Is this a good time to buy Asia?

Some good stuff on New Economist Blog:

Is this a good time to buy Asia?

The short answer is "no", according to Bloomberg columnist Andy Mukherjee in today's piece, Asia's Growth Is No Foil for Vanishing Money. In the wake of a global liquidity squeeze, the risk of further falls in equity markets cannot be discounted...

Read on here.

stocks bourse Asia liquidity

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Do they got it? - There will be no inflation...

When I shortly thing about what recently happened on the stock markets - all in all a quite gentle set back as long as the major markets are concerned, - I think, the core message is: folks, there will be no inflation!

That's on the first view exactly the opposite of what all the media and comments are screaming. Everybody points on the "inflation fears", which send stocks down. Well, they are down - in some hotter markets down considerably, in the established down a little.

Though, not "inflation is coming", but "inflation will not be" is the message. The Fed is vigilant, and if necessary it will drive the rates into recession-highs. The financial system, speculation inclusive, is highly dependent on debt, on credit, on interest. There are no shortages of any nature, not even commodities. The global production capacity is sound and capable to meet all the real demand. And it will be hold back from generating inflation. The only source of concern are virtually the commodity markets. I don't know, if I could say it properly: first, commodities are the only big threat for increasing inflation; second, Fed will crush inflation, be sure; hence, commodities will not go up that far to generate inflation (above the Feds target, defined by numbers and a certain time window), be sure as well.

The question is, how much of the commodity prices is "hot air", speculation and how much is fundamentals, i.e. real companies ready to pay real prices because they though make sound profits out of it?

If there is "hot air" - a bubble - it will burst. If not - so what? The corporations will make money, the fed is happy (inflation target kept), and stocks... well, stocks should adapt to the preferences of the investors - and in the long term their earnings yield will get closer at least to the prevailing capital market interest rates. With current valuations, and prospectives, stocks are most likely to perform good in the next time.

So, when will they got it? I think we'll see it in the commodities.

stocks bourse commodities inflation interest

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

The sell off in commodities is still only in the headlines

A little bit astonishing all that headlines about sell off in commodities. We haven't seen anything yet. Oil is still trading at about $70, and the REUTERS CRB FUTURES PRICE INDEX ist still not far from its high.

We'll have to wait.

But all this screaming without an actual massive correction, is a little bit suspect. I feel, there is more to come - for the commodities and stocks. Downwards. But while the commodities seem to be a dangerous game, stocks are well founded. Think twice before you trade stocks short. And for a while the commodities could even surprise on the upside.


stocks bourse commodities correction

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

"Three of the scariest words in economics used to be inverted yield curve"

The 10-year treasury yields fell for the first time below the Fed funds rate since long time. Precisely since short before the great bear market in 2000 began.

Here is an article in CNNMoney: Yields throw the Fed a curve

But what is it about? - Are the investors not afraid of coming inflation? This was the most prominent explanation (excuse?) for the drop in the stock markets, wasn't it? If inflation is to come, the yields should point higher, right?

Maybe the investors are seeking a "safe heaven" - and I suppose first they will redraw some funds out of the more volatile and "insecure" markets as Emerging Markets and maybe commodities.

And by the way - in a globalized world the global yield curve matters more and more. And it is not inverted.

stocks bourse yields yield curve

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Some thoughts on the current stocks situations

Finally, the long awaited correction of the stock prices has come, and all the "don't go too aggressively" statements (which I have made - or not have made in this English blog, but in my German) have "paid off". It is not funny to imagine how it looks like in the aggressive portfolios.

But, to make it sure - I am of course still bullish on this market. And today's rebound is the very last source of such optimism. I just do not use to change my opinion overnight.

In the last few days/weeks nothing really has changed. They say, the investors have suddenly got very scared about inflation and interest rates. But every investor and speculator with some understanding should always be vigilant about inflation and interest rates. There was virtually no news to be "suddenly" scared of.

No, I do not believe we will see any serious inflation. The Fed is watching closely. Globalization pressure, international competition, strong productivity gains and best opportunities for optimal allocation of labor and capital ever, will hold down inflation tendencies. This all hasn't changed.

The favorable valuation of stocks hasn't changed as well. Still the real interest rates are not an attractive alternative to stocks. Though, here I should give a "little" warning:

It is possible, that at some point in near future, a situation occurs, when climbing interest rates coincide with slowing in the economy, housing market, hopefully in commodities as well, hence decreasing inflation. Then you'll have at least temporary gains in the real interest rate, which could take liquidity from the stocks and from the economy. This will lead to a somewhat prolonged consolidation phase, especially when the economy outlook darkens. Remember: the stocks do not suffer under inflation. They are favored by inflation. Stocks suffer under the measures of the central bank against inflation, i.e. higher interest rates.

Anyway, I suppose stocks are solidly founded and will stand. I am more optimistic for the US markets in terms of less volatility and less sharp downturns. Europe is hotter. And the hottest is the case of the Emerging Markets and commodities.

I watch now for following developments:

US idexes to stay less volatile than rest of the world.

Commodities to set for a major downturn (probably not immediately)

Dollar to gain strength later this year.

Interest rates on the capital market not to go up considerably.

We will see.



stocks bourse consolidation inflation

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Mark Mahorney now at Stockblog.com

One of my favorite authors on stocks and investing, Mark Mahorney, has left Blogginwallstreet.com and now has (his own) blog - Stockblog.com. Good luck with the new beginning...




Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

The sentiment is ambivalent

How did the recent declines affected the sentiment of the stock investors?

My observations provide an ambivalent picture:

At least in Germany the mass media responded quickly with quite negative reports and statements. All the newspapers and online media give voice to the warning and skeptical analysts. Suddenly all are not that convinced in the sustainability of the stock markets and - yes and - the global financial system.

My personal impression of the German public is though, that the sentiment two weeks or so ago, was very "enforced" optimistic. The overall psychological state of the country (and the investors are not the exception) is relatively dull, but the strong performance "forced" the public to believe, what they can or do not want to believe: things get better. The bourse once again created its own facts.

You should of course consider that the European markets have performed recently and in the last years very strong. In the USA, the stocks didn't get that hot (but also didn't suffer that great much as the European counterparts in the bear market).

Anyway, the latent pessimism was pushed just very temporary aside and now is coming rapidly back. That's good and healthy.

But, I suppose not all positions, which might have been opened in a "just not to miss the opportunity" manner, are closed now. The long term oriented investors will not sell that easy. What for? - interest rates still do not provide an attractive alternative, especially with the inflation-fears background; the dollar is meant to fall further hence many are "locked" to euro alternatives, and the valuations are still - and getting even more - astonishingly favorable.

The rest is trading, often without any deeper sense and highly dependable on technical conditions (which are short term nature). But on the trading side not few are seeing a short term opportunity. They are now cautious, but not scary. Secretly many hope to go again in plus on the recent buys. This wasn't a sell off so far.

But I am not sure, if we need a sell off at all.

If you close your eyes and forget about the charts, stocks are ok. You want them more ok? - well, may be. But don't get too gready. I suppose there are some other gready men outside, who can take them sooner as you think.


stocks bourse sentiment

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Derivatives activity linked to share falls

Worth to read - the sharp declines are, as often, provoked also (or to a great extend) by the hedging and derivtive products used by the big institutional investors:

In particular, some banks and big investors appear to have been forced into selling large amounts of equity futures because they have been acting as counter-parties to large, leveraged bets on the direction of stock market volatility in recent months - and these bets are now unravelling because volatility has increased sharply.

Read on here...


stocks bourse volatility derivatives

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Venezuela 'may swap oil currency'

I wanted to write some words about the dollar, but here first this message from Venezuela:

Venezuela 'may swap oil currency'


After the announcement of Iran to create an oil bourse traded in euro, this is the second large oil exporter to consider such option.

All the analysts and comments look in quite the same direction: this move may bring the central banks (especially in Asia) to shift greater parts of their currency reserves out of dollar into euro.

We'll wait and see...Probably, if large quantities get moved around, it will have impact on the exchange rate, though the central banks will be cautious with their re-positioning and will (try to) do it delicately.

But, what I want to point at, is: the value of a currency is not that much implied by the quasi monopoly role in the world or certain markets as suggested by the comments. We do not trade any commodity in euro or Swiss francs, nor any central bank has reserves in Swedish crones...

If there is to be some down-drift in the dollar's value, it very well may be a overshooting by speculation and will not mirror the strength of the American economy and investment attractivity.

PS: Oh, yes, there was something more: the stocks are falling somewhat... Don't care too much. Although I suppose, we haven't seen the end of the correction now, I will say this: if stocks get cheaper, they get more worth to buy. Don't forget it as sooo many, who do exactly the opposite.



stocks bourse oil currency dollar

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Short Input : Ken Fisher's "Three Questions That Count"

Ken Fisher has recently talked again about his investing methodology, and in his typical manner has reduced the "investing universum" to "three questions that count":

1. What do you believe that’s actually false?
2. What do you know that others don’t?
3. What the heck is my brain doing to blindside me now?

The honest and right answer to them will surely provide you an important advantage on the stock markets. But it seems to be not that easy to be honest and right!?...

Some help is provided by Fisher himself and on this posting.


stocks bourse ken fisher investments strategy

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Something from the Business Scene

I have read several days ago in the German Newspaper Die Zeit (Print Edition) two interesting articles, which I’d like to mention here:

The first one was an interview with the Head of DaimlerChrysler, Zetsche. The keynote, which attracted my attention, was: “Focus on core business!”, “Focus on core business!” and “Take care of rentability!”. I believe this attitude is predominant in the German business scene nowadays, and maybe to some great extend in Europe and America as a whole.

Especially in Europe, a more rigid job market, a weaker growth of the national markets and the fact, that the bigger companies are mostly involved in “classical” industries, imply a more cautious and lean management. At present.

That “classical industries” point is surely more pure subjective opinion of mine, and certainly does not mean that the prospectives for the European stock markets are bad. Warren Buffet has also always had a pronounced affinity for “classical” stocks. With innovations and (risky) business expansion one can also loose money - much money.
Supporting the view of very good outlook for the leading European companies should be additionally the fact, that these have managed to increase substantially their profitability and have reached now the international level. Because, historically, particularly the German enterprises have always had a great business, great products, but lacked strong record on profitability.

Some people argue, that it would be normal if we come back to the historical averages, but I think, in the globalized world and with more flexible structures (implemented mostly due to the economic and bourse weakness in the years after 2000), the German companies will hold approximately the world level. And in this case the valuation (which is partly derived by historical standards) will appear seriously low.

But back to the interview: I assume, that enterprises, which focus that much on their core activities will much less surprise with negative profit development. The profits may somewhere be disappointing, but not “surprising”. This will add stability to the stock exchanges.

The second article treated the new internet developments, ever often referred to as “Next Economy” (oh, my dear!) or Web 2.0. This blog is by the way part of those Web 2.0 story...

In short, there are numerous new success stories, which developed out of the more intensive and personalized usage of the world wide web - prominent exsamples are Youtube, Facebook, OpenBC etc. etc. All in all profitable companies, which grew up from “a garage” and show very stable and prudent financial picture (not the hot air of the New Economy, HOPEFULLY).

But the new boom (if there is one) takes place “behind locked doors” for the investors. The companies are not listed publicly and for the investors remain only the old, established shares. Interesting: the supply of stocks in that growing industry is now relatively clammy...



stocks bourse business europe

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Every Breath Bernanke Takes

Ain't they cool!?




stocks bernanke fun

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Anti-cyclical speculation

Anti-cyclical investment is actually the key to the stock market success, and many (especially the “children of the 90th boom”) have understood it. The greatest speculators have often stressed it and have raised it virtually as a “dogma” of speculation. This also appears anyhow the "more uncomfortable", riskier and more difficult way to act on the stock exchanges, because the considerations from which an anti-cyclical investment is done, are extremely unpopular at the respective time. And it is also quite a risk: not only that one can be anyway wrong on speculative decisions, one must also take into consideration the old sentence that "the market can remain longer irrational, than you solvent ".

Now if I think a little bit courageously, I discover, actually, only two big areas which look after a perhaps favorable possibility for a anti-cyclical speculation: commodities, especially oil, and the dollar. Very briefly: Short oil, Long dollar.

If you are somewhat "frighten" now, you can see that the both are the most unpopular bets under the bigger investment classes or speculation markets (and if you do not, fancy please, I am your asset manager...).


Some days ago, when the oil price shot up, I had the intention to write something under the title (which I even still found as quite funny): "One more step and I will shoot, pardon … short". Well, maybe I do not have it with humor on it - and hopefully I will also not receive the possibility to prove my courage (i.e. we have seen the peak in oil). But, I have of course not forgotten that I haven’t expected such a rise in prices. I held the oil market already before fairly long time for too high and it was only good that I have simply kept away. And now it would be no big surprise if the oil climbs even further upwards. But maybe is sometime time? Sometime soon?

And, in addition, I think anyhow, that a Short in oil could be a good hedge of stock positions. Actually, this contradicts every common sense and learned correlations. Actually, one says "oil up, stocks down " and vice versa. The reasonable hedge would be: Long in oil, because with further raising oil prices the stocks might go down.

But I say the following to myself: the basic economic situation is rather stable, the valuations rather ok. It can be that this is delusive anyhow, but for bigger losses on the stock markets it requires quite a trouble. Should it come from the real economy (steep declining economic growth and/or profits, consumer's expenses collapse etc.), I want to see those oil speculators who will still hold on their futures contracts.

And if the high interest rates (due to inflation, thus above all due to high energy prices) press down on the stock exchange, they will press twice as strongly on commodities, which are now twice as more speculative to me. The save interest of bonds is the biggest competition of all speculative arrangements.

In brief: if the stocks go down, oil will also go down. And this will catch up the stock declines somewhat, while the oil price could go in a speculative downward spiral.

And about the dollar I write later.



stocks bourse oil hedge

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Air Berlin IPO in Germany stumbles

The IPO of Air Berlin, a popular discount airline company, was (and actually is still) supposed to be one of the major IPOs this year in Germany. But it stumbled somewhat. The initially targeted market capitalization was ca. 800-900 Mio. Euro, now after difficulties to attract enough investors and very critical voices from the funds managers, the price building range and the number of offered stocks were reduced considerably. In two days the company will finally be launched on the Frankfurt Stock Exchange and capitalize at about 400 to 600 Mio. Euro. (second number after full Greenshoe).

Why am I talking about it?

First it is quite an issue in Germany. Though secondly, more important, I consider the IPO market can often give some valuable hints on the overall conditions of the stock market.

My personal opinion is supposedly not exactly the common "wisdom" on this issue:

The analysts and stock market observers use to see in increasing IPO activity positive signs for the bourse climate. I am at least not that definite: IPOs are contrariwise unfavorable, because they take off the liquidity. Liquidity that otherwise could have been invested in the listed stocks.

They tell us, IPOs indicate the demand capability of the market. I don't love great demand indications - for the present moment it is of course good for the stocks as a whole; but it indicates also strong gear and investor activity. Demand now does not indicate demand tomorrow.

Of course there is a very fine edge, where positive interpretation can turn negative.

After this concrete story, I am more reassured about the market conditions than concerned about demand weakness. The investors do obviously some due diligence, do not buy blindly, there is no euphoria.

The time to be cautious will come, when all IPOs are 20fold oversubscribed and double digit gains on the first trading day are called disappointment.


stocks bourse IPO air berlin

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

Warren Buffett comments on real estate, commodities

Warren Buffett's comments on some hot (or "problematic") areas in the global financial markets on the annual meeting of Berkshire Hathaway: the real estate and commodity markets.

In brief:

The real estate market was a bubble to some degree, and we may see continuation in the slowing observed recently. Especially in the high-end of the market and where homes were purchased as investments "significant downward adjustments" seem possible.

Probably even more speculative is the situation on the commodity markets, where prices have risen quite above the fundamentals and more and more traders get involved only for speculative reasons.

Nice to read the summary at marketwatch.com

stocks bourse commodities buffett

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site

The second try...

As you easily can see, I have neglected this blog for some long time. Now I am willing to give it a second try. I wasn't away from the bourse and from the blog writing either, but I couldn't find enough time to maintain two blogs. You can see on my German site, I am still writing regularly and observing the stock exchanges and the financial markets closely.

So let try it for the first (or for the second) with this funny and ironic observation, I read about in Blogginwallstreet (one of the best investing blogs I've found):

All the world is talking about commodities as a hedge against inflation. The speculators (hedgers) buy massively all futures and derivatives and this way force the spot prices (especially of oil) to go up. Then - if we believe Blogginwallstreet - the oil producers themselves do not hedge the high prices via selling futures. But isn't it ironic - they want to hedge against inflation by pushing up the prices of the only thing where currently inflation dangers come from...


stocks bourse commodities inflation

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site