Investment/Trends

You Don’t Need a Weatherman to Know Which Way the Wind Blows

"There appears to be a tendency for market observers to follow the same news stories. The result of this phenomenon is that entire sectors are ignored or understudied for long periods of time. When the attention shifts, large swings can occur as the mob draws similar conclusions and takes action. Here are two phrases to wrap up the point: The first is: 'Liquidity only matters when it’s the only thing that matters.' This is a comment from the 2007-08 crisis, when otherwise functioning firms disappeared overnight because funding became impossible to find. Think Bear Stearns or Lehman Bros. The second is: 'Borrowing is cheap until it isn’t.'" Continue reading →

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Obama’s Next Big Blunder

"Many believe Janet Yellen, the Fed’s current vice chairman, is the best option because she’s been involved in all major recent monetary policies. But I won’t be taken aback if Obama picks Summers. He’s perfectly qualified for the job. If you have a terrible track record of predicting the economy and like to favor big banks at the expense of everyone else, then you’ve got a good shot at becoming the Fed chief. Because that’s precisely what the Fed does. It punishes savers and helps make bankers rich. And it fails to predict all major economic developments. That’s why Obama is considering Summers." Continue reading →

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Bill Bonner: Price does not tell you all you need to know

"Economists measure quantity. Alas, life is not all quantifiable. What really matters is quality. Right now, the Fed tries to control prices. But prices are only a part of the picture. When it comes to art, architecture, music, puppies and women - it's what strikes the senses that matters...what you see, hear, and feel. But when it comes to your money, what you see is not exactly what you get. Price tells you something. But it doesn't tell you all you need to know. Why? We're so glad you asked..." Continue reading →

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Deutsche Bank to Cut Assets $332 Billion as Profit Slides

"Deutsche Bank AG (DBK), continental Europe’s biggest bank, said it will shrink its balance sheet by 250 billion euros ($332 billion), joining Barclays Plc (BARC) and UBS AG (UBSN) in seeking to comply with stricter capital rules. Deutsche Bank will reduce leverage by changing the way it accounts for derivatives and by winding down a 73 billion-euro portfolio of assets. Co-Chief Executive Officer Anshu Jain has been offloading riskier assets, firing staff and raising capital by selling shares as lingering doubts about the ability of Europe’s banks to withstand another financial crisis prompted regulators and shareholders to demand stronger finances." Continue reading →

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6% Treasury yields? May come sooner than you think

"The Federal Reserve will lose control of interest rates as the "great rotation" out of bonds into equities takes off in full force, according to one market watcher, who sees U.S. 10-year Treasury yields hitting 5-6 percent in the next 18-24 months. 'It is our opinion that interest rates have begun their assent, that the Fed will eventually lose control of interest rates. The yield curve will first steepen and then will shift, moving rates significantly higher,' said Mike Crofton, President and CEO, Philadelphia Trust Company told CNBC on Wednesday. Under this scenario, he sees the yield on the 10-year rising to 3.5-4 percent in a 'very short period of time.'" Continue reading →

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The “I Thought Bonds Were Safe” Fallacy…

"Now remember, Bernanke didn’t change rates, he just implied that rates may increase in the future. The market, however, took that rhetoric and ran. Accordingly, the bond market fell. For instance, from its high around May 1st the 30-year treasury market has fallen some 9%. Nine….freaking….percent. That’s a huge move for a seemingly steady and professional market like bonds. It’s also a devastating move to risk-averse bond investors (like my dad.) All said, safety seekers got burned. And you can thank the 'Ber-nank.'" Continue reading →

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5,000 Chinese factory workers strike over Indian takeover of American firm

"Cooper Tire and Rubber announced last month that it would be taken over by Apollo Tyres of India, making the combined group the seventh-largest such firm in the world. But thousands of staff at Cooper Chengshan, a joint venture in the eastern Chinese province of Shandong, have walked out in protest, the Xinhua news agency said late Tuesday. It is the latest incident to hit a foreign joint venture after Chinese workers held an American factory executive hostage for nearly a week in late June over a plan by his US-based medical supply company to lay off 30 workers." Continue reading →

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China “offers sturdy floor” in gold: UBS

"In China – now the world's second-largest economy, and likely to overtake India as world No.1 gold consumer in 2013 – private household demand for gold bullion 'does hold the promise of a sturdy price floor' says a note from fellow Swiss investment bank and London market-maker UBS. Moreover, 'In China banks are setting up and/or growing gold accumulation plans offered to the public. Better and easier access to gold via banks' growing networks combined with strong appetite from retail customers have driven the tremendous appetite from China this year.'" Continue reading →

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Art Basel takes art world by storm

"With private jets filling the air and lines of luxury limousines on the ready, deep-pocketed collectors from around the world have flocked to Switzerland this week for Art Basel, the biggest contemporary art fair on the planet. An estimated 110 private jets landed and took off from the Basel-Mulhouse airport, after 83 flew through there on Tuesday despite a strike that reduced the airport’s capacity and forced some wealthy patrons of the arts to change their travel plans. The art world appears to have bucked the global economic crisis, with income from global auction sales more than doubling since it hit bottom in 2009, passing eight billion euros last year." Continue reading →

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(Sm)art Investing: Rich Move Assets from Banks to Warehouses

"Not everything the banks are losing is actually leaving Switzerland. Partly as a result of the many uncertainties in the financial markets, a growing share of the money is being invested in tangible assets, such as art, wine and classic cars. A total of $4 trillion has reportedly been invested in 'treasure assets.' This requires warehouse space that satisfies the most stringent security requirements. Swiss military bunkers blasted deep into Alpine rock are in great demand. But the free ports in Geneva and Zurich are even more popular because they offer what Swiss banks used to: the freedoms of a tax haven and maximum discretion." Continue reading →

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