft (MSFT): 3.39%
Everest Re (RE): 3.22%
McDermott (MDR): 3.17%
MI Developments (MIM): 2.93%

This doesn’t include:

1. Cash
2. Short postitions
3. Non-US equities

Other things to note:

1. Health care holdings, CAH and HNT, both got larger allocations (friend and colleague, Dan Loeb also added HNT to Third Point’s portfolio) and a new position was opened in CFN (CareFusion). Taken together with the fact that the largest holding for both Einhorn and Loeb is PFE (Pfizer), this makes medicine/health their biggest play.

2. Einhorn sold out of energy and upped his stake in MSFT (microsoft) a lot.

3. Besides GDX, Einhorn is also in physical gold, which is one of his largest holdings. It’s invisible in the list above, because it’s not disclosed in 13F filings.

4. Short the rating agencies, credit-sensitive financial institutions and REIT’s with cap rates of 6% and dividend yields of under 5%.

5. Greenlight, like Steve Cohen’s SAC and Soros, is also jumping into the anti-Euro trade, reports silobreaker, citing the Wall Street Journal.

As for Greenlight’s past performance, here’s a chart in percentage terms of Greenlights performance, from Gurufocus:

YR        GL(%)   S&P     Excess Gain

2009     32.1    26.5.    5.6

2008    -17.6   -37      19.4

2007    5.9      5.61      0.3

2006    24.4    15.79    8.6

2005    14.2    4.91      9.3

2004    5.2      12        -6.8

What’s interesting in this chart is Einhorn’s bad showing in 2004 and 2007, years in which most people did well, or at least, stayed out of trouble, since the market was still receiving the benefit of Federal “juicing.” Also notable is  2008, when, had it not been for the controversial and possibly criminal Lehman raid, Einhorn would’ve been even worse off. He would probably have been as much down as the S&P.

Finally, without the johnny-come-lately piling onto gold, last year, 2009, wouldn’t have been a good year for Einhorn, either.

Maverick Managers Say Short the S&P, Bonds, and Goldman

A Barron´s interview with Bearing Asset Management´s Kevin Duffy and Bill Laggner, via Lew Rockwell:

“Do you see the S&P 500 retesting its lows of this year?

Duffy: It’s difficult to know. It depends on how much money gets printed. In real terms, can we get cut in half from here? We think so. S&P earnings are distorted because of accounting changes for banks and brokers; if banks were marked to market, S&P earnings next year could fall to $45 a share. Bullish sentiment is rivaling the 2007 top, and volatility has fallen dramatically. We like the VXX, an exchange-traded note that’s based on S&P 500 short-term volatility as measured by the VIX index. It’s down 67% this year, and fits into the whole idea that complacency is very high. Continue reading