Posts Tagged The Global Economy
Patience. Patience…With This Nerve-racking Market Volatility
Posted by blodmell in Global Economy on July 20th, 2011
Focus on hard economic data (global output/inflation/interest rates/current account balances/trade volumes) and corporate earnings which continue to be positive…not on the drama in Europe, however serious, or outsized fears of a “hard landing” in China, however possible. Just remember that the markets are constantly pricing in their greatest fear and greates hope at once. Meanwhile, speculation and massive trading volumes make that process ever more exaggerated. I always say markets are quite literally, hysterical. This is why we must focus on the long run and patiently build positions when prices are below our average price per share. It ain’t glamorous but any other strategy will turn us into traders. There is nothing wrong with “trading”. We just don’t think it is consistent with the goals of our individual investors.
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Are We Entering a Prolonged Bull Market Or Can We Expect Just More Exhausting Volatility?
Posted by blodmell in Emerging Markets, Global Economy on April 11th, 2011
This is the big question for me. I just spent the weekend in Uruguay and enjoyed a long lunch with a money manager on Saturday. Firstly, we were both impressed with how much change has occured in not only in the region here but in Uruguay specifically. It is undeniable that capital is appearing all over the place. Even the burned out Hotel Carrasco is receiving a several hundred million dollar facelift and a Sofitel brand. We agreed that global leading economic indicators were stable and we both expect stable corporate earnings this quarter. We both believed that the global economy and financial markets had been surprisingly resilient after the shocks of 2009. I asked if he believed that now the trauma has passed and even Europe is raising interest rates to slow inflation which implies the emergency stage of the recovery has passed, did he think we are entering a prolonged bull market? “I’m really concerned about the price of oil,” he replied without thinking. “I also ask myself if it isn’t speculation that is behind the commodity boom. I guess I just wonder how sustainable these prices are and whether the global supply chain can keep absorbing them. There are also so many variables that can cause more volatility.” I asked if he was willing to sit on cash and pay the price to find out? “No, I am increasing my exposure to emerging market equities and am closely watching interest rates. I am eager to buy short term fixed income as soon as rates are a little higher. In the end, my guess is that asset prices will rise. I’m just sharing my fears.”
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Benjamin Reid Lodmell, “The Global Economy And Global Equity Prices Have Turned The Corner”
Posted by blodmell in Uncategorized on October 25th, 2010
It’s subtle but, I think, true. There will likely be more volatility but our emerging market asset prices seem to have floors now that imply, “the worst is over”. It’s as if confidence is finally finding footing. The questions now are: Will the USA discover demand again and will the fast growing emerging markets control inflation while maintaining growth. The Chinese have proven to be more adept than even admirers have given credit and Brazil keeps breakneck growth while keeping the inflation genie in the bottle. India has proven they will keep raising interest rates if necessary. This morning the markets are finding reasons for cheer after an awkard G20 meeting. It’s nice to see markets are seeing glasses half full…turning the corner.
www.crinvestmentadvisors.com
CR Capital Skinny: China’s consumers cannot compensate for the end of America’s shopping spree.
Posted by blodmell in Uncategorized on October 16th, 2009
As optmistic as we are about the recovery in China, Asian in general and Brazil, the realist has to acknowledge that global growth will be challenged because of the advent of a closehanded United States. The US consumer has pulled the world out of recession as long as anyone can remember but its different this time. We are confident about the medium run but must all be ready for volatility in the short run.
www.crinvestmentadvisors.com
Wealth Management
This is Why the Massive Fiscal Stimulus Policy is Flawed
Posted by blodmell in Uncategorized on October 15th, 2009
Like two drunks leaning against each other to stay upright, this leads to an odd symbiotic relationship in which governments have stepped in to rescue the banks, only for the banks in turn to finance the government. In the long run the danger is that this cosy relationship means lending is diverted away from productive private-sector projects and into government spending. Economic growth will be slower as a result.
A debt crisis, with Western governments defaulting or devaluing, is only one possible outcome. Japan shows another: a long period of stagnation in which debt constantly gnaws away at the economy like the eagle on Prometheus’s liver.
CR Capital is almost more concerned about a long period of stagnation. The rules of the game would be less clear.
http://www.economist.com/businessfinance/displaystory.cfm?story_id=14649258
www.crinvestmentadvisors.com
Offshore Banking
World Bankers Suggest Rebound May Be Under Way
Posted by blodmell in Uncategorized on August 22nd, 2009
Central bankers from around the world met in Jackson Hole, Wyoming and expressed growing confidence yesterday that the worst of the financial crisis was over and that a global economic recovery was beginning to take shape. Our clients often tire of the professorial discussion about global macroeconomics. However, we insist that since our clients manage their own money (in the context of our managed accounts program) and their accounts are titled in their names that they take responsibility to understand why we make the recommendations that we ask them to implement. CR Capital is not an asset management company or a mutual fund. We provide independent investment advice. Whether this massive coordinated global bailout achieves the goal of jumpstarting the global economy (and especially the United States) or not is a serious question. It has everything to do with your portfolio. There is a chicken and the egg game going on right now in the sense that Central Bankers and Presidents are trying to also reignite consumer confidence so that the rebound becomes a self fulfilling prophecy. We think that the Economist magazine was right in suggesting the rebound will look like a long, flat U not a V, and Asia and Brazil will come back faster. However, this doesn´t mean that it would be smooth sailing for financial markets. No matter what happens, it will take skillful sailers and I repeat again…we will need to be disciplined, buying on dips.
http://www.nytimes.com/2009/08/22/business/economy/22fed.html?_r=1&hp
The Expression on his face says it all
The World Is Falling Apart and Optimism Is Up
Posted by blodmell in Uncategorized on August 19th, 2009
I wanted to take two articles from the same day to highlight why CR Capital Investment Advisors are such strong advocates of staying the course with Emerging Market Blue Chips while focusing on building significant positions and lowering the average price per share. On the one hand, we had a flurry of articles alarming about big drops in market prices on renewed fears that the recovery is unstable or markets were overheating, or economists warning that unemployment in the US will tip over 10%. On the other hand, we have articles like the survey from Merrill Lynch title “Optimism About Global Economy is Growing.” It’s enough to make one confused or mad but one could be right, one wrong, or both right at the same time. We focus on fundamentals and keep our eye on a very long term approach. Our role is often to hand hold clients, inform and re-inform and provide steady competent and trustworthy long term counsel. That is investment advice.
A new survey by Banc of America Securities-Merrill Lynch showed optimism among portfolio managers about the chances for global economic recovery rising to their highest level in nearly six years.
Three-quarters of the 204 fund managers polled in the monthly survey said they believe the world economy will strengthen over the next 12 months, the highest reading since November 2003. About 63 percent of managers polled in July had an upbeat view.
“Strong optimism in August represents a big turnaround from the apocalyptic bearishness of March,” Michael Hartnett, chief global equities strategist at Banc of America-Merrill Lynch Research, said in a statement.
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/19/AR2009081901845.html
"The fact that people will be full of greed, fear, or folly is predictable. The sequence is not predictable." W. Buffett
Could the Global Recession Be Ending Sooner than Expected?
Posted by blodmell in Uncategorized on August 13th, 2009
Honestly, we have been a bit pessimistic, especially with respect to the United States. The long term prospects for solid, broad growth in the US returning sooner than later (say one year from now) is a tough call because of the macroeconomics of the situation. The looming debt´s capacity to crowd out investment is concerning. But there are positive signs that the recession in Asia and now Europe could be ending. We have long understood that the US is not the only engine for the world economy now. We have understood that domestic consumer markets in the developing world are a real source of economic support too. It is very encouraging to see that Europe however, may pull out sooner than later. Imagine if the world pulled the United States of recession this time instead of the other way around as it has been for the last 70 years? China is already the big winner, Brazil and India are already more settled and secure economies; but, what a dramatic switch that would be.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aQT0Edo.n_V8
http://www.bloomberg.com/apps/quote?ticker=BPGCGI%3AIND
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