Jim Rogers: Well I’m long the Euro because I expect them to come through this one okay. Either Greece is going to be papered over and they’ll give a blast to the Euro, or they’re going to let Greece go bankrupt. In my view, this is what they should do because then people would say, “Wow. They’re serious about sound economies in Europe.” That would make the Euro very strong. Then people would know they are not just going to print money or paper over failure.
Either way, I think there’s probably a rally coming. There’s a huge short position in the Euro and whenever there’s been a huge short position in anything, it’s sometimes profitable to go to the other side. So, I am long the Euro because I think there are too many pessimists. Maybe Greece will go bankrupt and the Euro will collapse before people realize, “That’s good … that’s not bad.” Sometimes it takes a lot for perception to become reality or reality become perception.
Jim Rogers is Long the Euro
Posted in Macro.
The case for/against gold
From Rick Bookstabler (hat tip Abnormal Returns) titled “The Gold Bubble”
For the gold bull, I repeatedly run into this pretty long but very interesting article by John Law (pseudonym, not a real name) posted in May 2006 “Why the Global Financial System is About to Collapse” – here part 1 and here part 2 of the full article.
Posted in Commodities.
DTZ’s Ji Says China Property Prices May Fall Further 20%
5 mins video from Bloomberg interview
Quite uncommon for a property service company making bearish call.
Posted in China.
Reuters: U.S. companies amass record cash vs debt
From Reuters
Cash amounted to just under 30 percent of debt in the fourth quarter, versus about 25 percent in the previous quarter, according to a Morgan Stanley report.… In recent weeks, tobacco maker Philip Morris (PM.N) launched a $12 billion share buyback plan, while Lowes Cos (LOW.N) announced a $5 billion buyback and Home Depot (HD.N) raised its quarterly dividend 5 percent, its first increase since 2006.
U.S. companies overall, however, “are a long way from large changes in capital structure and aggressive deployment of cash stockpiles,” Morgan Stanley said. “At the very least, until companies start hiring, we do not see aggressive spending.”
Posted in Credit.
Biggs: Stocks Cheapest Now in 30 Years
From Business Insider, and also voice recording of interview with Biggs (around 30 mins) here. Biggs sees inflation rising to 4 to 5% 5 years from now:
(Business Insider) … Today, Barton can say with “real certainty” that large cap multinational equities are the cheapest they have been in 30 years using sophisticated models that analyze price/sales, price/free cash flow, price/earnings, and a whole host of other metrics. Looking just at price/book ratios, these stocks have been this cheap only three times in the last 120 years.… He foresees a “new normal” of a lot of volatility in stocks for the next 4-5 years…… Barton thinks Asia is the place to be. A bubble may be developing in China, but it is at least 3-5 years off, and there will be plenty of money to be made until then. India is another big pick because it is ten years behind China, and has yet to experience its big growth spurt. South Korea, Thailand, H-shares in Hong Kong, and Turkey are also lining up in Barton’s sites……Commodities had their run last year, and won’t do much from here, but they aren’t going to crash either. He sees oil grinding up because the cost of new sources is becoming astronomically high. Barton avoids gold because it has no yield or PE, and would rather not be associated with the crazies that inhabit that space. Bonds will be deflation driven for the next year, but are definitely not for your “Rip Van Winkle” investor, as they represent poor value for money. Real estate is dead money…
Posted in Macro.
Perma-Bear Bob Janjuah Makes A Bullish Call
From Business Insider, and also ZeroHedge: Bob Janjuah – “Hopefully, For All Our Sakes, The Bubble Bursts Sooner Rather Than Later”.
(Bob Janjuah) … I know I will always be labelled a perma-bear … occasionally I do make bullish calls (most notably early in 2009!). … I want to be crystal clear: If S+P closes above 1120 for the 1st 3 days of this week, 1150 and 1220 are next. If not – if we fall and close below 1120 on 3/4 consecutive closes this week/early next, then the odds are high of a resumption of a downtrend which shud take S+P to sub-1000 over the next mth or so.
Posted in Macro.
Faber: Bullish on Gold and Non-US Stocks
Here CNBC interview with Faber (via gurufocus.com), he estimates in 10 years time, the US would spend 30-50% of tax revenue on interest payment. In another Bloomberg interview (via blog AngloAustria), he thinks Euro may rebound to 1.40 before going lower.
Posted in Macro.
Rosenberg: DEFLATION THE PRIMARY THEME
From the blog News to Use, quoting David Rosenberg. I think the real world deflation would go on, while asset price inflation may go even further.
(New to Use / Rosenberg) … As per the revised Q4 data, we now see that unit labour costs slid at a 5.9 % annual rate, the third decline in the past four quarters. On a year-over-year basis, unit labour costs plunged 4.7%, which is unprecedented (the pre-revised YoY trend was -2.8%). As the chart illustrates, there is a tight 82% correlation between unit labour costs and the trend in headline inflation…By way of comparison, commodity prices only have a 33% correlation to the inflation rate — in no small part because 60% of the CPI is in services and there is a whole host of cyclical services ranging from hotels, to recreation, to rents that are deflating, and deflating fast.
Posted in Macro.
The US Employment Really Improving?
From the blog Carpe Diem (hat tip Infectious Greed) “Monster Index Shows Widespread Employment Gains; 1st Positive Annual Growth Since 2007″:
(Carpe Diem ) The Monster Employment Index rose by ten points in February, as employers resumed hiring activity after January’s seasonal lull. The long-term growth rate turned positive, with the Index up 2% year-on-year, for the first time since December 2007 suggesting some improvement in the underlying demand for labor…
Also, from News to Use “JOB CREATION RESUMES IN US“:
(News to Use) The BLS employment report surprised on the upside in February…
[Also, take a look at] household survey from which the unemployment rate is derived. This survey is normally more volatile [but] much less impacted during episodes of severe weather conditions. As it turns out, the household survey showed an increase of 308,000 jobs in February, the second increase in a row.
As today’s Hot Chart shows, the 3-month moving average indicates that job creation has already resumed in the U.S., a development that we expect to see confirmed by the payroll survey as soon as next month. What’s more, it is extremely encouraging to see that the household survey showed two consecutive months of full-time job creation through February. As shown, this is the first such occurrence since the onset of the recession.
[Excellent counter arguments from Rosenberg, also via News to Use] The Household survey showed a decent 308,000 increase in February… [But] first agricultural and related employment surged 198k, which ranks as the fourth largest increase in 25 years. So, the same month that we endured one of the stormiest months, weather-wise, in recent memory, the farming community went out and hired a handful of corn planters. The rest of the Household survey was government related, therefore, what we see out of this survey was that private sector nonfarm workers actually fell 89,000 (and not weather affected).
… And, while the headline unemployment rate managed to stabilize at 9.7% compared with consensus views of a modest uptick, the more inclusive U6 measure, which takes into account the overall level of underemployment in the economy, rose to 16.8% from 16.5%.
One arcane statistic that still shows this to be an employers’ market, the “quit rate” — an old Greenspan favourite that illustrates worker confidence in the jobs outlook — dropped 5.7% from 6.1% and now stands at a five-month low. Perhaps it is because of this relentless large degree of slack in the labour market and the low level of worker security that we are seeing wage growth slow down as much as it has, even in the face of a statistical tentative recovery, with average weekly earnings down 0.2% MoM in February — the second decline in the past three months — and now just 100 basis points away from deflating outright on a year-over-year basis.
Posted in Macro.
