The Irish Independent reports that a controversial bottle manufacturing plant in the UK owned by Quinn Glass, which has been threatened with closure because it doesn't have proper planning permission, has received the thumbs-up from the local council's head of development management.
Cheshire West and Chester Council's strategic planning committee is meeting next week to consider the recommendation, and it is likely that the fresh application for the massive £260m (€295m) factory will be approved by the committee.
Its competitor, Ardagh Glass, controlled by Dubliner Paul Coulson, has been battling the local council in the UK courts in an effort to prevent it from granting retrospective planning permission to Quinn Glass, part of the empire of Fermanagh billionaire Sean Quinn. That legal attempt by Ardagh Glass was unsuccessful, but the judge who heard the case did instruct the council to issue an enforcement notice against Quinn Glass instructing it to cease production and demolish its factory.
However, implementation of that order was suspended pending an appeal by Quinn Glass. The UK's Secretary for Communities and Local Government can rescind the notice.
If the council's committee resolves next week to grant planning permission for the factory, the application will be referred to the regional government office.
The secretary of state may then call in the application for a determination, which would probably result in a public inquiry. Quinn Glass has said it is looking forward to next week's outcome.
A spokesman for Ardagh Glass said the company was not surprised at the recommendation to the strategic planning committee given the council's past behaviour in respect of planning for the site.
The Irish Independent also reports that embattled Dail chief John O'Donoghue has received almost €330,000 in allowances and expenses on top of his basic TD salary since his appointment as Ceann Comhairle, an Irish Independent investigation has found.
The under-fire Kerry South TD -- currently at the centre of a storm over revelations of lavish expenditure on travel and hotels while he was Arts, Sport and Tourism Minister -- has received a taxed ceann comhairle's allowance of €235,044 and untaxed allowances and expenses of €94,244 since becoming chairman of the Dail in 2007.
The taxed allowance is paid on top of Mr O'Donoghue's basic TD salary of €106,500, in recognition of the extra duties performed by the Ceann Comhairle and brings his total remuneration on par with that of a minister. That means he has earned nearly €543,000 in the two years since his appointment.
Details of the payments were contained in documents released under the Freedom of Information Act. They revealed the country's TDs have received an average of €110,500 -- or €55,250 a year -- in expenses and allowances on top of their salaries since the last general election.
That means €18.35m has been allocated to the country's 166 TDs on top of their basic wages in the two years since the May 2007 poll.
The bulk of the cash -- €16.37m -- was not subject to any tax and consisted of mainly unvouched allowances and expenses.
The remaining €1.97m was paid in the form of taxable allowances given to 86 TDs appointed to specific jobs, such as Ceann Comhairle, Leas-Cheann Comhairle, party whips and Oireachtas committee chairpersons.
The revelations will fuel debate over the Oireachtas expenses system, which does not require TDs to produce receipts for most of the expenditure they incur.
Documents obtained by the Irish Independent reveal that over the past two years:
- €7.6m was claimed by TDs for travel and subsistence costs.
- A further €1.5m was claimed by TDs for travel in their constituencies.
- €1.5m was claimed by TDs in miscellaneous expenses.
- €1.9m was paid out to TDs to cover telephone costs.
- A further €55,000 was allocated to TDs for the purchase of mobile phones and car kits.
- €440,000 in constituency office grants was allocated to TDs.
- A further €2.4m was allocated towards constituency office maintenance.
- Special secretarial allowances totalling €548,000 were also paid.
- TDs claimed €248,000 in Oireachtas committee travel expenses.
Many of the amounts previously claimed by TDs and senators have been significantly cut back in recent weeks as the Government's purse strings tighten.
Earlier this month, Finance Minister Brian Lenihan signed off on a 10pc reduction in various expense allowances. The cuts were first announced in April's crisis Budget.
The new regulations will see reductions in the amounts politicians can claim for miscellaneous expenses, travel within their constituencies, telephone costs and office accommodation allowances.
Penalties
An overnight allowance given to the country TDs to cover the cost of staying in Dublin while on Dail business has also been reduced by 10pc, while mileage rates were cut by a quarter.
However, politicians are bracing themselves for further changes to their expenses regime, with Mr Lenihan considering the introduction of penalties for those who don't attend in chambers.
Legislation which would allow for a single composite allowance for TDs and senators, known as a parliamentary standard allowance, has already been enacted, but has yet to be brought into force.
This would replace a host of existing separate expense allowances.
Ironically, this proposal was first made by the Houses of the Oireachtas Commission, which is chaired by Mr O'Donoghue.
Calls to Mr O'Donoghue's constituency spokesman for comment on the issue of allowances and expenses went unreturned over the weekend.
In a local radio interview earlier this year, Mr O'Donoghue said reducing TDs' salaries and expenses would result in poorer quality politicians. The Ceann Comhairle has refused to comment on the controversy over revelations about the size of his travel and hotel bills while he was Arts, Sports and Tourism Minister.
The former minister, his wife and his private secretary ran up a travel bill of over €126,000 in the space of just two years.
The expenditure included bills for €900-a-night hotels in Venice and €1,400-a-day chauffeur hire at the Cheltenham racing festival.
Mr O'Donoghue also spent €472 on a limousine to take him between terminals at Heathrow Airport -- a journey which would have taken just three minutes on the airport's free shuttle service.
The Irish Times reports that Fine Gael has strongly defended its opposition to the National Asset Management Agency (Nama) in the face of a warning from former taoiseach Garret FitzGerald about the dire implications of the Opposition defeating the legislation in the Dáil.
Dr FitzGerald, a former Fine Gael leader, said he was concerned that rejection by the Dáil of huge spending cuts and tax increases in the budget, as well as the Nama legislation, could leave the State vulnerable to intervention by the International Monetary Fund (IMF).
But yesterday Fine Gael said that neither the party nor its finance spokesman Richard Bruton shared Dr FitzGerald’s analysis.
The party spokesman said that as an “independent commentator” Dr FitzGerald was more than entitled to express his views, but they were not views shared by 46 other independent economists as published in last week’s Irish Times.
“Fine Gael has taken a very responsible approach. We supported the bank guarantee scheme. We highlighted problems with the Government backing Anglo Irish Bank. We also published our alternative banking solution in April this year.
“We do believe that there is a better alternative than Nama and Fine Gael’s good bank-bad bank is that alternative,” he said.
In his Irish Times column last weekend, Dr FitzGerald contended that the three-month period ahead was crucial and that failure to implement the two key measures would undermine the State’s capacity to “borrow the huge sums” necessary to recover from the crisis.
“The Opposition parties should be the first to recognise this. No worse fate could befall an Opposition than to precipitate themselves into government by defeating measures, the rejection of which could throw our State into the hands of the IMF,” he wrote.
He said he did not think it safe for there to be a change of government until the Nama legislation had been passed and the budget implemented. He also noted that Fine Gael had said it would vote against the Nama Bill and that Labour’s stance seemed recently to have hardened.
Minister for Finance Brian Lenihan is expected to intensify his attack on the Fine Gael proposal when he appears before the Oireachtas Committee on Finance this afternoon to discuss Nama.
However, the Fine Gael spokesman said that it was willing to defend a position that was always going to attract supporters and detractors. “If Fianna Fáil want a fight on Nama every day between now and Christmas we will do it. We are not persuaded on Nama. It’s the wrong approach in our opinion,” said the spokesman.
The key issue that is expected to dominate the committee’s proceedings today is the process to calculate the value of the bank’s assets and the percentage of discount, or “haircut”, that will be applied by the agency.
In addition to senior officials, the independent expert on property valuation hired by Nama, John Mulcahy of Jones Lang LaSalle, will attend.
Mr Lenihan said that the State was prepared to take a majority stake in one of the banks if necessary, but again emphasised his opposition to “pre-emptive nationalisation”.
In an interview with the Sunday Business Post, Mr Lenihan said that if the write-offs by the banks required a significant injection of capital from the State, then it was prepared to accept 50 per cent or more of the shares. But he he asserted that nationalising the banks would compromise the ability to find funding on international markets.
The Irish Times also reports that figures to be published next month by the Health Service Executive will show that the State last year paid out close to €500 million in fees, grants and pension contributions to GPs operating the general medical services scheme (GMS).
However, while this is an area which has been subject to controversial Government cutbacks, further measures are under consideration to reducing expenditure.
About 2,000 family doctors receive fees under the GMS, which mainly relate to the operation of the medical card scheme.
However, while some medical practices receive very large amounts under the scheme, others are paid tiny sums.
The fact that for the first time one general practice received more than €1 million in fees last year – coming as it does after revelations that one pharmacy received €1.6 million – is likely to attract some attention. But at the same time nearly 40 received less than €1,000 and two received less than €50.
The Irish Medical Organisation has argued that the fees set out in the official figures do not relate to the income of individual doctors.
The organisation maintains that practice expenses – which run to 30-40 per cent – have to be deducted and that in the case of the higher-earning practices, the money may have to be shared among a number of GPs. However, the Government and the HSE are likely to argue that the GMS – involving as it does hundreds of millions of euro in fees and allowances to doctors and pharmacists – cannot be immune from the current review of overall expenditure.
Indeed, the recent McCarthy report proposed significant reforms in this area.
Ironically, the HSE is expected to examine the current system for providing care to patients with medical cards later this week as it draws up plans for the Department of Health on how to deal with possible cuts of up to €800 million in its budget for next year.
The McCarthy report proposed that existing contracts with GPs be phased out and future arrangements be put out to tender. This issue has been under consideration by the HSE in recent weeks as part of its plan for dealing with the anticipated budget cuts next year.
However, doctors contend that there have already been significant cutbacks in the GMS and that this is likely to be reflected in the cost of the scheme in future years.
Chairman of the IMO’s general practitioner committee Dr Ronan Boland said fees paid to GPs for medical card patients over 70 were effectively cut in half, while a further 8 per cent was cut from all State fees for GPs in March
The Irish Examiner reports that the supermarket price war has heated up further with two of the biggest players pledging to cut more prices in a bid to win customers.
Tesco said it is cutting prices on Irish brands by 11%, while Superquinn also announced a new series of price reductions.
Just as Tesco finishes the roll-out of its multi-million euro Change for Good campaign, which saw it cut the prices of 12,500 items, it said it is slashing the prices of 100 Irish products, with some cuts up to 66%.
The brands include Denny’s, Irish Pride, Brennan’s, Glenisk, Charleville and Dairygold.
The largest price cuts are in the Irish yoghurt range with the prices of 40 products reducing by two thirds.
Tesco marketing director Kenny Jacobs said: "This is part of our ongoing campaign to help our customers spend less through long-term price cuts. These Irish favourites feature in a lot of baskets and trolleys every week so the majority of our customers will see a saving at the till. This also re-affirms our commitment to working with Irish suppliers."
Tesco came under fire earlier in the year as reports emerged that it was considering substituting Irish brands with products sourced in Britain.
However, it said each year it buys almost €2 billion worth of Irish food and drink products. Of this €655m is exported to Tesco stores worldwide, which it said makes Tesco a bigger export destination for Irish food than France, Germany or the US.
Meanwhile, Superquinn is the latest supermarket to shake up the price war pledging to cut thousands of prices on branded and own label items at its 23 stores.
Trading director for Superquinn, James Wilson said: "Shoppers are looking for ways to save money each week, so we are committed to lowering the price of the average weekly basket."
The Financial Times reports that Japan’s centre-left opposition Democratic party won a crushing victory over the long-ruling conservative Liberal Democrats on Sunday, redrawing the political landscape of the world’s second largest economy.
The result – the first time since the LDP’s founding in 1955 that any other party has won an electoral majority in the Diet’s lower house – gave the DPJ a mandate to pursue its campaign policies of taming the nation’s powerful bureaucrats and rolling out generous child allowances and welfare payments.
The DPJ will also take over the daunting task of reviving the economy which, as figures released on Monday showed, remains extremely fragile.
Japan’s Nikkei 225 stock average initially rose as much as 1.5 per cent to 10,767, its highest level in over 10 months, but the market gave up the early gains and slipped 0.4 per cent to 10,497.19 by 0218 GMT. The yen strengthened to 92.93 per dollar from 93.60 and climbed to 132.90 per euro from 133.85.
“The Japanese people have for the first time bravely selected a new government, and I would like to thank them for that,”said Yukio Hatoyama, DPJ president, and Japan’s prime minister presumptive.“We humbly accept their mandate.”
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According to the latest update on state broadcaster NHK’s website, the DPJ had won 308 seats in the lower house compared with the LDP’s 119. Before the poll the LDP had 302 seats to the DPJ’s 112.
“This election is not about a ruling party with an unpopular prime minister in a bad economy, this is about the end of the postwar party system in Japan,”said Gerald Curtis, professor at Columbia University in New York. “It’s the beginning of a different party system.”
While the DPJ fell short of a two-thirds super-majority in the Diet’s lower house, which would have allowed it to enact legislation without the approval of its coalition allies there, its victory was a vindication of its strategy of focusing its campaign on the simple theme of a “change of government”.
The result tore off one corner of the famous “iron triangle” established in the postwar era, which featured a close and co-operative three-way relationship between the LDP, the bureaucracy and Japanese business.
LDP timeline
November 15 1955The LDP is formed from a merger of the Liberal and Democratic parties, starting an uninterrupted 38-year reign as the majority party in the Diet.
October 1990The Nikkei closes at 20,222, a 48 per cent slide over nine months. Hyperinflated property prices follow suit and a banking crisis ensues.
August 9 1993The LDP, marred by scandal and economic declines, loses power for the first time.
June 1994The LDP returns to government in coalition.
September 2006Junichiro Koizumi steps down as prime minister after two terms. His two successors resign in quick succession.
September 2008Taro Aso becomes prime minister.
July 2009Mr Aso calls an election.
Click here for ful interactive timeline
For the LDP, this defeat was far more profound than its only previous fall from power, suffered in 1993 when it lost its lower house majority after senior members including some of the DPJ’s current leadership left the ruling party to create opposition groups.
The anti-LDP coalition government that resulted proved fractious and the LDP returned to power within 11 months. Analysts said Sunday’s result was likely to usher in a new political era featuring two dominant political parties competing for the favour of an impatient electorate wanting the government to revitalise the economy and tackle demographic challenges.
Taro Aso, defeated LDP president and prime minister, said he would step down as party leader after a poll that had“shown people’s disappointment”.
Other people were blunter. In remarks at LDP headquarters, where the mood grew ever more sombre as vote counting progressed, Yoshihide Suga, deputy-chairman of the LDP’s election strategy council, said the defeat suggested“the LDP has passed its use-by date”.
The DPJ’s manifesto promised better welfare and a shift away from support for big business and construction spending. It is unclear how far the incoming party can deliver in the face of budget constraints and bureaucratic resistance.
DPJ calls for a rethink of Japan’s half-century alliance with the US have raised concerns in Washington, but Mr Hatoyama has also stressed the need to win the trust of the US.
In a White House statement, Barack Obama, US president, said he looked forward to “working closely” with Tokyo following the DPJ’s victory in a “historic election”.
“We are confident that the strong US-Japan alliance and the close partnership between our two countries will continue to flourish under the leadership of the next government in Tokyo,” the White House said.
The FT also reports that Angela Merkel, German chancellor, suffered an electoral setback four weeks before the country’s general election as her Christian Democratic Union lost its absolute majority in two of the 16 states on Sunday. It appeared to have clawed back to power in a third.
Elections in the small western state of Saarland and in the eastern states of Saxony and Thuringia revealed an erosion of the CDU’s influence. But they also failed to deliver the good news its Social Democratic (SPD) rivals had hoped for.
The main winners were the smaller parties in Germany’s increasingly fragmented political landscape. The polls showed voters turning away from the CDU and SPD, which have ruled together in a grand federal coalition for four years and have held a dominant place in German political life since the second world war.
The two main parties saw their total vote share fall from 78.3 per cent to less than 60 per cent in Saarland and from 57.5 per cent to 50.9 per cent in Thuringia, say early estimates.
In the two eastern states, the SPD ended behind the radical Left party. In Saxony it also finished behind the pro-business Free Democratic party. The CDU and SPD lost votes at the lower-profile municipal elections in North Rhine-Westphalia, which were also taking place on Sunday.
The regional polls are a key milestone before the September 27 general election and are a bitter disappointment for the SPD. It had hoped to reverse weeks of falling national ratings by clinching the post of state premier in at least one of the states.
Like the national election of 2005, the polls in Saarland and Thuringia failed to deliver a clear centre-right or centre-left majority, leaving the option of a grand coalition or a three-way alliance between one large and two small parties.
In both states the outgoing CDU premiers face a painful choice between governing with their SPD opponents or putting their fate in the hands of the Green party, which was credited with 5.5 per cent in both cases, just above the threshold that guarantees entry to the state parliaments.
Saxony, ruled by a grand coalition under the CDU’s Ladislaw Tillich since 2004, provided the one bright spot for Ms Merkel. The state delivered a clear majority for CDU and FDP, the alliance the chancellor is running for at the national level.
The New York Times reports that nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again.
The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.
These early returns are by no means a full accounting of the huge financial rescue undertaken by the federal government last year to stabilize teetering banks and other companies.
The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.
But the mere hint of bailout profits for the nearly year-old Troubled Asset Relief Program has been received as a welcome surprise. It has also spurred hopes that the government could soon get out of the banking business.
“The taxpayers want their money back and they want the government out of our banking system,” Representative Jeb Hensarling, a Texas Republican and a member of the Congressional Oversight Panel examining the relief program, said in an interview.
Profits were hardly high on the list of government priorities last October, when a financial panic was in full swing and the Treasury Department started spending roughly $240 billion to buy preferred shares from hundreds of banks that were facing huge potential losses from troubled mortgages. Bank stocks began teetering after Lehman Brothers collapsed and the government rescued A.I.G., and fear gripped the financial industry around the world.
American taxpayers were told they would eventually make a modest return from these investments, including a 5 percent quarterly dividend on the banks’ preferred shares and warrants to buy stock in the banks at a set price over 10 years.
But critics at the time warned that taxpayers might not see any profits, and that it could take years for the banks to repay the loans.
As Congress debated the bailout bill last September that would authorize the Treasury Department to spend up to $700 billion to stem the financial crisis, Representative Mac Thornberry, Republican of Texas, said: “Seven hundred billion dollars of taxpayer money should not be used as a hopeful experiment.”
So far, that experiment is more than paying off. The government has taken profits of about $1.4 billion on its investment in Goldman Sachs, $1.3 billion on Morgan Stanley and $414 million on American Express. The five other banks that repaid the government — Northern Trust, Bank of New York Mellon, State Street, U.S. Bancorp and BB&T — each brought in $100 million to $334 million in profit.
The figure does not include the roughly $35 million the government has earned from 14 smaller banks that have paid back their loans. The government bought shares in these and many other financial companies last fall, when sinking confidence among investors pushed down many bank stocks to just a few dollars a share. As the banks strengthened and became profitable, the government authorized them to pay back the preferred stock, which had been paying quarterly dividends since October.
But the real profit came as banks were permitted to buy back the so-called warrants, whose low fixed price provided a windfall for the government as the shares of the companies soared.
Despite the early proceeds from the bailout program, a debate remains over whether the government could have done even better with its bank investments.
If private investors had taken a stake in the banks last October on par with the government’s, they would have had profits three times as large — about $12 billion, or 44 percent if tallied on an annual basis, according to Linus Wilson, a finance professor at the University of Louisiana at Lafayette, who analyzed the data for The Times.
Why the discrepancy? Finance experts say the government overpaid for the bank assets it bought, because its chief priority was to stabilize the teetering financial system, not to maximize profit.
“Had these banks tried to raise money any other way, they probably would have had to pay quite a bit more than the government received,” said Espen Robak, head of Pluris Valuation Advisors, which analyzes the value of large financial institutions.
A Congressional oversight panel concluded in February that the Treasury paid an average of 34 percent more than the estimated fair value of the assets it received.
Of course, many finance experts suggest that the comparison is academic at best, because there is no way to know what might have become of the banks or the financial system as a whole had the government not acted.
“Taxpayers should heave a sigh of relief that the investment in the banks protected them from even more catastrophic losses from more bank failures,” said Aswath Damodaran, a finance professor at the Stern School of Business at New York University.
A more direct comparison of profits can be made with the investment performance of other governments that poured money into ailing banks last fall.
The Swiss government, for example, said last week that it had pulled in a handsome profit for taxpayers on a $5.6 billion bailout it gave to UBS, the troubled Swiss bank, at the height of the financial crisis in October. The government netted $1 billion on its investment, a gain equal to a 32 percent annual return.
“They are substantially in the money,” Guy de Blonay, a fund manager at Henderson New Star in London, said after the announcement.
American taxpayers could still collect additional profits on their investments in two other big banks that have repaid their preferred stock but not their warrants: JPMorgan Chase and Capital One. They are expected to yield over $3.1 billion in gains for the Treasury in the next month or so, although the full tally will depend on how much they will pay to buy back their warrants.
And the government is owed about $6.2 billion in interest payments from banks that have not yet repaid their federal money.
But all the profits taxpayers have won could still be wiped out by two deeply troubled institutions. Both Citigroup and Bank of America are still holding mortgages and other loans that were once worth billions of dollars but whose revised values are uncertain. If they prove “toxic” because they cannot attract buyers, they could leave large holes in the banks’ balance sheets.
Neither bank is ready to repay its bailout money anytime soon, even though the banks’ stock prices have surged in the last month, leaving the government sitting on paper profits of about $18 billion between them.
The NYT also reports that it’s been a blockbuster summer for the bulls on Wall Street. Shares are up more than 15 percent since mid-July, investors are feeling optimistic, and once-idle money is pouring back into equities.
But as Wall Street heads into September, historically its worst-performing month, the party may be winding down.
Some of the analysts and investors who called a bottom in March, when the markets hit their worst levels in more than a decade, now say they are detecting a peak in share prices, and they warn that stocks could be headed for a sharp pullback.
Markets drifted over the last week as investors shrugged at more signs the economy was slowly turning around. Stock prices are not such bargains anymore. And corporate insiders, including executives and board members, are starting to sell, suggesting that some of the smarter money is heading for the door.
“The people who know are getting out early,” said Art Cashin, the director of floor operations at UBS, who said his “gut feeling” about the markets prompted him to sell some stocks last week. “This rally’s a little long in the tooth.”
On Friday, the research firm TrimTabs reported that insider selling had grown to $6.1 billion in the month of August through last Thursday, its highest levels since May 2008 — when the Dow Jones industrial average was floating above 12,000, compared with just over 9,500 at Friday’s close.
The ratio of insider selling to insider buying also soared in August, to about 30 to one, its highest levels since the firm started keeping numbers in 2004.
“You have a classic case of greed stampeding investors into believing that nirvana is at hand,” said Charles Biderman, chief executive of TrimTabs. “We just don’t see how the market’s going to last.”
Of course, insiders are not always right. Many of the country’s smartest investors got clobbered during the downturn last year, and analysts say it is normal for investors to cash in some gains.
And betting against Wall Street’s momentum has not been a smart move lately. The Dow and the Standard & Poor’s 500-stock index closed on Friday near their highest levels of the year. The Dow is up 45 percent from its March lows, and the S.& P. 500 is more than 50 percent higher.
Analysts say that financial stocks are looking even frothier as trading in a handful of big banks has come to dominate the action on Wall Street. The KBW Bank Index, which tracks two dozen national and regional lenders, has surged more than 150 percent since early March.
Shares of the troubled insurance giant American International Group have quadrupled. And Citigroup, Bank of America and Wells Fargo, while still down sharply from their record highs, have been some of the rally’s biggest winners.
For months, the cautious and pessimistic voices on Wall Street kept saying the rally would end as investors realized the extent of problems facing the economy — that the financial system was still on life support, companies were struggling to generate new revenue, and nearly 15 million people in the United States were unemployed. But the markets defied their warnings and chugged higher.
The investors now waiting for Wall Street to lose its footing see a big “sell!” sign flashing in the confidence that has accompanied the gains.
Just before stocks turned around in early March, only 2 percent of investors were optimistic, according to the Daily Sentiment Index, which measures the mood of small traders and is run by Jake Bernstein, an independent market analyst. Now, the index shows that about 89 percent are feeling bullish. Investors were equally cheery when the Dow hit its record high in October 2007.
Robert Prechter, president of Elliott Wave International, a technical analysis firm in Gainesville, Ga., cut his negative outlook on stocks in late February. “Now,” he wrote in an e-mail message, “we are firmly back on the bear side.” Investors might be embracing greed once again, but Mr. Prechter said he doubted the stock indexes could replicate the remarkable gains of the past five months.
Others see signs of trouble in volatile market swings in China, in the American commercial real estate sector, or in just the sheer amount of time that has passed without a major drop in stocks.
“I think everyone’s pretty bearish,”said Thomas J. Lee, the chief United States equity strategist at JPMorgan Chase. “People I talk to think there’s a 10 percent correction coming.”
Jeremy Grantham, chairman of the investment firm GMO, was another investor who began encouraging others to buy during Wall Street’s darkest days. But when the S.& P. 500 rose above 1,000 this summer, his firm started taking money off the table.
“We said that’s enough above fair value that you want to do something,” said Ben Inker, GMO’s director of asset allocation. “And we made a move.”
So far, it is just a small one. The firm cut its equity holdings by about two percentage points, to 63 percent, which is still up substantially from last year, and it is focusing on “big stable blue chips.”
The hedge fund manager Doug Kass, who declared in March that stocks had skidded to a “generational bottom,” said last week the rally had run its course.
Like other investors who expect the markets to falter, Mr. Kass said he believed the economy was not heading toward a quick or easy recovery. Companies have made themselves look profitable by slashing costs, but he said they are not going to rake in more money in the months ahead as long as weakened consumers stay in hiding.
“I think we’ve seen the high for the year,”he said. “There’s a time to hold ’em and a time to fold ’em. And I think we’re at that point.”
