We hope your summer is going well. Now that we’ve reached the mid-point of 2010, we thought this would be a good time to look back at our list of Top 10 Themes for 2010 and see how our predictions have fared. We’ve attached this list with an assessment of each of our calls. Like …
Mid-year review of our 10 themes for ’10 We expect to see the US unemployment rate to peak at 11% in 2010. We may have been a bit aggressive with this call. While the US job market remains anemic, the unemployment rate now stands at 9.5% (the lowest all year), partly because of workers who …
In our last few letters, we have discussed the extraordinary measures undertaken by governments across the world to support aggregate demand, and the extensive borrowing required to do this. Over the past three months, both of these issues have been thrown into stark relief by events. The dramatic and extremely sudden deterioration of Greek sovereign …
A series of measures were announced today to provide support for troubled Euro-zone states. The broad outline of the plan is that the European Union (EU) and the International Monetary Fund (IMF) are committing almost $1 trillion to support bond issues by Euro-zone states. We see three reasons to question the initial market euphoria surrounding …
One of the financial commentators we follow (for his trader’s eye view from the NYSE) is Art Cashin. Art wrote today about the brief free-fall in stocks last Thursday afternoon. To quote: Nothing Sold For A Penny On The NYSE There was a lot of discussion on the floor Friday about the huge air pocket that …
Like most market participants, we watched the market moves yesterday afternoon with a certain degree of amazement. Since US equity market prices are far higher than underlying valuation (according to our measures) we were not surprised by the extent of the drop. But we were very surprised by the speed at which the drop occurred, …
For the past several months, we have been thinking about the broader Euro-zone’s economic malaise. In the course of conversations, we sometimes use analogies, and we thought we’d share this one with our readers. As part of the aim to integrate Europe and limit the future likelihood of war, European countries have sought to …
The Bond Buyer reports that: Moody’s Investors Service kicked off a wide-scale “upward shift” in municipal credit ratings yesterday, assigning stronger grades to 34 states and Puerto Rico. the article contains a complete list of ratings for all US states Moody’s assigns ratings for. The new ratings are comparable to ratings for other entities. Prior …
Here is Charlie Rose’s interview with Jim Chanos regarding the China bubble. One of our favorite exchanges: Charlie Rose: Tom Friedman weighed in on this [China bubble]. He said “never short a country [China] with $2 trillion in foreign currency reserves.” Jim Chanos: Yes. The last two economies that had similar foreign currency reserves relative …
Gary Shilling was on Bloomberg TV this morning to discuss his views on China. Mr. Shilling has a long track record of being a successful contrarian (correctly predicting the recession of 1973, the end of rampant US inflation in the late 1970’s and Japan’s economic collapse in 1988). He has recently joined the China bubble …
For this letter, we’ve attached a brief summary of the investment highlights for the first quarter along with our analysis. We hope you find this useful. Two major economic developments not covered in this attachment we thought worth mentioning are: Landmark Health Care Legislation. Congress and the Obama administration finally managed to pass the much …
We’ve been following the revelations of prior administrations fudging budget numbers in Greece with some interest and thought we’d pick out a couple of the more interesting articles we’ve read on the subject. Wolfgang Schauble writes in the FT on the cross-roads the European currency union has reached. Stratfor provides the geo-political take on what …
The Journal’s E. S. Browning has an interesting piece contrasting the views of Robert Shiller and Jeremy Siegel, with some added commentary from Ben Inker at GMO.
John Dizard writes in the FT about the reforms needed in the securitisations market.
A lot of ink has been spilled recently on the weakness of a currency union without a federal political system (i.e. the Euro). The most interesting background article we’ve seen on this topic is Stratfor’s Germany’s Choice which takes the long view and is well worth a read. Simply put, Europe faces a financial meltdown. …