Markets

15

Your diversification free lunch is not “all you can eat”

Nobel prize winner Harry Markowitz gets the credit for coining the phrase that “diversification is the only free lunch in finance”. Add the insight that stock markets are at least semi-efficient, and a multi-trillion dollar exchange-traded fund (ETF) industry was born.  And indeed, many exchange-traded funds are worthwhile investments, providing low-cost diversification. But some take

8

RBA Deputy Governor Debelle lists ‘other’ policy options.

From CBA’s head of Australian economics, Gareth Aird: RBA Deputy Governor Guy Debelle listed four ‘other’ options to ease monetary policy further: (i) purchase bonds further out on the curve (supplementing the three year yield target); (ii) foreign exchange intervention; (iii) cut the current structure of interest rates in the economy without going negative; and (iv) negative rates. Purchasing

40

eSports are sexy, but expensive

The digital games and interactive media sector is probably much larger than you think and still growing. To put it into perspective, one of the highest rating movies ever, Avengers: Endgame, grossed US$858m during its opening weekend. Grand Theft Auto V’s release, earned US$1b in just over three days.  Originally just a PC/console experience, ubiquitous

25

Ray Dalio: markets are no longer free

by Chris Becker Ray Dalio, the masterful manager at Bridgewater Associates had a long and wide ranging interview on Bloomberg over the weekend, nailing how the markets are no longer free allocaters of capital, but completely propped up and fed by the Fed and other central banks. Take aside a half hour of your time

3

Fed confusion throws spanner into bond rally

By Damien Boey at Credit Suisse: Over the past few days, we have witnessed some very confusing signals from Fed officials: Vice Chair Clarida suggested that the Fed should not wait until things get so bad to have a dramatic series of rate cuts. These comments followed and potentially reinforced dovish comments from the New

39

Warnings mount over poor US earnings

  by Chris Becker Stock markets are renowned for pricing in promises but failing to deliver on accuracy. With US markets now at record highs, with the Dow Jones breaking through the 27000 point barrier last night as the S&P500 hovers at a near doubling of its GFC low, and a Federal Reserve hell bent

10

ECB smackdown on Bitcoin

by Chris Becker While Bitcoin launches back over the $13000USD level in the Asian session today, a quick reply on the currency question from the ECB Twitter account smacked down the crypto bulls: Lane: No. Bitcoin is not a currency, it rather is an asset and it is very volatile #AskECB https://t.co/XQ9Mqdm5rU — European Central

4

PBOC rejoins the easing game

by Chris Becker Following the jump in USD on the Friday night unemployment print, the PBOC has re-entered the easing game, resetting the Yuan fix to a much lower 6.8881 from Friday’s 6.8697. Offshore trading in Yuan (USDCNH) is already moving back above 6.89: This is part of Beijing’s ongoing manipulation of its currency as

9

Bitcoin bazooka to fizzle

by Chris Becker The undollar crypto currency the mainstream economists love to hate – Bitcoin – has seen a meteoric rebirth since the start of March this year, tripling in “value”: Having reached nearly $USD14000 mid way through last week, Bitcoin also showed why for most investors/speculators, its something to avoid traversing in the short term,

9

Bitcoin bubble to the dark side of the moon

by Chris Becker The Bitcoin boosters are back! HODL! Russia is still going to save the day and Bitcoin is going to $2 million! From Mickey: The economic analyst who claims Russia is about to buy more than $10 Billion worth of Bitcoin has responded to doubts about his credibility. Speaking exclusively to Micky News, Vladislav

11

Will Russia save Bitcoin?

by Chris Becker In short, not yet. The crypto lovers are going ga-ga over “news” that Russia, under “enormous pressure” by US sanctions after liquidating its very modest US Treasuries portfolio, will now diversify into Bitcoin. From ZH, where the cycle has hit the apex: According to Vladislav Ginko, an economist at the state-funded Russian

11

Good luck picking a bottom in Bitcoin

by Chris Becker Thar she blows – it didn’t take long for the crypto “currency” to fail again with price dropping over $400 last night to match its Christmas low at $3700USD: The technicals remain crystal clear – an inability to get positive momentum (green line below), unassailable resistance overhead at ca. $4000-4100 (red trailing

21

Is the Trump shutdown coming to a close?

by Chris Becker It’s been nearly three weeks since Donald Trump shutdown the US Federal Government over his intransigence to fund a “wall”, even though one already exists across most of the US-Mexico border. Equity markets leading up to the shutdown were in a tailspin with the Dow down nearly 3000 points or a little over

7

US stocks echoing the 2000 bubble high

by Chris Becker Predictions are hard to make, especially about the future and while trying to overlay charts from different periods can lead to the gambler’s fallacy, it’s when fundamentals collide with technicals that you should pay attention. For US stocks their are some alarming parallels with the end of the 2000 bubble today, according

39

Golden Rules for Tax Efficient Investing

Fairfax has been running a series of articles (see here and here) on the collapse of Great Southern and the hardships it has caused, a timely reminder of the perils of mixing debt, investment and tax breaks. Almost every case consists of investors borrowing to invest on the advice of a “trusted professional”, large amounts

10

Bitcoin cracks under regulatory pressure

More crypto shenanigans, from Bloomberg: Bitcoin mining, the computing process that makes transactions with the cryptocurrency possible, is about to become more expensive for some after China ordered mining facilities to close. ViaBTC Technology Ltd., which runs the fourth-biggest bitcoin mining collective, is raising maintenance fees for some of its clients Friday to 50 percent

11

Bitcoin volatility is normal – for Bitcoin

As the Aussie dollar makes new highs, going through 79 cents against USD, Bitcoin and other cryptocurrencies have sold off once again. It doesn’t take much for the volatility to spike with news – rumors actually – that the South Korean Government is flagging a potential a ban on cryptocurrency trading, sending bitcoin prices down over 20%

1

Bill Gross doubles down on bond bear market

  Here’s the latest from bond guru Bill Gross the Janus Henderson:Bonds, like men, are in a bear market. For both, it’s hard to say when it all began. There was no Helen Reddy “I Am Woman” moment back in June 2012, and then again in July 2016 when the 10 year Treasury double-bottomed at 1.45%, but

19

Will Bitcoin follow the silver 1980 bust?

Bitcoin mania has similar parallels with the epic silver bubble of the 1970s: Silver went through a huge bubble, moving from $6 to nearly $50USD per ounce in just over a year due to the Hunt brother’s cornering of the market. At the peak they owned one third of the world’s supply. Sound familiar? The

15

WSJ drinks MB’s kool-aid on China

Wall Street Journal on a theme dear to our hearts – Chinese growth slowing: The Business Cycle Is Different This Time—Thank China Diverging Chinese and U.S. growth are behind the confusion in global markets right now Commodities and stocks have started 2018 with a bang. U.S. oil is trading over $60 a barrel for the

3

Is the big bond boom over?

Bill Gross says so: The 10-year U.S. Treasury yield climbed to the highest level in more than nine months, leading Bill Gross at Janus Henderson Group to declare a bond bear market just ahead of a deluge of sovereign debt sales. The benchmark U.S. yield rose as much as six basis points to 2.54 percent, a

33

Bracing for a near term melt-up

I wanted to follow up on Jeremy Grantham’s comments from yesterday and run through some of GMO’s asset allocation views from the perspective of an Australian investor. Jeremy Grantham & Co. at GMO have put out two thoughtful (as always) pieces in the last 3 weeks. I rate the team there highly and so when