Even if he is saying that part of the portfolio is not fiat money based but Gold based, and he bought them more as a hedge, still 30% of the total equity portfolio is not a small number at all, according to the latest SEC filing for his equity book listed below. Moreover, it is not only SPDR Gold but also Gold miner stocks and ETFs.
That is not to say that Gold is going to the sky tomorrow or next week, like for him to short CDO and bought CDS on those toxic stuff in 2005 does not necessarily indicate that the housing is going to tumble next quarter, it is hard to do the exact timing on dollar debasement trade, but you can at least get well prepared for that while you can, can't you?
Other things worth noting is, he kicked out all of its Merrill and Wells Fargo holding in the 1st quarter and bought into both Jpm and Capital One, both of which are feeling much less credit card debt pain compared with their counterparts as said before.
- SPDR Gold Trust (GLD): 30.37% of portfolio
- Wyeth (WYE): 13.96% of portfolio
- Rohm & Haas (ROH): 13.44% of portfolio
- Boston Scientific (BSX): 8.4% of portfolio
- Gold Miners ETF (GDX): 6.81% of portfolio
- Kinross Gold (KGC): 5.87% of portfolio (Only his equity book,ONLY)
Attached Chart 1_John Pulson, just for fun.
2. Credit market update (Numbers from DTCC report)
A. Shrinkage on the Notional amount of CDS.
According to DTCC, estimated notional amount of CDS outstanding at the end of 2007 was over 60 trillion USD, and this number has now gone to less than 30 trillion. In short, 2008 was characterized by a massive destruction of money, and this process will likely continue well into 2009 and 2010.
B. Shoot squeez on the sovereign front.
As pointed out before, it is not only the equity market which is experiencing a dramatic short squeeze liquidity driven rally, it is also the case in sovereign front. Since March, all those well shorted sovereign names are seeing a phenomenal like ECC and PIGS. Check out Chart 2_Sovereign CDS, which shows both current spread as well as the pre-squeeze level, and the notional amount outstanding respectively.
C. On the Corporate side.
A little bit surprisingly, there is not too much going on with the Corporate CDS side in April, despite of course a well tightening of Financial names. According to the latest DTCC data, there appears to be a net increase in the outstanding amount of CDS in many sectors like consumer service, again except for the Financial ones. Please check Chart 3_Corporate CDS for a sector break down.
3. Latest update New Mortgage Loan Reset / Recast Chart from CS. See Chart 4_Reset CS.
It shows resets increasing from here with peaks in 2010 and 2011/2012 in the range of $30 to $45 billion monthly. The chart also shows subprime resets are still going on, but decreasing in frequency over the rest of 2009. However, prime resets and resets on loans to people with decent credit scores but special circumstances (stated income) are heading straight up through early 2012.
4. Well, you know which and where the problem is, when you read stuff like that.
From the Federal Reserve: Federal Reserve announces that certain high-quality commercial mortgage-backed securities will become eligible collateral under the Term Asset-Backed Securities Loan Facility (TALF)
5. Tracking the discount window. Source: Northern Trust - Daily Global Commentary, May 18, 2009.
Not only the Libor and TED spread but also the amount of discount window borrowing, see Chart 5_DW. Great reflection done.
6. While David Rosenberg has left Bank of Amerill, he is still with us. Please see attached his latest report, if you care.
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