Jan. 10 (Bloomberg) --- Tequila Avion Founder & Chairman Ken Austin discusses his tequilas and how helping cut a deal with Warren Buffett changed his life forever. He speaks to Pimm Fox on Bloomberg Televisions' "Taking Stock." (Source: Bloomberg)
Tuesday, 14 January 2014
Saturday, 11 January 2014
Al Qaeda on the Trading Floor? ~ The Peter Schiff Show Thursday 01/09/2014
Friday, 10 January 2014
The Higher the Rate, the Greater the Downward Pull
"I'm known as a long term investor and a patient guy, but that is not my idea of a big move."
"To understand why that happened, we need first to look at one of the two important variables that affect investment results: interest rates. These act on financial valuations the way gravity acts on matter:
"The higher the rate, the greater the downward pull. That's because the rates of return that investors need from any kind of investment are directly tied to the risk-free rate that they can earn from government securities. So if the government rate rises, the prices of all other investments must adjust downward, to a level that brings their expected rates of return into line.
"In the 1964-81 period, there was a tremendous increase in the rates on long-term government bonds, which moved from just over 4% at year-end 1964 to more than 15% by late 1981. That rise in rates had a huge depressing effect on the value of all investments, but the one we noticed, of course, was the price of equities. So there – in that tripling of the gravitational pull of interest rates – lies the major explanation of why tremendous growth in the economy was accompanied by a stock market going nowhere."
Tuesday, 7 January 2014
Soros' biggest bet ever
In November George Soros, John Paulson and Leon Cooperman, three of the most successful hedge fund managers ever, quietly participated in a rights offering and became major shareholders in Caesars Acquisition Co., a spinoff from casino company Caesars Entertainment that has ownership in Caesars' online gambling assets.
Monday, 6 January 2014
George Soros says the next crisis in Europe will be political
The crisis has transformed the EU from the “fantastic object” that inspired enthusiasm into something radically different. What was meant to be a voluntary association of equal states that sacrificed part of their sovereignty for the common good – the embodiment of the principles of an open society – has now been transformed by the euro crisis into a relationship between creditor and debtor countries that is neither voluntary nor equal. Indeed, the euro could destroy the EU altogether.
George Soros : China becomes major uncertainty facing the world
The hedge fund manager George Soros wrote in an article published in Economia that it has become a critical issue facing the world as to how China will cope with tension between its continual fast-growing economy and the rising burden of major debts, and China's future direction will become the major uncertainty of the global economy.
Sunday, 5 January 2014
Saturday, 4 January 2014
Buffett Missing Goal as Berkshire Lags S&P 500 Test
jan. 2 (Bloomberg) -- Berkshire Hathaway is poised to report that it failed to increase net worth more rapidly than the Standard & Poor's 500 Index during the past five years, according to analyst estimates. (Source: Bloomberg)
Friday, 3 January 2014
Marc Faber : “Well Done, Mr. Bernanke!”
George Soros: China Is The World's Biggest Story Right Now
There are some eerie resemblances with the financial conditions that prevailed in the US in the years preceding the crash of 2008. But there is a significant difference, too. In the US, financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises.
Aware of the dangers, the People’s Bank of China took steps starting in 2012 to curb the growth of debt; but when the slowdown started to cause real distress in the economy, the Party asserted its supremacy. In July 2013, the leadership ordered the steel industry to restart the furnaces and the PBOC to ease credit. The economy turned around on a dime. In November, the Third Plenum of the 18th Central Committee announced far-reaching reforms. These developments are largely responsible for the recent improvement in the global outlook.
So China could have a meltdown like the US in 2008 or it could drive the entire global economy to new heights.
The ultimate conclusion to China's tension — whether it can successfully rebalance its economy away from debt — will have "profound" consequences for the whole world he says.
Thursday, 2 January 2014
Bernanke has set the stage for the Fed's collapse
“The US went up because people said, 'Now it's done, we don't have to worry anymore.' But somewhere along the line, markets are going to start suffering. They'll taper until the markets start hurting and then they'll panic and loosen up again. They've got themselves in a terrible box.”
“It'll turn into a bubble or a very inflated situation, but eventually the markets will say, we're not going to take your garbage anymore, whether it's treasury bonds or currency.” Inflation, Rogers says, has only been kept in check in the US by the country's shale gas discovery, putting a “dampener” on energy prices.
Wednesday, 1 January 2014
Warren Buffett's firm buying Phillips 66 unit
Houston-based Phillips 66 said Monday that Berkshire Hathaway will give up about 19 million of its 27.2 million Phillips 66 shares to acquire a business that makes additives that help crude oil flow through pipelines.
The exact number of shares will be determined by the price of the Houston-based company's stock when the deal closes. That's expected to happen in the first half of 2014.
The exact number of shares will be determined by the price of the Houston-based company's stock when the deal closes. That's expected to happen in the first half of 2014.
Source @ usatoday
Tuesday, 31 December 2013
George Soros takes stake in debt-laden construction firm FCC
Billionaire financier and philanthropist George Soros has bought a 3-percent stake in heavily indebted Spanish construction firm FCC from the group’s founding family. Last week, Esther Koplowitz, whose father founded the company, sold 3.8 percent of her majority stake for 15 euros a share, amounting to 72 million euros. Soros is the second internationally renowned investor to take a stake in the company in recent months, following Microsoft founder Bill Gates’ purchase in October of nearly 6 percent.
FCC registered losses of 675 million euros ($923 million) in the nine months to September.
Esther Koplowitz, who inherited the firm from her father, now owns 50.01 percent of FCC. The sale is part of a debt-refinancing deal organized by B-1998, the company through which Koplowitz controls FCC, and which includes the Aguinaga family and Bodegas Faustino, each of which have 5 percent. The deal included the sale of these shares.
Bill Gates is now the second-biggest shareholder in FCC. The Microsoft founder bought 5.7 percent in October for 113 million euros, paying 14.85 euros a share.
FCC is currently refinancing some 5 billion euros of debt, the bulk of the 6.6 billion euros it had accumulated by September.
As the world, and Spain in particular, has faced financial troubles and a downturn in construction activity, the company has suffered and its share price has dipped. This year FCC faced restructuring of some $2 billion in debt as well as the restructuring and refinancing of its subsidiary Alpine in Europe. Early this year, there were rumors that Guggenheim Partners might inject equity, but no deal was announced. This all means Gates could be getting quite the bargain, presuming the price will eventually bounce back.
FCC has operations in 56 countries, according to its latest financial report. It is building the new, 6-billion-euro Riyadh metro, to be the longest subway in the world at 176 kilometers, and Central America’s first subway, a 1.1-billion-euro project in Panama. Other projects include a $650-million replacement for a failed bridge in Long Beach, California, as well as a hospital outside Belfast inaugurated by Queen Elizabeth II last year.
Sunday, 29 December 2013
Billionaire George Soros Bought This Texan Oil Stock
Located in the heart of West Texas, the nearest major city is a four-hour drive away. This town is about as close to the 'middle of nowhere' as it gets. Yet Midland could be sitting on the largest oil discovery in American history.
Thanks to new technologies like horizontal drilling and hydraulic fracturing, millions of barrels of previously unrecoverable oil are now being pulled up from the nearby Permian Basin.
One company has been quietly buying up tracts of land in this area since the 1980's. And the firm's prospects are so exciting that billionaire hedge fund manager George Soros owns a $200 million stake in the firm. Other smart money operators like Stanley Druckenmiller and John Paulson are pouring money into the stock as well.
I'm talking, of course, about Pioneer Natural Resources (NYSE: PXD ) .
George Soros owns 964,000 shares of this stock
For those of you unfamiliar with this name, Pioneer is one of the country's largest independent oil and gas companies. The firm was the first non-integrated player to produce oil from Alaska's North Slope. Today, the company boasts a great set of high-quality assets in the Eagle Ford, Barnett Shale, and other fields.
But it's the company's assets in the West Texas Spraberry Wolfcamp that are really impressive. For instance...
Source @ The Motley Fool
Friday, 27 December 2013
Warren Buffett donates $10m to Rambam Hospital
The contribution was announced by his close friend Eitan Wertheimer at an event to celebrate 75 years since the hospital's establishment.
Wertheimer has been a close friend of Buffett since the sale of the family's precision tool developer and manufacturer Iscar Ltd. to the American's company Berkshire Hathaway. In May 2006, Berkshire Hathaway bought 80% of Iscar for $4 billion, and in May this year it exercised an option to buy the remaining 20% for $2.05 billion.
Source @ Globes
3 Things Shared by Warren Buffett's Best Investments
Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) didn't grow to become a $290 billion company without some help. HavingWarren Buffett at the helm helped a lot.
As Chairman of Berkshire, Buffett's made several outstanding investments in industries ranging from financial services to consumer products. And although these investments differed in some ways, they all shared surprising similarities.
1. Brands that have pricing power
Warren Buffett looks for companies that can survive and thrive over decades, and even centuries. One common attribute of Buffett's best portfolio companies is pricing power -- the ability to pass on price increases to consumers.
See's Candies is an excellent example. Berkshire Hathaway purchased the company for $25 million in 1972. Today, it earns $80 million per year. See's Candies has not grown tremendously -- it's still a West Coast confectioner -- but it has raised prices. In fact, Buffett's raised prices every single year for 41 years since he acquired the company.
Other Berkshire mainstays have this attribute. Coca-Cola prices have only gone up over time. In a similar vein, automobile values have gone up over history, and so have the insurance premiums Geico charges its customers. Prices for consumer goods have only risen, driving merchant processing volume at American Express.
When a brand has pricing power, it benefits from the consistent, perpetual tailwinds of inflation.
As Chairman of Berkshire, Buffett's made several outstanding investments in industries ranging from financial services to consumer products. And although these investments differed in some ways, they all shared surprising similarities.
1. Brands that have pricing power
Warren Buffett looks for companies that can survive and thrive over decades, and even centuries. One common attribute of Buffett's best portfolio companies is pricing power -- the ability to pass on price increases to consumers.
See's Candies is an excellent example. Berkshire Hathaway purchased the company for $25 million in 1972. Today, it earns $80 million per year. See's Candies has not grown tremendously -- it's still a West Coast confectioner -- but it has raised prices. In fact, Buffett's raised prices every single year for 41 years since he acquired the company.
Other Berkshire mainstays have this attribute. Coca-Cola prices have only gone up over time. In a similar vein, automobile values have gone up over history, and so have the insurance premiums Geico charges its customers. Prices for consumer goods have only risen, driving merchant processing volume at American Express.
When a brand has pricing power, it benefits from the consistent, perpetual tailwinds of inflation.
Soros’ ex-wife buys Shelter Island estate
Weber Soros bought the 4,358 square foot traditional home, on 1.37 acres, for close to its $5.95 million asking price. Built in 2005, the beach manse has five bedrooms and 5½ baths. There is no pool, but there is room for Weber Soros to build one. The property, in Dering Harbor, also comes with a deep water dock. The home has panoramic water views from the living room, which has double height ceilings and a fireplace. There’s also a chef’s kitchen, and a “Hollywood style serpentine staircase that wraps around the fireplace,” according to the listing. A “hand cut river stone” path leads to the bulkheaded sandy beach and deep water dock. There’s also a generator and cistern for irrigation.
Last year, Weber Soros put her 6,000 square foot pad at the Majestic, on Central Park West, on the market for $50 million — and then chopped it to $39 million — which doesn’t appear to be on the market any more, and she also bought a $22 million 1869 townhouse on E. 70th St. Listing broker Penelope Moore of Saunders & Associates declined to comment.
Last year, Weber Soros put her 6,000 square foot pad at the Majestic, on Central Park West, on the market for $50 million — and then chopped it to $39 million — which doesn’t appear to be on the market any more, and she also bought a $22 million 1869 townhouse on E. 70th St. Listing broker Penelope Moore of Saunders & Associates declined to comment.
Source @ nypost.com
Thursday, 26 December 2013
Peter Schiff : Unbelievable Liberal Reaction to my Walmart Video
Peter Schiff: What Bernanke Should Have Left Janet Yellen at His Last Press Conference
A Spoonful of Sugar
By Peter Schiff
The press has framed Ben Bernanke's valedictory press conference last week in heroic terms. It's as if a veteran quarterback engineered a stunning come-from-behind drive in his final game, and graciously bowed out of the game with the ball sitting on the opponent's one-yard line. In reality, Bernanke has merely completed a five-yard pass from his own end zone, and has left Janet Yellen to come off the bench down by three touchdowns, with no credible deep threats, and very little time left on the clock.
The praise heaped on Bernanke's swan song stems from the Fed's success in initiating the long-anticipated (and highly feared) tapering campaign without sparking widespread anxiety. So deftly did the outgoing chairman thread the needle that the market actually powered to fresh all-time highs on the news.
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| Peter Schiff |
There can be little doubt that the Fed's announcement was an achievement in rhetorical audacity. In essence, they told us that they would be tightening monetary policy by loosening monetary policy. Surprisingly, the markets swallowed it. I believe the Fed was forced into this exercise in rabbit-pulling because it understood far better than Wall Street cheerleaders that the economy, despite the soaring gains in stocks and real estate, remains dependent on continued stimulus. In my opinion, the seemingly positive economic signs of the past few months are simply the statistical signature of QE itself. Even Friday's upward revision to third-quarter GDP resulted largely from gains in consumer spending on gasoline and medical bills. Another major driver was increased business inventories fueled perhaps by expectations that QE supplied cheap credit (and the wealth effect of rising asset prices) will continue to encourage consumer spending.
But to many observers, the increasingly optimistic economic headlines we have seen over recent months have not squared with the highly accommodative monetary policy, making the arguments in favor of continued QE untenable. Even taking the taper into account, the Fed is still pursuing a more stimulative policy than it had at the depths of any prior recession. As a result, as far as the headline-grabbing taper decision, the Fed's hands were essentially tied. But they decided to coat this seemingly bitter pill in an extremely large dollop of honey.
More important than the taper "surprise" was the unusually dovish language that accompanied it. More than it has in any other prior communications, the Fed is now telling the markets that interest rates - its main monetary tool - will remain far more accommodative, for far longer, than anyone previously believed. Abandoning prior commitments to raise rates once unemployment had fallen below 6.5%, the new statement reads that the Fed will keep rates at zero until "well after" the unemployment rate has fallen below that level. No one really knows what the new target unemployment level is, and that is just the way the Fed wants it. On this score, the Fed has not simply moving the goalposts, but has completely dismantled them. With such amorphous language in place, they appear to be hoping that they will never have to face a day of reckoning. This is a similar strategy to that of the legislators on Capitol Hill who want to pretend that America will never have to pay down its debt.
At his press conference Bernanke went beyond the language in the statement by hinting that we should expect consistently paced, similarly sized reductions through much of the year, and that he expects that QE will be fully wound down by the end of 2014. The outgoing Chairman may be writing a check that his successor can't cash. He also made statements about how monetary policy needs to compensate for "too tight" fiscal policy that is being delivered by the Administration and Capitol Hill. Does the chairman believe that $600 billion annual deficits are simply not enough... even with our supposedly robust recovery? By the time President Obama leaves office, the national debt may well have doubled in size, and he will have added more to the total of all of his predecessors from George Washington through the first five months of George W. Bush's administration combined! How can Bernanke possibly say that our economic problems result from deficits being too small?
It's easy to forget in the current euphoria that a majority of market watchers had predicted that the first taper announcement would be made by Janet Yellen in March of 2014. But perhaps with a nod toward his own posterity, Ben Bernanke may have been spurred to do something to restrain his Frankenstein creation before he finally left the lab. But no matter who pulled the trigger first, this initial $10 billion reduction in monthly purchases has convinced many that the QE program will soon become a thing of the past.
But without QE to support the markets, in my opinion, the US economy will likely slow significantly, and the stock and real estate markets will most likely turn sharply downward. [To understand why, pick up a copy of the just-released Collector's Edition of my illustrated intro to economics, How An Economy Grows And Why It Crashes.] If the economic data begins to disappoint, I believe that Janet Yellen, who is much more likely to be concerned with full employment than with price stability, will quickly reverse course and increase the size of the Fed's monthly purchases. In fact, last week's Fed statement was careful to avoid any commitments to additional tapering in the future, merely saying that further changes will be data dependent. This means that tapering could stall at $75 billion per month, or it could get smaller, or larger. In other words, Yellen's hands could not be any freer. If the additional cuts never materialize as expected, look for the Fed to keep the markets convinced that the QE program is in its final chapters. These "Open Mouth Operations" will likely represent the primary tool in the Fed's arsenal.
Despite the slight decrease in the pace of asset accumulation, I believe that the Fed's balance sheet will continue to swell alarmingly. As the amount of bonds on their books surpasses the $4 trillion threshold, market watchers need to dispel illusions that the Fed will actually shrink its balance sheet, or even halt its growth. Already fears of such moves have pushed up yields on 10-year Treasuries to multi-year highs. Any actual tightening could push them significantly higher.
We have much higher leverage than what would be expected in a healthy economy, and as a result, the gains in stocks, bonds, and real estate are highly susceptible to rate spikes. If yields move much higher, I feel that the Fed will have to intervene to bring them back down. In other words, the Fed will find it much harder to exit QE than it was to enter.
In the meantime, the Fed's open-ended commitment to keep rates at zero, despite the apparent recovery, should provide an important clue as to what is really happening. We simply have so much debt that zero is the most we can afford to pay. The problem, of course, is that the longer the Fed waits to raise rates, the more deeply indebted we become. As this mountain of debt grows larger, so too does our need for rates to remain at zero. So if our overly indebted economy cannot afford higher rates now, or in the next year or two, how could we possibly afford them in the future when our total debt-to-GDP may be much larger?
As he left the stage from his final press conference, Ben Bernanke should have left a giant bottle of aspirin on the podium for his successor Janet Yellen. She's going to need it.
Wednesday, 25 December 2013
Jim Rogers: Tapering will be 'disaster'
Influential investor Jim Rogers has warned about the impact of the US central bank's tapering plans, saying they will be an "unmitigated disaster".
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