Monday, July 29, 2013

Stock Market Rally, Asset Bubbles & Crash

“For the next year or so, as long as the economy grows 1.5-2 percent, and you have easy money, this market can go higher. Growth is slow. Earnings growth is also slowing down. Top line and bottom line are not as good as they used to be, but margins are high. They could correct, somehow, over time. This might lead to a generalized credit and equity and asset bubble in the next year or two, followed by a crash.”

Sunday, July 28, 2013

Gold Is Solely A Play On Capital Appreciation

"Unlike other assets, gold does not provide any income. Whereas equities have dividends, bonds have coupons, and homes provide rents, gold is solely a play on capital appreciation. Now that the global economy is recovering, other assets – equities or even revived real estate – thus provide higher returns." - in A World Of Ideas

Friday, July 26, 2013

The Ongoing Weakness of America’s Economy

The ongoing weakness of America’s economy—where deleveraging in the private and public sectors continues apace—has led to stubbornly high unemployment and sub-par growth. The effects of fiscal austerity—a sharp rise in taxes and a sharp fall in government spending since the beginning of the year—are undermining economic performance even more.

Wednesday, July 24, 2013

France Is Slipping Into A Recession

"France is slipping into a recession that complicates the austerity & reform agenda." - in Roubini`s Official Twitter

Related ETFs: iShares MSCI France Index ETF (EWQ)

Tuesday, July 23, 2013

Fed's Liquidity Injections Are Not Creating Credit For The Real Economy

The problem is that the Fed's liquidity injections are not creating credit for the real economy, but rather boosting leverage and risk-taking in financial markets. The issuance of risky junk bonds under loose covenants and with excessively low interest rates is increasing; the stock market is reaching new highs, despite the growth slowdown; and money is flowing to high-yielding emerging markets.

Sunday, July 21, 2013

Market Outlook: Gravitational Forces & Levitational Forces

"It could go on for another year or two. Of course, there are two forces. Growth is slow. Earnings growth is also slowing down. Top line and bottom line are not as good as they used to be, but margins are high. They could correct, somehow, over time.

But you have the gravitational forces of slow economy leading eventually to correction, but then the levitational forces of QEs, zero policy rates, more money coming in the market – not just from the U.S., but from other economies – it's going to levitate asset prices.


So, as I pointed out, this might lead to a generalized credit and equity and asset bubble in the next year or two, followed by a crash. But for the next year or so, as long as the economy grows 1.5-2 percent, and you have easy money, this market can go higher. "- in Business Insider 

Related ETFs: SPDR SP 500 ETF (SPY), Financial Select Sector SPDR ETF (XLF), iShares MSCI Emerging Markets ETF (EEM)

Saturday, July 20, 2013

Be Sure Your Seat Belt Is Securely Fastened

“Be sure your seat belt is securely fastened, because nothing has really come to rest. We have entered the ‘New Abnormal’, a period in which...the wise investor is prepared to be surprised.”



Related ETFs: iShares MSCI Emerging Markets (ETF) (EEM), SPDR SP 500 ETF (NYSE:SPY), SPDR Gold Trust ETF (GLD)

Friday, July 19, 2013

Wednesday, July 17, 2013

Kenya: An Economy With Many Opportunities & Many Challenges As Well

Interesting policy meetings in Nairobi. Kenya is an economy with many opportunities and many challenges as well.

Tuesday, July 16, 2013

Dr Nouriel Roubini says Rwanda is fascinating...

Rwanda is a fascinating country with a visionary leader and a very competent policy team. It has been growing close to 8% for many years now

Its impressive economy growing at 8% a year albeit from a low base. And Kigali has good urban planning unlike other African cities " 

Gold Bugs Strangely Silent & Quiet

"Gold bugs strangely silent and quiet. They must be eating crow..."

Sunday, July 14, 2013

Gold: Keynes’s ‘Barbarous Relic’

“Gold remains John Maynard Keynes’s ‘barbarous relic,’ with no intrinsic value and used mainly as a hedge against mostly irrational fear and panic.”

Nouriel Roubini on Zimbabwe inflation decline

 Zimbabwe had the highest peacetime hyperinflation ever in 2008. But now inflation is in the single digits

Monday, July 8, 2013

There is a painful period that can last over a decade

It’s been anemic because the financial crisis was one, first in which it was too much debt, leverage and excessive risk taking in the private sector, households, banks, financial institutions, even corporates. And now is the result of the resolution of financial crisis were the search of public debt and deficits.

Historically, whenever you start with too much private and public debt, there is a painful period that can last over a decade, where growth is going to be anemic. Why? Because you have to spend less, to save more or dissave less to gradually reduce this tox of deficit and debt.

And that implies that economic growth has been very weak in the United States, in Europe, in Japan and other advanced economies. And that’s going to continue. Eventually, that slow economic growth is associated with rising unemployment rate, and also with social and political unrest. That’s the situation we’re facing right now – is unstable disequilibrium, is the new abnormal. We’re ahead of decade of very low economic growth.” 

Thursday, July 4, 2013

Italy: Critical To Implement Policies To Restart Growth

With a new government in place and ongoing recession it is critical to implement policies to restart growth

Monday, July 1, 2013

The Gold Bubble Is Deflating

"The runup in gold prices in recent years – from $800 per ounce in early 2009 to above $1,900 in the autumn of 2011 – had all the features of a bubble. Now, like all asset-price surges that are divorced from the fundamentals of supply and demand, the gold bubble is deflating."

Gold is not a means of payment

A currency serves three functions, providing a means of payment, a unit of account, and a store of value.

Gold may be a store of value for wealth, but it is not a means of payment; you cannot pay for your groceries with it. Nor is it a unit of account; prices of goods and services, and of financial assets, are not denominated in gold terms.