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NEWS MONEY SPORTS PREDICTIONS Jobless TOP FROM SALT rate dips to LIFE HEDGE FUND 7-year low AUTOS CONFERENCE TRAVEL
L awrence J ournal -W orld - USA TODAY SATURDAY, MAY 9, 2015
MONEYLINE HEDGE FUNDS WARNED ON CYBER EXTORTIONISTS Several hedge funds have been victims of cyber extortionists, John Carlin, head of the Justice Department’s National Security Division, said Friday at the SALT hedge fund conference in Las Vegas. He came to warn the crowd, made up of hedge fund professionals, that cyber criminals are out to steal their information, their corporate secrets and their money. “We are seeing nation-state action — from Russia, China, Iran and North Korea — target your companies and what you have, day in and day out, to use your information against you,” Carlin warned the Wall Street crowd.
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Maybe it’s the gambling atmosphere in Las Vegas, but the crowd at the SALT hedge fund conference sure hasn’t been shy about placing bets on everything from the price of oil to who will Kaja win the 2016 presidential election. Whitehouse USA TODAY Here are five of the top predictions made at the conference by some of Wall Street’s biggest names: LAS VEGAS
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JEFF KOWALSKY, BLOOMBERG
NEW VERSION OF VIPER COMING FROM DODGE Dodge said Friday that it will make a super fast new Viper. “This is the fastest street-legal, track car we’ve ever built — bar none,” says Dodge chief Tim Kuniskis. The top speed of Viper ACR, on sale this fall, is 177 mph, technically less than the Dodge SRT Viper at 204 mph. But Dodge says aerodynamics and more powerful brakes let the car complete a lap on the track faster than any other Viper. TRIBUNE BUYS U-T SAN DIEGO Tribune Publishing, which owns “The Los Angeles Times,” said it has agreed to pay $85 million to buy “U-T San Diego” and nine community weeklies in San Diego County. Tribune, which was spun off last year by its former parent as a company that focuses on publishing, will pay the paper’s current owner, San Diego-based businessman “Papa” Doug Manchester, $73 million in cash and $12 million in its common stock, as well as assuming obligations of a pension plan. The deal, which doesn’t include real estate, is expected to close in the second quarter. Tribune said the newspapers will remain separate operations.
Oil is going to rise to $70 a barrel by the end of the year, said T. Boone Pickens, head of BP Capital Management. “Demand is very, very good this year for oil,” but supply is going to get tight due to the number of oil rigs that have shuttered production, Pickens said.
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Shares of oil company Royal Dutch Shell are headed down, said famed short seller Jim Chanos. “Big oil is pumping negative cash flow,” said the Kynikos Capital founder. Shell’s play for BG’s liquid natural gas resources won’t fix the problem because there’s more supply than demand.
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Stocks are going to rise between 7% to 9% this year, said Leon Cooperman, head of Omega Advisors. “There’s consternation about interest rates, but I personally don’t quite get it,” Cooperman said, adding that stocks can easily withstand a slight uptick in historically low rates.
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Fixed-income investments, on the other hand, are on the decline, Cooperman said. “I would reduce all fixed income positions and move to short-term durations,” he said. Michael Novogratz of hedge fund giant Fortress also warned that the bull market for fixed-income is over while speaking with Bloomberg Television at the conference, which is hosted by investment firm SkyBridge Capital founder Anthony Scaramucci.
NUMBER OF THE DAY:
$19 BILLION
That’s the collective cost of “always-on” Internet-connected appliances and other digital products annually, according to a study by environmental group Natural Resources Defense Council, a sum equal to the output of 50 large power plants. DOW JONES INDUSTRIAL AVG. 18,200 18,150
4:00 p.m.
18,191
18,100 18,050
267.05
18,000 17,950
9:30 a.m.
17,900
17,924
FRIDAY MARKETS INDEX
Nasdaq composite S&P 500 T-note, 10-year yield Oil, light sweet crude Euro (dollars per euro) Yen per dollar
CLOSE
5003.55 2116.1 2.15% $59.37 $1.1206 119.79
CHANGE
x x y x y x
58.01 28.10 0.03 $0.45 0.006 0.02
SOURCES USA TODAY RESEARCH, MARKETWATCH.COM
USA SNAPSHOTS©
CFO’s self-portraits Top fictional characters CFOs related to the most:
34% Jerry Maguire 20% James Bond 16% Ebenezer 13% Scrooge Mr. Spock
Source Adaptive Insights CFO Indicator of 227 chief financial officers JAE YANG AND PAUL TRAP, USA TODAY
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Hillary Clinton will face off against Jeb Bush in the coming presidential election, said Greg Fleming, president of Morgan Stanley’s brokerage operations. Fleming made the prediction in a lightning-round session in which all the panelists were told to place bets on who makes it to 2016. Indeed, with the election around the corner, predictions on who will win in 2016 often dominated the Vegas gathering. And with so many outspoken people swarming the opulent Bellagio Hotel and Casino, the political conversation sometimes grew heated. When Pickens took the stage on Thursday, he was asked to play a word-association game. When Clinton’s name came up, he simply said, “Loser.” “Winner,” he said, when the interviewer
said, “Jeb Bush.” Pickens also spent some time criticizing Massachusetts Sen. Elizabeth Warren, who is from his hometown in Oklahoma. “Well, we’re both from the same place, but that doesn’t make us much alike,” the oil tycoon said of the former Consumer Financial Protection Bureau chief. He accused her of having “trouble” with the truth. “Loser,” he said when Warren’s name came up.
A healthy rebound in job April’s growth last month was tainted by a sharp downward revision in 223,000 March’s gains, raising questions gains about the strength of the lower economy. Employers added 223,000 jobs figure in April, in line with economists’ estimates, the Labor Department to 5.4% said Friday. The unemployment rate fell from 5.5% to 5.4%, lowest Paul since May 2008. Davidson But March payroll gains were revised down to 85,000 from a USA TODAY previously reported 126,000. That took the gleam off the April tally, leaving average gains the past two months at 154,000, down from an average 233,000 the first two months of the year and 260,000 for all of 2014. Many economists had chalked up March’s anemic job growth to JOBS REBOUND frigid weather in some Monthly change in parts of the country and non-farm payroll jobs a labor dispute at West from preceding month, Coast ports that slowed in thousands: shipments. But Lindsey Piegza, chief economist 330 of Sterne Agee, says the April 2014 downward revision to 236 the March total and the 286 absence of a stronger recovery in April sug249 gests more enduring 213 factors are at work. Doug Handler, chief 250 U.S. economist of IHS 221 Global Insight, cites a strong dollar that’s 423 hampering manufactur329 ers’ exports and reduced oil company 201 investment as a result 266 of low crude prices. He expects the latter to ac85 celerate in coming months. He also points April 2015 330 to aggressive business Note Figures are stockpiling earlier this seasonally adjusted year that will crimp Source Bureau of Labor growth in the current Statistics from Haver Analytics quarter as firms draw KRIS KINKADE, USA TODAY down inventories. He has revised down his estimate for second-quarter growth to an annual rate of 2.1% from 3.4%. The slowdown, he says, could prompt the Federal Reserve to push an expected September hike in short-term interest rates to later this year, or even early 2016. But by the second half of the year, Handler expects the effects of the lofty greenback and weak energy-sector spending to ease while rising inflation-adjusted wages boost consumer spending. Good Monthly job growth, he says, should average about 225,000 the news rest of the year. for inIn April, businesses added 213,000 jobs on strong advances vestors by professional and business ser- Jobs report vices, health care and construc- got the job tion. Federal, state and local done, 1B governments added 10,000. Mining employment continued to decline, falling by 15,000, as energy companies shed workers because of low crude oil prices. Wage growth, sluggish throughout the recovery, ticked up a bit. Average hourly earnings increased 3 cents to $24.87 an hour. Over the past year, pay is up 2.2%, in line with previous tepid advances.
Is it time for a no-bond portfolio? Given current yields and future worries, it’s worth considering John Waggoner
jwaggoner@usatoday.com USA TODAY
Living in the modern world means living with a constant feeling of impending doom. You could lose your job! The market could crash! Your dog could be an alien! In recent weeks, the biggest fear of the day has been that interest rates would rise, clobbering bond funds and ruining the plans of Joe Btfsplk, the only person in the United States who hasn’t refinanced his mortgage in the past
seven years. And those fears have some merit. The bellwether 10-year Treasury note yield is hovering near 2.20%, up from the low of 1.40% set in July 2012. And even at current levels, it could be a long, painful rise to the average long-term yield of 6.44%. So perhaps it’s time to consider a nobond portfolio. Let’s start at the beginning. In recent weeks, several prominent investors — Warren Buffett, CEO of Berkshire Hathaway, Bill Gross, manager of Janus Unconstrained Bond, and Jeremy Grantham of GMO — have warned that the long bull market in bonds could be at an end. The bull market is, after all, more than three decades old. In the upside-down world of bonds, a bull market is a sustained period of falling interest rates. (More on this in a moment.) Interest
rates have been falling since INVESTING winding of the bond bull Sept. 30, 1981, when the 10- EVERY market is likely. When rates year note yielded an aston- SATURDAY rise, investors make videos ishing 15.84%. of your 2.20% bond and Falling rates mean rising mock it on the Internet — prices for bonds. Think of it this because, after all, newly issued way: Suppose you owned a bond bonds yield more. Should you that paid 5% annual interest. In- want to sell your bond, you’ll have vestors who owned bonds yield- to cut the price, and your 2.20% ing 2.25% would treat you like a yield will provide little cushion. If you own individual bonds, a god. They would wax your car to a high gloss. They would even pay bond bear market isn’t much of you more than the face value of an issue, unless you sell before your bond, because your yield your bond matures. If you hold was more than twice what they your bond to maturity — barring could currently get. a default — you’ll get your interCould Treasury yields go low- est and principal back. But bond er? Sure, and they have. And gov- mutual funds have to price their ernment bond yields overseas are holdings every day. And for most somewhere in the third sub-base- bond funds, rising rates mean ment parking lot. The 10-year lower share prices. Bond bear markets tend to be German bund yields 0.59%, and the Swiss 10-year note yields less severe than bear markets in stocks, but they make up for that 0.10%. Nevertheless, you should be aware that at least a partial un- v STORY CONTINUES ON 5B