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).

More from BusinessWeek

“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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Phil's Favorites

The most expensive stock on earth

 

The most expensive stock on earth

Courtesy of 

This weekend’s Barron’s looked at the phenomenon of technology companies with market capitalizations above $5 billion crushing the overall market this year, with names like DataDog, Fastly, Bill.com, DraftKings, Zscaler and Zoom Video all more than doubling year-to-date. Technology columnist Eric Savitz points out the most extreme performer of all, Shopify, which looks to me as though it’s now the most expensive stock on earth.

Shopify’s market cap now exceeds $120 billion and its stock price has zoomed above 1,000 per share. My chart below,...



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Zero Hedge

Google Joins Twitter, Facebook In Refusing To Cooperate With Hong Kong Nat Sec Law

Courtesy of ZeroHedge View original post here.

Update (1500ET): Google has just confirmed its intention not to cooperate with CCP officials or Hong Kong police regarding data requests under the new nat sec law.

  • GOOGLE STOPPED RESPONDING TO NEW HONG KONG DATA REQUESTS

That leaves Apple left...will Tim Cook dare to jeopardize Apple's access to Chinese markets just to show solidarity with Hong Kong?

* * *

Update (1220ET): Twitter has joined Facebook and Telegram in...



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ValueWalk

Bank OZK and John Wiley & Sons Reward Shareholders With Raises

By DIVIDEND GROWTH INVESTOR. Originally published at ValueWalk.

I review the list of dividend increases every week, in an effort to monitor existing holdings, and uncover hidden dividend gems for further research.

Q2 2020 hedge fund letters, conferences and more

I usually narrow my research to companies with a ten year history of annual dividend increases.

Bank Ozk Raises Its Dividends

Last week, there were two companies that raised dividends. The companies include:

Bank Ozk (NASDAQ:OZK) provides ...



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Kimble Charting Solutions

Shangai Index Soars Higher, Testing 11-Year Breakout Level!

Courtesy of Chris Kimble

Is the Shanghai Index (SSE) about to experience a long-term breakout and send the world a bullish message?

An 11-year breakout test is in play that will answer this question.

The Shanghai index trend continues to send a bullish message, as it has created a series of higher lows for the past 24-years above line (1).

This long-term support line was tested at the March lows at (2) and it held.

The rally off the lows has the index testing dual resistance at (3).

Will this important index succeed in breaking out? If it does at (3), it will send a very bu...



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Biotech/COVID-19

As U.S. buys up remdesivir, 'vaccine nationalism' threatens access to COVID-19 treatments

 

As U.S. buys up remdesivir, ‘vaccine nationalism’ threatens access to COVID-19 treatments

Are we really all in this together? ‘Vaccine nationalism’ must be addressed to ensure equitable distribution of a COVID-19 vaccine. (Pixabay)

Courtesy of Joel Lexchin, University of Toronto

At the end of June, the United States government announced that it had ...



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Chart School

Golds quick price move increases the odds of a correction

Courtesy of Read the Ticker

Every market corrects, maybe profit taking, maybe of allowing those who missed out, to get in!


The current open interest on the gold contract looks to high after a very fast price move, it looks like 2008 may be repeating. A quick flushing out of the weak hands open interest may take place before a real advance in price takes place. The correction may be on the back of a wider sell off of risk assets (either before of after US elections) as all assets suffer contagion selling (just like 2008).

This blog view is a gold price correction of 10% to 20% range is a buying opportunity. Of course we may see  a very minor price correction but a long time correction, a price or time is correction is expected, we shall watch and...

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The Technical Traders

Wild Volatility Continues As US Markets Attempt To Establish New Trend

Courtesy of Technical Traders

We’ve continued to attempt to warn investors of the risks ahead for the US and global markets by generating these research posts and by providing very clear data supporting our conclusions.  Throughout the entire months of May and June, we’ve seen various economic data points report very mixed results – and in some cases, surprise numbers as a result of the deep economic collapse related to the COVID-19 virus event.  This research post should help to clear things up going forward for most traders/investors.

As technical traders, we attempt to digest these economic data factors into technical and price analysis while determining where and what ...



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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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