Most U.S. portfolio managers seem to view the EU sovereign debt crisis as they would a pesky mosquito that refuses to fly away. If only the mosquito would leave, the asset managers could concentrate on the U.S. where the economy is said to be showing so much improvement and stocks are incorrectly perceived...
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We have two bits of commentary from Kyle Bass today. First he gave his usual straight forward views to CNBC this morning. Second his latest letter. Unfortunately I cannot find a version of the letter that can be printed or downloaded, so you will need to read it online.
From the Interview
“If you get out a blank piece of paper and have a look at it, that’s the plan they’re working from right now. Everything is an agreement in principle. There are no details. It’s very difficult to arrange such a disparate group of people, and get them all to cede their fiscal sovereignty to call it a central taxing authority, and in the absence of that, it won’t work.
…I think that if you look at this last agreement, from the last summit, it’s somewhat of a doomsday machine. What they’re talking about, are the ECB and governments guaranteeing the debts of the banks which in turn buy the debts of their country that’s making that guarantee, pledging it at that central bank and getting more money to go buy more debt of those countries.
It’s somewhat sophomoric if you ask me. It is a circular reference that I don’t think institutional investors around the world are going to buy, they might hoodwink some retail investors into buying these things. When you look at the periphery today, there are no buyers of peripheral bonds.”
Some of the best commentary I have read on the Euro, and from several different directions, from Gavekal. Truly a must read.
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Despite markets having more moves than a MLB shortstop hitting .200, not all that much has changed in the past three weeks. We are still awaiting the latest iteration of a "plan" out of Europe, coincident economic data for the US remains ok, though leading indicators continue to forecast that a recession is already...
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This week we saw a coordinated effort by central banks to use their bazookas to head off another 2008-style credit disaster. The market reacted as if the crisis is now over and we can get on to the next bull run. Yet, we will see that it wasn't enough. Something more along the lines...
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Investors should recognize that Euroland’s problems are global and secular in nature, reflecting worldwide delevering and growth dynamics that began in 2008. It will be years before Euroland, the United States, Japan and developed nations in total can constructively escape from their straitjacket of high debt and low growth.
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Germany is roundly seen as the obstacle to saving the Euro by refusing to allow massive bond purchases and refusing to consider Eurobonds. The real obstacles however are poor options, not Germany.
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Niels Jensen looks at the debt situation in the developed world, the implications for Europe and the potential opportunity in European equities and corporate bonds.
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John Mauldin looks into whether the European debt crisis is solved. Looking deeply there is more to the market "melt-up" than simple euphoria and relief. What you find is a very disturbing unintended consequence that will come back to haunt us.
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With a serious impending crisis on our hands, we need to understand it from all angles, starting with geopolitical risk. To help John Mauldin sends this insightful two-part series from STRATFOR, written just prior to the meeting of the Eurozone Finance Ministers last Friday Oct 21.
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As most investors know by now, these instruments were created to protect bondholders from default. Of course, what we found out in 2008 was that they really just shifted the risk from one investor to the other. Sort of like tossing a hand grenade in a circle hoping you aren’t the one...
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We keep hearing about positive signs month after month, but the latest data on the housing markets shows the pace of declines has been accelerating and widening, not slowing down. In my opinion this is good. The decline in prices of overvalued assets is a good thing, whether houses, stocks or debt. The problem...
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As far as I know Jeremy Grantham has never appeared for the general public on TV or video. We get a real treat from Consuelo Mack of Wealthtrack with Jeremy dispensing advice about where the market is now. Like myself he sees the market as reasonably cheap, but not spectacularly so. He gives sound...
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Yesterday was one fo the best days ever for the stock markets: What does it mean? I think it ultimately depends on factors unrelated to the move itself. Econompic provides us with some context: Obviously large one day moves in and of themselves tell us little about what is to come. So, let us...
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Yves Smith hits a theme I have been harping on, the Federal Reserve, and central banks in general, are making things worse in may ways by destroying the incentive for banks to lend or borrow from one another. She quotes James Bianco of Arbor Research: The Fed’s massive and numerous liquidity facilities are making...
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I am often asked about individual bank stocks, especially JP Morgan. Generally my answer is that Bank of America, JP Morgan and a few others look to be likely survivors, but how profitable they will be I am really unsure. JP Morgan is a special discussion, because I point out a rather astonishing fact,...
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Let us look at one of the ways that we are being panicked unnecessarily, and why incidentally we can help many of these financial institutions in the fashion I discussed in my post on a potential alternative plan. In my next post we will discuss ways in which we are not being misled, and...
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I do believe we should be doing something as a nation, through our government, to avoid the not insignificant chance of a total financial meltdown. I have seen several things proposed that I find interesting, and I will get into them and other longer term issues in coming days. I had hoped to address...
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Yves Smith has picked up on a pet peeve of mine. In the midst of our crisis we have heard all kinds of cat calls about the failure of the “American Model” of financial capitalism, especially from Europeans. I find this fascinating given the far more leveraged and under supervised practices of their banks....
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Back in February of 2007 we began to scrub our portfolio’s of all exposure to financials, which wasn’t very high at that point anyway. Needless to say, instant alpha. Of course, the follow on question I get repeatedly, especially those who have been investing with Bill Miller and Legg Mason Capital all the way...
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