Posts Tagged ‘ financial crisis ’

Chinese Inflation Turning Down – More Confirmation on Inflection Point

November 9, 2011
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Chinese Inflation Turning Down – More Confirmation on Inflection Point

Overnight, China released inflation data for October, which came down as expected and declined meaningfully from the previous month. Chinese consumer inflation, which includes food and energy prices, rose 6.1% in September, and 5.5% in October. This data shouldn’t be a complete surprise because China is on a tightening campaign with higher interest rates, lower credit growth, and an exchange rate that has slowly appreciated this year. The actualization of lower Chinese inflation is  important because it provides the political cover for China to start easing monetary policy. In addition, many global commodities such as; copper, oil, cotton, wheat, corn, sugar, etc. have declined which will eventually help ease pressure on Chinese inflation. The Chinese Producer Price Index also declined meaningfully based on the same factors. PPI inflation fell...

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Market Confidence in Italy Hits New Lows – Berlusconi to Face New Rounds of Confidence Votes

November 7, 2011
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Market Confidence in Italy Hits New Lows – Berlusconi to Face New Rounds of Confidence Votes

Italian 10-YR bond yields hit 6.62% this morning, which marks a new high since concerns over the sustainability of European sovereign debt began to unfold. This wasn’t supposed to work this way after the Eurozone leaders announced a new structured investment vehicle to be put in place to leverage up the EFSF. It remains unclear who is going to fund the SIV which raises doubts around how much firepower the EFSF will really have and whether Italian interest rates can be maintained at sustainable levels? All of this uncertainty takes place while Italian bonds yields escalate towards unsustainable levels, government approval ratings hit new lows, Berlusconi’s trial for soliciting an underage prostitute moves forward, and the real economy in Italy remains under intense pressure. The above issues are scary...

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Magnifico! – Getting to Know Mario Draghi & Analysis of the ECB Monetary Policy Press Conference

November 4, 2011
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Magnifico! – Getting to Know Mario Draghi & Analysis of the ECB Monetary Policy Press Conference

The global equity markets have been held hostage by fears of a crisis since the summer. Taking another step back; crisis fears, macro, and policy responses have really been driving all financial markets since the summer of 2008. To be clear, the economy always has a meaningful impact on the investing environment, but the recent four years have been remarkable. Sound and prudent public policy has been of paramount importance, and a necessary condition, towards stabilizing the economic and business environment. The importance of the change at the helm of the ECB this week cannot be overstated. Now there are hardened and unrelenting cynics in the investment community, often quite vocal, who will say that nothing matters and the global financial system is inevitably doomed. Those who have read...

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When Will the Market Start to be Forward Looking – Early Signals from Asia?

November 2, 2011
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When Will the Market Start to be Forward Looking – Early Signals from Asia?

The markets have been through a period of wicked volatility with a significant pullback almost to the point of entering a new bear market. Intraday the S&P 500 was down 20% from its high but closed above those levels and went up from there. From the market’s closing bottom of 1,099 the S&P had a tremendous move higher up about 17% in 4-weeks. During this period, the market maintained an obsession with day-to-day and even hour-to-hour news. The situation becomes impossible for investors because the news flow is utterly unpredictable and investors can get whipsawed and hacked up quite easily. Often the market is described as a voting mechanism for 6-9 months out. Understanding that this is the normal state of things will be important at some point in...

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Europe’s Eleventh Hour Fix

October 27, 2011
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Europe’s Eleventh Hour Fix

After keeping the world on edge and pushing up against the brink of a European recession, details of the European fix are trickling out. It is sure to be a headline filled Thursday, Friday, and weekend. I won’t focus on the specific details because many of them still aren’t known and the ones that have been announced are likely to evolve regardless. Europe has recognized the enormity of its financial crisis. The European financial system couldn’t fund itself, sovereign interest rates started to spiral out of control, and the Euro experienced a rapid and unhealthy correction. It seems absurd to highlight that Europe recognized that this was collectively a very big problem but at times, even right up until the end, European leaders at any moment could seem either...

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