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Synchronized Slowdown. The Global Recession of 2012. PDF Print E-mail
Written by Burnham Banks   
Saturday, 02 June 2012 08:22

We are in the midst of a global synchronized slowdown. 

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Grexit? Greece Needs to be Ejected To Save the Euro. Grejection. PDF Print E-mail
Written by Burnham Banks   
Sunday, 20 May 2012 02:12

It must be clear by now that the Euro doesn't work. Member countries will always disagree on what is an appropriate exchange rate and thus terms of trade with the rest of the world, and worse, with one another. There is no automatic mechanism to link a (further) Greek default to their exiting the Euro. An unceremonious ejection by current Euro members is more likely as Greeks demonstrate intransigence in the face of insolvency.

Last Updated on Sunday, 20 May 2012 03:07
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Chinese Banking Crisis. Are China's Banks Solvent? PDF Print E-mail
Written by Burnham Banks   
Tuesday, 15 May 2012 00:19

In the May 5th edition of the Economist magazine, there appears an article on China’s banks. It points to the high profitability of the banks and the low level of NPLs.

Last Updated on Tuesday, 15 May 2012 01:40
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Raising Capital PDF Print E-mail
Written by Hedge Fund Marketer   
Friday, 11 May 2012 06:00

Since 2008, raising capital for a hedge fund or private equity fund has become very difficult. In the case of some would be institutional or family office investors, it has always been difficult.

Last Updated on Tuesday, 29 May 2012 00:29
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The Trouble With Banks. PDF Print E-mail
Written by Burnham Banks   
Tuesday, 08 May 2012 02:53

There is something wrong with the fractional reserve banking system. It should have become clear post 2008 but it hasn't.

Last Updated on Tuesday, 08 May 2012 04:45
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How Not To Invest. How To Deal With Complexity PDF Print E-mail
Written by Burnham Banks   
Wednesday, 25 April 2012 07:41

Diversification hides a multitude of sins. The idea of diversification is to ensure that no single investment or risk factor causes a catastrophic and irrecoverable loss. Too little diversification and you become vulnerable to being taken out by a single factor or event.

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Euro In Crisis Yet Again: Spain in Trouble. Italy is Potentially Worse. But Worry Not. PDF Print E-mail
Written by Burnham Banks   
Tuesday, 24 April 2012 02:02

If anyone believed that the proceeds of the LTRO were meant to be spent buying bonds in the secondary market, they have misunderstood the raison d’etre of the LTRO.

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Hedge Fund Investing In 2012 PDF Print E-mail
Written by Burnham Banks   
Monday, 16 April 2012 08:10

Forget about correlations. Here are the conditional probabilities between equity market monthly returns and hedge fund returns as represented by the MSCI World Equity Index and the HFRI Hedge Fund Index respectively.

Last Updated on Monday, 16 April 2012 08:20
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Investment Strategy In a Crazy World April 2012 PDF Print E-mail
Written by Burnham Banks   
Friday, 13 April 2012 08:44

The erratic path taken by macro economic data and by asset prices such as stocks, bonds, commodities etc are the confluence of long, medium and short term cycles. The long term cycle took a turn in 2008 and remains decidedly poor.

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China Hard Landing. The Chinese Recession and the Threat to the US Economic Recovery PDF Print E-mail
Written by Burnham Banks   
Thursday, 29 March 2012 08:14

In Nov 2011 I warned that the Chinese economy was headed for a slump. This is an update. In the past quarter, manufacturing data has supported the view that the Chinese economy was decelerating rapidly.

Last Updated on Thursday, 29 March 2012 08:51
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Strong USD weak CNY PDF Print E-mail
Written by Burnham Banks   
Friday, 23 March 2012 00:11

Look for a moment at the deal struck between the US and China in the past decade. China has effectively agreed to hand over a thousand pairs of cotton underwear in exchange for an iPad 6 somewhere down the line.

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The ECB's QE2. How To Read The LTRO PDF Print E-mail
Written by Burnham Banks   
Tuesday, 21 February 2012 22:30

The 22 Feb MRO allocation came in at 166 billion EUR, 23 billion EUR more than the 15 Feb MRO of 143 billion EUR. All is not lost for those expecting another outsized allocation for the upcoming 3 year LTRO on 29 Feb. But interpreting a small or large number is not straightforward.

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ECB LTRO Mk II. QE(Stealth) PDF Print E-mail
Written by Burnham Banks   
Wednesday, 08 February 2012 06:18

 

The ECB’s QE(stealth) has worked a treat since the printing presses were deployed 22 Dec 2011. The 3 year repo saw a 489 billion Euro allotment, equal to over 620 billion USD.

Last Updated on Wednesday, 08 February 2012 06:39
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Europe is so passé, watch China PDF Print E-mail
Written by Burn ham Banks   
Thursday, 26 January 2012 02:11

Brace

Last Updated on Thursday, 26 January 2012 02:16
 
The ECB Is Operating QE PDF Print E-mail
Written by Burnham Banks   
Friday, 13 January 2012 02:44

 

The ECB is printing money. It may not yet be directly purchasing sovereign bonds but it is acting as prime broker to the following hedge funds: commercial banks in Italy, Spain, France, Germany, etc etc.

On Dec 14, 2011 it became clear what the ECB’s intentions were. Faced with political constraints and bureaucracy regarding its mandate, a desperately practical ECB decided on a course of action to operate debt monetization on a significant scale circumventing the German government’s envisaged objections. For the full analysis of the ECB’s cunning plan, refer to The ECB is Ready For QE.

Last Updated on Sunday, 15 January 2012 23:49
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Complex Organizations. Some Management Theory. PDF Print E-mail
Written by Burnham Banks   
Saturday, 02 June 2012 08:17

When the troops fail the general, its not always clear who's to blame. But when different divisions fail each other, the blame is crystal clear. Generals are to blame.

Last Updated on Saturday, 02 June 2012 08:21
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10 Secs Into The Future. Investment Strategy For a Broken World 2012 PDF Print E-mail
Written by Burnham Banks   
Friday, 18 May 2012 01:05

Its one of those periods again when markets are falling and people are feeling down. And when they feel down, they sell assets and markets fall, and they feel even more down.

Last Updated on Friday, 01 June 2012 22:32
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Euro crisis update. Will the Euro break up? The Fiction of Banks and Sovereigns. And China. PDF Print E-mail
Written by Burnham Banks   
Monday, 14 May 2012 00:13

A few months ago the ECB's long term loans to the banking system appeared to have staved off risk of default or breakup for at least as long a term as the facility. The fears of default and breakup have returned with a vengeance.

Last Updated on Monday, 14 May 2012 00:34
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Singapore Wage Price Inflation Spiral PDF Print E-mail
Written by Burnham Banks   
Wednesday, 09 May 2012 00:10

Take a small island with an open economy highly dependent on trade and intellectual property, grow the economy to the hilt, run out of ideas, grow the population to grow the economy, to the hilt, or the shoreline, and what do you find? High inflation at each level of economic output.

Last Updated on Wednesday, 09 May 2012 00:12
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European Distressed Assets? What European Distressed Assets? PDF Print E-mail
Written by Burnham Banks   
Wednesday, 02 May 2012 05:23

A substantial volume of capital has been raised by various asset managers to capitalize on the imminent or eventual fire sale of distressed assets by European banks and financial institutions. Its going to be a long wait.

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Euro Malignancy. No Euro Breakup, Just Lots of Bumps PDF Print E-mail
Written by Burnham Banks   
Tuesday, 24 April 2012 05:55

The Euro is a chronic disease. But you can bet on the good days and bad days in Europe as the governments and the ECB sequentially crash and revive the patient.

Last Updated on Tuesday, 24 April 2012 06:02
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Singapore Housing Market 2012. Singapore Property Outlook PDF Print E-mail
Written by Burnham Banks   
Monday, 23 April 2012 08:21

Singaporeans are obsessive about real estate, much like Americans and Britons were before 2008 burst their bubble. However, while other countries' housing markets have failed to recover fully, the housing markets of the emerging markets have rebounded and surged past old highs.

Last Updated on Tuesday, 24 April 2012 02:05
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Why Invest In Funds? What Can They Do For Us? PDF Print E-mail
Written by Burnham Banks   
Monday, 16 April 2012 06:31

In investing and trading, easy to identify strategies are rare. Asian convertible bonds in late 2008 are an example, the QE2 liquidity infused rally of 2010, the first LTRO rally, the rebound in RMBS in 2009, are others. The massive relief rally on early 2009 was harder to identify and caught most investors off guard. The rally in US treasuries in the last 3 years, the rally in gold, the implications of the second LTRO, all have been diabolically hard to call and trade.

Last Updated on Tuesday, 17 April 2012 01:53
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Insane Markets and How To Think About Manager Selection PDF Print E-mail
Written by Burnham Banks   
Tuesday, 03 April 2012 03:43

Insanity

 

  • The US credit rating gets downgraded and US treasuries rally.

 

  • The ECB shoots morphine into an insolvent European banking system and it is the banks that rally most.

 

  • China leads global economic growth and its stock market performs most poorly.

 

  • Europe is in a serious recession whereas the US is in a mild recovery, yet European stocks rally as much as US stocks.

 

  • Global risk levels remain elevated and investors are increasingly jumpy yet VIX and other measures of risk aversion signal calm.
Last Updated on Tuesday, 03 April 2012 03:48
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Rising Interest Rates and a Stronger USD PDF Print E-mail
Written by Burnham Banks   
Monday, 26 March 2012 22:46

The last 30 years have been defined by falling interest rates across the USD curve. Since Volcker defeated inflation in the early 1980’s short term rates and long bond yields have tracked lower and lower. Inflation has similarly been trapped in the 3% to 5% range as Greenspan was celebrated for creating a Goldilocks economy, in reference to porridge that was neither too hot nor too cold. Since 1980, the US current account has also trended down into severe deficit until late 2006. During this time, the trade weighted USD has weakened by roughly 50%.

Last Updated on Tuesday, 27 March 2012 06:19
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The ECB's QE2. What a Result PDF Print E-mail
Written by Burnham Banks   
Thursday, 01 March 2012 00:37

Mario Draghi has been a genius. And I am sure he realizes that all he has done is bought the politicians more time to sort out the fundamental issues surrounding the Eurozone crisis. In the first 3 year LTRO 489  billion EUR was allotted. In this, the second, 529 billion EUR has been allotted, apparently to a great many banks, some 800 of them.

Last Updated on Thursday, 01 March 2012 01:10
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Economic Recovery or False Dawn PDF Print E-mail
Written by Burnham Banks   
Wednesday, 15 February 2012 07:36

 

The US economy consolidates its economic recovery while Europe slips into recession. China eases as its economy cools and the rest of the BRICs begin to loosen policy to bolster slowing growth. Amid this landscape, equity markets and other risky assets have rallied. The surge has been concentrated in the BRICs and in the cyclical and previously distressed corners of the global economy such as banking and consumer discretionary companies, especially luxuries. Defensive companies with stable and predictable cash flows have lagged.

Last Updated on Wednesday, 15 February 2012 10:08
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Investment Strategy, General Comments for 1Q 2012 PDF Print E-mail
Written by Burnham Banks   
Wednesday, 01 February 2012 01:06

 

Equity markets have rallied since mid Dec 2011 as the ECB began its QE(stealth) and the US economy continued to recover. It appears that equity markets want to take a breather. This could last between a matter of days to a couple of weeks. The trend is up.

Last Updated on Wednesday, 01 February 2012 22:43
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S&P Downgrades Europe; Morphine and Major Surgery PDF Print E-mail
Written by Burnham Banks   
Sunday, 15 January 2012 23:37

 

So S&P has downgraded a gaggle of European countries' sovereign debt ratings. What a surprise. Ratings agencies are not always the last to know, but they are always and everywhere a tad slow.

Last Updated on Monday, 16 January 2012 00:11
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Ten Seconds Into The Future: Investment and Economic Outlook 2012 PDF Print E-mail
Written by Burnham Banks   
Sunday, 08 January 2012 09:15

 

There is a reason I call this Ten Seconds Into The Future. The chances of getting a forecast right on the economy are probably 50-60% if you’re good. The chances of translating that into a call on market direction are probably 45-55% if you’re good. So whenever I express an opinion, I’m setting myself up to be wrong. But everyone needs a hobby. So for 2012, here goes.

Last Updated on Thursday, 22 March 2012 06:25
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