No real sign of structural reform – FT
John Dizard writes in the FT about the reforms needed in the securitisations market.
Blog
Stratfor on Germany and the future of European currency union
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. …
Deep dive into the BLS model
Bloomberg is running a report on pending amendments to the BLS labor statistics which may result in sharply higher unemployment statistics in 2008/2009. The reasoning is that the BLS model’s mechanism to account for newly-created and recently-closed businesses does not consider the sharply higher number of closures over that time period. More recent data will …
James Bond meets Barbarians at the Gate
A very interesting, disturbing, but perhaps unsurprising article in today’s FT, about how Russia may have tried to get China to simultaneously dump GSE securities on the market to exacerbate the US financial crisis. Sounds like a cross between international espionage and hostile takeovers, but scarier: Paulson claims Russia tried to foment Fannie-Freddie crisis
Must watch debate on financial innovation.
Jeremy Grantham and Rick Bookstaber debate Myron Scholes and Robert Reynolds on whether or not financial innovation boosts global growth. We found this particularly engaging since one of the debaters (Myron Scholes) was a principal at Long Term Capital Management and another (Jeremy Grantham) is a manager whose views we follow very carefully. As an …
The Bank problem in a single Chart
FT’s Tracy Alloway has a very intriguing post about excess profits in the banking sector, relying on Jim Reid’s work (Deutsche Bank strategist).
FT’s John Authers on crude regulation
John Authers writes in the FT on the efficacy of crude regulation that clearly demarcates acceptable and unacceptable behavior and actions.
Political uncertainty at a critical juncture.
We are frequently amused by the myriad explanations pundits present for any moves in the market. Our view has always been that single day moves are largely inexplicable, and that it often takes investors time to incorporate events into their thought-process, and to translate them into action. An example is the market rose yesterday in …
Collapsing BRICs
The Financial Times’ John Tasker writes about conflating economic growth and investment opportunity in Insight: Busting the myth of the Brics
2009 Q4 client letter
We hope you enjoyed a restful holiday season and have had a good start to the New Year. In this quarterly letter, our aim is to provide a review of Q4 2009 as well as a look ahead at 2010, which we’ve separated into an attachment titled “10 economic themes for 2010”. In the fourth …
10 themes for ’10
Who’s Hiring? We expect to see the US unemployment rate peak in 2010 at 11%. While seeing a peak will certainly be an encouraging sign, we don’t believe this will be followed by a rapid economic recovery creating the millions of jobs necessary to lower the unemployment rate down to pre-recession levels (5%). I’m fine …
Retail sales trends this holiday season
Retailers are in the business of parting consumers from their money and they have been remarkably successful at this over the past several years. However, we believe this holiday season will turn out to be very tough for most retailers as consumers will continue to maintain tight control over their spending. Consumer spending levels have …
Who is leading this herd?
The extent of the market’s shrinkage in 1969-70 should have served to dispel an illusion that had been gaining ground during the past two decades. This was that leading common stocks could be bought at any time and at any price, with the assurance not only of ultimate profit but also that any intervening loss …
Water works
There are two interesting articles published in today’s NY Times on the topic of water. The first, from the front page, explores the challenges facing coal-fired power plants and the municipalities that surround them when it comes to waste disposal. While many of these plants have reduced the amount air pollution they create, these pollutants …
Bears: Out in the cold?
An article in the Economist reviews a number of the more interesting reasons some strategists remain bearish on stocks.