Investment/Trends

Michigan’s 4.375% Yield on School Notes Shows Detroit Stigma

"Michigan’s Finance Authority is offering an interest rate almost 14 times higher than that on top-rated bonds to sell $92 million of one-year notes for Detroit’s public schools. Today’s deal is the first tied to the Motor City since it sought bankruptcy protection July 18. The bonds are backed by state aid payments. The securities maturing in August 2014 are being offered with a preliminary yield of 4.375 percent, down from 4.5 percent earlier in the sale, according to three people familiar with the deal who requested anonymity because the pricing wasn’t final. That compares with a 0.32 percent interest rate on benchmark AAA munis due in one year." Continue reading →

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Export stats confirm massive outflow of Western gold to Asia, maybe ETF gold

"The London Bullion Market Association said that the daily cleared trading volume on the London market by its members hit a 12-year high of 900 tonnes -- worth $39 billion -- in June on the back of 'strong physical demand particularly from China and India.' At the same time Swiss gold refiners, such as Metalor, Pamp, Valcambi, and Argor-Heraeus, have enjoyed a boom, melting down large 400-ounce bars from London vaults and reprocessing them into smaller products that are preferred by Asian buyers. 'The Swiss are running three or four shifts to keep the refineries going non-stop. They're throwing bodies at it,' said one senior gold trader." Continue reading →

Continue ReadingExport stats confirm massive outflow of Western gold to Asia, maybe ETF gold

Marc Faber: I would own physical gold

"Faber noted weakness in such sectors as home builders, retailers, airlines and food companies. That made the precious metal a strong play, he added. 'First of all, I have a preference for physical gold, held in a safe deposit box outside the United States, and preferably in Asia, for a variety of reasons,' he said. Faber chided gold bears for missing the precious metal's 1999-to-2011 bull run. Faber also said that he had recently bought stock in Newport Mining, Freeport-McMoRan and Barrick. As a member of their boards, Faber also owned equity in Ivanplats, NovaGold and Turquoise Hill, he added." Continue reading →

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India’s war on gold fails to protect the rupee, which keeps plunging

"The fresh currency falls also increased pressure on the debt markets. Yields on India's 10-year debt spiked above 9 per cent for the first time since late 2011, while Jakarta's cost of borrowing jumped 18 basis points to the highest level since March 2011. Over the weekend a range of senior figures including Prime Minister Manmohan Singh tried to calm investor fears that the country's mixture of weakening growth and an unsustainable current account gap was pushing India’s economy towards a crisis point. Notably, officials ruled out capital controls on foreign investors." Continue reading →

Continue ReadingIndia’s war on gold fails to protect the rupee, which keeps plunging

Fear of Fed Retreat Roils India

"After a growth spurt from 2006 to 2011, the country lapsed back into a plodding pace as economic reforms lost steam. India's government, in an effort to narrow the current-account gap, has tried to curb gold imports and announced a plan to buy more of the country's oil from Iran through what is effectively a barter mechanism. On Wednesday, the country reduced the amount of money residents and companies can send abroad, sparking fears of more-draconian measures. The government says these moves aren't a prelude to capital controls and that it doesn't plan to impose restrictions on companies repatriating profits." Continue reading →

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A Summer of Troubles Saps India’s Sense of Confidence

"The Indian government recently loosened restrictions on direct foreign investment, expecting a number of major retailers like Walmart and other companies to come rushing in. The companies have instead stayed away, worried not only by the government’s constant policy changes but also by the widespread and endemic corruption in Indian society. Wednesday night, the government announced measures to restrict the amounts that individuals and local companies could invest overseas without seeking approval. It was an astonishing move in a country where a growing number of companies have global operations and ambitions." Continue reading →

Continue ReadingA Summer of Troubles Saps India’s Sense of Confidence

India to launch Save Gold Campaign to convince consumers to deposit gold

"India's bullion industry is set to revive its gold deposit scheme in a bid to mobilise gold coins and bars lying idle. The Save Gold Campaign (Swarna Bachao Abhiyan) is hoped will mop up some of the gold currently lying fallow with individuals, banks, high networth individuals, charitable trusts and even temple trusts, that is estimated to be as much as 25,000 tonnes. The consumer would take sealed gold and authenticity certificate to the bank, which would issue a deposit certificate for a valid period, ranging from one and a half to three years. After the said period, the depositor would get the gold back with interest as promised by the bank." Continue reading →

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George Soros Takes a Giant Put Position Against the S&P 500

"Hedge fund titan George Soros' biggest position is a huge bearish bet that the Standard & Poor's 500 will go down, MarketWatch reported. Soros has a history of rolling the dice on risky propositions in the past and making giant gains. He is known as 'The Man Who Broke the Bank of England' because of his successful bet against the British pound that led to $1 billion in profits during the 1992 Black Wednesday U.K. currency crisis. Soros Fund Management reported it bought a put on 1,248,643 units of the SPDR S&P 500 Trust (SPY) exchange-traded fund (ETF) in the second quarter – its largest holding, according to MarketWatch." Continue reading →

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Repo Market Decline Raises Alarm as New Regulations Strain Debt

"The U.S. repurchase, or repo, market where banks and investors borrow and lend Treasuries and other fixed-income securities shrunk to $4.6 trillion daily outstanding last month, down 35 percent from 2008. Financial institutions are responding to more stringent capital standards imposed by regulators around the world. Already, the group of dealers and investors that advise the U.S. Treasury say that they see declines in liquidity in times of market stress, including wider gaps between bid and offer prices and the speed of completing trades. The potential consequences are higher borrowing costs for governments, companies and consumers." Continue reading →

Continue ReadingRepo Market Decline Raises Alarm as New Regulations Strain Debt