Posts Tagged ‘Willem Buiter’

Hugh Hendry Sees 1920′s Japan-Like Crash In China

Hugh Hendry Sees 1920′s Japan-Like Crash In China

hugh hendryCourtesy of Tyler Durden

Hugh Hendry, whose previous appearances have been well-logged by Zero Hedge, and who is currently raking the money thanks to long Treasury bet and his EURUSD short from when the pair was 20% higher, has never been a fan of China, and almost got into a fight with Marc Faber recently discussing the country’s future prospects. In fact, Hendry uttered this memorable soundbite back in February, in which he mopped the floor with Goldman permabull Jim "BRIC" O’Neill: "I love Jim O’Neill. I love that Goldman Sachs guy. He says you either get it, or you don’t. I don’t get it. In the future there will be a Confucius saying: the wise man not invest in overcapacity. The flaw of the business model, at the center of it is a craving for power as opposed to profit." BusinessWeek reports that Hendry has now officially put his money where his mouth is and has bought puts on 20 companies that will profit from “a dramatic collapse” of China’s growth. With the Chinese stock market approaching 52 week lows, will Ecclectica soon become the next Paulson & Co. hedge fund iteration, even as the latter continues (allegedly) to bet on a US recovery, and thus stands to lose tens of billions if the thesis does not play out (although we are fairly confident Paulson’s long stock positions are matched by even longer CDS hedges… but without additional data, we can never be sure).

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“There are striking parallels with Japan in the 1920s, when ultimately the whole system collapsed,” said Hendry, 41, whose firm manages $420 million in assets. “China could precipitate a much greater crisis elsewhere in the world.”

Japan’s export boom collapsed after the war amid excess global capacity, slashing growth and sparking a stock-market crash and bank runs.

Hendry’s flagship Eclectica Fund, a global macro hedge fund with $180 million in assets, may gain almost $500 million from its options if China’s economy plunges into a recession, he said. The options cost the fund about 1.5 percent of its net asset value annually, Hendry said.

China’s vulnerability to a crash comes from the “inherent instability” created by a lending binge for infrastructure projects that’s “unprecedented in 400 years of economic history,” Hendry said. The country is also exposed to exports to


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Buiter: “It’s Five Minutes to Midnight for Greece”

Buiter: “It’s Five Minutes to Midnight for Greece”

Courtesy of Edward Harrison at Credit Writedowns

Incoming Citigroup Chief Economist Willem Buiter believes Greece still has it within their means to prevent a national default. In the video below, he discusses with Bloomberg what the crisis in Greece means not just for the Greeks but also for the Brits, Americans, Irish, Portuguese, Italians – all of whom have less than ‘pristine’ government finances. What happens in Greece is pivotal for the global economy because a default there would likely trigger distress elsewhere. 

As for talk of unsustainable deficits, it seems premature to start worrying about inflation and higher interest rates when we are still in a deflationary environment.  I don’t buy Buiter’s arguments on Labour’s loss of fiscal credibility mandating some pain upfront. Government should wait until it sees the ‘whites of inflation’s eyes’ before firing anti-stimulus bullets. And if they do begin firing, addressing future liabilities (everywhere) or military spending (US only) is just as effective as cutting other present discretionary spending.

Buiter’s video is below

 


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Willem Buiter Apparently Does Not Like Gold, and Why

Jesse debates Willem H. Buiter on the subject of Gold. Willem H. Buiter is a Professor of European Political Economy, London School of Economics and Political Science, former chief economist of the EBRD, former member of the MPC, and adviser to international organisations, governments, central banks and private institutions. He writes the FT’s Maverecon blog. – Ilene

Willem Buiter Apparently Does Not Like Gold, and Why

goldCourtesy of Jesse’s Café Américain

Dr. Willem Buiter of the London School of Economics, and advisor to the Bank of England, has written a somewhat astonishing broadsheet attacking of all things, gold.

I have enjoyed his writing in the past. And although he does tend to cultivate and relish the aura of eccentric maverick, it is generally appealing, and his writing has been pertinent and reasoned, if unconventional. That is what makes this latest piece so unusual. It is a diatribe, more emotional than factual, with gaping holes in theoretical underpinnings and historical example.

I suspect that commodities such as oil and gold are giving many western economists with official ties to government monetary committees a stomach ache these days. Perhaps this is just another manifestation of statists and financial engineers facing the music, as illustrated by the second piece of news from Mr. Buiter on the US dollar, from earlier this year.

Here are relevant excerpts from his essay, with my own reactions in italics.

Financial Times
Gold – a six thousand year-old bubble

By Willem Buiter
November 8, 2009 6:02pm

"Gold is unlike any other commodity. It is costly to extract from the earth and to refine to a reasonable degree of purity. It is costly to store."

This is inherent to its rarity. It is desirable because it is scarce and useful, and this requires greater protection against theft or accident. Euro notes are far more costly to store than the paper and ink which is used to make them, at least for now.

"It has no remaining uses as a producer good – equivalent or superior alternatives exist for all its industrial uses."

This is an absolute howler to anyone who cares to look into industrial metallurgy. Gold is one of the most malleable and ductile of metals, with excellent conductive properties, slightly less than silver but better than copper, and it is remarkably resistant to oxidation. It does not tarnish.


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Zero Hedge

Did Amazon Employees Unwittingly Reveal The Location Of HQ2?

Courtesy of ZeroHedge. View original post here.

Did Amazon employees, ensconced in their luxurious Seattle headquarters, just tip the company's hand and unwittingly reveal the location of the second Amazon headquarters?

Speculation is intensifying after Arlington Now, which covers the Arlington area, noted a curious development on its website: An article from December entitled ...



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Phil's Favorites

Why Altered Carbon is not about the future - nor is any other science fiction

 

Why Altered Carbon is not about the future – nor is any other science fiction

Netflix

Courtesy of Gavin Miller, University of Glasgow

The hopes and dreams of the technological movement known as “transhumanism” have been brought into the media spotlight thanks to Netflix’s new science fiction series, Altered Carbon (based on Richard Morgan’s 2001 novel).

Transhumanists believe that our species will soon undergo a technological evolution into a new and superior form. While ...



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Chart School

Sellers Come In But Semiconductors Gain

Courtesy of Declan.

Markets were set up for sellers with most indices experiencing broad selling. However, the one index which looked set up best for shorts - the Semiconductor Index - actually managed to gain.  Anyone taking up Friday's short in the latter Index will have been stopped out but another shorting opportunity may have presented itself. Technicals haven't returned to becoming net bullish but only the ADX remains to shift.


The S&P eased a little lower but didn't return below what was channel support. Te...

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ValueWalk

Bill Nygren's Stock Picks

By VW Staff. Originally published at ValueWalk.

Bill Nygren, Harris Associates U.S. equities CIO and Oakmark Funds portfolio manager, shares his top stock picks and long-term investment strategy.

H/T Dataroma

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Bill Nygren's Stock Picks

Pro: Three hot stocks to watch from ...



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Insider Scoop

Stifel Sees Reboot Opportunity For Chipotle, Upgrades From Sell To Hold

Courtesy of Benzinga.

Related CMG Benzinga's Top Upgrades, Downgrades For February 20, 2018 The Market In 5 Minutes: Albertsons-R...

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Digital Currencies

As Bitcoin Nears $11,000, Here's A History Of Its Biggest Ups And Downs

Courtesy of ZeroHedge. View original post here.

The cryptocurrency rebound off Feb 5th's bloodbath lows (below $6,000 for Bitcoin) has been impressive, as a 'mysterious' massive buyer 'bought the dip' and momentum took care of the rest.

With Bitcoin now nearing $11,000 (almost a double off the lows), ...



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Biotech

What is 'right to try,' and could it help?

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

What is 'right to try,' and could it help?

In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

Morten Wendelbo, Texas A&M University and Timothy Callaghan, ...



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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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