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Noteworthy News – June 16, 2014

Economy:

How America became uncompetitive and unequal - Washington Post

Ignore Those World Cup Productivity Studies - US News

The Lack of Major Wars May Be Hurting Economic Growth - New York Times

Congratulations, class of 2014: You’re totally screwed – Salon

Technology incubators: Has their time past? - Haaretz

Markets:

Central banks shift into shares as low rates hit revenues – Financial Times

The Fed could inadvertently jolt markets this week – CNBC

Politics:

Dangers of central banks’ public investments - USA Today

The path through the fields: Bangladesh has dysfunctional politics and a stunted private sector. Yet it has been surprisingly good at improving the lives of its poor – Economist

Gary Becker and the Economics Revolution that Wasn’t - New Yorker

Japanese central bank chief sticks his neck out, pressures PM Abe for action – Reuters

Banks:

Anat Admati Discusses the Still-Too-Big-to-Fail Banks on Bill Moyers – Naked Capitalism

Wells Fargo Nears Market-Value Milestone - Wall Street Journal

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Posted in Economics, Markets, Media, Politics.


Invest in Putin?

Thanks to Mebane Faber for getting me looking at Cyclically Adjusted P/E ratios by country again.  The one country that caught my eye was Russia:

CAPES

The beauty of CAPE is that it smooths out earnings so you do not get to caught up in a short term focus.  There are many arguments against it, but I believe it gets close to what a long-term investor should be looking at.  For Russia, it has been the geopolitical stress and constant news stories that have kept their stocks in the “cheap” zone.  In addition, many investors were once bitten by the 98 Russian default and not eager to relive that experience.  If you look at the historical volatility of the MICEX index you might feel like caution is a wise choice:

MICEX Volatility

Only 50 stocks and a volatile environment leave everyone fearful of the MICEX index

There are a few things to take a look at before going headfirst towards the Red investment.  One item to keep in mind is currency depreciation.  If the Russian Ruble is losing value then investing in a Russian ETF denominated in dollars will be hurt by the depreciation of the Ruble.

Russian Ruble

There has been fairly significant depreciation in the value of the Ruble versus the dollar since 2011 (upward move) but it looks as if the trend might reverse

The second item that is helpful is the credit worthiness of the Russian government.  Given that there was a default in 1998, you would think that investors would be extremely cautious in lending money to Russia.  But most investment sins are forgiven in about 15 years…

Russian CDS

Fear (credit spread) spiked in 2014 but has quickly come back to normalcy

Lastly we could look at what easy ETF options exist to allow us to buy into the Russian story.  RSX, ERUS, RBL, RSXJ (small cap) and RUSL (3x Bull!).

For liquidity I will stick to RSX – Market Vectors Russia ETF:

Russian ETF RSXpng

Looks as if RSX has broken above its 200 day moving average

You will never feel 100% comfortable buying into a market that has sold off while everything else has rallied.  At the same time, you probably shouldn’t feel comfortable buying into a market that just continues to rally at odds with its own CAPE ratio…

 

Posted in Economics, Markets, Trading Ideas.

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Noteworthy News – June 9, 2014

Economy:

Affordable Housing That’s Very Costly - New York Times

Americans think economy won’t recover until 2017 – CNN Money

Manufacturers confident on growth for 2014, says EEF – BBC

THE GREAT DELEVERAGING: SIX AND A HALF LOST YEARS – New Yorker

Markets:

Investors look to China and U.S. after ECB fights deflation risk – Reuters

A primer on ‘global liquidity’ - VOX

Are Negative Interest Rates Coming to the United States? – LinkedIn

Where’s the fear in the stock market? - clickon Detroit

Politics:

Private Jobs Have Recovered. Government Jobs Still Lag. – New York Times

Banks:

The GOP’s Antique Bank – Wall Street Journal

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Posted in Economics, Markets, Media, Politics.


Noteworthy News – June 2, 2014

Economy:

Financial Hazards of the Fugitive Life - New York Times

The paradox of this recovery, in two charts – Washington Post

Financial Hazards of the Fugitive Life - New York Times

Markets:

House price growth at four-year high – BBC

How QE Encourages Stock Buy Backs, Discourages Hiring and Stunts the Housing Market - SmauGLD

Politics:

The $272 billion swindle: Why thieves love America’s health-care system – Economist

Spain to launch 6.3bn euro stimulus package – BBC

Europe has an even bigger crisis on its hands than a British exit – Telegraph

Banks:

The Post Office Should Just Become a Bank – New Republic

Are banks too large? – VOX

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Posted in Economics, Markets, Media, Politics.


Noteworthy News – May 27, 2014

Economy:

Thomas Piketty accuses Financial Times of dishonest criticism – Guardian

The Whole Economy Is Rife with Ponzi Schemes – Scientific American

The Retail Death Rattle Grows Louder – ZeroHedge

The world has an astonishing chance to take a billion people out of extreme poverty by 2030 – Economist

Markets:

UK interest rate could settle at 3%, says Bank of England deputy governor – BBC

Politics:

Surprise! Fairtrade Doesn’t Benefit The Poor Peasants – Forbes

Some things to consider if Spain leaves the euro – Michael Pettis

Scottish independence: Oil fund could start from ‘day one’ – BBC

Banks:

Travel insurance doesn’t pay for these bank customers - CBCNews

 JPMorgan Chase Announces Detroit Investment – NPR

10 ways Wall Street skims $100 billion of your money - Marketwatch

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Posted in Economics, Markets, Media, Politics.




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