World Leaders – Greek Emotion?

I suggest you take 4 minutes and read what I think is an important follow-up commentary on last week’s Davos Conference.

An article published by Bloomberg on January 29 reports that no world economy is safe from Europe’s debt crisis according “global finance chiefs”. Hong Kong’s Chief Executive, Donald Tsang, is quoted as saying:

“I’ve never been as scared as I am about the world. Nobody’s immune. You need decisive action. You need to inspire confidence.”

Concurrently, Yale University professor Robert Shiller and Nouriel Roubini both contributed negative comments and concerns. Christine Lagarde again stated she wants to increase the International Monetary Fund’s lending capacity by US$500 billion.  She is looking for further IMF contributions from countries already ‘debt-strapped’. 

At the same time, on January 30 Toronto’s Globe and Mail reported that the Greek Finance Minister has rejected a German plan to impose a Budget Overseer on Greece in return for a new €130 billion bailout. From my perspective, the Greek debt restructuring is beginning to border on the ridiculous. Without being there, the Greeks seem to be dealing at least in part with the restructuring from an emotional base. As I often have said in these e-mails, logic in the end prevails over emotion. 

In the end, it may be that Greece and its creditors will simply run out of time against a March 20 deadline. That said, I doubt that will happen.  I think Greek and the Eurozone’s problems will likely once more be time delayed, as the consequences of that not happening are so uncertain.  I continue to think that in the end Greece will very likely default on its debt in 2012, or will de facto default through a renegotiation mechanism that will so seriously reduce the owing on its remaining outstanding debt principal and the interest rates on that remaining debt that Greece effectively will have defaulted – but Greek and world leaders will be able to say Greece did not ‘technically default’.

I also do not believe that a de facto default will ultimately solve Greece’s debt problems and potential serious societal disorder.  I think it highly likely this will prove to be a very interesting summer as things heat up in Greece and other northern hemisphere developed countries in more ways than one.

I suggest you speak with your investment advisor and determine whether he she agrees with me on this or not. 

See ‘Davos Leaders Urge Europe to Fix Crisis Hurting Growth’ published January 29 by Bloomberg – reading time 3 minutes.

Also see ‘Greece angrily rejects German plan for EU budget control’ published by The Globe and Mail on January 30 – reading time 3 minutes.

Robbing Peter to Pay Paul – U.S. Life-Style & Societal Issue?

A recent article reports a number of statistics related to aging Americans that I think you ought to know about if you don’t.  I also think you should reflect on these statistics in the contexts of both current world macro-economics and your investments and investment/trading strategy.  The article apparently is based on a sample of 150,000 Americans with 401K’s.  The Canadian equivalent …..continue reading. 

Commentary reading time 4 minutes.  Referenced article(s) reading time 8 minutes

Should The Rating Agencies Be Listened To? 

I am not sure why Jim Rogers, who apparently retired at age 37 after working with George Soros for several years, failed to include Fitch in a recent brief Internet posting he made.  While most days I read at least the headlines of what Rogers writes and think on balance much of what he says makes sense, in this case I think …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 2 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!

Roubini at Davos!

Nouriel Roubini, the globe-trotting New York University Economics Professor who gained wide acclaim by predicting the economic events that transpired in 2008, continues to be in the economic predictions business. Friday in Davos, speaking in one of the final sessions of this year’s World Economic Forum, he is reported as having made the following specific predictions:

• Eurozone countries (I doubt he was including Germany) “and not just Greece – are insolvent”.  My comment:  I don’t think there is much news in that;
• Greece will leave the Eurozone this year, and Portugal would leave the Eurozone after this year.  My comment:  I don’t know whether or not either will  leave the Eurozone.  I think the bigger question is whether or not Greece with default or ‘de facto’ default on its debt, and that question will be answered long before the end of 2012;
• there is a 50% chance the Eurozone will break up in the next 3 to 5 years.  My comment:  I don’t have an opinion that, other than having just spent Friday in London in part talking about that very thing, I would say that the senior UK businessmen I talked with believe it is not in Germany’s interest for the Eurozone to break up;
• if the U.S. and Iran go to war, oil prices would increase by 50% and there will be a global recession.  My comment:  Roubini may be correct in this.  I have doubts as to whether the U.S. will go to war against Iran, as I think the U.S. Government likely shares that view and likely believes that a significant increase in oil prices would have a very negative effect on what I think to be a fragile U.S. economy.  That said, Leon Panetta, the current U.S. Secretary of Defense said on 60 minutes last evening that the U.S. would not tolerate Iran’s development of a ‘deliverable nuclear weapon’, so for that and other reasons I clearly could be proven wrong;
• there is a recession in the UK, the U.S. “is not doing great”, India is in slowdown, and there will be significant slowdown in China in 2012.  My comment:  antidotally, from conversations with the people I spoke with in London on Thursday and Friday things are looking quite bleak there economically.  I don’t have an informed opinion on slowdowns in India and in China other than the 2012 GDP growth rates in both those countries are forecast to decline from those of 2011.

Roubini proved to be correct in his forecasts prior to 2008.  The question has to be:  Was that a ‘one swallow does not a summer make’ moment?  It seems to me one at least needs to think hard about what Roubini says, and not dismiss it out of hand.

See ‘Eurozone will collapse this year, says Nouriel Roubini’ published by The (UK) Telegraph on January 28 – reading time 1 minute.

Commodities – The Next Decade?

In a recent article written by Frank Holmes, CEO and chief investment officer of US Global Investors, there is a very interesting Periodic Table of commodity returns which shows the annual returns for 14 major commodities including coal, copper, crude oil, gold, nickel, silver, and zinc. If you are not familiar with that table I suggest you visit this article and download …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 5 minutes.

George Soros On Europe and Riots! 

George Soros, the well-known successful investor (right up there with Warren Buffet) can – at least in my view – hardly be expected to rant about things he doesn’t believe.  A recent article reports Soros is now expressing the views: 

• that “at times like these, …..continue reading.                                  

Commentary reading time 3 minutes, thinking time much longer.  Referenced article(s) reading time 5 minutes.

Iran To Be Paid In Gold?

A January 24 article has reported that India may have agree to pay Iran in physical gold for its oil – and that China may follow suit. The article says that these moves, if made, will be made to circumvent US sanctions that target countries who trade with Iran. The article also reports that Iran and India are negotiating backup alternatives with …..continue reading.

Commentary reading time 4 minutes.  Referenced article(s) reading time 13 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!

The Baltic Dry Index!

The Baltic Dry Index tracks the cost of shipping major raw materials, and arguably is an important early measure of Global Trade. A recent article shows a chart of that index for the year 2011, and says that the index is down by approximately 40% in December from November and is down approximately 54% in Q4 2011. The author blames the European sovereign debt issues as the underlying consideration.

I am not sure the reason for the recent Index decline is just an escalation of the sovereign debt issues in Europe – in fact such a conclusion intuitively seems itself to be simplistic to me. I don’t profess to be able to pinpoint specific reasons for the Q4 2011 drop in the Index, but think those reasons have to number more than one. I was also not satisfied that to look only at 2011 in isolation as a basis for a conclusion as to whether this Index drop was an abnormality, or simply a repetitive fourth-quarter drop. Subsequent to finding and commenting on that first article, I found a second article that attributes these recent drops in the index to a normal seasonal drop in Chinese manufacturing which in turn the article attributes to Chinese New Year celebrations.  I don’t find that explanation compelling either.

Accordingly, I found (on Bloomberg) the one-year and five-year Baltic Dry Index charts.

One Year Chart

Five Year Chart

 I cannot easily do a one-year regression analysis trend line for either chart, but think such a trend line:

• for the one-year chart would in any event not be conclusive of much of anything; and, 
• over the past 5 years almost certainly is continuously downward.

This is something that strikes me as consistent with my view that all the talk over the past 2 years or more of technical economic recovery in most developed countries is just that – technical economic recovery and not important real economic recovery. It is then not surprising to me that in the last 2 weeks there has been talk in both the UK and Spain of double-dip recession in 2012. It will be interesting to see whether those concerns will extend to other countries in the next few months. It strikes me that if that happens it will be an indicator that the Baltic Dry Index is indeed the important early measure of economic activity that many seem to think it is.

The first article referenced in this commentary is titled ‘The Most Alarming Chart I’ve Seen All Week’.  It was published January 20 in the Wall St. Daily Blog (no association as best I can tell with the Wall Street Journal) – reading time 3 minutes.

The second article that speaks to Chinese Manufacturing is titled ‘Baltic Dry Index – sell-off overdone?’.  That article is was published on January 23 on the InvestmentPostcards Blog – reading time 3 minutes.

Country Risk Issue!

A January 23 article reports that in 2012 “the citizens of 59 countries – one third of the world’s countries – will have gone to the polls to choose national, state and local leaders”. Interestingly, the article also says that in 1945 there were only 12 democracies in the world, and there are now …..continue reading.

Commentary reading time 2 minutes.  Referenced article(s) reading time 4 minutes.

2012 Recession Expectation!

John Mauldin is a U.S. newsletter writer whose commentaries I read and reference from time to time in these e-mails. I generally agree with a good part of what Mauldin says.  This may, of course, bias my views as to the efficacy of his opinions.

In an article last Thursday, he referenced the ‘Quarterly Review and Outlook’ generated by …..continue reading.                                     

Commentary reading time 2 minutes, thinking time much longer.  Referenced article(s) reading time 5 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!

Ray Dalio – October 20, 2011 Interview!

July 21, 2011 I wrote a commentary titled ‘Neat Article – Interesting Man’ – reading time for minutes. That commentary discussed referenced a lengthy article and video interview of Ray Dalio.  Dalio is the U.S. billionaire founder of Bridgewater Associates, one of the largest hedge funds in the world. At the time I wrote that commentary I said Dalio was someone I thought well worth listening to, and that it would behoove any investor, trader, or human being to listen to, and think hard about his philosophy and views.  Ray Dalio is a calm, deliberate, articulate and thoughtful speaker.

I have just found an interview by Charlie Rose of Ray Dalio that took place on October 20, 2011. I consider what Dalio says in that interview to be as relevant today as it was then, and importantly, consider what Dalio says between minutes 20 – 24 of that interview timeless and ‘must listen to’ by investor, traders, and all human beings.  The October 20 interview lasts 37 minutes, and I strongly suggest that if you have not already watched this interview you take 37 minutes out of your life at your earliest possible convenience, listen carefully to what Dalio says, and then think very hard about it.

In the aforementioned four minute interview segment Dalio says he believes and attributes a good part of his success to knowing what he doesn’t know, and continuously worrying about being wrong.  Philosophically, Dalio says:

• that if a person successfully can attack what he himself says, then he will learn from that experience;
• he would far rather be told he was wrong then be told he was right;
• “don’t believe anything – think for yourself”;
• importantly, or so I believe, he says, “the cost of being wrong is a terrible thing – therefore worry about (and continually revisit) your decisions”; and,
• the greatest gift he believes a parent can give a child is self-sufficiency – because if a person is self-sufficient they are then free to make their own choices.

While I have not remotely had the financial success Ray Dalio has had, those of you who have been reading these e-mails ought to see commonality between the views I express in these commentaries, and the advice given by Dalio.  I believe that thinking for oneself has never been more important than it is today, both with respect to the way one conducts their own day-to-day activity, and the way in which one conducts their investment and trading anticipation participation.

Please do yourself a favour.  Watch and listen to the Ray Dalio interview titled simply ‘Ray Dalio’ – again, watching/listening time 37 minutes.  It strikes me that the title of the interview is simply ‘Ray Dalio’ speaks volumes in a very positive way.

Venezuela Nationalization – Exxon?

A recent article reports that in one of the major Venezuela nationalization cases – this one involving what is said to be the world’s largest heavy oil deposit – that Exxon has will receive only 10% of what it demanded in compensation for its expropriation by Venezuela.

The article reports that Petroleos de Venezuela, the State Oil Company, said January 2 it would pay Exxon Mobil …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 4 minutes.

Experts v. The Canadian Public?

On Friday, January 6 the lead headline on the front page of Toronto’s Globe and Mail proclaimed “experts, public at odds over economy”. The article itself reported that based on a annual December survey of between 2,000 and 3,000 Canadians, almost 70% of them believe Canada is in recession. Needless to say, economists …..continue reading.

Commentary reading time 3 minutes, thinking time much longer.  Referenced article(s) reading time 4 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!