Is the USD Carry Trade for Real?

Thursday, December 3rd, 2009

Caroline Baum, one of Bloomberg’s most highly respected columnists, questions the veracity of Nouriel Roubini’s claim that the carry trade is inflating assets around the world.

Zero percent interest rates started it. A weak dollar fueled it. Speculators fanned it. And famed forecasters see it everywhere they look. There’s only one problem with the claims that the dollar carry trade - borrowing dollars cheaply to invest in higher-yielding assets abroad - is inflating bubbles across the globe: There is no visible credit expansion, at least in the US, to support them.

Roubini’s bubbles float on flimsy credit source, Bloomberg, December 2, 2009

Tags: Assets, Bloomberg, Bubbles, Caroline Baum, Credit Expansion, Credit Source, Forecasters, Globe, interest rates, Nouriel Roubini, Speculators, Veracity, Weak Dollar, Zero Percent
Posted in Markets | No Comments »

How to save a friend from the false prophet Nouriel Roubini

Thursday, October 22nd, 2009

This is a guest contribution by Damien Hoffman, editor of the very popular Wall St Cheat Sheet blog. Make sure to add this site to your must-read list.

In August I wrote an article “Is Nouriel Roubini a false prophet?” Apparently, some people are so smitten with Roubini they actually ignored all the cited articles and said, “No”. Consequently, I teamed up with a group of people around the world on an open source project to continue our mission exposing false prophets and help unwash those well-meaning brains.

The video below is a large collection of evidence proving Roubini has an horrendous record as a prognosticator. If you too know someone who has been listening to the seductive sounds of Roubini’s mantras, send them this helpful deprogramming message.

Source: Damien Hoffman, Wall St. Cheat Sheet, September 3, 2009.

Tags: Blog, Brains, Cheat Sheet, Deprogramming, False Prophet, False Prophets, Group Of People, Hoffman, Message Source, Nouriel Roubini, Open Source Project, People Around The World, Prognosticator, Sounds, Well Meaning
Posted in Markets | 2 Comments »

Joseph Stiglitz Interview on Economic Recovery

Tuesday, October 6th, 2009

Joseph Stiglitz is interviewed by Bloomberg during a visit to Istanbul. Stiglitz believes markets are “irrationally exuberant” about the global recovery.

Bloomberg reports: His comments echo New York University Professor Nouriel Roubini’s view that “markets have gone up too much, too soon, too fast,” and billionaire George Soros, who warned yesterday that America’s economic recovery will be “very slow.”

The U.S. has lost 7.2 million jobs since the recession began in December 2007, and the unemployment rate reached a 26- year high in September, a Labor Department report last week showed. Joblessness is likely to reach 10 percent by the end of the year, according to economists surveyed by Bloomberg News last month.

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It’s “pretty clear that the situation will continue to get worse,” Stiglitz said, citing elements of the jobs report such as the number of people who can’t find a full-time job and the pace at which Americans are dropping out of the labor force.

Economic growth this year and next will “fall well short of what we need to stop unemployment from growing,” he said. The likelihood that the U.S. economy will be “out of the woods” before most of the measures in the Obama administration’s stimulus package expire in 2011 is “very small,” he added.

Source: Stiglitz Says Markets ‘Irrationally Exuberant’ About Recovery, Francine Lacqua and Jeremy Torobin, Bloomberg, October 6 2009

Tags: Billionaire, Bloomberg, Bloomberg News, Economic Growth, Economic Recovery, Economists, ETF, Full Time Job, George Soros, Global Recovery, Jeremy Torobin, Joblessness, Joseph Stiglitz, Labor Department, New York University, Nouriel Roubini, Obama, October 6, Recession, Stimulus Package, Unemployment Rate, York University Professor
Posted in Markets | No Comments »

Techniques used by false prophets and charlatans

Friday, September 4th, 2009

This is a guest contribution by Damien Hoffman, editor-in-chief of the very popular Wall St Cheat Sheet blog. Make sure to put this site on your must-read list.

Nouriel Roubini and His Acolytes

Following the incredible popularity of my post “Is Nouriel Roubini a False Prophet?“, I’ve decided to do a little introductory lesson for those more interested in avoiding charlatans …

Cold Reading is a primary set of techniques employed by phony psychics and market prognosticators. When cold reading, the primary objective of the sender is to ensure that the recipient perceives the statement/prophecy to be a hit. Here are a few classic techniques used by Ms. Cleo and Nouriel Roubini:

TECHNIQUE 1. The “Rainbow Ruse”: Indicate one trait and, at times, the opposite.

For example: “The bad news out of the financial sector will continue to flow, and on the days that it does, the market will take a hit,” said Chris Johnson, chief investment officer at Johnson Research. “But select stocks will outperform the rest of the market,” he said, “particularly in technology.”

“Robert Loest, portfolio manager at Integrity Funds, said that a late December rally could depend on what the Fed does on Dec. 11.”

TECHNIQUE 2. “Barnum Statements”: General statements that fit most people (can also be combined with “Forking” - see below).

For example: “I think we’re going to have a tremendous amount of volatility and basically stay in a trading range until we get information on first-quarter earnings,” said Dan Genter, president at RNC Genter Capital Management.

TECHNIQUE 3. “Fuzzy Facts”: General broad statement likely to be right.

For example: “An end of the year run is not necessarily off the table,” said Art Hogan, chief market analyst at Jefferies & Co. He said that Wall Street still needs to work its way through a lot on the financial side. Yet, the broad selloff of recent weeks may have primed stocks for a bigger bounce back, particularly in the areas of the market that are unaffected by the credit market mess. “But there’s no question of volatility,” he said. “It’s going to be very bumpy through the end of the year.”

TECHNIQUE 4. “Good Chance Guess”: Like a Fuzzy Fact, these are guesses as to facts which are highly likely to register a hit.

For example, a psychic might say, “I see a blue car,” or “a house with number 2 in address,” or “I see a painting on the wall, it might be of somebody who has passed or somebody who is alive, I’m not sure?”

TECHNIQUE 5. “Lucky Guess” / “Forking”: A compounded guess - one that contains 2, 3, or more parts.

If one guess is a hit the recipient will typically say “wow,” even if the others were a miss. This was one of Roubini’s strategies.

For example, “7,000 is going to be a resistance area in the Dow. Otherwise, if it breaks through, resistance should become support and we are next likely to see some resistance at the 7,400 area. If it breaks through there we should see a run at 7,600 and then possibly new highs.”

A subset of this is one noted by Charles Kirk at The Kirk Report: “make so many predictions that you can later say you were right no matter what.” This is Jim Cramer’s forte and most other gurus out there.”

TECHNIQUE 6. “Push Statements”: State something wrong and keep pushing it!

For example, something like “The subprime scare is pushing stocks down and may spill over into the general economy causing recession and global slowdown.”

TECHNIQUE 7. “Russian Doll”: Statement with many possible layers of meaning. Keep working this until you get a hit.

For example, “Market participants were concerned about Wall Street which sold off sharply Monday as concerns about a weakening credit market wiped out investors’ enthusiasm about strong retails sales over the holiday weekend. For a brief period today, there was a twinge of optimism that the stock market would be able to score back-to-back gains. Reports of stronger than expected retail traffic over the Thanksgiving holiday contributed to that view. However, it wasn’t long before concerns about the financial sector (-4.1%) took hold again and knocked the market down to size.”

TECHNIQUE 8. “Peter Pan/Pollyanna”: Tell them what they want to hear.

“After years of living happily beyond their means, Americans are finally facing financial reality. A persistent rise in energy prices will mean bigger heating bills this winter and heftier tabs at the gas pump. Job growth is slowing and wage gains have been anemic. House prices are sliding, diminishing the value of the asset that’s the biggest factor in Americans’ personal wealth. Even the stock market, which has been resilient for so long in the face of eroding consumer sentiment, has begun pulling back amid signs of deep distress in the financial sector.”

TECHNIQUE 9. “Certain Predictions”: Predictions with no time frame.

“The market is very likely to make new all time highs despite the recent sell off.” This was another favorite by Roubini.

OTHER TECHNIQUES:

“SELF-FULFILLING”

For example, the psychic might say, “You will make a new start.” The market commentator might say, “The market may see new lows before turning higher and cause uncertainty among traders creating risk.”

“VAGUE PREDICTIONS”

For example, “The market is now looking toward 2008 and a slowdown, and I find it hard to believe that we can have a year-end rally. But there are some reasons to believe that Wall Street might see a typically upbeat December and an end of the year “Santa Claus” rally.” Clearly, in this case the speaker is predicting A or B and if either occurs they are right.

“UNVERIFIABLE STATEMENTS OR PREDICTIONS”

For example, ex post facto word fitting like “The pull back to resistance level provided support for the overnight rally. The Asian traders encouraged by strength in the yen decided to bid up the S&P in the night market.”

Note: These techniques should be differentiated from conditional propositions given by a speaker who tells you what action you should take if X or Y happens. For example, a extraordinary mentor should say, “If the market does X, then you should do why. However, if the market does N, then you should do M.” This way, the speaker is admitting they cannot predict the future, yet are still offering conditional propositions to take beneficial action.

This post was researched by my friend Dan who has a passionate interest in educating people about subversive rhetorical techniques. Thanks Dan!!

Source: Damien Hoffman, Wall St. Cheat Sheet, September 3, 2009.

Tags: Acolytes, Charlatans, Chief Investment Officer, Chief Market, Cold Reading, False Prophet, False Prophets, Financial Sector, Fuzzy Facts, Introductory Lesson, Jefferies, Management Technique, Market Analyst, Market Prognosticators, Ms Cleo, Nouriel Roubini, Phony Psychics, Quarter Earnings, Rnc Genter Capital Management, Selloff
Posted in Markets | No Comments »

Nouriel Roubini: The Phantom Economic Recovery

Tuesday, August 18th, 2009

The following article is a guest contribution from RGE Monitor, and Nouriel Roubini’s Project Syndicate, August 16, 2009.*

Where is the US and global economy headed? Last year, there were two sides to the debate. One camp argued that the recession in the US would be V-shaped—short and shallow. It would last only eight months, like the two previous recessions of 1990-1991 and 2001, and the world would decouple from the US contraction.

Others, including me, argued that given the excesses of private sector leverage (in households, financial institutions and corporate firms), this would be a U-shaped recession—long and deep. It would last about 24 months, and the world would not decouple from the US contraction.

Today, 20 months into the US recession—a recession that became global in the summer of 2008 with a massive recoupling—the V-shaped decoupling view is out the window. This is the worst US and global recession in 60 years. If the US recession were—as is most likely—to be over at the end of the year, it will have been three times as long and about fives times as deep—in terms of the cumulative decline in output—as the previous two.

Today’s consensus among economists is that the recession is already over, that the US and global economy will rapidly return to growth and that there is no risk of a relapse. Unfortunately, this new consensus could be as wrong now as the defenders of the V-shaped scenario were for the past three years.

Data from the US—rising unemployment, falling household consumption, still declining industrial production and a weak housing market—suggests that the US recession is not over yet. A similar analysis of many other advanced economies suggests that, as in the US, the bottom is quite close, but it has not yet been reached. Most emerging economies may be returning to growth, but they are performing well below their potential.

Moreover, for a number of reasons, growth in the advanced economies is likely to remain anaemic and well below trend for at least a couple of years.

The first reason is likely to create a long-term drag on growth: Households need to deleverage and save more, which will constrain consumption for years.

Second, the financial system— both banks and non-bank institutions—is severely damaged. Lack of robust credit growth will hamper private consumption and investment spending.

Third, the corporate sector faces a glut of capacity, and a weak recovery of profitability is likely if growth is anaemic and deflationary pressures still persist. As a result, businesses are not likely to increase capital spending.

Fourth, the releveraging of the public sector through large fiscal deficits and debt accumulation risks crowding out a recovery in private sector spending. The effects of the policy stimulus, moreover, will fizzle out by early next year, requiring greater private demand to support continued growth.

Domestic private demand, especially consumption, is now weak or falling in over-spending countries (the US, UK, Spain, Ireland, Australia and New Zealand, etc.), while not increasing fast enough in over-saving countries (China, other Asian countries, Germany and Japan, etc.) to compensate for the reduction in these countries’ net exports. Thus, there is a global slackening of aggregate demand relative to the glut of supply capacity, which will impede a robust global economic recovery.

There are also now two reasons to fear a double-dip recession. First, the exit strategy from monetary and fiscal easing could be botched, because policymakers are damned if they do and damned if they don’t. If they take their fiscal deficits (and a potential monetization of these deficits) seriously and raise taxes, reduce spending and mop up excess liquidity, they could undermine the already weak recovery.

But if they maintain large budget deficits and continue to monetize them, at some point—after the current deflationary forces become more subdued—bond markets will revolt. At this point, inflationary expectations will increase, long-term government bond yields will rise and recovery will be crowded out.

A second reason to fear a double-dip recession concerns the fact that oil, energy and food prices may be rising faster than economic fundamentals warrant, and could be driven higher by the wall of liquidity chasing assets, as well as by speculative demand. Last year, oil at $145 a barrel was a tipping point for the global economy, as it created a major income shock for the US, Europe, Japan, China, India and other oil-importing economies. The global economy, barely rising from its knees, could not withstand the contractionary shock if similar speculative forces were to drive oil rapidly towards $100 a barrel.

So, the end of this severe global recession will be closer at the end of this year than it is now, the recovery will be anaemic rather than robust in advanced economies, and there is a rising risk of a double-dip recession. The recent market rallies in stocks, commodities and credit may have gotten ahead of the improvement in the real economy. If so, a correction cannot be too far behind.

©2009 / PROJECT SYNDICATE

Nouriel Roubini is chairman of Roubini Global Economics and a professor at the Stern School of Business, New York University.

Tags: Commodities, Consensus, Contraction, Economic Recovery, Economists, Eight Months, Emerging Economies, Emerging Markets, Excesses, Financial Institutions, Global Economy, Global Recession, Household Consumption, Households, Housing Market, India, Leverage, Nouriel Roubini, oil, Private Sector, Project Syndicate, Recessions, Relapse, RGE Monitor
Posted in Emerging Markets, Markets | No Comments »

Roubini: Setting the Record Straight

Friday, July 17th, 2009

The following is a statement from Dr. Nouriel Roubini, chairman of RGE Monitor and professor at New York University’s Stern School of Business, on the US economic outlook:

“It has been widely reported today [Thursday] that I have stated that the recession will be over ‘this year’ and that I have ‘improved’ my economic outlook. Despite those reports - however - my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.

“I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If as I predicted the recession is over by year end, it will have lasted 24 months with a recovery only beginning in 2010. Simply put I am not forecasting economic growth before year’s end.

“Indeed, last year I argued that this will be a long and deep and protracted U-shaped recession that would last 24 months. Meanwhile, the consensus argued that this would be a short and shallow V-shaped 8 months long recession (like those in 1990-91 and 2001). That debate is over today as we are in the 19^th month of a severe recession; so the V is out of the window and we are in a deep U-shaped recession. If that recession were to be over by year end - as I have consistently predicted - it would have lasted 24 months and thus been three times longer than the previous two and five times deeper - in terms of cumulative GDP contraction - than the previous two. So, there is nothing new in my remarks today about the recession being over at the end of this year.

“I have also consistently argued - including in my remarks today - that while the consensus predicts that the US economy will go back close to potential growth by next year, I see instead a shallow, below-par and below-trend recovery where growth will average about 1% in the next couple of years when potential is probably closer to 2.75%.

“I have also consistently argued that there is a risk of a double-dip W-shaped recession toward the end of 2010, as a tough policy dilemma will emerge next year: on one side, early exit from monetary and fiscal easing would tip the economy into a new recession as the recovery is anemic and deflationary pressures are dominant. On the other side, maintaining large budget deficits and continued monetization of such deficits would eventually increase long term interest rates (because of concerns about medium term fiscal sustainability and because of an increase in expected inflation) and thus would lead to a crowding out of private demand.

“While the recession will be over by the end of the year the recovery will be weak given the debt overhang in the household sector, the financial system and the corporate sector; and now there is also a massive re-leveraging of the public sector with unsustainable fiscal deficits and public debt accumulation.

“Also, as I fleshed out in detail in recent remarks the labor market is still very weak: I predict a peak unemployment rate of close to 11% in 2010. Such large unemployment rate will have negative effects on labor income and consumption growth; will postpone the bottoming out of the housing sector; will lead to larger defaults and losses on bank loans (residential and commercial mortgages, credit cards, auto loans, leveraged loans); will increase the size of the budget deficit (even before any additional stimulus is implemented); and will increase protectionist pressures.

“So, yes there is light at the end of the tunnel for the US and the global economy; but as I have consistently argued the recession will continue through the end of the year, and the recovery will be weak and at risk of a double dip, as the challenge of getting right the timing and size of the exit strategy for monetary and fiscal policy easing will be daunting.”

Source: RGE Monitor, July 16, 2009.

Tags: 19 Months, Consensus, Contraction, Economic Growth, Economic Outlook, Economy, GDP, New York University, Nouriel Roubini, Occasions, Recession, RGE Monitor, School Of Business, Stern School Of Business, Three Times, Year End
Posted in Markets | No Comments »

Halftime Show: Second Half Outlook 2009

Saturday, June 20th, 2009

The financial debate during the past few days was dominated by President Obama’s sweeping revamp of financial market supervision, and this issue also occupies a number of slots in today’s Video-o-rama.

But it was not all about regulation, as pundits were also trying to figure out whether there were in fact economic “green shoots” and what the implications for financial markets might be. Commentators include Michael Lewis, John Rogers, Robert Kleinschmidt, Jack Welch, Barry Ritholtz, Nouriel Roubini, Stephen Roach, Mario Gabelli and George Friedman.

The compilation kicks off with author Michael Lewis discussing his article “The End of Wall Street”, and concludes with a fascinating analysis of the Iranian situation by George Friedman of Stratfor, geopolitical analysts.

You Tube: Michael Lewis - the end of Wall Street?
“Author Michael Lewis discusses how his experience working at Salomon Brothers and writing Liar’s Poker influenced his article, ‘The End of Wall Street’.”

Source: You Tube, June 16, 2009.

Barron’s: The Barron’s Roundtable - a midyear update
“Our 10 investment experts share their picks, plans and predictions for the rest of 2009. Barron’s Lauren Rublin reports.”

Source: Barron’s, June 15, 2009.

Consuelo Mack (WealthTrack): John Rogers and Robert Kleinschmidt - things are looking up this year
“On this week’s Consuelo Mack WealthTrack meet two veteran contrarian investors with successful track records spanning a generation or more. John Rogers founded value-oriented Ariel Capital Management at the tender age of 24. The first African-American owned mutual fund company is now the nation’s largest black-owned investment management firm.

“Robert Kleinschmidt has run the large-cap Tocqueville Fund since 1992. Going against the crowd has earned him and his investors market beating performance over the years and high ratings from Morningstar.”

Source: Consuelo Mack, WealthTrack, June 12, 2009.

CNBC: Obama unveils regulation revamp
“President Barack Obama unveils his plan to revamp the financial regulatory system.”

Source: CNBC, June 17, 2009.

CNBC: Geithner testifies on regulation revamp
“Treasury Secretary Timothy Geithner testifies in front of the Senate Banking Committee about the Obama administration’s plan to overhaul financial rules.”

Source: CNBC, June 18, 2009.

CNBC: Jack Welch on regulation reform
“Jack Welch, former General Electric CEO & author of “Winning” and “Straight From the Gut”, shares his thoughts on Obama’s regulation revamp.”

Source: CNBC, June 18, 2009.

The Wall Street Journal: Bailout Nation Author - a big banks should be allowed to fail
“Barry Ritholtz, author of ‘Bailout Nation‘ says the Obama administration did the right thing in letting poorly run automakers fail and that the same rule should have applied to badly managed banks that took too many risks.”

Source: The Wall Street Journal, June 17, 2009.

CNN Money: Roubini - risks of TARP paybacks
“Economist Nouriel Roubini says that allowing banks to repay TARP funds creates competitive disadvantages.”

Source: CNN Money, June 15, 2009.

Charlie Rose: A conversation with Peter Orszag
“A conversation about with Peter Orszag, Director of the Office of Management and Budget under President Barack Obama.”

Source: Charlie Rose, June 15, 2009.

CNBC: Fed’s Bullard on the economy
“St. Louis Federal Reserve Bank President James Bullard discusses the economy with CNBC’s Steve Liesman.”

Source: CNBC, June 15, 2009.

CNBC: Roach on the economy
“Stephen Roach, chairman of Morgan Stanley Asia, discusses the dollar, the economy and more with CNBC.”

Source: CNBC, June 16, 2009.

Yahoo Finance, Tech Ticker: Second half recovery is “nonsensical” - economy still descending, Ritholtz says
“Wednesday’s report of a 17% monthly rise in housing starts made for some dramatic headlines, but don’t confuse that with an actual recovery, says Barry Ritholtz, CEO of Fusion IQ and author of Bailout Nation.

“‘Housing Starts did not ’soar’ as Bloomberg claimed; you soar high in the sky, and a move from ankle to knee level does not qualify,’ Ritholtz writes on his popular blog, The Big Picture. ‘This was not, as the WSJ asserted, a ‘Surge in Home Construction’. Rather, it was a bounce off of record lows.’

“Ritholtz’s bigger point is that the free fall from September to March was so agonizing, it feels good to be in a ‘normal’ recessionary environment, as he believes we’re currently experiencing. Ritholtz compares the economy today to a skydiver right after the parachute opens - the fall is now controlled, but you’re still descending.

“Furthermore, the fund manager says hopes for a second half recovery are ‘nonsensical’, citing the continued pressure on US consumers and lack of evidence of a business recovery, as evinced by today’s capacity utilization data, the lowest on record going back to 1967.”

Source: Aaron Task, Yahoo Finance, Tech Ticker, June 16, 2009.

CNN Money: Roubini - risks of a “W”-shaped recovery
“Economist Nouriel Roubini talks about surging oil prices, slow economic growth and what is needed right now.”

Source: CNN Money, June 15, 2009.

The Wall Street Journal: Inflation debate brewing at Fed
“A debate is brewing inside the Fed about how bad expected inflation will be, WSJ’s Jon Hilsenrath explains.”

Source: The Wall Street Journal, June 16, 2009.

John Authers (Financial Times): Inventory rebound positive for equities
“Green shoots, or red herrings? John Authers looks for answers in London. In this part, David Bowers of Absolute Strategy Research explains why inventory cycles could help sustain the equity rally.”

Source: John Authers, Financial Times, June 17, 2009.

MarketWatch: Lazy, languid summer market
“Barrons.com’s Bob O’Brien says that for the first time in several years it looks as though we are set for a lazy kind of languid summer, even though the underlying fundamentals have been dynamic.”

Source: MarketWatch, June 17, 2009.

MarketWatch: Mario Gabelli sees “great opportunities” in the market
“The chief executive officer of Gama Funds explains that he sees a coming wave of merger-and-acquisition activity in the US, driven by companies and countries with strong balance sheets.”

Source: MarketWatch, June 17, 2009.

TheStreet.com: Wait to buy gold?
“David Morgan, founder of Silver-Investor.com, argues that gold will see a wider trading range as the precious metal continues to trade against the dollar and that now is not the time to invest.”

Source: TheStreet.com, June 15, 2009.

Financial Times: The doubling in the oil price.
“The price of a barrel of oil has doubled since February this year. Javier Blas, FT’s commodities correspondent, explains the reasons behind the recovery and whether it is based on fundamentals or speculation.”

Source: Financial Times, June 12, 2009.

CNBC: ZEW - worst of recession over
“The ZEW economic sentiment index rose for the eighth consecutive time, posting a number of 44.8 in June, compared to 31.1 in May. The current conditions indicator also rose. ‘What these numbers are telling us is that the hardest part of the recession appears to lie behind us,’ Christian Dick from ZEW told CNBC Tuesday.”

Source: CNBC, June 16, 2009.

CNBC: Roach - betting on BRICs
“Stephen Roach, chairman of Morgan Stanley Asia, and the CNBC news team discuss whether investors should bet on the BRIC nations.”

Source: CNBC, June 16, 2009.

CNBC: Will China lead us out of the recession?
“Stephen Roach, chairman of Morgan Stanley Asia, and the CNBC news team discuss whether China will lead us out of this recession.”

Source: CNBC, June 16, 2009.

You Tube: George Friedman - Iranian elections, Israel and the United States
“In the latest instalment of the Stratfor Insights video series, CEO George Friedman discusses the tense future of the Middle East following the recent Iranian elections. With Israel offering a Palestinian state on terms that are unacceptable to the Palestinians, and freshly re-elected Iranian President Mahmoud Ahmadinejad expected to continue his hard-line policies, how President Barack Obama moves forward merits close observation.”

Source: You Tube, June 15, 2009.

Tags: Author Michael, Barry Ritholtz, BRIC, Cnbc, Consuelo Mack, Contrarian Investors, George Friedman, Halftime Show, Investment Experts, Investment Management Firm, John Rogers, Mario Gabelli, Market Supervision, Michael Lewis, Morningstar, Nouriel Roubini, O Rama, oil, Regulatory Reform, Robert Kleinschmidt, Salomon Brothers, Stephen Roach, Wall Street Source, Wealthtrack
Posted in Gold, Markets | No Comments »

Video Digest: Stress Tests Ad Nauseum

Friday, May 8th, 2009

As to be expected, discussions about the stress tests on the health of the 19 biggest US banks dominated the video airwaves during the past few days, with arguments ranging from whether the tests were necessary to whether they were stressful enough.

For the rest, Warren Buffett held his annual Berkshire shareholders’ jamboree - this year sharing both concern and optimism about the future. And as the nascent stock market rally is looking more tired by the day, the debate intensified on whether this was a “real rally”.

In addition to Buffett and the usual suspects of Tim Geithner and Ben Bernanke, commentators featured on camera in this post include Richard Bernstein, Bill Fleckenstein, Nouriel Roubini, Neel Kashkari, Alan Blinder, Russell Napier, Robin Griffiths and Meb Faber.

The selection kicks off with an item in lighter vein - a song entitled “Zombie Bank”, and concludes with a great vintage animation, dating back to 1948, on the profit motive and the part it has played in the development of the US economy.

YouTube: Zombie Bank
“Musical op-ed piece written and performed by John Forster and Tom Chapin.”

Source: YouTube, April 15, 2009.

CNBC: Buffett speaks
“Warren Buffett, chairman and CEO of Berkshire Hathaway, tells CNBC’s Becky Quick he has both concern and optimism about the future.”

Part 1

Part 2

Source: CNBC, May 4, 2009.

Minyanville: Are stress tests necessary?
“What’s the point of a stress test if the government isn’t going to allow banks to fail? Minyanville’s executive editor, Kevin Depew, debates himself to find the answer.”

Source: Minyanville, May 4, 2009.

CNBC: Dr. Doom - stress tests aren’t stressful enough
“Nouriel Roubini, co-founder & chairman at RGE Monitor, also known as Dr. Doom, doesn’t put a lot of credibility into the US bank stress tests. He tells CNBC’s Martin Soong that the tests aren’t stressful enough. Josh Felman, assistant director from the IMF joins in the discussion.”

Source: CNBC, May 7, 2009.

CNBC: Bernanke’s bank structure
“Federal Reserve chairman Ben Bernanke speaks at the Chicago Fed’s Conference on bank structure and competition.”

Part 1

Part 2

Source: CNBC, May 7, 2009.

Charlie Rose: A conversation with Timothy Geithner, US Treasury Secretary

Source: Charlie Rose, May 6, 2009.

Charlie Rose: A conversation with Neel Kashkari, former assistant Treasury Secretary

Source: Charlie Rose, May 7, 2009.

Financial Times: Gillian Tett of Fool’s Gold
“Gillian Tett, the FT’s capital markets editor, talks to Andy Davis, editor of FT Weekend, about the background to her new book, Fool’s Gold, in which she traces the origings of the financial crisis back to innovative work by a small group of bankers in the mid-1990’s and explains how the products they pioneered ultimately enguifed most of the developed world’s biggest financial institutions.”

Source: Financial Times, May 1, 2009.

The Wall Street Journal: Goldman connection puts NY Fed official in tight spot
“When Goldman Sachs became a bank holding company late last year, New York Fed official Stephen Friedman inadvertently found himself in violation of charter rules. Kate Kelly reports on his efforts to receive a waiver and potential conflicts of interests.”

Source: The Wall Street Journal, May 4, 2009..

Yahoo Finance: The financial system - where’s the trust
“A discussion with Elizabeth Warren, Chairwoman, Congressional oversight panel.”

Part 1

Part 2

Source: Tech Ticker, Yahoo Finance, May 6, 2009.

CNBC: Ben Bernanke’s economic outlook
“Federal Reserve chairman Ben Bernanke discusses the current state of the economy and an outlook.”

Source: CNBC, May 5, 2009.

John Authers (Financial Times): Credit less crunched
“Libor’s fall and surveys of lending officers by central banks show that the credit crunch is no longer intensifying.”

Clik here for the article.

Source: John Authers, Financial Times, May 5, 2009.

Financial Times: Markets respond to stress test
“Despite the release of US bank stress test results, market sentiment was most strongly affected on Thursday by a $14 billion US Treasury bond auction, in which the government had to offer higher yields than expected. This trend is worrying Wall Street.”

Source: John Authers, Financial Times, May 7 2009.

Bloomberg: Richard Bernstein says US stocks in “real rally”
“Richard Bernstein, former chief investment strategist at Merrill Lynch, talks with Bloomberg’s Tom Keene and Ken Prewitt about the outlook for the US equity market. The S&P 500 has rebounded 34% from a 12-year low on March 9 after companies from Wells Fargo & Co. to Ford Motor Co. beat analysts’ earnings estimates by an average 11% since April 7, according to Bloomberg data.”

Source: Bloomberg, May 6, 2009.

The Wall Street Journal: Earnings season is mostly over - thankfully
First quarters earnings reports have been awful, but not as awful as expected.

Source: The Wall Street Journal, May 4, 2009.

CNBC: Charts - bears still in control
“Western stock indexes still seem to be undergoing a bear-market rally, instead of starting a bull market, Robin Griffiths from Cazenove Capital told CNBC Thursday.”

Source: CNBC, May 7, 2009.

John Authers (Financial Times): Bear market bottoms
“What can we learn from history? Russell Napier, author of ‘Anatomy of the Bear’, talks to John Authers about how his study of historical bear markets can help identify when markets have bottomed out.”

Source: John Authers, Financial Times, May 6, 2009.

Fox Business: Fleckenstein, Altucher & Lindzon - from surviving to thriving in the market

Source: Fox Business, May 4, 2009.

The Wall Street Journal: Ivy League Investing
“Money manager and author of ‘The Ivy Portfolio’ Meb Faber talks with MarketWatch’s Jonathan Burton about steps investors can take to protect themselves in volatile bear markets.”

Source: The Wall Street Journal, May 4, 2009.

Charlie Rose: Future of trade in the global economy
“A conversation about the future of trade in the global economy with Susan Schwab, United States Trade Representative, Jagdish Bhagwati, University Professor at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations, Alan Blinder, Director of Princeton’s Center for Economic Policy Studies and Sherrod Brown, United States Senator from the state of Ohio.”

Source: Charlie Rose, May 5, 2009.

CNBC: China’s next engine for growth
“China’s big move toward social infrastructure spending could turn out to be its engine for growth in next 10-15 years, says Robert Barbera, global economist at Investment Technology Group, speaking to CNBC’s Martin Soong.”

Source: CNBC, May 4, 2009.

CNBC: ECB starts quantative easing
“The European Central Bank began its own version of quantitative easing Thursday, following its interest rate cut. Ken Wattret from BNP Paribas and Stephen Gallo from Schneider Foreign Exchange discussed the move.”

Source: CNBC, May 7, 2009.

CNBC: Obama proposes new tax provisions
“President Barack Obama proposes changing provisions in the tax code that he says encourage US companies to move jobs overseas, as part of a broader package aimed at saving $210 billion over 10 years.”

Source: CNBC, May 4, 2009.

YouTube: Going Places (1948)
“Fun and Facts About America, John Sutherland Productions. Defines the profit motive and dramatizes the part it has played in the economic development of our country. Stresses the need for continued industrial profits if our economic vitality is to endure.”

Source: YouTube, June 6, 2006.

Tags: Answer Source, Ben Bernanke, Berkshire Hathaway, Bill Fleckenstein, Dr Doom, ETF, John Forster, Market Rally, Martin Soong, Minyanville, Neel Kashkari, Nouriel Roubini, Profit Motive, Richard Bernstein, Robin Griffiths, Stress Tests, Tim Geithner, Tom Chapin, Us Bank, Vintage Animation, Warren Buffett
Posted in Gold, Markets | No Comments »

Nouriel Roubini: A night with the Bears

Saturday, April 18th, 2009

A big bear: Markets ‘way too optimistic’

Nouriel Roubini, from NYU and founder of RGE Monitor presents the keynote speech at A Night with the Bears. The other guest speakers at the event hosted by Sprott Asset Management, held in Toronto last week included Meredith Whitney, and Ian Gordon, and Eric Sprott.

The accompanying article from the Globe and Mail can be read here.

Tags: April, Asset Management, Bear Markets, Bears, Big Bear, Canada, Dr Doom, Eric Sprott, Event Management, Globe And Mail, Globe Mail, Guest Speakers, Keynote Speech, Long Dark Night, Meredith Whitney, Night Mail, Nouriel Roubini, Nyu, Roubini, Toronto
Posted in Markets | No Comments »

Jim O’Neil and Nouriel Roubini: FT.com Interview

Friday, April 17th, 2009

April 6, 2009: Nouriel Roubini of New York University and Jim O’Neil, Chief Economist at Goldman Sachs, talk to John Thornhill about the G20 summit and the road to economic recovery.

Click image to see video.

John Thornhill (FT.com): Nouriel, The G20 has just concluded. What difference do you think the agreement will make to the global economy?

Nouriel Roubini: There was some positive developments, I think the most important one was this commitment of resources for the IMF is going to triple the resources of the IMF. There is also the creation of this new SDR, Special Drawing Rights. There are many Emerging Market economies that are in trouble, some of them with better market financial and policy fundamentals subject to a liquidity crunch, a sudden stop and reversal. You know the Brazils and Chiles and Mexicos of the world, and some others which have significant financial difficulties because of policy mistakes. And imbalances like those in emerging europe on the verge of a financial crisis. So I think that these additional IMF resources provide monies to both groups of emerging markets and help both of them to avoid a more severe crisis, especially those who are in trouble, they need good policies and IMF resources.

John Thornhill (FT.com): Now the three of us were here exactly a year ago, and Nouriel, you were pretty pessimistic about the global economy and Jim, you’re more upbeat, and ummm, I guess Nouriel won that argument, but um you see Jim is of hope again, in the global economy.

Jim O’Neil: Well, maybe I’m an perpetual optimist. Part of the reason why I guess I had a different view a year ago is to do with the whole focus of mine, you know, often about the role of China and the so-called BRICs. And, whilst China has been really severely challenged by the crisis, in the past couple of months theres some encouraging signs that China might be actually coping with it better than many other countries. That’s really where I see the most sustainable glimmers of hope. And then, even in some of the real crisis places, the UK actually, is showing one or two cyclical signs that the severity of the problems are starting to ease a little bit. We’ve had a tiny glimmer of that in the US as well. I guess what I really see is that its unlikely that the worlds going to continue decelerating at the rate that its been doing since October.

John Thornhill (FT.com): I think Nouriel, do you agree with that?

Nouriel Roubini: I agree in the following sense that the peak of the economic contraction in the US and in advanced economies and emerging markets was between the 4th quarter and 1st quarter of this year, you know a contraction of -6 percent among advanced economies compared to this contraction I think policy stimulus, monetary fiscal and otherwise, is going to imply that this economic contraction is going to slow down the rest of the year but while the more bullish consensus is US growth by Q3, it will be positive, by Q4, close to 2%, and next year something closer to a potential 2 to 2.5%. My view is that the imbalances of the United States are going to imply that economic growth is going to be negative in the second half of this year, -2% still by the fourth quarter, and next year the recovery’s going to be so weak, less than 1%, between zero and 0.5%, and then unemployment rising to above 10% and effectively its going to feel like a recession even if we’re technically out of the recession, so certainly I do believe that that 2nd derivative is in due time becoming positive, but has to be very positive for reaching faster rather than later the bottom, and therefore I see that bottom of that business occuring later than those who are more optimistic. [351]

John Thornhill (FT.com): There still seems to be a lively debate about the relative risks of inflation or deflation. Which do you think is the bigger threat at the moment?

Jim O’Neil: I’ve a pretty simple stance on that. I get asked it all the time everywhere I travel. I can almost anticipate it coming, “Aren’t you really worried about inflation?” My view is that its a nice problem to have. We’ve lost so much output the past 6 months around the developed world, there’s just no pricing power, and unless we can stop the deflationary mechanism now, the last thing people should be worried about is inflation, and be actually wanting to have some. Moreover, even if I’m wrong with aspects of that, against a background of globalization hopefully continuing, I think once you see any evidence of pricing pressures or inflation starting, compared to the current challenges policymakers have got it would pretty easy to stop. I don’t have the same concerns as appear to be so widely held by many many people in the financial markets all over the world, its quite interesting.

John Thornhill (FT.com): Nouriel, one of the most optimistic things I’ve heard over the last two days is that you’re now beginning to talk about an ‘exit’ strategy out of this economic crisis., but you nonetheless say that this is going to be very difficult. Could you explain that?

Nouriel Roubini: Well, you know, I agree with Jim, that deflationary pressures are going to be very significant. Over a year ago, I wrote this piece, titled, “The risk of a Global Stag-deflation Depression,” a combination or recession and deflation, because I was expecting a severe global recession, and now the slacking goods market, with demand falling relative to supply, and the slacking labour market, where the unemployment is going above 10% for most OECD countries, the slacking commodities market means that for the next few years, means that deflation is going to be the problem to be faced and therefore this huge output gap and slacking labour market would have to shrink significantly before we’re going to have any kind of pressures on resources.

I think that eventually, but that’s kind of a 2011 story, not even a 2010 story, there would have to be a mop up of the liquidity once there is a more sustained US and global economic recovery, and that’s going to be a tricky issue. I think the lesson we learned from the last bubble is that the Fed cut rates and kept them too low for too long and then the normalization occurred too slowly, 25 basis points every 6 weeks.

This time around you want to normalize it faster, not just because you worry about the inflation, but also because you should worry about asset inflation, creating another bubble, but the problem is that if the recovery is tentative, then you want to do is slowly because of the concerns about the growth, but on the other side, if you do it too slowly, you could create down the line, another asset bubble, more than actual inflation. That exit issue is going to be a serious issue, how you mop up the liquidity, how you sell back to the market all these illiquid and toxic assets you bought, how you make sure that these fiscal deficits are shrinking so you don’t have to monetize them, so you don’t cause longer term inflationary pressures.

Certain things are not questions that we have to worry about today or next year, but by 2011, we’ll have to start thinking about those questions.

John Thornhill (FT.com): Do you think, Jim, that there is a risk that we’ll have an unsustainable recovery because of the policy mix.

Jim O’Neil: Well, you know, listening to Nouriel, and thinking about it myself, its difficult to avoid creating booms and bursts, that’s almost how life is. I think there is a likelihood that to solve this crisis, governments will probably overextend their friendliness, and could create quite a few issues in the government bond markets around the world. We’re already seeing one or two signs of that. But, again, when I think about what those challenges would be, compared to the ones that they’re currently facing, I think they’re relatively manageable.

At least I certainly hope so.

John Thornhill (FT.com): Final question to both of you. What is the danger of a political backlash to globalization and could that derail any global recovery?

Nouriel Roubini: certainly the longer this crisis lasts, the more severe it is, the more the [risk of] backlash is there, in terms of backlash against the markets, against globalization, against free trade, in the form of financial protectionism, and a whole slew of actions. The G20 November promised free trade and now we know that 17 out of 20 countries already have had protectionist actions. 50 plus actions, and that’t the risk. That’s why in my view, its so paramount that we follow the aggressive monetary, fiscal, credit, and other policies to clean up the banks, to make sure that the recovery occurs faster than otherwise because the longer the crisis lasts, the more this backlash is going to be, and then you’ll have a risk of a vicious circle with that backlash and the policy actions that are negative, having negative effects on the economic recovery.

John Thornhill (FT.com): Jim?

Jim O’Neil: I’ll bring you back to where you started at with the G20. Again in the statement, they re-iterated slightly more briefly than in November, a strong stance against protectionist policies.

Its really important they follow it up this time and stick with it, because this time, the thing that would cause me to change my relative optimism would be a further acceleration of protectionist tendencies around the world. And I think its really really important that it doesn’t happen otherwise things will be a lot worse, and then could end up being a much more prolonged
problem, and a severe cyclical recession.

In that regard, another thing that I’m encouraged about from the BRIC world, is that the two big population nations, China and India, interestingly enough, despite how much we all stress out in Western Europe and the US, don’t appear to have lost any of their desire to slowly engage more and more in the world through trade and financial liberalization, which in many ways is the one thing that really grounds me in longer term hope, because if you really think about the engines of world activity the past decade, as much as its been the US, its been these guys, and if they lose their enthusiasm for engaging with the rest of the world then we’d have an entirely different situation.

END.

Tags: BRIC, BRICs, Chief Economist, Chiles, Economic Recovery, Emerging Europe, Emerging Market Economies, Emerging Markets, Financial Difficulties, G20 Summit, Glimmers, Global Economy, Goldman Sachs, Imf Resources, India, John Thornhill, liquidity, Monies, New York University, Nouriel Roubini, O Neil, O Neill, Optimist, Special Drawing Rights
Posted in Bonds, Commodities, Credit Markets, Emerging Markets, Gold, Markets | No Comments »

Five in a row for stock markets

Friday, April 10th, 2009

The holiday-shortened week witnessed relatively few news and economic reports, but the major US stock indices nevertheless scored their first five-week stretch of gains since October 2007.

A mixed bag of video clips was produced. First up is Pimco’s Mohamed El-Erian, saying, “Fundamentally we are in a volatile journey to what we call the new normal, the new destination. The world is changing.” Also featuring prominently are a series of must-see interviews by Aaron Task (Yahoo Finance, Tech Ticker) with George Soros about a wide-ranging number of issues.

Spicing up the week’s video footage was a fairly lively debate between UBS’s George Magnus and the G7’s Len Komileva, with another interesting discussion coming from Nouriel Roubini and Goldman’s Jim O’Neill.

Also make sure to watch Argentinean economist Adrian Salbuchi’s video clips, putting the financial collapse in context by referring to historical examples from Argentina.

CNBC: Pimco’s power player
“The markets are on a volatile journey to a ‘new normal’, says Mohamed El-Erian, Pimco CEO.”

Source: CNBC, April 7, 2009.

Financial Times: Roundtable - the road to recovery
“Nouriel Roubini of New York University and Jim O’Neill, chief investment economist at Goldman Sachs, talk to John Thornhill about the G20 summit, and the road to economic recovery.”

Source: Financial Times, April 6, 2009.

Face the Nation: Geithner talks recovery
“Bob Schieffer spoke with Treasury Secretary Timothy Geithner about economic recovery and a possible auto industry bailout.”

Source: Face the Nation, April 5, 2009.

Financial Times: A heated debate on G20 and fiscal stimulus
“In a special View from the Markets, Gillian Tett, capital markets editor, chairs a debate on what the G20 did and didn’t achieve. In the hot seats were George Magnus, chief economist adviser, UBS and Len Komileva, head of G7 market economics.”

Click here or on the image below for Part 1 of the interview.

Part 2: They agree the G20 didn’t go far enough in finding measures to fix the banks and end the financial crisis.

Click here for Part 2 of the interview.

Part 3: They discuss whether credit markets will follow glimmers of hope in the equity markets and if securitization has any future after the crisis.

Click here for Part 3 of the interview.

Source: Gillian Tett, Financial Times, April 6, 2009.

Yahoo Finance, Tech Ticker: Soros says Fed in a bind - beware stagflation, bursting of bond bubble
“After the financial market collapsed last fall, the Fed responded with a massive injection of liquidity and expansion of the monetary base. Eventually, Ben Bernanke & Co. will face the challenge of having to remove that liquidity from the system. ‘That’s a big and difficult task and probably the authorities will not be able to do it well,’ says legendary financier George Soros, chairman of Soros Fund Management. ‘That’s the fear that drives people into gold.’

“Soros wouldn’t say whether he’s actively trading gold but certainly implied it’s a good bet; more explicitly, he agreed with the view there’s a ‘bubble’ in Treasuries that’s likely to burst sooner rather than later.

“‘The moment this fear of deflation turns into a fear of inflation, you’ll find interest rates rise in the long end which is going to choke off the recovery,’ he says. ‘If we are successful [in reviving the economy] we are heading from the prospect of deflation to stagflation.’”

Source: Yahoo Finance, Tech Ticker, April 7, 2009.

YouTube: Elizabeth Warren introduces COP’s April report
“Elizabeth Warren introduces the April oversight report of the Congressional Oversight Panel: Assessing Treasury’s Strategy: Six Months of TARP.”

Source: YouTube, April 7, 2009.

Bloomberg: Geithner addresses mortgage fraud

Source: Bloomberg (via YouTube), April 6, 2009.

Business News Network: Richard Koo - Lost decade
“BNN interviews Richard Koo, chief economist, Nomura Research Institute.”

Source: Business News Network, March 23, 2009.

YouTube: Salbuchi - global financial collapse

“Part 1: An Argentine opinion on the Global Financial Crisis, describing the whole Global Financial System as one vast Ponzi Scheme. Like a pyramid, it has four sides and is a predictable model. The four sides are: (1) Artificially control the supply of public State-issued currency, (2) Artificially impose banking money as the primary source of funding in the economy, (3) Promote doing everything by bebt, and (4) Erect complex channels that allow privatizing profits when the model is in expansion mode and socialize losses when the model goes into contraction mode.”

“Part 2: How will the global financial collapse end? Are we on the way towards global war and world government?”

Source: YouTube, April 3, 2009.

Charlie Rose: A review of President Obama’s trip to Europe with Zbigniew Brzezinski & Henry Kissinger
“A review of President Obama’s trip to Europe with Zbigniew Brzezinski, United States National Security Advisor to President Jimmy Carter, and Henry Kissinger, former Secretary of State.”

[PduP: The duration of the video is 53 minutes.]

Source: Charlie Rose, April 6, 2009.

Forbes: Meredith Whitney predicts new crisis in consumer credit
“Star analyst Meredith Whitney warns Steve Forbes to avoid big bank stocks like Wachovia, Bank of America and Citigroup as she predicts a new crisis in consumer credit.”

Source: Steve Forbes, Forbes, April 3, 2009.

John Authers (Financial Times): Climbing the wall of worry
“The rally of the past month has been impressively broad. More impressive still, it has been achieved in spite of a string of awful superlatives, says John Authers.”

Click here for the article.

Source: John Authers, Financial Times, April 8, 2009.

Yahoo Finance, Tech Ticker: Soros - “danger of collapse has passed,” but stock rally not sustainable
“‘The real danger of collapse has passed,’ says legendary financier George Soros. But the ‘fallout of the collapse’ of the banking system ‘will linger’.

“In the wake of Lehman Brothers’ bankruptcy on September 15, 2008, authorities were forced to put the financial system remains on ‘artificial life support, which is where it is now,’ says Soros, the chairman of Soros Fund Management and author of several books, including most recently The Crash of 2008 and What It Means.

“As a result, the billionaire speculator says the stock market’s recent rally is doomed to fail. ‘Now we will face reality,’ he says, referring to a belief policymakers ‘did not succeed in recapitalizing the banks to the point where they can lend freely.’ He added, ‘talk of zombie banks - unfortunately that’s where we are now,’ Soros says. ‘Instead of providing lifeblood of credit, [banks] are effectively drawing the lifeblood of activity of profit to themselves.’

“That, in turn, will keep the economy from producing anything more than a fleeting bounce for the foreseeable future, says Soros.”

Source: Yahoo Finance, Tech Ticker, April 7, 2009.

Bloomberg: Marc Faber says stocks may see correct by 10%
“Marc Faber, publisher of the Gloom, Boom and Doom Report, talks with Bloomberg’s Susan Li, Arnold Gay and Patricia Lui about the outlook for global stocks. Faber, speaking from Singapore, also discusses his forecasts for the bond market, gold price, dollar and his investment strategy.”

Source: Bloomberg, April 7, 2009.

CNBC: Bear market rally is halfway through, says chartist
“‘All European markets are in the middle of a rally, which is probably about halfway through,’ Robin Griffiths from Cazenove Capital said. When analyzing the chart for the Xetra DAX index, he suggests the German index has another 20% higher to go.”

Source: CNBC, April 6, 2009.

Yahoo Finance, Tech Ticker: “The tide is turning,” says Prieur du Plessis
“There was a general sense of optimism this weekend in San Diego, where I attended a hedge fund conference and separate tribute dinner for newsletter legend Richard Russell. Among those in attendance - and feeling at least cautiously optimistic - was Prieur du Plessis, noted blogger and executive chairman of Plexus Asset Management, a South African-based firm with about $2 billion of assets.”

Source: Yahoo Finance, Tech Ticker, April 6, 2009.

Yahoo Finance, Tech Ticker: Soros - dollar’s strength a measure of system’s “sickness”, euro will remain viable
“George Soros is a man of many skills. The billionaire has been very successful as an author, philanthropist, and as a force in liberal politics.

“Arguably Soros’ greatest skill - and undoubtedly where he made his fortune - is as a speculator, specifically in the realm of currencies. Soros is best known as ‘the man who broke the Bank of England’ for his infamous short bet against the pound in 1992. Less known but nearly as successful was his 1985 ‘Plaza Accord’ bet that the dollar would fall against the yen.

“So when George Soros talks currencies, people listen. In the accompanying clip, he provides insights on three of today’s big currency questions:

Will the dollar maintain its status as the world’s reserve currency?

Is there are risk of a breakup of the Eurozone?

Is he still short the British sterling today?”

Source: Yahoo Finance, Tech Ticker, April 7, 2009.

John Authers (Financial Times): Gold loses lustre
“Gold is an inflation hedge but inflation expectations cannot explain its recent sell-off, says John Authers.”

Click here for the article.

Source: John Authers, Financial Times, April 7, 2009.

CNBC: Yergin - oil headed to $40?
“Investors should brace themselves for the long aftershock of oil trending towards $40 a barrel, says Daniel Yergin, Cambridge Energy Research Associates chairman.”

Source: CNBC, April 6, 2009.

CNBC: Irish Finance Minister cuts growth outlook
“Irish Finance Minister Brian Lenihan cut his growth forecast for the country’s economy on Tuesday, to -8% for 2009. Dan O’Brien from Economist Intelligence Unit has the analysis.”

Source: CNBC, April 7, 2009.

Tags: Adrian Salbuchi, Bob Schieffer, Chief Economist, ETF, Face The Nation, Financial Collapse, Fiscal Stimulus, G20 Summit, George Magnus, George Soros, Gillian Tett, Goldman Sachs, Hot Seats, John Thornhill, Market Economics, Mohamed El Erian, New York University, Nouriel Roubini, Stock Indices, Timothy Geithner, Yahoo Finance
Posted in Bonds, Credit Markets, Gold, Markets | No Comments »

The Road to Recovery

Friday, April 3rd, 2009

Video footage this week centered around the G-20 meeting, the FASB’s decision to relax mark-to-market accounting rules, the Detroit drama, the Geithner plan to remove toxic assets from banks’ balance sheets, and the staying power of the nascent stock market rally.

As investors’ start regaining their risk appetite and increasingly look past the “valley”, the Dow Jones Industrial Average seems to be on track to record its best four-week winning streak since 1933.

Commentators featured on camera in this post include Timothy Geithner, Nouriel Roubini, Nassim Taleb, Wilbur Ross, Bill Gross, Rob Arnott and Frank Holmes.

The selection below kicks off with a real gem, “Geithner Plan II - let’s go to the chalkboard”, and ends with another of Paddy Hirsch’s “back-to-basics” lectures, this time on leveraging and deleveraging.

YouTube: Geithner Plan II - let’s go to the chalkboard
“Khan Academy, a ‘not-for-profit organization with the mission of providing a high quality education to anyone, anywhere’, has posted a great ‘chalkboard’ commentary on YouTube covering the latest Treasury Department rescue plan and how banks could use it to scam the taxpayers.”

Source: Charleston Voice (via YouTube), March 23, 2009.

Bloomberg: Geithner sees “encouraging signs” in financial markets
“US Treasury Secretary Timothy Geithner talks with Bloomberg’s Peter Cook about the prospects for financial markets and the response of global policy makers to the current crisis. Geithner, speaking in London, also discusses the outlook for consensus among leaders attending the G-20 summit on economic stimulus and global financial standards, restructuring of General Motors and Chrysler, and new programs designed to attract private investment to help clean up banks’ balance sheets.”

Source: Bloomberg, April 1, 2009.

Yahoo Finance: Geithner plan good for some banks, says Roubini
“Tim Geithner’s plan to get toxic assets off bank balance sheets should help strengthen solvent financial institutions, Nouriel Roubini of RGE Monitor says. But banks that fail stress tests (a.k.a. insolvent ones) should be seized, restructured, and sold.”

Source: Yahoo Finance, March 31, 2009.

Bloomberg: Taleb says Geithner bank plan is too limited, will fail
“Nassim Nicholas Taleb, author of the best-selling finance book ‘The Black Swan: The Impact of the Highly Improbable’, talks with Bloomberg’s Erik Schatzker about US Treasury Secretary Timothy Geithner’s plan to remove toxic assets from bank balance sheets. Taleb, who also advises Universa Investments, also comments on the Group of 20 nations meeting in London and the outlook for financial regulation.”

Source: Bloomberg, April 1, 2009.

CNBC: Obama’s auto viablity plan
“President Barack Obama announces his administration’s plan to aid the automakers.”

Source: CNBC, March 30, 2009.

The Wall Street Journal: Dissecting GM’s press conference
“Dow Jones Newswires automotive reporters Jeff Bennett and Sharon Terlep discuss incoming GM CEO Fritz Henderson’s press conference.”

Source: The Wall Street Journal, March 31, 2008.

CNBC: Wilbur Ross’ forecast - the future of Detroit
“Fritz Henderson is a good choice to lead GM and the financing of dealers has yet to be addressed, says Wilbur Ross, WL Ross & Co. chairman/CEO, with Mike Jackson, AutoNation CEO.

Source: CNBC, April 1, 2009.

CNBC: President Obama’s G20 statement
“President Barack Obama discusses the G20 meetings.”

Part 1

Part 2

Source: CNBC, April 2, 2009.

CNBC: One-on-one with Soros
“Discussing new promises to increase spending in emerging economies, with George Soros, Soros Fund Management and CNBC’s Maria Bartiromo.”

Source: CNBC, April 2, 2009.

CNBC: OECD sees global trade falling 13%
“On the eve of the G20 summit, the OECD warned that global trade will fall by over 13% this year and that its members will see a 4% contraction in growth domestic product. Klaus Schmidt-Hebbel from the OECD discusses the gloomy outlook.”

Source: CNBC, March 31, 2009.

CNBC: Roubini’s read on the recession
“The solutions and government interventions that need to be tackled in order to take the economy and financial system off of life support, with Nouriel Roubini, RGE Monitor chairman/NYU Stern School of Business professor, and Arianna Huffington, Huffington Post.”

Source: CNBC, March 31, 2009.

The Wall Street Journal: Finding a bottom for home prices
“David Berson, chief economist of PMI Group, talks to MarketWatch’s Stacey Delo about how the housing market will rebound before jobs do, and why he expects home prices to bottom for most of the US in early 2010.”

Source: The Wall Street Journal, April 1, 2009.

John Authers (Financial Times): Housing hopes
“The falling ratio of prices to rents coupled with recent data showing that house sales have at least stopped slowing down suggests that an end to the precipitous fall in US house prices may be in sight, says John Authers.”

Click here for the article.

Source: John Authers, Financial Times, March 31, 2009.

The New York Times: The new hard times
“Ernest Kurnow, a 96-year-old business school professor at New York University, finished his own schooling in the middle of the Great Depression. Now his current students are faced with finding a job in the floundering world of finance after graduation.”

Source: The New York Times, March 27, 2009.

CNBC: Gross talks bonds
“Bond holders are still negotiating and hoping, with William Gross, Pimco, and CNBC’s Erin Burnett.”

Source: CNBC, March 31, 2009.

Bloomberg: Robert Arnott sees “big opportunity” in high-yield debt
“Robert Arnott, who oversees more than $30 billion at Research Affiliates LLC, talks with Bloomberg’s Julie Hyman about investment opportunity in high-yield debt. Arnott, speaking from Irvine, California, also discusses the outlook for the US stock and bond markets, and how potential Federal Reserve purchase of long-term Treasuries may affect credit markets.”

Source: Bloomberg, April , 2009.

John Authers (Financial Times): Equities - happy days
“The S&P, the world’s most tracked index, traded above its 100-day moving average - the average of prices for the previous 100 trading days - for the first time since May last year, says John Authers.”

Click here for the article.

Source: John Authers, Financial Times, April 2, 2009.

The Wall Street Journal: In like a bear, out like a bull
“Barron’s Bob O’Brien says that after the S&P 500 fell to a 12-year low on March 9, it then experienced a V-shaped recovery shooting 23% off the March lows. Is this a true rally with staying power, or is the data a fake to the head?”

Source: The Wall Street Journal, March 27, 2009.

The Wall Street Journal: Why are Wall Street observers interested in 1938?
“Barron’s Mike Santoli discusses similarities between the market of 1938 during the Roosevelt Administration and the market of 2009 during the Obama Administration.”

Source: The Wall Street Journal, March 30, 2008.

Financial Times: V Anantha-Nageswaran on dollar’s decline
“VA, chief investment officer of Bank Julius Baer, the Swiss private bank, believes the dollar’s days as the world’s reserve currency are numbered.”

Source: Financial Times, March 30, 2009.

Bloomberg: Frank Holmes says “odds favor” oil prices rising to $65
“Frank Holmes, chief executive officer of US Global Investors, talks with Bloomberg’s Pimm Fox about the outlook for oil, gold and commodity prices. Holmes also discusses mark-to-market accounting and his investment picks of San Juan Basin Royalty Trust and AngloGold Ashanti Ltd.”

Source: Bloomberg, March 31, 2009.

YouTube: Chris Powell - requesting gold audit
“Chris Powell appeared on the Fox News program ‘America’s Newsroom’ today, to discuss GATA’s request for an audit of the gold in Fort Knox, and the gold suppression scheme.”

Source: Fox News (via YouTube), March 31, 2009.

CNBC: CLSA - China’s PMI falls to 44.8
“According to CLSA, China’s March PMI fell to 44.8 from 45.1 in February. Eric Fishwick, head of economic research at CLSA explains to CNBC’s Amanda Drury what this means for the Chinese economy.”

Source: CNBC, April 1, 2009.

CNBC: Japan output falls
“Japan’s industrial output falls in February for the fifth straight month but signs of a rebound emerge. Susumu Kato, chief economist & strategist at Calyon Capital Markets shares his outlook for the economy, with CNBC’s Chloe Cho.”

Source: CNBC, March 30, 2009.

Marketplace: Leveraging and deleveraging
“Leveraging - or borrowing - has been cited as one of the contributors to the financial crisis. Senior Editor Paddy Hirsch explains how the move to deleverage - or reduce debt - is prompting wild market swings and concerns about deflation.”

Source: Marketplace (via Vimeo), December 2008.

Tags: Bill Gross, Dow Jones, Dow Jones Industrial, Dow Jones Industrial Average, Economic Stimulus, ETF, Frank Holmes, Global Policy Makers, High Quality Education, Market Rally, Nassim Taleb, Nouriel Roubini, Peter Cook, Risk Appetite, Rob Arnott, Tim Geithner, Timothy Geithner, Treasury Department, Treasury Secretary, Wilbur Ross, Youtube
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