They Bravely Chickened Out

Earlier this week Congress tried to show that it is capable of tackling our chronic and dangerous debt problems. Despite the great fanfare I believe they have accomplished almost nothing. Supporters say that the budget truce created by Republican Representative Paul Ryan and Democratic Senator Patty Murray will provide the economy with badly needed certainty. But I think the only surety this feeble and fictitious deal offers is that Washington will never make any real moves to change the trajectory of our finances, and that future solutions will be forced on us by calamity rather than agreement.

Read more @ peterschiffbulletin

Read More

Water shortages a crucial issue in China: Jim Rogers

American investor and author Jim Rogers says water shortage is the biggest problem in China. The country's water resources are limited but reuse of water is still insufficient and groundwater is being overexploited, reports ifeng, the financial news site run by Phoenix New Media in Hong Kong.

War, famine, civil war or recession can be overcome but drought cannot; people cannot build a society or a country without water, the investor said during an interview with the media.

Read more @ jimrogersbulletin

Read More

Soros Soars Thanks To Sarepta Therapeutics and Towerstream Corporation

Today’s midday gainers are Sarepta Therapeutics Inc (NASDAQ:SRPT), Towerstream Corporation (NASDAQ:TWER), Icahn Enterprises LP (NASDAQ:IEP) and daily losers are IAMGOLD Corp (NYSE:IAG), Enphase Energy Inc (NASDAQ:ENPH), Turquoise Hill Resources Ltd (NYSE:TRQ).

Read more @ georgesorosbulletin

Read More

BNSF CEO Rose shifts role, renewing Buffett succession talk

NEW YORK, Dec 11 (Reuters) - Berkshire Hathaway Inc's BNSF Railway Co has moved Chief Executive Matthew Rose to an executive chairman role, renewing speculation he might be in line to replace Warren Buffett at Berkshire's helm.

As executive chairman, Rose, 54, will work on organizational planning, market positioning and public policy at BNSF over the next decade, the company said on Wednesday.

Carl Ice, 57, will replace Rose as chief executive at the nation's largest railroad, starting on Jan. 1.

Read more @ warrenbuffettbulletin

Read More

Can Mutual Funds Invest Like George Soros?

NEW YORK (TheStreet) -- George Soros and other star hedge fund managers famously made fortunes by betting on global trends. Global macro funds can range widely, holding foreign currencies one year and U.S. stocks the next. But the macro strategy is hard to execute, and not many managers have succeeded. Most mutual funds that have tried the macro game have failed and shut their doors. For mutual funds, the strategy is particularly difficult because managers cannot use the leverage that hedge funds employ.

Read more @ georgesorosbulletin

Read More

Jim Rogers: "US Heading for Disaster. Be Prepared"

"These guys are academics and bureaucrats. I suspect the first time they do come to their senses and start to cut back it will lead to some kind of correction, markets going down everywhere. So they will panic and they will start printing again.

Read more @ jimrogersbulletin

Read More

Jim Rogers : How to Protect Your Portfolio in 2014

Read more @ jimrogersbulletin

Read More

The “Small” Solution to a Big Tax Problem by Marc Faber

If the government levies taxes on landowners, retailers, corporations, and individuals, it is far from certain that the targeted interest groups will actually pay the tax. Depending on a variety of factors, they may be able to roll over or shift the tax to other people (tenants, consumers, workers, etc.) either partly or entirely. As Alfred Marshall said: “There is scarcely any economic principle which cannot be aptly illustrated by a discussion of the shifting of the effects of some taxes.”

The Swedish Nobel Laureate, economist, sociologist, and politician Karl Gunmar Myrdal also contended that the results of taxes can “diverge greatly” from the intentions. (All government interventions in free markets lead to unintended consequences.) This was already obvious to David Ricardo, who commented: “Almost all taxes on production fall finally on the consumer.”

Read more @ marcfaberbulletin

Read More

Soros Partners with Cheney in Halliburton Deal

Billionaire oil tycoon George Soros, who recently endorsed Hillary Clinton for President, has recently teamed up with one of his nemesis, former Vice President Dick Cheney to invest big-time cash on Halliburton. Mr. Cheney is a former CEO of the corporation, which has been villified by Leftist organizations such as Moveon.org.

According to American Thinker, Mike Boyer, writing in the Passport blog of Foreign Policy Magazine, notes the gigantic stake George Soros has taken in Halliburton, the epitome of evil in the eyes of his left wing friends:"

Halliburton accounts for 3.5% of Soros' hedge fund, which signifies its fourth-largest holding.
As reported by American Thinker, "Soros' position in Halliburton is reported to be his first, which means he bought it with a full understanding of Halliburton's reputation. Soros may not see a problem with profiting from a company that has been accused of everything from sweatheart deals to cooking the books to serving U.S. troops lousy food in Iraq. The real question, however, is whether MoveOn.org, the Center for American Progress, and other organizations that have benefitted from Soros' charity will see a problem with accepting money earned off Halliburton shares?"

Read More

Jim Rogers: I Cannot See A Crash Anytime Soon

Right now we have all these people printing so much money. So, I cannot see a crash anytime soon. I can see corrections, I can see the markets going down a bit and for a while but with all the money printing everywhere in the world and no constraints on Congress now, Congress gets free to spend as much as they want to...They have moved the debt ceiling, they are afraid to do anything about it. So, with all the money printing and all the spending everywhere in the world, this could go on for a while. 

Read More

Faber : I think it’s too late to Buy US Stocks

I think it’s too early to move into emerging economies, and I think it’s too late to buy US stocks. They (US stocks) may go up another 10%, maybe even 20%, but the risks have increased significantly and I don’t think equity investors in the US, aside from a short-term trading opportunity, will reap very high returns in the future. Now, compared to equities in emerging economies and equities in the US, what is really incredibly depressed are mining companies. My preference has always been to own physical gold, but I have to say that at this level the mining companies are relatively good values. - in businessinsider 

Read More

People Pay too much Attention to GDP Growth Figure

Q: I know you are not very gung-ho on emerging markets as a whole, but what is your view on India in specific? Would you have a target for the Nifty that you can share with us? The domestic cue that we are working with would be the state assembly elections and the national elections later next year. Would that change your opinion or maybe help your view towards India in specific? 

Marc Faber : We are down in India from the early 2008 high by 40 percent in US dollar terms, in other words adjusted for the currency movements. We are not down 40 percent in rupee terms, but in dollar terms. I think that people pay too much attention to GDP growth figure etc and should rather focus more on individual companies. The problem in American economies is that a lot of money has flowed in and it has boosted the valuation of essentially very liquid stocks or big market cap stocks whereas smaller cap stocks are reasonably priced. So I think there is an opportunity in India, whether the index will go up a lot or not that I do not know, but for the active investor that does not buy the index, I see an opportunity. - in moneycontrol

Read More

Faber : I think Banks (in India) are very Inexpensive

Q: Do you have any select stocks or sectors that you are taking positions if in case within India?

 Marc Faber : I think banks are very inexpensive. - in moneycontrol

Read More

George Soros racks up stake in newly-floated Hibernia REIT

Legendary billionaire investor George Soros is one of the biggest backers of the €365m Hibernia REIT, the property investment vehicle that floated last Friday.

The Soros-run Quantum fund has an 8.22 per cent stake in the Hibernia REIT, which was set up to invest in the Irish property market recovery. Soros, known as the "man who broke the Bank of England" for his bet against the British pound in the 1992, has invested in Irish groups before, taking stakes in Elan and Amarin as well as buying into Ardmore Shipping.

The Soros group is joined by Wall Street titan Louis Bacon's Moore capital and the vast US group CREF, which manages pensions and investments for thousands of US teachers.

Source: http://www.independent.ie/business/irish/george-soros-racks-up-stake-in-newlyfloated-hibernia-29818759.html

Read More

Warren Buffett gets a boast with Media General

Today’s middays gainers are Enzon Pharmaceuticals Inc (NASDAQ:ENZN), Media General, Inc. (NYSE:MEG), Theravance Inc (NASDAQ:THRX) and midday losers are InterOil Corporation (NYSE:IOC), Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), Novacopper (NYSEMKT:NCQ).

Today’s midday gainer is Enzon Pharmaceuticals Inc (NASDAQ:ENZN). The healthcare stock shot up +10.69%, hitting $1.61. Billionaire Seth Klarman holds 7.6 million shares (0.37% of his fund), acquired for $3.32 each. Carl Icahn owns 5.9 million shares (0.04% of his holdings), purchased for an average $3.59.

The second company with a major gain today is Media General, Inc. (NYSE:MEG). The television broadcast company increased +6.83% to $19.87. With 4.6 million shares, MEG represents 0.07% of Warren Buffett’s fund. The investor paid an average $4.63 per asset.

Read More

The Return from Equities will be very muted in the next few years

Q: If it is not the developed market equities and it is not the emerging market equities where would you put your money to use at current levels?

Marc Faber :  I think what people hate today is essentially to hold cash and my sense is that the return from equities will be very muted in the next few years. Maybe you will make something like 5-10 percent per annum, but even that would be a very high return considering that in the western world - in eurozone, in America and in Japan you have essentially zero interest rates. So if equity investors make 5 percent per annum, it is actually a very higher return. - in a recent interview with CNBC TV18

Read More

Peter Schiff vs. Harry Dent : Inflation/Deflation Debate

[VIDEO] CLICK READ MORE TO VIEW IT. [VIDEO]

Read More

Soros’ fund leases chunk of Boston Properties’ 250 West 55th

Billionaire George Soros’ investment firm has taken just under 100,000 square feet at Boston Properties’ 250 West 55th Street. Soros Fund Management will take the spec office tower’s penthouse, on the 38th floor, and also floors 26 through 28 in the 15-year deal.

The firm will pay rents north of $100 per square foot at the million-square-foot building, Crain’s reported. Hanley Advisors’ principals Jim Coleman and Steve Kaufman represented Soros Fund in the deal, while Boston Properties was represented in-house by Andrew Levin in conjunction with a CBRE team.

Source :http://therealdeal.com/blog/2013/12/05/george-soros-fund-takes-100000-sf-at-boston-properties-building/

Read More

Peter Schiff: Holding the Dollar Could be Riskier Than Stocks

[VIDEO] CLICK READ MORE TO VIEW IT. [VIDEO]

Read More

Berkshire Hathaway Down to Neutral

Zacks downgraded Berkshire Hathaway stock to Neutral on December 5, 2013. The stock was previously ranked at Outperform. The downgrade was due to the earnings miss, and the company gave a negative surprise of 6.9%. The stock is currently listed as a Hold.

Why Downgrade Berkshire Hathaway?

During the third quarter of 2013, Berkshire Hathaway reported operating earnings of $1.49 per share. They missed Zacks consensus estimate by $.11, because they believed it would be $1.60 per share. The decline came from a lack of underwriting income in the insurance business of the company, all because they suffered a catastrophic loss during the third quarter.

The company’s earnings are always subject to volatility, and this is especially true because of the exposure to catastrophes. Zacks believes that the exposure to catastrophes can result in more large individual losses, and they believe it will also produce more volatility in the casualty and property underwriting results.

Another area in question is the successor of Warren Buffett, the current chairman and CEO of Berkshire Hathaway. Many investors look at this as a real concern. We know that Buffett has a succession plan in place and a successor is already chosen, but the name of the individual is currently being kept under wraps. So there is still uncertainty in the market as to whether or not the new CEO is going to be able to perform at the same level of Warren Buffett.

Also the huge company investment in derivative contracts creates volatility with company earnings.

After the third quarter earnings report, Zacks Consensus Estimate for the year 2014 went down. One of two of its estimates was lowered by 0.5% to the amount of $6.22 per share.

Even so, Berkshire Hathaway has shown that it has a strong favorable operating performance over many quarters in the past, and each one of its segments has shown growth.

Its noninsurance businesses – retail, service, manufacturing, energy and utilities – are all performing very well even though they suffered substantial earnings declines in the recent past because of the current weak economy.

The financial products segment is also performing well, plus they are seeing trends improve in the business segment now that the housing market has gradually improved as well.

Read More

Marc Faber: A Financial Crisis is Looming on The Horizon

As a distant but interested observer of history and investment markets I am fascinated how major events that arose from longer-term trends are often explained by short-term causes. The First World War is explained as a consequence of the assassination of Archduke Franz Ferdinand, heir to the Austrian-Hungarian throne; the Depression in the 1930s as a result of the tight monetary policies of the Fed; the Second World War as having been caused by Hitler; and the Vietnam War as a result of the communist threat.

Similarly, the disinflation that followed after 1980 is attributed to Paul Volcker’s tight monetary policies. The 1987 stock market crash is blamed on portfolio insurance. And the Asian Crisis and the stock market crash of 1997 are attributed to foreigners attacking the Thai Baht (Thailand’s currency). A closer analysis of all these events, however, shows that their causes were far more complex and that there was always some “inevitability” at play.

Simply put, a financial crisis doesn’t happen accidentally, but follows after a prolonged period of excesses…

Take the 1987 stock market crash. By the summer of 1987, the stock market had become extremely overbought and a correction was due regardless of how bright the future looked. Between the August 1987 high and the October 1987 low, the Dow Jones declined by 41%. As we all know, the Dow rose for another 20 years, to reach a high of 14,198 in October of 2007.

These swings remind us that we can have huge corrections within longer term trends. The Asian Crisis of 1997-98 is also interesting because it occurred long after Asian macroeconomic fundamentals had begun to deteriorate. Not surprisingly, the eternally optimistic Asian analysts, fund managers , and strategists remained positive about the Asian markets right up until disaster struck in 1997.

But even to the most casual observer it should have been obvious that something wasn’t quite right. The Nikkei Index and the Taiwan stock market had peaked out in 1990 and thereafter trended down or sidewards, while most other stock markets in Asia topped out in 1994. In fact, the Thailand SET Index was already down by 60% from its 1994 high when the Asian financial crisis sent the Thai Baht tumbling by 50% within a few months. That waked the perpetually over-confident bullish analyst and media crowd from their slumber of complacency.

I agree with the late Charles Kindleberger, who commented that “financial crises are associated with the peaks of business cycles”, and that financial crisis “is the culmination of a period of expansion and leads to downturn”. However, I also side with J.R. Hicks, who maintained that “really catastrophic depression” is likely to occur “when there is profound monetary instability — when the rot in the monetary system goes very deep”.

Simply put, a financial crisis doesn’t happen accidentally, but follows after a prolonged period of excesses (expansionary monetary policies and/or fiscal policies leading to excessive credit growth and excessive speculation). The problem lies in timing the onset of the crisis. Usually, as was the case in Asia in the 1990s, macroeconomic conditions deteriorate long before the onset of the crisis. However, expansionary monetary policies and excessive debt growth can extend the life of the business expansion for a very long time.
In the case of Asia, macroeconomic conditions began to deteriorate in 1988 when Asian countries’ trade and current account surpluses turned down. They then went negative in 1990. The economic expansion, however, continued — financed largely by excessive foreign borrowings. As a result, by the late 1990s, dead ahead of the 1997-98 crisis, the Asian bears were being totally discredited by the bullish crowd and their views were largely ignored.

While Asians were not quite so gullible as to believe that “the overall level of debt makes no difference … one person’s liability is another person’s asset” (as Paul Krugman has said), they advanced numerous other arguments in favour of Asia’s continuous economic expansion and to explain why Asia would never experience the kind of “tequila crisis” Mexico had encountered at the end of 1994, when the Mexican Peso collapsed by more than 50% within a few months.

In 1994, the Fed increased the Fed Fund Rate from 3% to nearly 6%. This led to a rout in the bond market. Ten-Year Treasury Note yields rose from less than 5.5% at the end of 1993 to over 8% in November 1994. In turn, the emerging market bond and stock markets collapsed. In 1994, it became obvious that the emerging economies were cooling down and that the world was headed towards a major economic slowdown, or even a recession.

But when President Clinton decided to bail out Mexico, over Congress’s opposition but with the support of Republican leaders Newt Gingrich and Bob Dole, and tapped an obscure Treasury fund to lend Mexico more than$20 billion, the markets stabilized. Loans made by the US Treasury, the International Monetary Fund and the Bank for International Settlements totalled almost $50 billion.

However, the bailout attracted criticism. Former co-chairman of Goldman Sachs, US Treasury Secretary Robert Rubin used funds to bail out Mexican bonds of which Goldman Sachs was an underwriter and in which it owned positions valued at about $5 billion.

At this point I am not interested in discussing the merits or failures of the Mexican bailout of 1994. (Regular readers will know my critical stance on any form of bailout.) However, the consequences of the bailout were that bonds and equities soared. In particular, after 1994, emerging market bonds and loans performed superbly — that is, until the Asian Crisis in 1997. Clearly, the cost to the global economy was in the form of moral hazard because investors were emboldened by the bailout and piled into emerging market credits of even lower quality.

…because of the bailout of Mexico, Asia’s expansion was prolonged through the availability of foreign credits.

Above, I mentioned that, by 1994, it had become obvious that the emerging economies were cooling down and that the world was headed towards a meaningful economic slowdown or even a recession. But the bailout of Mexico prolonged the economic expansion in emerging economies by making available foreign capital with which to finance their trade and current account deficits. At the same time, it led to a far more serious crisis in Asia in 1997 and in Russia and the U.S. (LTCM) in 1998.

So, the lesson I learned from the Asian Crisis was that it was devastating because, given the natural business cycle, Asia should already have turned down in 1994. But because of the bailout of Mexico, Asia’s expansion was prolonged through the availability of foreign credits.

This debt financing in foreign currencies created a colossal mismatch of assets and liabilities. Assets that served as collateral for loans were in local currencies, whereas liabilities were denominated in foreign currencies. This mismatch exacerbated the Asian Crisis when the currencies began to weaken, because it induced local businesses to convert local currencies into dollars as fast as they could for the purpose of hedging their foreign exchange risks.

In turn, the weakening of the Asian currencies reduced the value of the collateral, because local assets fall in value not only in local currency terms but even more so in US dollar terms. This led locals and foreigners to liquidate their foreign loans, bonds and local equities. So, whereas the Indonesian stock market declined by “only” 65% between its 1997 high and 1998 low, it fell by 92% in US dollar terms because of the collapse of their currency, the Rupiah.

As an aside, the US enjoys a huge advantage by having the ability to borrow in US dollars against US dollar assets, which doesn’t lead to a mismatch of assets and liabilities. So, maybe Krugman’s economic painkillers, which provided only temporary relief of the symptoms of economic illness, worked for a while in the case of Mexico, but they created a huge problem for Asia in 1997.

Similarly, the housing bubble that Krugman advocated in 2001 relieved temporarily some of the symptoms of the economic malaise but then led to the vicious 2008 crisis. Therefore, it would appear that, more often than not, bailouts create larger problems down the road, and that the authorities should use them only very rarely and with great caution.

Source: http://dailyreckoning.com/that-financial-crisis-was-no-accident/

Read More