Financial Crisis, Part III: This Time Made in China; Act I: The Day Before
In 1979, a movie came out starring Jack Lemmon, Jane Fonda, and Michael Douglas. The title of the movie was The China Syndrome. The movie – in the spirit of those days- desired to expose the consequences of a nuclear reactor going bad. It also dealt with the cover-ups...
Recent Real Estate Concerns and Waterproofing a Portfolio
Over the course of the last few days we have been hearing renewed concerns in the real estate sector. We would like to take this opportunity to outline a few thoughts regarding those concerns, as well as continue with our thoughts about taking measures to waterproof a...
Dum Spiro Spero in the Land of Commodities: The Case of Copper
Cicero is famous for several things, among which is the “Dum Spiro Spero” quote, implying that hope dies last. For weeks now, my colleagues and I have been contemplating drafting an internal portfolio strategy-index. In the land of dismal growth where deflation knocks...
The Economic Outlook: Still Looking for the Roses Among the Thorns
It seems that the economic slowdown is taking root. The consensus forecast for the Philly Index that portrays manufacturing activity for the Eastern part of the country was expected to rise from 5.1 to about 7. On the contrary it fell to negative 7.7. This is a big...
Financial Infertility: From Euphoria to Paralysis
As readers of our publications, presentations, and commentaries could confirm, for quite some time now we have been talking about the dangers of over-collateralization, especially of collateralizing paper-assets a.k.a. financial instruments of various forms. Moreover,...
On Emerging Markets, Fed’s Recent Announcement, Bond Yields, and the Postman’s Bell
James Cain’s book The Postman Always Rings Twice is an allegory of greed, passion, judgment, and even divine intervention. Frank (the novel’s main character) got away with murder the first time. However, the second time around he was wrongly convicted for murder. Here...
Manufacturing a Credible Irrationality: Slush Funds, August Memories, and a Prelude to the Chinese Case
In our June newsletter, we announced that in a few months we will publish our research on what we believe to be a Chinese bubble. In that issue we showed how the Chinese coincidental and leading indicators point to a slowdown in China. Since then, the numbers have...
From the Great Moderation to the Great Recession
The period from the mid 1980s to the middle of 2007 is known as the period of great moderation, when inflation was low and stable, unemployment also was low, utilized capacity pretty high, productivity growth rate very healthy, interest rates stable and declining,...
On Credit Contraction and Deflationary Pressures
The following is a series of thoughts about the threat of deflation knocking at the door of the U.S. economy. The U.S. economic growth is most dependent on the consuming culture of its citizens as it comprises 70% of our GDP. Yet the last decade saw the trend of...
Waking Up From a Dream: An Assessment of Recent Events and Emerging Indicators
The stress tests for Europe’s banking system have come and gone and now we feel obliged to provide you with our take. We prefer not to trust the fox guarding the chicken coop just yet. The stress tests are a pinnacle example of the world of finance that has gripped us...
