Markets are all over the place at the moment so what to do? Well, for those that read this column regularly, you know that I am a great believer in putting as many of your eggs in as many different baskets as possible. So, here we go:
Generally, if it looks like a duck, if it waddles like a duck and if it quacks like a duck, then you can be pretty sure what it is… unless of course you specialise in the ancient art of polishing words to a fine lustre that has long been mastered by central bankers and economic policy makers, especially in Europe and so making them look like one thing but actually meaning another.
In the midst of the accounting scandals that are currently affecting a significant number of Chinese companies listed overseas, Eric Rosenkranz was in typically ebullient form on Squawk Box recently, warning investors to stay wary of new initial public offerings (IPOs) of Chinese companies. He explained how many firms keep multiple sets of books, telling viewers, “I’ve been investing in China for the last 10 years and there’s one thing I’ve learnt - with many Chinese companies there are usually two sets of books, and whenever there are two sets of books, there are usually three.”
Should I stay or should I go has been a constant question in the minds of well-advised members of final-salary schemes for years. So the idea that some senior public servants could be better off out of their final-salary scheme than staying in can only make cashing in more attractive.
Earlier this year, we wrote a treatise about the impending problems facing the four fiscally-challenged ‘horsemen’ of the economic apocalypse - Japan, USA, UK and the Eurozone). Today let us look at how investors face incalculable financial risks alongside exceptional investment opportunities and not necessarily in the most obvious areas.
As the debate rages on about whether the U.S. economy is headed for a double-dip, we believe another recession is all but guaranteed, and there is nothing that can be done to prevent it. Many American politicians have been following the Nelson tenet of above. The only difference is that good old Horatio had a solution whereas Bernanke and Obama do not - apart from sticking their heads in the sand and kissing their backsides goodbye.
My business partner, Paul Gambles, was chatting again recently with John Noonan, Senior FX Analyst at Thomson Reuters. Like us, John sees the Swiss Franc as overvalued, although I do not share his faith in Europe’s ability to move towards fiscal consolidation as an immediate factor in generating an Euro-Swiss Franc cross rally.
Firstly before we even start this debate, it is only fair to take a step back and explain what the Fed model is and what it attempts to do. In simple terms it is a model that compares the valuations of 10 year bonds to equities by comparing their respective yields.
There’s a great deal of talk about Asian currencies of late - especially the Chinese Renminbi which has joined the ASEAN currencies and the Yen on our list of currencies where we see tactical opportunities for investors wishing to enjoy opportunities for returns in the established major western currencies.
The idea of the Euro project was also at least partly underpinned by an impetus that has been a constant theme in European history throughout the last three millennia; namely the evolution of hundreds of tribal states in the face of hegemony from a succession of various dominant empires from within or from outside Europe.