We're Giving Away $25,000

Mon, 2010/02/22 - 11:21am | Your editor

Hi, I’d like to write you a check for $5,000.

No, this is not a joke.

We are in the process of planning to increase the reach of our investment advisory services and as part of that we’d like to share the successes of our current subscribers.

And as a “Thank-You” for taking the trouble to do so I’ll be writing $5,000 checks to the first 5 people who respond and complete the criteria listed below.

Also, because we’re fiercely committed to “truth in advertising,” I’m asking for some form of verification of the successes mentioned on your video. I know this is a little more hassle which is one reason we’re giving away $25,000 to compensate you for your trouble.

Here are the guidelines for claiming your $5,000.

Read more »

Cassandra's Euro Forecast

Mon, 2010/02/22 - 11:18am | Your editor
From the darkest post-World War II trials, of Nazi war criminals in Nuremburg, came a key feature of modern international diplomacy, the use of simultaneous interpreters housed in little booths to translate what people speaking different languages have to say. Without this instantaneous translation, the post-War world would not have seen the United Nations, global trade negotiations, functioning bodies like the International Monetary Fund, the World Bank, the ASEAN or the OAU.
 
And of course there would be no way that the European Community could have grown from six countries speaking 3 different languages to its current membership of 27 nations speaking a dozen and a half different languages (not counting Erse since most Irish speak English.)
 
In the pre-War years, the only way diplomats could communicate and haggle and play chicken about financial aid to each other countries was by all talking French.
 
My knowledge of Estonian or Hungarian, Bulgarian or Latvian. is meager.

My Nightmare

Fri, 2010/02/19 - 12:19pm | Your editor

I had a nightmare last night. I was driving a van on a steep crooked road while talking on a cellphone with a reporter who had just landed an exclusive interview for us at the Bank of England. I was taking notes while driving and talking on the phone, and absolutely terrorized. I woke up before the crash.

Your editor lives in New York City where she rarely drives (although when babysitting with grandchildren she does sometimes have to drive a monster van. She is a law-abiding driver and would not talk on a cellphone while at the wheel. There is no way the Old Lady of Threadneedle Street would allow one of my reporters an interview. It was a nightmare.

You don’t need Dr. Freud to know this dream  tells you about my mood and concerns after a short week of using the new website under construction and working with the new webmaster, sometimes by telephone at late hours. The message for all of you, and me as well is: please be patient about problems on the site because they will be dealt with but cannot all be handled at once. Today we lost the lede paragraph indent.

And also, please forgive me for sending out the same article to subscribers three times yesterday. I am still being trained in the new system. I now understand what went wrong.

My dream also reflects my uncertainty about the impact of the American variant of the Bank of England, our Fed, raising the discount rate it charges banks. The stock and gold markets appear to dislike the measure, but the dollar is stronger, which of course hurts an international portfolio like ours.

Wall Street runs on liquidity these days, and even this tiny hint of eventual money supply tightening scares the pants off the equity market, to say nothing of the market for Treasury bonds. (Remember when interest rates rise, the price of existing bonds falls.)

But whenever there is a nightmare, you eventually wake up. The dollar’s meteoric rise may not even last long enough for my next overseas trip, to start Mar. 17 and end April 21. This should provide an escape or closure from the hassle of transitioning to a new website.

Yes, I will be filing my newsletter from England, France, and Spain where I’ll be traveling. The newsletter will come out normally except for Mar. 30 (Passover),  April 2 (Good Friday), April 4 (Eastern Monday),  when we would not create a newsletter anyway.  (We’re ecumenical.)

The huge European visit is not only for business, but also for two weddings, of my eldest nephew and his Italian bride in Kew Gardens, London; and of a close cousin’s daughter and her partner in Malaga. Both bridegrooms are bobbies, British police officers, which tells you something about my family. And why would not even think of really chatting on a cellphone while driving.

One piece of intriguing news: Invesco is creating an exchange-traded fund in its Power Shares series, to invest in closed-end funds (tracking an index they have created.) This combines two investment vehicles into the first U.S. legal fund of funds since Goldman Sachs  was barred from using this vehicle after the 1929 crash. In the 1960s many Americans in Europe, mostly in the military, were lured into another fund of funds by Bernie Cornfeld. His slogan was “Do you seriously want to be rich?” He lured in GIs who were not buying Global Investing, as the newsletter did not yet exist.

More for paid subscribers follows from Mexico, Israel, Britain, Canada, Japan, and the Dutch Antilles. Read more »

You Load 16 tons

Thu, 2010/02/18 - 12:51pm | Your editor

 

You load 191.3 tons, and what do you get? Another day older and deeper in debt.

The note I published yesterday mixed up the venerable billionaires. The one who bought gold exchange traded funds was George Soros, not Warren Buffett. Soros did this, according to papers he filed with the SEC, despite having publicly called gold a bubble early this year. Presumably he was trying to cheapen the price.

What Soros failed to do, the International Monetary Fund managed yesterday, by announcing it would sell another 191.3 (metric) tons of the yellow metal, why I was quoting the miner’s song. Presumably the money it raises will help pay for more bailouts.

That of Greece, however, will not be an IMF operation; it will have to be financed by the European Community. Right now EU leaders are all dumping on Wall Street and Goldman Sachs, which is easier for them to do politically than dumping on their own errant Eurostat watchdog, their local banks, or fellow pols. Read more »

Wednesday Trades

Wed, 2010/02/17 - 1:45pm | Your editor

For paid subscribers only, here are my trades of today. Read more »

Gurus and Asia hands

Wed, 2010/02/17 - 12:57pm | Your editor

Warren Buffett has doubled his holdings in gold Exchange Traded Funds. I have bought more but not to that extent.

There has been a substantial drop in foreign purchases of U.S. Treasury bills. China sold $34.2 in Treasuries, largely short-term T-bills, in Dec., for which a report has just been analyzed by Alan Ruskin, chief international strategist at RBS Securities. That brings its total sales after last August to $45 bn.

China ended the month and the year with few treasuries than Japan, which has now again become the largest foreign holder of US govt debt, with $768.8 bn.

Japan also beat China in gross national product in the final quarter of 2009, becoming global no. 2, thanks to statistical revisions.

“Overall, net capital inflows into the US rose to $60.9 bn in December from an inflow of $30.9 bn the prior month. But foreigners cut purchases of long-term securities”, the Treasury said on Tuesday.

China seeks both strategic diversification and scoring points by cutting its purchases of U.S. debt. China signaled last year that it would reduce its holdings in the US T-bill market despite being the largest US trade partner. It has now begun the cutback.

Reuters wrote: “Continued improvement in U.S. mortgage and other lending markets still depends on borrowing rates staying low, a factor influenced by foreign purchases of US debt. Analysts said this underscored the risk that waning appetite for U.S. debt among major foreign holders could spark a sell-off and send yields rising.

“Over the longer term, borrowing costs may determine how anemic the U.S. economic recovery will prove,” Reuters concluded.

Both Asian countries place money in T-bills to help keep down US interest rates and maintain American appetite for their goods.

Once again, to reassure current paid subscribers, your new sub will only kick in after your existing sub runs out. We do not double-dip. Your payment will be taken now but you will get the same price as you paid a year ago, usually minus 99 cents because the new site is more rational.

For paid subscribers, more Asian news, with stock picks in Japan and Greece.. Read more »

Change

Tue, 2010/02/16 - 2:23pm | Your editor

      Change is difficult but sometimes it is for the better.

      Today is the first day of the rest of our lives. Global Investing moved to a new websites over the three day weekend I spent in Boston for my youngest grandchild’s 2nd birthday.

      Our new site is live at http://global-investing.com/

      Check out the new site. Please visit www.global-investing.com/ On the right of the front page you can click to seek help if needed.

      Paid subscribers should go to http://global-investing.com/user/password and enter their email address.

      You will get a link to log into the site, and you can set or reset your password.

      We're interested in hearing what you have to say about it.

      Problems? Send a note to webmaster@global-investing.com/

     The password reset will work today or any day of your subscription. Just click to the “forgot my password” page and put in the email address we have for you. It will send you a message that will let you log in and set your password anew or confirm the old one.

     From the New York Times of President’s Day I learned that Goldman Sachs and other Wall Street houses had created a bunch of derivatives to help the Greek government hide the country’s enormous budget deficit from the supposed watchdogs of the European Community. Today someone bombed the Athens offices of JP Morgan to show what they think of American banks.

      One off-balance sheet entity was called Aeolius Fund. Aeolius was the Attic Greek god of the wind. It was a way to pretend that the receipts from the Port of Athens and Salonika were received before they were in hand. Another fund collected highway tolls in advance. Wall Street paid cash up front to collect the money in future years (along with a nice fee for its service.)

      They apparently also wanted to include future revenues from entries to the Acropolis but the museum authorities nixed this plan.They feared there would be a modern shopping center (or agora) put at the foot of the hill. There already is a monstrously ugly mall. This I learned from today’s newspaper.

      It would help if the world stopped blaming the Greeks and Wall Street for these innovative derivative contracts. The Greeks were not the first European Community joiners who fudged their national accounts to get into the bloc. The first were the Italians, signatories of the original Treaty of Rome when they joined the Benelux trio, Germany, and France in the ur-EU.

      Then neighboring “Club Med” countries naturally followed the Italian example. They also learned from the French who, when it suited Paris, announced to the world that budget deficits in violation of the EU rules did not matter if they were needed for national economic stimulus.

      Had the European Community wanted a hard-money currency, it would have had to impose not just a common currency but also a common fiscal policy on its members. Fat chance.  If they had wanted a common fiscal policy they would have had to do it back in 1954.

      My secret theory is that the European Central Bank is taking its time using cash on hand to help Greece for two reasons. First of all, it wants to maximize the pressure on Athens to reform (as Voltaire said) “pour encourager les autres”, to encourage the others (Portugal, Italy, Spain.)

      But it also is setting a bear trap. So many hedge funds and institutions and people trying currency futures for the first time have shorted the Euro that its rise is almost inevitable as soon as reality sets it. The CB can  enjoy watching a panic for the exits when the time is ripe to trap the bears.

      One likely indicator that this is likely is that the price of gold has edged up today. The value of the US dollar relative to other currencies is based on our supposed faster recovery, which means the Fed will tighten monetary policy. This will boost the greenback further, because you will get more interest as inflationary pressures are squeezed out of the economy. Higher interest rates will also increase the opportunity cost of non-yielding investments in commodities, like god.

      Which way gold will go in dollars is a tough call, with my current view that the price will go up despite the opportunity cost of not getting interest. There will be fear of inflation given the sharp increase in U.S. liquidity to support the financial system. There will be no way to collect that bonus by owning euros; the ECB has also boosted liquidity. There will be no way to collect that bonus in sterling as the Bank of England did the same and more.

      The only inflation protection out there is gold. And there will be demand for the stuff from ever richer Chinese and Indians. And less and less gold produced in South African mines which are running out. And probably less selling by central banks. All these factors mean that the gold price will inch up.

      Having bought more at $108 I am sure I did not get the absolute bottom, but I think I came close. We were over and under $110 today. It was over a year ago that I warned against just assuming gold would rocket up short term. Now I have recently changed my view. La donna é mobile. Read more »

Quick tips for users

The new site is different from the old, so here are some tips:

  • If you're an existing member of the newsletter, you will need to set your password here. To do that, go to the "forgot my password" page and put your email in the form. It will send you a link that will let you log in and set your password.
  • You can log in or update your account information any time on the Account link.
  • You can search the full content of the site in the "Search this Site" block on the left side of every page.
  • Your newsletter membership was brought over from the old site. You can check it on your account page. If there are any errors, of course, please let us know.
  • You can choose to receive the newsletter by email or not - Set that in the "manage my subscriptions" on your account page. The newsletter setting affects only whether you receive the newsletter by email - it doesn't affect your access to full content on the site. You can turn it on or off at any time.
  • If you like to get the newsletter by RSS, it's available right on this page. Use the RSS icons on the top or bottom of the page, or use http://www.global-investing.com/rss.xml.  (Don't worry about that if you don't know what RSS is.) Logged in subscribers get the full content, nonsubscribers get the "teaser".
  • Non-subscribers can receive the daily email, but they only get the first part. To get the whole thing, please subscribe.

As you can imagine, there will be some rough edges as we work to make the site serve you. Please let us know and we'll do our best to make it better.

Read more »

Misconceptions Galore

Fri, 2010/02/12 - 1:18pm | Your editor

 

     Friday’s selloff was triggered by two misconceptions and the prospect of a long weekend, not just here with President’s day, but also in China where the New Year (of the Tiger) begins Sunday.

 

     These misconceptions hurt the indexes but every now and again a wiser head prevails and stocks stop falling. The Dow Jones Industrial Average, which Rupert Murdoch sold yesterday to the Chicago options board, is holding at 10 000 and change.  It will probably be a down day but not a Black Friday. One silly idea causing havoc is that the Euro bloc will have to get money from Germany to “bail out” Greece.

 

     In fact, the European Central Bank has enough cash on hand to offer a guarantee to Athens for any likely bond issue. All it has to do is say that the guarantee is there for the market to calm down.

  Read more »

A Notice

Thu, 2010/02/11 - 2:40pm | Your editor

 

 

     After our year-ago re-start-up of Global Investing following the bankruptcy of the former publisher, Rightside Advisors, I have good news and bad news.

 

     The good news is that we are in the process of creating a new website which will be much better than the temporary site we settled for a year ago in desperation. The web designer has managed to extract from hashed files that Global Investing issues which I wrote during the Rightside period, so we have our track record back. This will be made available on the new site which will go live in about 10 days.

 

     We also have the issues we printed monthly until Jan. 2008, more of our track record. I am not sure if we can put them onto the site because I do not have them in PDF format. But that is something we will work on.

  Read more »