Posts Tagged ‘ investing ’

Spain & Germany – In Sickness and in Health

January 4, 2012
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Spain & Germany – In Sickness and in Health

The plan forward with the Eurozone crisis is the German plan forward. Germany proposed closer fiscal union and increased austerity for EU-17 nations with high deficits and/or high debt burdens. This path suits German interests well because there is little that needs to be changed. Unfortunately from Spain’s standpoint, the German path forward is not what Spain needs. This dynamic is highlighted with yesterday’s unemployment releases. Spain hit a 22.8% unemployment rate, which is an all-time high, while Germany released a 6.8% unemployment rate, which represents a new low since German reunification. It is clear that Spain needs dramatically lower interest rates relative to appropriate monetary policy set rates for Germany. It is also clear that Spain needs a drastically lower currency value relative to the currency value which...

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Investing Ahead of a European Recession

December 14, 2011
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Investing Ahead of a European Recession

Investing ahead of a recession is like a trip to the dentist for a filling when the Novocain isn’t quite right. You know you are in for some pain, but it’s unclear just how much, and how long it will last. Europe is accepting the German path forward, which will at a minimum, lead to plenty of pain for many countries. Spain, Portugal, Greece, Belgium, Italy, and France are all experiencing, or likely to experience, a recession. Forward looking indicators are declining, confidence is dashed, austerity being implemented, European financial assets down sharply, and interest rates higher. The ECB is taking a minimalist approach to fighting the recession and the 17 countries in the Eurozone have different agendas, interests, and policy aims. In the background of the economic recession, there...

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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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Obama’s American Jobs Act Speech – Implications for Markets

September 8, 2011
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Obama’s American Jobs Act Speech – Implications for Markets

The S&P 500 futures were about unchanged heading into his speech and at last glance they were down 3 points – but this may be due to the 9/11 anniversary terror threat announcement more so than anything said in the speech. I come away moderately encouraged by Obama’s speech tonight. He stated at the outset that our economic recovery won’t be led by the government but by businesses – which is refreshing. I felt the tone was still somewhat abrasive but the fact that the size of the Jobs Act is larger than expected ($447B) may be a slight positive. I think the gist of the plan makes sense. While you are trying to emerge from recession you spend in order to stimulate. So long as the spending is...

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Investing In Europe – Now the Risk/Reward Is Attractive

September 7, 2011
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Investing In Europe – Now the Risk/Reward Is Attractive

Yesterday, I reviewed the reasons why the Eurozone as a monetary union is a flawed construct and why the implications for a breakup are disastrous. I believe this is so much the case, that the odds of a Eurozone unwind are actually quite low. The breakup option is really the self-immolation option as all parties involved would come out dramatically worse off. Investing in the whole mess that is Europe, makes sense now, particularly for any investors who seek to be contrarians. A number of subtle, yet bullish items have come about and most importantly the markets are 30% cheaper relative to the spring. I’ve read a lot that Europe is “to be avoided” from an investment perspective and that the region is “un-ownable”. These types of comments generally...

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Chanel, Gaspard Ulliel, Scorsese, and The Rolling Stones: The Awesome Power of Global Brands

September 5, 2011
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Chanel, Gaspard Ulliel, Scorsese, and The Rolling Stones: The Awesome Power of Global Brands

One theme I have been highlighting is the value that exists in the developed European corporate sector which of course gets ignored as fears of a crisis escalate. Chanel having the ability to get Martin Scorsese to direct an advertisement with French actor, Gaspard Ulliel, with vintage Rolling Stones (“She Said Yeah – December’s Children (And Everybody’s) – 1965”) points to the insurmountable competitive advantages that many European brands and companies have. Chanel is a private company but there are many other listed companies through Europe with similar brand heritage, charisma, and intellectual capital. These companies are some of the best positioned in the world to participate in the growth of emerging markets – despite being listed on indicies that sport single-digit multiples such as the; CAC 40, FTSE,...

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It’s Time to Buy in Hong Kong

August 31, 2011
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It’s Time to Buy in Hong Kong

After a brutal correction in both prices and valuations it is time to get long(er) China geared Hong Kong listed equities. I believe the timing is right because the single largest risk factor, inflationary pressure, is in the process of peaking, and is likely to abate moving forward. China growth persists at a 9% clip and I believe this growth rate is likely to slow gradually. Through a combination of currency appreciation, higher real interest rates, and credit constraints (the growth rate of credit) China will start the gradual process of focusing on domestic demand. Valuation is on the side of real investors as the H-Shares (HSCEI index) are at ex-crisis lows and sub 10x forward earnings. This is a 30%-40% valuation discount to what is “average” over the...

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