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. …
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 …
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
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 …
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).
John Authers writes in the FT on the efficacy of crude regulation that clearly demarcates acceptable and unacceptable behavior and actions.
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 …
The Financial Times’ John Tasker writes about conflating economic growth and investment opportunity in Insight: Busting the myth of the Brics
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 …
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 …
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 …