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Guide to Save the Euro
by Axel Merk of Merk Investments,
Can the euro be saved? Is it possible to stem the flight of money from the periphery into the core? With a botched German auction in mind, investors are now wondering whether its possible to prevent a flight out of all things euro? We examine the dual challenges of fiscal sustainability and bank solvency in this analysis, with the not-so-modest title Guide to Save the Euro.
Jeremy Siegel on Why Stocks are 'Extremely Attractive'
by Robert Huebscher,
Jeremy Siegel is the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania. His book, Stocks for the Long Run, now in its fourth edition, is widely recognized as one of the best books on investing. We spoke to him last week about equity valuations and the prospects for the economy.
The Euro-Recession?
by Russ Koesterich of iShares Blog,
Stocks and the euro rose as efforts heated up to help ease Europes debt crisis. Germany and France increased a drive for coercive powers to reject euro zone members budgets that breach EU rules, while a rout of European debt eased on hopes of outside help for Italy and Spain. Despite this progress, a general erosion in confidence coupled with an ongoing deleveraging by the European banks are raising the odds that Europe will experience at least a mild downturn in 2012. For many investors one to two quarters of negative growth now represents the best case scenario for Europe.
Krugman versus Summers ? Will the US mirror Japan?
by Robert Huebscher,
Larry Summers and Paul Krugman may share ideological leanings, but they disagree sharply about our economic prospects. Both agree that political gridlock is responsible for the failure to grow our economy, but is that impasse is so severe that the US is destined to endure the slow growth, high unemployment and deflation that has plagued Japan for the last two decades? It depends who you ask.
Readers Questions Answered Part VIII
Its been a while since I answered some readers questions. Thank you, readers, for all your responses to the blogthey have been highly encouraging. 1. Do you think there will be a recession globally or in emerging markets from a mid- to
long-term perspective? 2. What is the impact if one or more countries withdrew from the euro? 3.What is your view on Ukraine? Ukraine is one of the more interesting markets since it has a number of viable industries with growth potential.
Readers Questions Answered Part VIII
Its been a while since I answered some readers questions. Thank you, readers, for all your responses to the blogthey have been highly encouraging. 1. Do you think there will be a recession globally or in emerging markets from a mid- to
long-term perspective? 2. What is the impact if one or more countries withdrew from the euro? 3.What is your view on Ukraine? Ukraine is one of the more interesting markets since it has a number of viable industries with growth potential.
No Direction Home
The conceit of Ancient Rome: In Imperial Rome, roads out of the city marked only the distance from the city, not to anywhere. All that counted was how far or near you were from it. The ECB adopts a similar centricity: all that matters is to keep prices stable. Nothing else. Which is why euro bonds continue to retreat with Italy and Spain hitting the 7% club for their 10-year paper. Unemployment can remain at 10% for three years. Growth can slow to 0.2%. But while inflation stays above the 2% target, all bets are off to ease the pain.
No Direction Home
The conceit of Ancient Rome: In Imperial Rome, roads out of the city marked only the distance from the city, not to anywhere. All that counted was how far or near you were from it. The ECB adopts a similar centricity: all that matters is to keep prices stable. Nothing else. Which is why euro bonds continue to retreat with Italy and Spain hitting the 7% club for their 10-year paper. Unemployment can remain at 10% for three years. Growth can slow to 0.2%. But while inflation stays above the 2% target, all bets are off to ease the pain.
Print or Perish
I do not think the euro will survive with the current mix of countries, nor do I think that Germany thinks so either. Greece is likely to go, as is Portugal. Can Spain really get its deficit under control in time? Do we see a two-euro world, one in the northern states and one in the southern? And to which one does France go? Looking at the politics, one might think the answer is obvious, but if you just look at the numbers, it is clearly not. France is in many respects a Mediterranean country. So many choices and none of them good.
It's All Greek to Me
by Michael Lewitt,
As one who has written that there is little chance of a long-term solution to Europe's problems without a radical rethinking of global economic policy, the Europeans still have little choice once they peer over the cliff to realize other than to step back and buy some time before taking the inevitable leap. For, in the end, they have no other options than to jump.
Michael Aronstein on Today's Key Macro Trends
by Robert Huebscher,
Michael Aronstein is the president and chief executive officer of Marketfield Asset Management. Since its inception in 2008, his fund has returned 31% while the S&P has been down 15%. I spoke with him about the key macroeconomic and strategic issues facing investors today.
A Strategy with a 25-year Record of 25% Returns
by Robert Huebscher,
Indiana-based SBAuer Funds launched its inaugural mutual fund in December of 2007, after having established a successful track record with a separately managed account business. I spoke with Bob Auer, who has employed the same stock selection system used by the fund for the last 25 years, over which time returns have averaged 25% annually.
Three Great Paragraphs from Peter Lynch
Since the stock market is in some way related to the general economy, one way that people try to outguess the market is to predict inflation and recessions, booms and busts, and the direction of interest rates. True, there is a wonderful correlation between interest rates and the stock market, but who can foretell interest rates with any bankable regularity? There are 60,000 economists in the U.S., many of them employed full-time trying to forecast recessions and interest rates, and if they could do it successfully twice in a row, theyd all be millionaires by now.
Bill Gross' Revised Paradigm: The New Normal Minus
by Robert Huebscher,
Following the financial crisis of 2008, PIMCO articulated its 'new normal' forecast of slow growth and mediocre capital market returns. Appending the even drearier modifier 'minus' to that outlook, Bill Gross said that expectations now appear worse than even he previously feared. Gross was pessimistic in both the near and long terms, and he startled the audience with his premonition that 'capitalism is at risk.'
Greek Democracy Could Be Costly
by John Browne of Euro Pacific Capital,
Financial planners and politicians could be faced with a possible depression accompanied by a breakdown of confidence in fiat currencies if either the euro or the EU collapses. As the worlds second currency, the euros collapse would create a massive currency crisis in the European Union, the worlds largest economy, possibly triggering a massive depression. With both the dollar and the number two global currency (the euro) facing an uncertain future, investors would likely be wise to maintain some exposure to stores of value, such as precious metals.
A Gravity Test for the Euro
by Kenneth Rogoff of Project Syndicate,
Although I appreciate that exchange rates are never easy to explain, I find todays relatively robust value for the euro mysterious. Do the gnomes of currency markets seriously believe that the eurozone governments latest comprehensive package to save the euro will hold up? The new plan relies on a questionable mix of dubious financial-engineering gimmicks and vague promises of modest Asian funding. I can think of one very good reason why the euro needs to fall, and six not-so-convincing reasons why it should remain stable or appreciate. Lets begin with why the euro needs to fall.
Regulatory Armageddon
by Bob Veres,
Suppose you were somehow able to convince 40 advisors, who are all well-known thought leaders in the profession, to gather in the same room for a six-hour brainstorming session. The goal: to identify the single most important thing that the financial planning profession should be thinking about now. What do you think they'd come up with? Fasten your seat belts, because this may be the most important report you'll read all year.
The Danger in European Stocks
European equity prices, depressed by fears of a sovereign debt crisis, are cheap to such a degree that William Bernstein, author of The Intelligent Asset Allocator, called them a true bargain. Income-oriented investors, in particular, may be tempted by 4.2% dividend yields and a market-wide P/E ratio of approximately 11. My analysis, however, contradicts Bernstein's and shows the underlying risk those investments carry.
And That's The Week That Was
by Ron Brounes of Brounes & Associates,
Europe apparently has solved all of its financial challenges While Greek protests continue daily, the EU leaders held a contentious summit that teetered between storming out with nothing and completing a breakthrough deal. In the end, the group agreed to significantly write-down Greeces sovereign debt held by private investors, recapitalize the banking system, and expand the bailout fund. The ministers hope that China and Japan will embrace the new deal and even throw a few bucks their way as an investment in the global economy, but nothing definitive has been determined at this time.
What's Going Right?
Everyone knows housing is still weak. And, everyone knows jobs are growing, but not fast enough to seriously lower the unemployment rate (9.1%). Everyone also knows real GDP has expanded for nine consecutive quarters, at an average annual rate of 2.5%. No one is satisfied with this; but it is a recovery, not a recession. So, how can real GDP grow when housing and employment are so weak? Well, it turns out that the strongest part of the economy has been business investment. Equipment and software investment has grown five times faster than GDP-12.9% over the past nine quarters.
Euro Bailouts - The Good, The Bad & The Ugly
by Axel Merk of Merk Investments,
The markets appear euphoric about the ability for European policy makers to deliver on new promises. Low market expectations were met. We, too, have a positive takeaway, but only because of one detail of the grand plan; actually, lets call it a grand sketch, as many details are still unknown. When the current euphoria is over, the bond market will have little mercy with those ducking from their responsibilities. Long live the euro! Talking about leadership: Has anyone noticed that the Federal Reserve might be paving the way for QE3?
Sector Insights - Focus: Health Care
by Mark W. Broughton, Mark H. Dawson, Michael D. Emery, and Stacie L. Cowell of Rainier Investment Management,
Our focus is on identifying companies that we believe are likely to grow earnings faster than their competitors, yet are priced at reasonable valuations. Health care is an interesting sector in that there is a fair amount of differentiation within the sector, so it is rare that companies within the sector move entirely in tandem with one another. Successful investments can typically be found within the sector even during times that the group is out of favor. Today we are much more attuned to the economic sensitivity of the group and the effects of reform on the broader landscape.
Developed Europe: Economic Review September 2011
by Team of Thomas White International,
With the world anxiously watching, Developed Europe battled against its sovereign debt problems on several fronts all through September. Investors became increasingly concerned as the month progressed because Euro-zone leaders delayed making a decision on paying Greece the next installment of its bailout package, despite the beleaguered country declaring that it would run out of money by mid-October without the aid tranche. News reports from the region indicated that the installment was being delayed to pressure Greece into speeding up crucial structural reforms.
Gundlach: Markets Aren?t Cheap Enough Yet
by Robert Huebscher,
Prices for risky assets are straddling the extremes of two potential outcomes. A 'hurricane' may hit, in the form of a blow-up in Europe or a move to put the US federal government on an austerity program, driving prices lower. Or world economies will plod along, in which case optimistic pricing makes sense. But prices should be 'truly cheap' against those parallel problems, according to Jeffrey Gundlach, and that is not yet the case.
A Hair Trigger Rally
by John Browne of Euro Pacific Capital,
While a meeting between two Euro leaders (Sarkozy and Merkel) may have galvanized Eurozone politicians into more dramatic group action, the new Facility fails to address the intractable political problem that solvent countries are tiring of funding profligate neighbors. It also fails to reverse the fundamental structural problems that plague the euro. Just a few weeks ago, when the EFSF bailout fund was announced, it was widely trumpeted as a cure-all. However, even $2 trillion would be a paltry sum with which to confront any debt problems erupting from larger countries such as Italy.
The Euro is Dead. Long Live the Euro
by Axel Merk of Merk Investments,
To ensure the European sovereign debt crisis doesnt go to waste, the markets have kept policy makers and bankers on their toes. The naysayers of a European turnaround have become so overwhelming that it is stunning Europe hasnt submerged into the Atlantic Ocean yet. It appears that German Chancellor Angela Merkel, is about to turn the tide. A month ago, we turned cautious on the euro. However, in a world where policy makers are throwing billions and trillions at the problems, market fundamentals can quickly change. And so it is that our assessment of the outcome for the euro has changed.
Managed Futures are not a New Asset Class
by Michael Kitces,
The focus on finding investments that have a low correlation to equities has grown to such an obsession that we're willing to name anything that has a low correlation as 'a new asset class.' While some alternatives truly have their own investment characteristics unique from stocks and bonds, other alternatives - like managed futures - simply represent an active manager buying and selling existing asset classes.
The Global ?Old Normal?
by Michael Nairne,
Amidst a torrent of dismal economic news and plunging stock prices, investment horizons have become increasingly short-sighted. The new normal of faltering growth and painful deleveraging appears to be only too true. However, investors capable of taking a long-term, global view will find forces at work that will likely drive resurgent world growth akin to that which occurred in the decades right after World War II.
Strategists Predicting Explosive Q4
This morning I read a Bloomberg article titled: Strategists See Biggest S&P 500 Gain Since 98. Could this be a misprint? We would tend to agree with the potential for an explosive Q4. The markets have traded down on the Euro scare which has spread to Ameri scare. The truth is that the U.S. is in a MUCH better place than Europe, in our opinion. Our banks are very well capitalized. Our consumer has much less debt and is actually holding up well. We believe markets often turn when sentiment is at its worst. Could it be time to be greedy in the midst of all of this fear? We think so.
Value Investing Lessons from Moneyball
Is baseball a metaphor for life, as many literati have suggested, or for value investing? Michael Lewis' 2003 bestseller Moneyball argues the latter. More recently, the book has been adapted to make a thoughtful movie that will be of special interest to investors who believe in trying to find hidden bargains.
Jeffrey Gundlach: Preparing for the Coming Crisis
by Katie Southwick,
Speaking at a luncheon in New York last week, Jeffrey Gundlach, the founder and chief investment officer of DoubleLine Capital, gave investors advice on how to survive pending crises at home and abroad. After outlining the current state of U.S. debt and tax policy, Gundlach advised against European investments, favoring the U.S. dollar and owning U.S. government bonds as a hedge against credit.
The Energy Expert You Shouldn?t Trust
by Richard Vodra,
Daniel Yergin, a self-described 'leading energy expert,' has written The Quest: Energy, Security, and the Remaking of the Modern World, designed to provide information that policy-makers can rely upon in shaping energy policy for the decades ahead. This could be a dangerous reliance, for Yergin is an advocate for the fossil fuel community, not an honest broker of information.
The Adjusted Gold/XAU Ratio as an Indicator of Forward Returns for Gold Stocks
by Georg Vrba, P.E.,
While the recent bull market took gold prices to new highs, the prices of gold-mining companies lagged. Some claim those companies are now drastically undervalued, and we can investigate that claim by examining the relationship between gold and gold-mining prices.
Six Pac(k)in'
by Bill Gross of PIMCO,
Long-term profits cannot ultimately grow unless they are partnered with near equal benefits for labor.
There is only a New Normal economy at best and a global recession at worst to look forward to in future years.
If global policymakers could focus on structural as opposed to cyclical financial solutions, New Normal growth as opposed to recession might be possible.
All Eyes on Europe
by Mark Kiesel of PIMCO,
The longer policymakers wait, the more likely Europes financial crisis will deteriorate. The risk of a global liquidity trap has also increased as many healthy balance sheets around the world are also refusing to engage. Germany and other strong sovereign nations in Europe have to make a choice: continue to provide financial assistance to countries with more debt and assist in helping to restructure the debt of some European peripheral countries, or potentially move forward with a smaller, stronger group of countries-or at the extreme walk away from the Euro and the EU all together.
Twist Paves the Way for QE III
by Peter Schiff of Euro Pacific Capital,
But many of those who oppose QE3 do so because they believe the economy doesnt need more stimulus not because the stimulus itself is causing the economic weakness. As a result when the economy deteriorates, support for QE III could grow. In the end QE3 will likely be far more popular than another bank bailout, which may be on the table if the Fed fails to rescue the banks it may be pushing over the edge with Twist. But our zombie economy does not need to be perpetuated by more QE. It must be allowed to die so that a living, breathing, self-sustaining economy can replace it.
The Power of Dividends ? And What They Say About Future Returns
by Lance Paddock,
The return on equities is driven by dividends, since companies must ultimately distribute their hard-earned cash to shareholders. Given that
reality, recent history of dividend yields portends a disappointing future for equity investors, one of sub-par returns relative to historical averages.
Europe!?
by David Kelly of J.P. Morgan Funds,
Investors might wonder why global markets care so much about European debt. After all, relative to the size of their economies, both the U.S. and Japan run bigger annual budget deficits and have accumulated more government debt than the Euro Zone as a whole. The answer lies in the fact that Europe is now too integrated to be immune to the problems in any one nation, but still too divided to do anything effective to deal with them. Because of this, a very serious budget problem in one nation can undermine confidence in government debt and the banking system across the entire continent.
Fall 2011 Market Review
by Owen Murray of Horizon Advisors,
After the volatility in the capital markets over the past few weeks, it is easy to forget that the market was just a hair from its 52-week high as recently as July. Then, a flurry of events has made the once happy days of spring feel like a distant memory. With the debt ceiling debate going into the eleventh hour, Standard and Poors announcing a debt downgrade, and the euro-zone debt crisis seemingly reaching a crescendo, confidence has been severely impacted and concerns over the durability of our recovery have been raised.
An Uncritical Glorification of Hedge Funds
by Michael Edesess,
Sebastian Mallaby's book, More Money than God, sheds some light on interesting events in hedge fund history and is strewn with a few valuable insights. Mostly, though, it is a work of serial hagiography. It seems designed to attract worshipers like those who drive by celebrity homes in Beverly Hills.
Europe on the Verge of a Political Breakdown
Europe is again on the precipice. The most recent Greek rescue, put in place barely six weeks ago, is on the brink of collapse. The crisis of confidence has infected the eurozones big countries. The euros survival and, indeed, that of the European Union hang in the balance. European leaders have responded with a cacophony of proposals for restoring confidence. There are several ways to recapitalize Europes weak banks. If these proposals have one thing in common, it is that they all fail to address the eurozones immediate problems.
Merk sells Euro to buy Australian Dollar
by Axel Merk of Merk Investments,
Given that many know Merk Investments as "euro bulls", arguing that the euro can thrive despite all the turmoil in the Eurozone, we wanted to share with our investors and the public that in our hard currency strategy, currently with over $700 million in assets, we sold over U.S. $90 million worth of euros late Thursday to re-allocate to the Australian dollar. This re-allocation was an acceleration of a recent trend to deploy euro holdings elsewhere. The strategy is now underweight in euros. Our move was motivated by recent European Central Bank (ECB) and U.S. Federal Reserve communication.
Emerging Europe: Economic Review August 2011
by Team of Thomas White International,
Economic growth in the Eastern European region faltered during the 2nd quarter. With this sputtering growth, the central banks are feeling pressured to reduce borrowing costs for consumers and businesses alike. Significantly, the economic recovery in the region is currently facing its most serious threat amid the burgeoning Euro-zone debt crisis and the recent downgrading of the U.S. credit rating. The woes of these former communist states are compounded further by the fact that most of these economies are dependent on their exports to the industrial powerhouse Germany.
Middle East/Africa: Economic Review August 2011
by Team of Thomas White International,
According to the IMF, global economic prospects have taken a downturn in the wake of a weaker U.S. economic recovery, uncertainty surrounding the Euro-zones fiscal stability and relentless turmoil in the Middle East and North Africa (MENA) region. In recent weeks, the MENA region has been in the spotlight yet again, with the Libyan revolt against Muammar Gaddafis 42-year long dictatorship gaining momentum. The IMF has been keeping a close watch on developments in the strife-ridden country and is yet to determine the uprisings impact on the Libyan economy.
Byron Wien Reflects on His List of Surprises
Byron Wien is a senior managing director and vice chairman of Blackstone Advisory Partners, the largest alternative investment firm in the world with $140 billion under management. Each year, for the last 26 years, he has published a list of 10 'surprises' investors should expect in the capital markets and the economy. In this interview, he reflects on his list for 2011 and what see sees ahead.
No Way Out
by Michael Lewitt,
There aren't enough Steve Jobs and Mark Zuckerbergs to innovate our way out of the Everest of debt we have built for ourselves (and will continue to build for the foreseeable future). The good news (a purely relative evaluation) is that astute investors will find enormous opportunities in today's markets as they increasingly reflect unsustainable fiscal and monetary imbalances.
Strategies for a Rising Rate Environment
Shortening the duration of a fixed-income portfolio is often considered the default option, but it is not the only way to hedge against a potential rise in interest rates. This article provides investors with a framework to analyze and implement a range of fixed-income strategies, and highlights various investment considerations that should carefully be taken into account.
Results 9,901–9,950
of 10,168 found.
