Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20
Is The Coronavirus bullish for Stocks? - 8th Feb 20
Ryzen 9 3950X Best UK Custom PC Builder 2020 - Scan.co.uk vs Overclockers.co.uk - 8th Feb 20
Warwick University Offer Holders Open Days 2020 - Visitors Car Park 15 Parking - 8th Feb 20
The Historical Impact of Recessions on Gambling Activity - 8th Feb 20
UK Points-Based Immigration and Its Effect on the Job Market - 8th Feb 20
British Pound GBP Long-term Trend Analysis - 7th Feb 20
The Case for Buying Precious Metals - 7th Feb 20
Vacuum Cleaner Features You Need To Know - 7th Feb 20
How to Shrink Financial Market "Maybes" Down to a Minimum - 7th Feb 20
Stock Market Broad Sector Rotation Starts In 60+ Days – Part I - 7th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Sovereign Wealth Funds - The Last Bastion's of “Dumb Money”?

Stock-Markets / Financial Markets Feb 09, 2008 - 02:46 AM GMT

By: Anthony_Cherniawski

Stock-Markets

Best Financial Markets Analysis ArticleIn recent months, Wall Street has taken comfort in the idea that Sovereign Wealth Funds will come riding to the rescue of banks that are up to their eyeballs in subprime sludge. First Citigroup, then Merrill Lynch and a host of other commercial banks have reported receiving “injections” of capital to help them reinvigorate their balance sheets. Some $40 to $60 billion of new capital has been promised.

After having stepped to the plate so willingly last year, the Sovereign Funds are now having second thoughts. The $8 billion loan to Citigroup made last year was more than likely made to protect their prior investments from an outright collapse. And the Chinese are becoming more sophisticated about their money as well. They are growing resentful that they are being considered the last bastion of “dumb money” for troubled banks. They may be right.


Lets get the record straight. These Sovereign Funds are not buying the subprime mortgages. They are lending money to these banks so that they, in turn, can lend money to us. It might disturb people to know that Citigroup agreed to pay the Sovereign Fund of Dubai 11%. What interest rate will Citi have to charge its customers to meet overhead and pay back that loan?

Consumer borrowing is slowing down.

WASHINGTON (AP ) -- Consumers increased their borrowing in December at the slowest pace in eight months - additional evidence that economic activity was slowing significantly at the end of last year. For all of 2007, consumer credit rose at the fastest clip in three years.

Consumer credit, as measured by the Federal Reserve, does not include any debt secured by real estate, such as mortgages or home equity loans. The December report showed that revolving credit, the category that includes credit cards, rose at an annual rate of 2.7 percent in December, a significant slowdown from a 13.7 percent jump in November.

Unfortunately, consumers haven't yet come to the realization that these loans have to be repaid.

Bank failures…prepare yourself for them.

U.S. News & World Report tells us that, “A tiny bank in Kansas City, Mo., has become the first bank in the country to fail this year—but it's unlikely to be the last.” Smaller banks with limited resources will likely have the most trouble this year, especially those that have made large commercial real estate loans. A banker reports to me that many businesses are now in arrears on their payments, since they are not being paid for work already done.

How well is your bank doing? I cannot answer that question, but Veribanc, Inc. will be out soon with their 4 th quarter report on banks. They are an independent rating service and rely on subscriber fees to pay the bills. The cost of a report is $10.00 for the first bank and each additional report has a reduced fee. They may be reached at (800) 442-2657 or by email at service@veribanc.com .

Reining in egregious credit card practices.

The House Financial Institutions and Consumer Credit Subcommittee introduced new legislation yesterday to curb unfair credit card practices. Increasing numbers of consumers are falling into arrears on their credit cards, causing an onslaught of fees and higher interest rates. Companies are cutting back on employees, causing even on-time payments to be credited late. Will the bill make it to a vote? Let your voice be heard.

Is the “recovery” faltering?

Wall Street pundits are arguing whether investors should pile back in to the market to take advantage of the “recovery” that they claim is taking place. Not so fast! Recoveries seldom come in this kind of environment. The S&P 500 is in the process of a “retest” of the January lows. Today the Commerce Department reports that wholesale inventories increased 1.1% in December. This is the largest gain in inventories since August 2006. What is more, sales at wholesalers dropped .7% in December, the largest decline in 11 months. It appears that shoppers sat on their wallets in the month of December, the single most important month of the year for wholesalers.

Who else is sitting on his wallet? 

Berkshire Hathaway Chairman Warren Buffett is reported to be sitting on his wallet , too. The world's second wealthiest investor has created his wealth by buying good companies at low prices. He thinks there's more pain to come before he's ready to put his money to work.

 

Volatility takes bonds south.

A surprisingly low turnout at the treasury auction yesterday surprised traders. This was startling because the auction was a small one and it was expected that there would be no trouble finding bids for the offering. Foreign central banks appeared to be especially disinterested in submitting bids at this auction. Last week I noted the increasing volatility in bonds and suggested this could not be positive for bonds. The near-term trend is now down.

Who's in charge here?

 

 

 

Is it the buyers or the sellers? Last week appeared to be a top of sorts for gold. Despite lower prices a week later, it still isn't evident whether the buyers or the sellers are in charge. Today's news headline trumpets the rise of gold. The World Gold Council anticipates a 30% rise in ownership of the gold exchange traded funds, but caution that continued interest is dependent on new highs in the price of gold bullion.

 

 

 

 

The Nikkei ends a very bad week.

Feb. 8 ( Bloomberg) -- Japanese stocks fell, ending their worst week in a month, led by industrial stocks after machinery orders fell three times more than expected in December.

The Tokyo Stock Exchange halted trading of Topix index futures halfway through the trading day due to a computer malfunction. Transactions stopped on contracts expiring in March at 10:59 a.m. local time, the bourse said in a faxed statement. Hmmm. Do I sense that it could have been worse had they not halted the market?

 

 

Shanghai has a relief rally before the festivals.

The Shanghai Index had its best one-day rally in over two years on Monday. The markets closed on Wednesday, after giving back some of the gains. It seems that the Chinese are celebrating the Zhonghe Festival and the Blue Dragon Festival, a carryover from its agrarian culture. I wonder what the Shanghai Composite will look like after opening on Monday? Despite the strength of the one-day rally on Monday, the Shanghai market has not changed its down-trend.

 

 

 

Mr. Buffett, may I (mis)quote you on that?

There is a bit of tempest in a teapot about a misquote of a comment made by Mr. Buffett. The headline says, “ Warren Buffett says U.S. dollar 'worthless' if account deficit persists”

In his speech, Mr. Buffett said, "If our current account deficit keeps running at present levels, the dollar I think is almost certain to be worth less five to ten years from now compared to other major currencies."

Warren , can we talk?

 

 

Exploding ARMS foil Bernanke's attempt to calm the mortgage market.

Exploding ARMS ” are called the neutron bombs of the housing market. They leave the house standing, but the people are gone. They are also known as “liar loans” because they have been aboused both by people trying to get into houses they otherwise could not afford as well as sales people who glossed over the many intricate details or represented them as fixed rate loans.

 

 

 

Will a recession cause gasoline prices to decline? 

The Energy Information's Weekly Report suggests, “It depends!” A recession in the United States economy will have a significant effect on the demand for petroleum products. However, as oil prices have moved from $3 per barrel in the early 1970s to $90 per barrel today, U.S. firms have found more energy efficient ways to produce goods and services.

 

 

 

 

Arctic blasts put strain on natural gas.

The Natural Gas Weekly Update reports, that natural gas prices decreased in most of the 48 states this week. That was before yesterday's price spike. Due to the weather, last week's draw down of supplies in storage was 200 billion cubic feet (bcf), the second largest draw down of the winter. This still leaves the total natural gas in storage about 3% above the five year average. Another month of winter weather remains. Then the Spring decline in natural gas prices will begin.

 

 

 

Message to Americans, “Prepare to live within your means.”

Since the 1960s, the average American consumer became used to the “buy now, pay later” notion promoted by lending institutions. After all, the stock market and real estate market were rising. We could pay back those loans from our appreciating portfolios, if we had to. Consumers are taking notice that this is no longer true.

“ The long collapse in the United States savings rate is over,” said Ethan S. Harris, chief United States economist for Lehman Brothers. “People are going to start saving the old-fashioned way, rather than letting the stock market and rising home values do it for them.”

Thrift is coming back.

We're on the air every Friday.

Tim Wood of www.cyclesman.com , John Grant and I pre-recorded our weekly session on Wednesday about the markets. It was shockingly prescient. You will be able to access the interview by clicking here .

Please make an appointment to discuss our investment strategies by calling Claire or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Regards,

Anthony M. Cherniawski,
President and CIO
http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Donald R. Engen
09 Feb 08, 06:11
Lets not forget the big ethanol lie…

Corn-based ethanol, Instead of Reducing Greenhouse Gases by 20%, will increase it by 93% compared to using gasoline over a 30-year period. Politicians in Washington DC (District of Criminals) need to be tosses out of on their asses.

Washington needs to start putting citizens and good judgment before their egotistical and self centered political careers.

Frankly, people are really getting sick and tired of do nothing Government.

Want to know more? http://www.usatoday.com/weather/climate/globalwarming/2008-02-08-ethanol-study_N.htm?csp=34

Thanks for listening

D.R. Engen

P.O. Box 304

Clayton WI 54004


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules