Another weekly update from Jacob H Schmidt, CEO, Schmidt Research Partners Ltd and FinTuition Hedge Fund course trainer.
The long awaited results from the 2011 European bank stress came out last week, but it took the market several days to digest and understand the results. Conclusion: tougher than last year, but not tough enough. The test did not even take a Greek default (now a reality!) into consideration. Hence the objective of calming the market was missed. My grade: C-.
Apple’s earnings were amazing, beating guidance and consensus by a large margin. They did it again, sold as many iPADs and iPhones as they could, for the stock to rally sharply. My grade: A
Hedge fund returns reported for June and YTD range from disappointing to interesting:
After Greece the markets can focus now on the US debt ceiling problem which is being dragged on. For US treasuries investors the US debt ceiling has a positive aspect (ironic) as a delay in the approval of a higher ceiling means less bonds will be available, and the problem is not one of solvency but a political / legal action to raise it. Incomprehensible how politicians mess around with US’s rating. My grade: C-
Limited upside in equities from here, with substantial downside if and when the market realizes that the Greece bail-out is full of hot air. In a low interest rate environment full of political risk safety is key (return of capital rather than return on capital).
Jacob H Schmidt, international financial markets expert, HF expert, Webster Finance Professor. Anglo- Austrian, multi-lingual,-cultural, critical thinker. CEO of Schmidt Research Partners Ltd, an investment advisory firm and MD of SFP-International Ltd, a consulting and training company. Available for high quality investment advisory, due diligence and consulting projects.