Thursday, 30 December 2010
Friday, 24 December 2010
Monday, 20 December 2010
Saturday, 18 December 2010
Monday, 13 December 2010
Thursday, 2 December 2010
Tuesday, 30 November 2010
Monday, 22 November 2010
Friday, 19 November 2010
Wednesday, 17 November 2010
Tuesday, 9 November 2010
Monday, 8 November 2010
How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Friday, 5 November 2010
Wednesday, 3 November 2010
Monday, 1 November 2010
Friday, 29 October 2010
Thursday, 28 October 2010
Saturday, 23 October 2010
Friday, 22 October 2010
Thursday, 21 October 2010
Monday, 18 October 2010
Thursday, 14 October 2010
Monday, 11 October 2010
Friday, 8 October 2010
“There is clearly the idea beginning to circulate that currencies can be used as a policy weapon,” Mr Strauss-Kahn told the Financial Times on Monday.“Translated into action, such an idea would represent a very serious risk to the global recovery . . . Any such approach would have a negative and very damaging longer-run impact.”
Government bonds, stocks and gold prices all rose on the expectation that central banks of the world’s biggest economies would embark on a round of quantitative easing.
Monday, 4 October 2010
Thursday, 30 September 2010
Tuesday, 28 September 2010
Thursday, 23 September 2010
The concern of the Bogan report, as well as other market participants I’ve been talking to, is that the complexity of exchange-traded funds and their increased use as trading vehicles by hedge funds can be quietly but quickly creating serious market risk.
Greenberg: Can an ETF Collapse? - CNBC
Tuesday, 21 September 2010
Monday, 20 September 2010
● Political risks have been exaggerated - The stereotype of an African country ruled by one-party or military dictators is outdated and exaggerated. More than 90% of African nations now have functioning democracies.
● Strong economic and market growth - Nine of the 15 countries with the highest 5 year growth rate are in Africa and the continent is urbanizing at a faster rate than India and is already as nearly urbanized as China.
● Increased global demand for commodities - Africa holds an estimated 30% of the world’s mineral reserves. A supply that simply cannot be ignored. As BRIC countries industrialize, their demand for natural resources will keep increasing and they are turning to Africa as a source of scarce natural resources - especially energy and industrial metals. If you believe in the commodity growth story over the next five (5) years, Africa will be a prime beneficiary of that growth.
● The China Factor- China has increased its trade with Africa from $10 billion to $90 billion over the past decade. China is committed to investing its growing reserves into real assets around the globe and specifically commodities to secure its future economic growth. Africa as the mineral reserves and should benefit.
Sunday, 19 September 2010
Friday, 17 September 2010
Wednesday, 15 September 2010
Monday, 13 September 2010
Thursday, 9 September 2010
Wednesday, 8 September 2010
Tuesday, 7 September 2010
Monday, 6 September 2010
Wednesday, 1 September 2010
But we think the converse is more likely: the weak stock market is causing the economy to weaken. It is not a surprise that the recent US consumer confidence numbers were so poor; with the stock market having fallen so sharply since late April, they could hardly be otherwise.
It’s a truism in capital markets that the best investments are those that have previously done worst, where expectations are low, demand is down, and prospects appear at best highly uncertain. In 1980, bonds had been through a 30-year bear market relative to stocks, inflation was soaring, yields were at historic highs, yet expected to go higher, and a long bull market in bonds was at hand.
All the tailwinds of H1 will become headwinds in H2. As state and local governments keep retrenching and even the federal stimulus diminishes, the fiscal stimulus will turn into a fiscal drag that will be much more pronounced in 2011 and after some of the 2001-03 tax cuts expire. The base effects from the lousy economic activity figures of 2009 are gone, temporary census hiring is finished and tax incentives—cash for clunkers, the investment tax credit, the first-time homebuyer tax credit and cash for green appliances—have all expired after “stealing” demand and growth from the future.
The truth is that we have not had much of a recovery in the first place, which might prevent the economy from falling enough to display what many would label a double dip—although we are now assigning a 40% probability to such an outcome.
Tuesday, 31 August 2010
Friday, 27 August 2010
Wednesday, 25 August 2010
Monday, 23 August 2010
Wednesday, 18 August 2010
Mutual fund advertisements are far too effective. Fund companies often promote actively managed funds that have generated high returns, and investors flock to such funds. Unfortunately for these investors, there is little relationship between high past returns and high future returns.
Why doesn't strong past performance continue? The primary reason is that luck is a major factor in fund returns, and luck generally does not persist. Investors tend to overlook the role of luck in fund returns. There are thousands of actively managed equity funds, so even if all fund managers were randomly picking their portfolios by throwing darts at a stock page, a large number of funds would still soundly beat market averages.
In a new study finance professors Eugene Fama of the University of Chicago Booth School of Business and Kenneth French at Dartmouth's Tuck School of Business quantify the role of luck in fund returns. They find that the strong returns of actively managed funds are almost always due to luck, not the stock-picking skill of fund managers. The study will be published in the Journal of Finance.
Monday, 16 August 2010
Tuesday, 10 August 2010
Monday, 2 August 2010
Thursday, 29 July 2010
Monday, 26 July 2010
Thursday, 22 July 2010
Wednesday, 21 July 2010
Monday, 19 July 2010
Wednesday, 14 July 2010
Tuesday, 13 July 2010
Monday, 5 July 2010
Friday, 2 July 2010
Thursday, 24 June 2010
Wednesday, 23 June 2010
Friday, 18 June 2010
Tuesday, 15 June 2010
Monday, 14 June 2010
“The euro became a strong currency with very small interest rate spreads [on government bonds]. It was like some kind of sleeping pill, some kind of drug. We weren’t aware of the underlying problems.”
Mr Van Rompuy acknowledged that the markets had played a useful role since the Greek debt crisis erupted last October in identifying weaknesses in eurozone economic governance. But he fully supported tougher financial market regulation, especially for credit rating agencies and derivatives markets – measures EU authorities are drawing up.
“Most of us are not happy with excessive market developments. But when you look at this in a broader perspective, the markets are sanctioning bad policies, sometimes excessively, disproportionately and based on rumours and prejudices.”
Europe’s biggest challenge was to introduce reforms required to double the EU’s economic growth rate and safeguard its unique blend of vigorous capitalism and a generous welfare state. “The toughest thing now is reforms in the budgetary field and the economy – competitiveness, labour market reforms, the retirement age,” he said.
Saturday, 12 June 2010
Friday, 11 June 2010
Wednesday, 9 June 2010
Tuesday, 8 June 2010
Tuesday, 1 June 2010
To what purpose?
They are all desperately trying to buy time in the absence of the one thing really needed to keep the debt dragon contained and successfully address the centrifugal forces tearing the Euro apart.
That something is the absence of growth. Old Europe (recalling Donald Rumsfeld) remains woefully ex-growth.
Bits here and there impress (the German export engine, north Italian creativity and fashion, Dutch trade).
But much more of Europe is without it. The Italian south sponging on its north. The endemic Spanish unemployment. And now we discover Greece and Portugal and their problems. Italy and Portugal in recent years have barely averaged 1% growth.
All these countries have rigid labour markets, high structural unemployment, inefficient bureaucracies, too many monopolies. Overdue supplyside reform is needed, indeed revolutionary stuff.
But this is not limited to the distressed countries. Germany also needs supplyside reform in order to generate more domestic growth than its export engine can generate.
Europe needs to grow, growing its tax revenue base, outdistancing its debt, making debt loads sustainable.
As the German Minister of Finance noted, you want Germany to grow more, but you don�t want him solely doing the pushing by increasing government spending or widening the fiscal deficit.
Instead, more long-term German unemployed need to be productively re-absorbed (thereby also assisting fiscal contraction through reduced welfare payments).
In the case of the distressed Club Med, these countries should function well even if the government bureaucracies were HALVED in size. Not that this is going to happen to quite this extreme degree, but it indicates the extent of available scope. In addition, their already far too many long-term unemployed need to be reabsorbed.
That means far more flexible labour markets, easier exits and entries and lower wage rates WITHOUT welfare incentives to stay on the sidelines longer than needed.
The present European welfare state is dying, its luxuries unable to be maintained at such low growth rates if it means steadily higher debt burdens.
So the spectacle of macro policy bending over backwards to ease market liquidity and prevent debt default is merely an attempt to create space time in which Europe will need to do something far more fundamental.
Europe needs to change its operating style, become again hungry for growth and less lifestyle preoccupied while encouraging rather than preventing competition (between vested interests and labour elites) or condoning large swaths of non-productive bureaucracy.
This sounds easy, right?
But even a casual stroll through the enchanting Club Med countries AND the richer parts of Europe tells you it won�t be. Indeed, some think it outright impossible, perverse even. If it was that easy, it would have been tried long ago. But they didn�t, for a reason.
Modern Greece is really an ex-Balkan state with its Ottoman feudal foundations rehashed into a local client state run by a small elite and greased by corruption in which private initiative cannot flourish.
The other country cultures similarly suffer from age-old afflictions which aren�t easy to jettison in favour of what a modern market economy requires.
The resulting debate falls into two distinct parts.
Namely those who feel different spirits don�t belong together and should split. And those who feel they do belong together for the simple reason of occupying the same space (home), but requiring offers from the weak as much as the strong to be workable.
On a ten year view, the true European revolution won�t be fiscal cleanup as budget deficits are shrunk and spiraling debts are arrested, or even the audacious manner in which the ECB of late is imitating the Anglo-Saxon central banks in preventing country defaults from gumming up the region and risking costly splits.
Instead, the real challenge is structural, aiming to restart economic growth akin to Europe�s post-war reconstruction. Annual growth of 1% in parts and near 2% overall isn�t enough. As the US has shown, GDP growth of 3% or better is what is needed, also bearing in mind the aging challenge.
The creative destruction of war and its aftermath can unleash such rejuvenation. Can the threat of financial unraveling?
Or are there easier outcomes, such as falling back on national currencies, taking the easy route, simply devaluing the currency often, even if this comes at the expense of a greater growth dynamic remaining out of reach (crises again becoming the regular stuff of life)?
There is a lot of fear driving Europe, about past disasters, future competition, how to pay for ageing and not wanting to lose the welfare advantages achieved.
But are these, and the fear of total financial loss, enough to transform European supplysides, overcoming inertia and ideological opposition (ideas), never mind vested interests richly served by the sclerotic present?
We are about to find out these next few years. Expect lots of water in the wine, but also genuine effort. The trick is not to confuse the two.
Monday, 31 May 2010
Friday, 28 May 2010
Wednesday, 26 May 2010
Monday, 24 May 2010
Friday, 21 May 2010
Wednesday, 19 May 2010
The U.S. posted its largest April budget deficit on record as the excess of spending over revenue rose to $82.7 billion. The federal debt is currently projected to reach 90 percent of the economy by 2020.
“Even today there is a risk of a breakup of the monetary union, the euro zone as well,” Roubini said. “A double dip recession in the euro zone” is “something that’s not unlikely, given what’s happening.”
Monday, 17 May 2010
Friday, 7 May 2010
A four per cent drop in Chinese stocks started the downbeat mood, but Wall Street added an exclamation point. Later in the afternoon, the S&P 500 index took its biggest plunge since December 2008, erasing its 2010 gains in a matter of moments. It was down at one point 8.6 per cent, to 1,065.93.
The VIX index of market volatility spiked nearly 40 per cent to 40.71, to highest level in a year – and its sharpest one-day jump since February 2007.
In spite of fear emanating from sovereign risk, the beneficiary of the anxiety was the world’s deepest haven market, the 10-year US Treasury. The benchmark fell 15 basis point to 3.38 per cent, having earlier tumbled 28bp. 30-year Treasuries at one point tumbled 30bp lower, to 4.06 per cent, their lowest level since March 2009.
Wednesday, 5 May 2010
Wednesday, 28 April 2010
Banks are shorting the euro, along with German and French government bonds, as a hedge against an escalation of the Greek debt crisis. Their fear is that a Greek restructuring is inevitable and will scare investors away from other vulnerable members of the eurozone. One obvious consequence would be a weakening of the single currency, but banks have entertained a variety of other, wilder scenarios as they seek to immunise their books against a possible Europe-wide crisis.
Or something even nastier. Some analysts have suggested that if the capital markets close to other eurozone countries, forcing them to go cap-in-hand to the EU, it could test the commitment of countries like Germany to economic union - richer nations could choose to go it alone, or they might just boot out the weaker countries. The consequences for European assets would be enormous.
"Germany pulling out of the eurozone would be great for Germany and terrible for everybody else," says one European bank's market risk head. "But it doesn't have to be that. You can imagine some statement from the EU saying the enlargement project is on hold, so the Czech Republic, Poland, and Hungary get caned. You really have to look at anything related to the EU including potential break-up. There's a pretty much unlimited set of scenarios."
Monday, 19 April 2010
The ECB argues that the 16-country eurozone had “remained very close to external balance”, even though the large trade surplus of Germany, its largest member, is seen by many economists as restricting growth prospects elsewhere in the region.
Since the outbreak of the crisis, the imbalances have narrowed. However, the report argues that such trends are likely to be temporary. Cyclical factors that led to a narrowing, such as lower oil and commodity prices, have gone into reverse. At the same time, structural factors that contributed to the build-up in imbalances remain – including the lack of a social “safety net” in emerging Asian economies, which has encouraged domestic saving, and the desire of countries to build up reserves as insurance against future crises. Moreover, differences in growth rates have widened, with export-led emerging economies becoming an increasing source of global growth, the ECB adds.
Friday, 16 April 2010
Thursday, 15 April 2010
House prices increased by 11.7% over the past 12 months - the fastest rate since the figures were first published five years ago and prompting new concerns about a potential bubble in the property market.
Despite rising fears of overheating, consumer price inflation dipped to 2.4 per cent last month, from 2.7 per cent in February. However, factory-gate inflation continued to accelerate, increasing from 5.4 per cent to 5.9 per cent in March.
Tuesday, 13 April 2010
Mr Greenspan said it was likely that Congress would have blocked any attempt by the Fed to rein in the subprime mortgage industry, since it was bolstering home ownership across the country. He said lawmakers were now suffering from “amnesia” about their stance on the issue.
In his opening statement, Mr Greenspan said there was no evidence that Fed monetary policy during his tenure contributed to the housing bubble. He argued that it was low long-term interest rates, not the short-term rates that the central bank controls directly, that nourished the proliferation of subprime mortgages. “The house-price bubble, the most prominent global bubble in generations, was caused by lower interest rates but . . . it was long-term mortgage rates that galvanized prices, not the overnight rates of central banks, as has become the seeming conventional wisdom,” Mr Greenspan said.