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Money matters:
Graham Macdonald MBMG International Ltd.
Running Scared, part 2
Currencies continued…
Since 2002, MBMG has been exploiting the relative weakness of the US
dollar versus euro, Swiss franc, Australian dollar and to a lesser extent
sterling to derive currency attribution on investment portfolios and to achieve
savings on multi-currency loans. The only exception to this was a period from
the end of 2003 when we favoured a technical bounce in the USD on the grounds
that it had become oversold. This call has provided good dividends for our
clients.
We generally aim for currency attribution of 2-4% per year. This broad trade
over a 6 1/2 year time frame has yielded well over 5% per year. We have also
gone with subsequent secondary plays such as shorting sterling versus euro,
Swiss franc and AUD. Clients with USD denominated portfolio bonds who have
adopted our managed currency strategy are showing gains of almost 6% for the
first half of 2008, at a time when equity markets have recorded double digit
losses. If you can get sentimental about a trade, it would be this one. But you
can’t. For now, we are slamming this door firmly closed.
As western economic outlooks have become more and more unclear, we have been
actively advising both investment clients and multi currency mortgage clients to
return holdings to their base currencies to eliminate all exposure to currency
risk. During this time we have been monitoring currencies and paying close
attention to currency allocation within our portfolios and multi-currency
mortgages. It is a contradiction that we are telling investors to hold
liabilities and assets in base currencies - the former should be in something
weaker than base, the latter in something stronger but the uncertainty around
making these calls is at an unprecedented level. I cannot think of any currency
where there is not the possibility for both significant strengthening and major
weakness. We just do not know what is round the next corner for any currency.
The highest probability trade is for a recovery in USD. Structurally, recession
would result in reductions in the twin deficits giving the currency a huge
boost. However, loose fiscal policy (printing a lot more dollars) would push the
value of the greenback a long way further down.
From a fundamental point of view the USD is looking oversold - we forecasted
these levels but we saw them coming later into the recession and being the
bottom - the springboard for recovery. The question is; did we underestimate the
dollar’s demise or have currency markets gotten ahead of themselves?
Recent behaviour is supportive of the idea that we are seeing a floor being
formed. The dollar is finding it hard to strengthen but it also keeps abutting
against resistance to any further weakness. This may well be forming a platform.
Alternatively, it may just be a juncture at which the markets are looking for
clues as to which way to go next. The very public prospect of central bankers
publicly performing policy flip flops on a daily basis is not making the picture
any clearer.
Fears of a repeat of 1929 may well have been priced into the euro, explaining
its current pricing but at this stage we believe that the reality is that such
fears are receding. Financial institutions in the west have written off amounts
that will ultimately most likely reach at least $1-2 trillion (in the American
sense of trillion). They, and their CEOs, or rather ex-CEOs in most cases, have
learned a hard lesson.
New investors have had to step in and the Federal Reserve has had to supply huge
amounts of liquidity to prevent the fall of huge institutions. Shareholders have
borne the brunt of this and the collateral damage has not yet fully spread into
the real economy. However, the fundamentals for economic recovery and currency
appreciation remain optimistic. On balance you would expect that at some point
the Greenback will recover from here and recover strongly. There is a very real
possibility, however, that it will not.
The UK continues to feel the effects of its exposure to the credit crisis as
financial institutions see their share prices continuing to fall amidst fears of
insolvency in high street banks and lenders. As discussed in a previous update
the UK, in comparison to the US, is considerably more dependant on the financial
sector to sustain a strong economy. Recession looms and debt in the UK remain at
record highs.
Our favoured euro trade now has the potential to fall from its pedestal in the
coming months. According to Goldman Sachs, this is due to fears that European
banks may need to raise as much as 90 billion euros ($141 billion) to keep their
financial ratios at current levels amid a decline in credit markets.
Regulatory pressures and a sharp turn in the European credit cycle are the two
main causes for concern. I wrote last month - “The USD is at a fork right now -
waiting behind it is the euro - the fate of the euro is largely an inverse
relationship with the dollar as well as a reflection of its own intrinsic
merit”. I believe that more or less describes our stance on the euro and its
fate over the next 18 months.
Just as you might expect that this could be the peak for the single currency
with a nasty tumble down from here, do not rule out the possibility of
significant further strengthening. Signs of cooling expansion in the region’s
largest economy Germany may deter the European Central Bank from further
increasing borrowing costs, diminishing the allure of euro-denominated assets.
The Swiss franc is in a similar boat. More on that next week.
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The above data and research was compiled from sources
believed to be reliable. However, neither MBMG International Ltd nor its
officers can accept any liability for any errors or omissions in the above
article nor bear any responsibility for any losses achieved as a result of any
actions taken or not taken as a consequence of reading the above article. For
more information please contact Graham Macdonald on
[email protected]@mbmg-international.com.com
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Snap Shots: by Harry Flashman
Camera maintenance simplified
 The
manufacturer of your highly technical motor car tells you when to bring
it in for service, but your camera gets ignored, does it not? Since a
top of the line camera can represent a very expensive investment, surely
we should look after and service it as well?
I have been asked many times about what people should do (or shouldn’t
do) regarding looking after their investment. The first thing to
remember is that cameras are very delicate pieces of equipment. They
have lots of moving parts (shutters, apertures, mirror system etc) plus
expensive optical glass in the lenses and viewfinder, let alone all the
fancy electronics, batteries and such. The humble camera is not so
humble these days. Even the pocket point and shooters are claiming eight
megapixels and upwards and optical zoom lenses.
Let’s start with the outside and clean it. Do not get the kitchen
universal “Spray ‘n Wipe” all purpose cleaner and spray liberally. The
family that sprays together doesn’t always stay together, and many of
the commercial cleaners react badly with modern plastics. With a clean
soft brush (like a child’s water color paint brush, or a lady’s make-up
brush) gently wipe the nooks and crannies on the surface. Round the eye
piece and all the little edges, and under the knobs. Now dampen a cloth
with plain water and gently rub it all over the exterior of the camera
body. By now, the camera should be looking like new again - but we’ve
hardly started!
The next item to deal with is the lens. Unscrew the lens and put the
camera body aside somewhere safe. With your soft brush gently dislodge
any dirt and dust from the lens barrel. What is really good here is one
of the soft blower brushes available in most camera shops for around 180
- 300 baht, depending on fancy packaging and a little bottle of cleaner.
Go for the brush only type - do not use commercial camera cleaning fluid
anywhere near your camera! Blow brush the lens elements as well (front
and rear).
Now with a very clean damp cloth and exceptionally gently, clean both
the front and rear surfaces of the lens. Use a spiral motion to clean
from the centre to the edges. Use a fresh piece of the cloth and give it
one last swipe. Put the cleaned lens aside safely.
Now let’s turn our attention to the camera body. This is where you have
to put in the majority of your time, and the ultimate care and
attention. There are certain things you must never do. Let’s look and
note these first. You must NEVER touch the mirror or the focussing
screen with your fingers. Even to change the focussing screen, you will
be supplied with special tweezers by the manufacturer.
The other part of the camera that should never be touched with your
fingers is the shutter. This is a very delicate part of the workings and
can be bent or twisted very easily. The other NO NO is oiling or
spraying with CRC or other similar lubricating fluids. Leave lubrication
to the manufacturers agents or camera repair shop only.
Now if you own a film camera, open up the back of the camera and clean
the internals with the blower brush again, taking particular care with
the channels where the back fits in as it closes. You are quite likely
to find small particles of dust and dirt in the cassette holder area, as
this is the part you open up every time you change film. The pressure
plate inside the back has to be completely clean too, because the film
emulsion runs across it. Any dirt or grit there will leave a scratch on
the negatives.
The last area to check is the battery compartment. Again, a quick brush
and blow should be enough. Do not use the damp cloth in here. Finally,
if you don’t know how old the battery is - then change it for a new one.
That’s it. Your camera is now sparkling clean and ready for your next
project this weekend.
Modern Medicine:
by Dr. Iain Corness, Consultant
Check-ups. Are they a waste of time?
Do you work on the principle that you would rather not know
about any underlying or sinister medical conditions you may have? After all,
we are all going to die one day, aren’t we? Despite all advances in medical
science, the death rate will always be the same - one per person! So why
bother?
However, check-ups are inherently involved in that important feature called
the Quality of Life. Longevity alone, with no Quality, just isn’t worth
having. For example, being stuck in a wheelchair as a double amputee for the
last 20 years of your life because you did not know you had diabetes. Not
the Quality I would want - or you, I am sure.
The concept behind check-ups is to find deviations from normal health
patterns at an early stage. Early enough that the trend can be reversed,
before damage has occurred. This includes high Blood Pressure (BP), a
significant factor in poor future health if unchecked now. High BP affects
many organs in the body, not just the heart. Unfortunately, elevated BP
generally gives no warning symptoms.
Now blood sugar. It requires sky-high sugar levels before the person begins
to feel that something might be wrong. And by then the sugar levels have
affected vision, the vascular system and many other systems, all of which
can decrease your Quality of Life in the future. Amputation of limbs I have
mentioned already. Order your wheelchair today.
Cardiac conditions and abnormalities can also very adversely affect your
Quality of Life, but are very easily found during a routine check-up. Blood
tests and an ECG (EKG if you come from the left hand side of the Atlantic)
can show just how well the cardiac pump is functioning, and how well it will
continue to function in the future. The inability to walk more than 30
meters certainly takes the fun out of walking to the pub, yet this can be
predicted!
Another of the silent killers can be discovered in your lipid profile, with
cholesterol and its fractions HDL and LDL being intimately connected with
your cardio-vascular status. Detecting abnormalities now can mean that you
can get through the deadly 50-60 year age bracket with clear coronary
arteries and a clean bill of health.
There are so many conditions that can affect your enjoyment of the future,
but can be discovered early. Renal (kidney) function and liver function can
be monitored through an annual check-up, as can prostate size (indicated by
the PSA blood test) or breast tumors (by mammogram).
If you are a non-smoker, under 30 years of age, play sport every weekend,
train regularly during the week, have never visited a doctor other than
childhood immunizations and have both sets of grandparents alive and well,
then a very simple general check-up is all that is needed. You are not at
high risk, but it is good to have a baseline to compare against as you get
older.
If you are under 40 years of age, but have given up the regular training and
weekend sport, you are in a somewhat different situation. Your ‘risk’
category is higher and now is the time to look at your cardiovascular system
in particular. Lipid (blood fats) profile and a check on your red and white
cells and a blood sugar reading will cover most major future problem areas.
There is also the personal question of sexual history. If you have been
visiting the horizontal pleasure palaces (and you know what I mean), then
you should add in an AIDS and Hepatitis screen as well!
By the time you are in the 40-50 age bracket, physical wear and tear has
become evident. You should be looking at exercise stress tests and urgently
correct any lifestyle factors which are going against your general health.
By the way, if you are female then you should throw a Thin Preparation Pap
Smear as well.
But it gets worse! When you pass the magic 50 number, you are considered to
be ‘at risk’ anyway. If you are a male, then you should also add in your
prostate cancer screen, the PSA blood test.
See you in the check-up department.
 Heart to Heart with Hillary
Dear Hillary,
I was going through some back issues and I was very interested to read your
advice to someone called Valentino who had a problem with his Harley Davidson. I
don’t have one of those heavy American monsters, as I have a fine British
motorcycle (a Triumph) and I park it in the garage when I go off shore. I have
noticed that when I come back these days, it no longer leaks oil on the garage
floor. I have my suspicions that my wife is giving it to a Thai boyfriend, and
the motorcycle is staying at his place while I’m away. Why she would do this is
beyond me as I give her everything she wants, gold chains and everything. I
really cannot think of any other reason for the garage floor to be so clean. Do
you think the seals have taken up, or what is happening? Is there another
logical answer?
James
Dear James,
Just what have I brought on my head this time? Now it’s a motorcycle clinic! I
remember Valentino. I thought I was about to be wined and dined by a
curly-headed Italian when the letter came through. But back to your problem. No,
my Petal, the seals on your Triumph have not taken up. My motorcycling friends
all tell me that good British bikes always leak oil, so the seals haven’t ‘taken
up’. They suggested that you go and check the level of oil in the crankcase.
That looks like a logical answer. I think you will probably find there is no oil
left. That is the most likely explanation with your British bike. Unless it was
made in Japan, whereupon it is really a copy bike! Check the serial numbers,
Poppet. And talk to the nice man at the motorcycle shop, not Hillary. You could
of course, try locking it up while you are away. A good heavy chain, like the
gold one your wife wears, with a strong combination lock, should be enough to
keep it in the garage, and you will see if the drip is from the motorcycle, or
riding the motorcycle.
Dear Hillary,
Dad is a widower, Mum died one year ago after a long illness. They were a
devoted couple and we all took it hard. I am the only daughter. After six
months, my father’s brother suggested Dad go on a holiday to Thailand, a place
he has been to many times. When he came back after three weeks in Pattaya, he
was a changed man. Now he says he has a girlfriend over there who has been
writing to him every day since he was there. I thought he was just joking until
he showed me the emails he has been getting, asking Dad when he is coming back
as she misses him and even says she loves him. I asked Dad how old she was and
he was a bit shifty on that but finally admitted she was in her twenties. Dad is
74! I asked him what does she do and he said she works in a bar there, and I
think they slept together when he was there, but I can’t ask him too much.
Everyone in my family says I should mind my own business, but when it is my
father that it is about, I say it’s my business too. What can I do about this?
It’s just not right. I am so worried about my Dad.
Janet
Dear Janet,
I can understand your worrying, and I also understand that this has been a
stressful time for both you and your father, losing a mother and a wife. What
you have to understand is that life goes on, and everyone has their own ways of
dealing with grief. You are dealing with it by taking on some of your mother’s
role in looking after your father, while your father is dealing with it by
seeking warmth and enjoyment in the arms of a woman. He may be 74, but that is
not that old. After all, Charlie Chaplin was still popping out children when he
was 73. You should be happy for him that he has a romantic interest. (Just be
aware, however, that this younger woman may have a financial interest in the
association - but that is up to your father!)
It may interest you that in July 2006 an 88 year old Indian farmer, Virmaram
Jat, from a village in Rajasthan, became the father of twin boys by a woman
forty-five years his junior. Virmaram, a vegetarian, has never smoked
cigarettes, drunk alcohol, nor heard of Viagra. He takes long walks every day
and has been drinking fresh camel milk since childhood. Keen to share his
knowledge with others, Virmaram said that he has intercourse daily and that the
best time is between the hours of 2 a.m. and 4 a.m. He also said that he wants
to have more children. So if your father starts ordering camel milk from the
local milkman, you may have small problems coming.
Really Janet, your father’s lifestyle is his decision. You can advise him if he
asks for it, but remember that unsolicited ‘advice’ is never appreciated. Just
be there for him, when he needs it.
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
007 – Quantum of Solace: UK/US Action/ Adventure/ Thriller
– Starring Daniel Craig and Judy Dench. Really a continuation of the
2006 Casino Royale, which was a reinvention of the James Bond
film series for present-day audiences. Here, with a different director,
I found the undertaking greatly diminished in charm and style and
elegance, with the action sequences more mindless and muddled, the plot
vastly more convoluted and confusing, but with much to still like if
you’re a fan of Bond films. The locations, for example, are grand, as
are Bond’s female foils and villains. Generally favorable reviews.
Tropic Thunder: US Comedy/ War – I heartily recommend the film for
those not easily shocked. You might just have the best laughs you’ve
had in years. Robert Downey, Jr. gives another amazing performance,
this time playing a black. It’s an action comedy about a group of
self-absorbed actors who set out to make the biggest war film ever.
After ballooning costs (and the out of control egos of the pampered
cast) threaten to shut down the movie, the frustrated director refuses
to stop shooting, leading his cast deep into the jungles of Southeast
Asia where they inadvertently encounter real bad guys. Generally
favorable reviews.
Body of Lies: US Action/ Drama/ Thriller – Leonardo DiCaprio and
Russell Crowe. I like this film very much – it’s smart and tightly
drawn, and has a throat-gripping urgency, with some serious insights.
Coming Soon: Thai Horror – Another bloody scream-fest, this one is
about a projectionist who decides to help a friend illegally film a
newly released horror movie, with dire consequences.
Queens of Langkasuka / Peun yai jom sa-lud: Thai Adventure/ Fantasy
– Nonzee Nimibutr’s 200-million-baht historical action-fantasy, more
than three years in the making, is for me an entertaining Thai
blockbuster – big stars, loads of special effects, lavish costumes, and
an exotic seaborne setting. Sumptuous in production design, it has
whirlwind action sequences merging realistic Thai boxing with theatrical
Hong Kong style stunts. I think it has the nostalgic charm of classics
like Sinbad the Sailor, plus it has a truly exhilarating sea
battle at the end.
Max Payne: US Action/ Thriller – Starring Mark Wahlberg. Based on
the popular interactive video game, it’s the story of a maverick cop
determined to track down those responsible for the brutal murder of his
family. Basically for fans of the game and action movies, it
nevertheless has some stylish visuals in a somber mood, which I really
enjoyed looking at, and an intense performance by Wahlberg. Generally
negative reviews.
Scheduled for Nov 20
Traitor: US Drama/ Thriller – As a thriller for adults who
don’t require manic chases, frenetic shoot-outs, and ten cuts per second,
Traitor is smart, effective, and at times suspenseful. It’s one of
a very few terrorist-themed movies that presents its situation without
resorting to exploitation or oversimplification. Mixed or average
reviews.
Burn After Reading: US Comedy/ Crime – This interesting movie stars
George Clooney, Brad Pitt, Tilda Swinton, and John Malkovich (the whole
team of serious anti-government rabble-rousers) in another expose of
dirty dealing and incompetence in high places. But this time it’s a
comedy! Clooney, for example, seems to have a hobby of building
homemade sex toys in his basement. With Frances McDormand and Richard
Jenkins. Directed by Ethan and Joel Coen.
Twentieth Century Boys: Japan Fantasy – A live-action film based on
the wildly popular manga comic written and drawn by Naoki Urasawa. The
main character is Kenji, who once aimed to be a rock star but now works
at a convenience store and raises the child of his sister who has
disappeared. He comes to learn about a cult led by guru called
“Friend.” The cult is behind mysterious incidents that have bizarre
similarities to the “Book of Prophecy” that Kenji himself wrote as a
child.
Sex Drive: US Comedy – Eighteen-year-old Ian Lafferty sets out on a
cross country drive with his best friends Lance and Felicia in order to
lose his virginity to a red-hot babe he met on the Internet. Randy and
raucous, Sex Drive follows three friends on what the film is
touting as the road trip of a lifetime!
Teeth: US Comedy/ Horror – Directed by Mitchell Lichtenstein (son of
Pop artist Roy). Dawn, a high school student, works hard at suppressing
her budding sexuality by being the local chastity group’s most active
participant. A stranger to her own body, innocent Dawn discovers she
has a toothed vagina when she becomes the object of violence. As she
struggles to understand her anatomical uniqueness, Dawn experiences both
the pitfalls and the power of being a living example of the vagina
dentata myth. More enjoyable than I thought it would be, it is
still pretty sick and unpleasant, and with the number of appendages that
eventually litter the ground, I think Teeth bites off more than
it can chew. Mixed or average reviews.
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