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Showing posts from January, 2016

The one chart to answer your questions on Gold, Crude etc.: Asset Price Bubbles Since 1976

This chart shows the inflation adjusted performance of the FHFA Housing Index, Gold, Oil and the NASDAQ since 1976.Housing and Crude oil seem to be at a god level to invest expecting good returns for the next 10 years period. 
The shaded parts of the charts are periods of recession. We can see that the periods of recession are not overlapping tops or bottoms of any asset.
 The world financial system moved from the relative discipline of the gold-dollar, fixed-currency standard to a system of free-floating currencies in 1973. This move unleashed a series of asset pricing bubbles over the subsequent decades as there was scope for unlimited money supply. Data Sources: LBMA, EIA, Yahoo Finance

Click on the chart  images to enlarge

Reference:  http://www.macrotrends.net/1311/asset-price-bubbles-since-1976
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Clicking on the names of different assets at the bottom of the chart in the link given below, will remove its curve from the main chart.
Reference:  http://www.macrotrends.…

German bond yields went to negative recently, ECB made same move, US bonds may follow soon. What it indicates for the world economy?

A long term view covering past 25 years to the projected next one or two decades show a grim future.

Click on the chart  images to enlarge


10 year Treasury yields of German bonds
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Negative interest rates show desperation. They signal change in the usual norms of central banks. They punish the major banks to maintain high cash levels with them and force them to extend loans to businesses and to weaker lenders. 
In June 2014, ECB became to first major central bank to venture into sub zero interest rate. It means the ECB will charge banks 0.3 banks to hold cash with them for a day. By mid-November in that year, about a third of the government debt instruments issued by Eurozone governments had negative bond yields. It meant that people depositing money with the bank would not even get the principal in full when taking the deposit out. Smaller banks resisted out of fear of losing customers, but complied to a considerable extent.



On the most basic level, Bunds, like Treasuries, ar…

Which are the present and the projected future(2030) economic powers of the world ?

World's largest economies- in a chart:

http://money.cnn.com/news/economy/world_economies_gdp/

The World's Top 10 Economies: described:

http://www.investopedia.com/articles/investing/022415/worlds-top-10-economies.asp

These Will Be the World's 20 Largest Economies in 2030 if the Factors Dont Change significantly:

http://www.bloomberg.com/news/articles/2015-04-10/the-world-s-20-largest-economies-in-2030

Which investments are safe in times of a threat of recession:Stock,Commodities,Bonds,Currencies roundup

Note: For all the links to charts on the bloomberg.com website, use the time perios '5 years' which can be selected in the 'Time frame' option above the chart.
As can be seen from the charts of some of the major commodities- Gold, Crude, Natural Gas, Copper, Corn, we can see that Gold is performing far better as compared to others since the past 1 year. Stocks are weak all over the major markets. Hence keeping a good part of your assets as Gold and in US dollars is important for the next 1 to 2 years.

Commodities: may have been in downtrend since more than 2 yeras, and may remain in weak phase for 6 months to 1 year:
Chart comparing ' Rogers International Commodity Index' and 'Gold'.http://www.bloomberg.com/quote/RICIGLTR:IND

Click on the chart  images to enlarge


About  Rogers International Commodity Index http://www.rogersrawmaterials.com/ ---

Among currencies, USD is in uptrend since 10 years. The index to judge the value of USD is the Dollar index. …

The world has glimpsed financial crisis. But is the worst to come? : The Guardian

As the Davos jamboree wound up on Saturday, Tidjane Thiam, chief executive of Credit Suisse, captured the mood. “The market is very worried about China,” he said, adding that dealers were sceptical about official figures showing its economy was growing at close to 7%. “The markets believe there may be a hard landing or a very significant reduction in growth which will have a big impact on the rest of the world. There is a fear that we are walking into a global recession.”
But with central banks’ interest rates at historic lows and billions of pounds in quantitative easing – printing money – expended, the institutions charged with breathing life into a flatlining global economy have few weapons to draw on. “I think that the arsenal of many central banks has been significantly depleted and we no longer have many of the options that existed in years past,” said Eric R Peterson, partner at consultancy giant A T Kearney. “My sense is that we have an incredibly complex and challenging combi…

These 12 slides from Albert Edwards predict a high chance of global financial collapse

On a cold Tuesday afternoon on January 12, about 950 financial professionals gathered in a hotel basement to hear terrifying theories on how the next financial collapse would come about. It was hosted by Albert Edwards, an economist at Societe Generale who is the voice of market bears, or people who think imbalances in the financial system will lead to a collapse. In a little over 100 slides, Edwards and speakers Russell Napier and Andrew Lapthorne took apart the global economy and monetary system. One big theme formed the backbone of the presentations: Global growth is no longer enough to service global debt. Creditors will have to take losses. Translated, this means the banks that lent the most money with the least amount of reserves may go bust. Worst hit are the emerging-market economies, many of which are dependent on China to stoke demand for the commodities they produce. This plan worked well for many years after the 2008 financial crash, and emerging markets loaded up on debt…

Crude oil deciphered: Technical analysis: price predictions

At this moment, Crude oil looks weak and may go down but will probably not fall more than 10 to 20% below $32. 
Crude oil price came down from highs of around 140 and touched around $32 before reversing and moving up again in early 2009. Thus according to the rules of technical analysis, this level will act as important level or 'barrier' when it tries to move up or down. This is the reason it is now at $32. If it rises in coming weeks, the resistance will come at $50 which acted as important levels in end of 2006 and early 2015. 
Thus, until crude oil comes up, and remains above $32 for 3 to 4 weeks, we can not say it has gained strength.
When it reverses upwards It will not rise up consistently till it crosses above $50 and remains at or above that level for 3-4 weeks, which can take at least a year looking at past movements as see in the chart below.


Chart Reference (Live chart):
http://in.investing.com/commodities/crude-oil-streaming-chart

Power of the dollar to be tested, dollar based reserves may not be enough for China

China Finds $3 Trillion May Not Make It Comfortable In the World Economic Matrix

True, trillions of dollars under the central bank's care are thought to be invested in safe liquid securities, including Treasury bonds. The U.S. measure of China's holdings of Treasuries, the benchmark liquid investment in dollars, stood at $1.25 trillion in October, according to the U.S. Treasury Department, which cautions that the figures may not reflect the true ownership of securities held in a custodial account in a third country.

In China, like some other countries, the exact composition of China's reserves is a state secret. But analysts worry the currency armory may not be as strong as it looks. That's because some of the investments may not be liquid or easy to sell. Others may have suffered losses that haven't been accounted for.  

In addition, some Chinese reserves may have already been committed to fund pet government projects like the Silk Road fund to build roads, ports and…

Saudi ARAMCO may get privatized

Saudi has announced numerous steps for a radical rollback of the state that may include privatizing oil giant Saudi Aramco, among the world's largest companies.

The flurry of action, a result of tumbling oil prices, shifting U.S. interests and regional upheaval threatening rulers across the Middle East, appears to be the largely the work of Prince Mohammed bin Salman, the 30-something son of King Salman, in office less than a year. And while his ambition to modernize has drawn praise, some fear he is in over his head.

Ref:
http://bloom.bg/1kRan7uBloomberg News

Gene-Editing Drugmaker Gets Backed by Google, Bill Gates

Editas Medicine Inc., the drugmaker whose backers include Bill Gates and Google Ventures, filed to become the first publicly traded company to specialize in a new technology to edit flaws in genes.

The company, which uses a gene-editing technique called Crispr, filed Monday for the IPO with an initial size of $100 million. That's a placeholder amount used to calculate fees and will probably change.

Gene-editing startups have drawn more than $1 billion in private venture-capital investments since 2013, according to Boston Consulting Group, with investors hopeful that new, more precise DNA-editing capabilities will yield treatments for conditions as diverse as blood diseases, cancers, auto-immune disorders and inherited eye disorders.

Cambridge, Massachusetts-based Editas has raised $163.3 million from selling preferred stock, its filing said. Venture capital firms Flagship Ventures and Polaris Partners each hold more than 15 percent of the company before the offering. Google Ventures…