Archive for category Uncategorized
Emerging Market Inflation Has Become The Focal Point Threat To the Global Economic Recovery
Posted by blodmell in Uncategorized on April 16th, 2011
This was the FT headliner. I live in an emerging market and inflation is for real. A lot of easy money was unleashed into the global economy and it is payback time. Data released on Friday showed a surge in Chinese and Indian inflation, highlighting the threat to the global economic recovery as emerging markets overheat and commodity prices rise. Consumer prices in China increased 5.4 per cent year-on-year in March – their biggest jump since July 2008.
Benjamin Reid Lodmell: I Am Beginning To Watch Global/Emerging/Frontier Market Small Caps
Posted by blodmell in Uncategorized on April 12th, 2011
Today was ugly. Japan is nagging. The markets fell all over the world even though we are up on the week. I know I sound like a broken, broken, broken record player….but hard economic data and corporate earnings (despite Alcoa´s disappointment today) are solid. We are recovering from the greatest economic setback since the depression!
I have been an advocate for the building blocks of the global economy since the collapse of 2008: Energy, Materials, Financials. As evil as the finacial sector may be, they have a quasi governmental role in the global economy: the financial nervous system. I think we are breaking out into a subtle expansion. The opportunity of the future lies with companies nobody is watching right now, emerging market small caps…or ¨global¨small caps. More later. These are thoughts from your money managers mind.
Just When Doubters Started Doubting The World’s Largest Bank
Posted by blodmell in Uncategorized on March 30th, 2011
Industrial & Commercial Bank of China (1398) Ltd., the world’s largest lender by market value, posted a 33 percent gain in fourth-quarter profit as wider loan margins allowed Chinese banks to overcome a slowdown in credit growth.
Net income climbed to 37.9 billion yuan ($5.8 billion) in the quarter ended Dec. 31, based on figures released by the Beijing-based bank today. That exceeded the 36.6 billion yuan average estimate of 19 analysts surveyed by Bloomberg.
Pimco Talks About US Treasuries: Yields Are Going Up
Posted by blodmell in Uncategorized on March 21st, 2011
Will Japan buy fewer US Treasuries?
beyondbrics reader: Will the Japanese disaster be an important factor for Treasuries? Will it result in less demand from Japan?
A great question, that speaks directly to how Japan will fund its reconstruction program.
After the required focus on human rescue operations and the stabilization of the nuclear reactors, the attention of the Japanese authorities will shift to a massive reconstruction programme to offset the impact of the terrible earthquake and devastating tsunami. The funding can come from three major sources: borrowing, debt monetisation, and the repatriation of the considerable Japanese investments held abroad.
The impact on US Treasuries will depend on the exact mix of these three. The larger the repatriation, the greater the upward pressures on US treasury yields (and, also, the implications for some other assets classes).
As regards demand, yes there will be a reduction in the Japanese component as the country’s current account surplus will fall significantly. Since global balances need to add up, the reduction in Japan’s surplus will be accompanied by a higher surplus/lower deficit in other countries. The net impact is what counts for US Treasuries.
Note that, according to the data issued by the US government, we have had periods in which Japan has been a net seller of Treasuries. The impact was offset by purchases by other countries, most notably China, with similar asset preferences for Treasuries.
Based on all this, and in considering the level and composition of the various marginal propensities to save that are in play, we are inclined to the view that this demand effect would be also place upward pressures on the existing level of US Treasuries yields.
Japan Worries Will Continue To Depress Prices Until the Crisis Is Resolved
Posted by blodmell in Uncategorized on March 16th, 2011
We had a lot of limit orders tick off these days and I am very comfortable about it. Build positions and lower the average price per share. I think the crisis will pass and the Japanese and global economy will absorb the shock but it sure is nerve racking process. Hold the line.
They Should Get Control Of The N Reactors In Japan. Markets Should Rise As A Result
Posted by blodmell in Uncategorized on March 15th, 2011
As nerve racking as these kind of crisis are….we have to keep our discipline and use them as buying opportunities, or simply stay cool. No pun intended.
For Tokyo Electric Power Co.’s stricken nuclear reactors to release catastrophic amounts of radioactive material into the atmosphere, a rare chain of events needs to happen.
Averting a full-scale meltdown — which scientists say isn’t likely — depends on cooling the uranium-containing rods at Fukushima Dai-Ichi’s Reactor No. 2, said S.K. Malhotra, a scientist at India’s Department of Atomic Energy in Mumbai. A worst-case outcome may occur if overheating in the reactor culminates in the rupture of the steel lining protecting radioactive material.
“In the worst scenario, an explosion could occur inside the steel pressure vessel, fuel bundles melt down and the radioactivity is exposed,” Malhotra said in a phone interview. “I would say there is a 10 percent probability still.”
A 10% probability is still uncomfortable.
The Japanese Nuclear Plant Is The Quintessential “Black Swan”
Posted by blodmell in Uncategorized on March 15th, 2011
Watching closely.
The Economist Magazine Believes The Euro’s Future Is Simply In Merkel’s Hand
Posted by blodmell in Uncategorized on March 11th, 2011
Here is the least two paragraphs of their leader:
In her memoirs, Mrs Merkel might well say that Mr Cameron was to blame if it came to this. But she would have helped. In the past she resisted the idea of regular euro-zone summits precisely so as to ensure that the British, Poles and Swedes had seats at the table. By giving way now, she may soothe her voters’ current anxieties about the euro, but the future price could be large. If the euro zone moves to greater fiscal and economic-policy harmonisation, it may make the entire club less congenial to liberals—and less appealing even to those in Britain (including Mr Cameron) who want to stay in.
The European project has long had at its heart a tension between an economic liberalism that favours openness to the world and an economic nationalism that prefers a fortress. The Economist has always been on the first side of that argument; so, usually, has Mrs Merkel. As Europe’s most powerful politician, she should make clear that this week’s euro-only meeting is a one-off emergency summit rather than the start of something much more permanent—and more damaging.
We Build On Positions When There Is Crisis Driven Volatility
Posted by blodmell in Uncategorized on March 11th, 2011
Again, I know it is frustrating to watch our market gains slip away. We watched 60% gains in Geely Auto literally disappear in the last 2 months. But that doesn’t change our long term story. Geely is a winning long term story. Period. This is why we must stay the course. Brazilian Banks are being beaten up on rate hikes but it doesn’t change their long term story. We have cash and must use it when our prices are down. Build positions and lower average price per share on our great assets. That is mantra!
Here is JP Morgan’s comments on Brazil rate hikes:
All in all, we maintain our interest rate and exchange rate forecasts unchanged but consider the risk of fewer hikes in the pipeline greater than that of more tightening. This could translate into 50bp and 25bp hikes at the next meetings. The result should be some negative short-term pressure on the BRL (not likely to break below 1.65 to the dollar) and a steeper yield curve out to 2 years, with ST yields likely to compress further as the market is still expecting 120bp of tightening in 2011. The curve inverted after 2yr also reflects expectations for moderate rate cuts from next year on.
Easing Global Tensions, US Jobs Data and Markets Bounce Back
Posted by blodmell in Uncategorized on March 4th, 2011
, but it shows we are still living in volatility. Volatility is here to stay. I often joke that these darn markets are going to force us all to become traders, not investors. I noticed Dang E commerce bounced up 10% yesterday. One day. 10%? Akbank bounced up 5.15% I thought banking was boring?
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