The Insider Report

Gary Shilling’s excellent book, The Age of Deleveragingpublished in May of 2010 predicted a future that has only become all too obvious to the world in the last few months.  Conveniently for the reader’s sake Shilling divides his book in two parts: the first part which is 90% or more of the book is devoted to laying out his thesis of slow growth and deflation and the last chapter details his investment ideas on how one can benefit from this state of affairs.  Unfortunately he doesn’t provide many specific capital investment ideas other than his love of the long bond … Read more

Italy gives EU a post-party hangover By FT reporters Italy’s borrowing costs have climbed to euro-era highs just a day after European leaders agreed on a new plan to reverse the region’s spiralling debt crisis, a worrying sign they have failed to regain the confidence of key financial markets. via Italy gives EU a post-party hangover – FT.com.

CHART OF THE DAY: Serious Question: Does The Euro Even Care About What Happens In Europe? Joe Weisenthal and Eric Platt | Oct. 26, 2011, 3:53 PM | 301 | 4   The more we look at US markets the less it looks like Europe is proving to be a big force in one way or another. As we pointed out this weekend, what’s clearly moving the US market is expectations around GDP growth. As the data has improved, US stocks have improved in a pretty straightforward manner. But it’s funny, because you always hear about how the US market … Read more

OP-ED COLUMNISTThe Hole in Europe’s BucketBy PAUL KRUGMANPublished: October 23, 2011RECOMMENDTWITTERLINKEDINCOMMENTS 377SIGN IN TO E-MAILPRINTREPRINTSSHARE If it weren’t so tragic, the current European crisis would be funny, in a gallows-humor sort of way. For as one rescue plan after another falls flat, Europe’s Very Serious People — who are, if such a thing is possible, even more pompous and self-regarding than their American counterparts — just keep looking more and more ridiculous.Fred R. Conrad/The New York TimesPaul KrugmanGo to Columnist Page »Blog: The Conscience of a LiberalRelatedTimes Topic: European Sovereign Debt CrisisReaders’ CommentsReaders shared their thoughts on this article.Read All … Read more

Foreigners’ Sweetener: Buy House, Get a Visa Article   By NICK TIMIRAOS The reeling housing market has come to this: To shore it up, two Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S. The provision is part of a larger package of immigration measures, co-authored by Sens. Charles Schumer (D., N.Y.) and Mike Lee (R., Utah), designed to spur more foreign investment in the U.S. via Bill Would Give U.S. Visas to Foreign Home Buyers – WSJ.com.

Banks, whose shares as measured by the 46-member Bloomberg Europe Banks and Financial Services Index have fallen 30 percent this year, oppose the plan partly because it would dilute the value of existing shares. In addition, Deutsche Bank AG (DBK)’s Chief Executive Officer Josef Ackermann and Banco Santander SA Chairman Emilio Botin say capital injections won’t address the real problem, which is sovereign debt. “Since private investors will certainly not be providing the funds for such a recapitalization, governments would ultimately have to raise such funds themselves, thus only exacerbating their debt situation,” Ackermann, who’s also chairman of the Washington-based … Read more

Europe: Clock is ticking, Officials try to ratchet back expectations by CalculatedRisk on 10/16/2011 04:52:00 PM From the WSJ: Europe Faces More Hurdles on Aid Plan European leaders have primed investors to expect a sweeping euro-zone rescue plan to be unveiled within a week. But several hurdles remain, among them the details of a new Greek bailout, and clearing them could take weeks, not days. The result could be a plan broad in ambition but short on specifics. … The plan will have three pillars: a call for higher capital levels for banks, a beefing up of the euro zone’s … Read more

When you read this article, you wonder if not every municipality and state in the country will have to go bankrupt or reorg in some manner to deal with this problem.  I don’t think I’d own anything but pre-refunded munis or for that matter, the perceived most risky of  muni bonds, revenue bonds might actually be the better since you don’t have all of these health care and pension guarantees with many of them.  A good article on How to Short the Muni Bond Market   States’ Fiscal Health   |  Contact: Margie Newman, 202.552.2230 April 25, 2011 — The gap between the promises states … Read more

How they plan on raising your property taxes   Why States Need to Restructure Pension Obligations Published: Tuesday, 12 Jul 2011 | 9:45 AM ET Text Size By: Jonathan S. Henes Partner, Kirkland & Ellis LLP Twitter   The major issue facing states and municipalities is the unsustainability of their defined benefit public pension plans. States and local governments made promises to public employees that upon retirement they would receive defined payments for the rest of their lives. Jonathan Henes Kirkland & Ellis LLP Unfortunately, this was a promise that could never be kept over the long term and today, … Read more

Actually this is a summary of the introduction from Michael Lewis’s new book, Boomerang, which we are giving away this month.  Definitely read it.   Hayman Capital’s Kyle Bass says “Buy Guns and Gold” OCTOBER 4, 2011 Kyle Bass, “one of 15 people” who put on the CDS subprime trade, has been interviewed a couple times of late. Bass has bought 20 million nickels for $1million. He said the metal inside each coin is worth 6.8 cents Ken Rogoff, who wrote the book on sovereign debt defaults, was shocked at the numbers Kyle Bass shared. Thus his new investment thesis: … Read more

By Jilian Mincer NEW YORK | Thu Oct 13, 2011 11:39am EDT (Reuters) – Deteriorating conditions in the pension system are jeopardizing the lump sum payouts workers count on, and pushing some workers to retire ahead of schedule. Stock market losses began dragging down pension assets a few years ago, but the current near-zero interest rates – intended to spur the American economy – have worsened the problem and created the largest gap in assets and liabilities since the end of World War II. “While low interest rates help people borrow money, they dramatically shoot up the pension obligations of … Read more

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By ALEX FRANGOS HONG KONG—Though the world’s economic and financial problems are largely concentrated elsewhere, markets in Asia have been hit hard in recent weeks, falling more than those in the U.S. and Europe. Driving the selloff are fears of global recession, worries about the fragility of the financial system and a cash crunch for some investors that led to forced selling. The fall in Asian markets means they have now priced in all but a major shock to the global economy, and to some analysts appear cheap. “The way markets are trading, people are anticipating some kind of falling … Read more

Linking Sovereign Risk to Corporate Credit Spreads in Europe Author: Rebecca Wilder  ·  September 24th, 2011  ·  Comments (3) Financial firms in Europe and the US are hitting crisis mode, as illustrated by relative borrowing costs, spreads, to comparable government bonds (see financial spreads chart to left and click to enlarge). World policy leaders anxiously await – and some promise to deliver – a solution to the euro area sovereign debt crisis at the IMF annual meetings. Tim Geithner urges policy makers in Europe to end the “threat of cascading default, bank runs and catastrophic risk”. We really are in … Read more

Echoes of 2008 Here we go again The Europeans are pushing the global banking system to the edge Oct 8th 2011 | from the print edition YOU know something bad is going to happen in a horror film when someone decides to take a late-night stroll in a forest. The equivalent in finance is a bank boss insisting that his institution is completely solid.European bankers have been saying things are fine for weeks now, even as their exposure to indebted euro-zone countries strangles their access to funding. The amount of money parked at the European Central Bank ECB has risen … Read more

Why should you hedge?. The answer is simple, you can secure profits long term if you limit your risk. To understand hedging you must first understand a basic but ignored concept that all investors and traders should know. Equity Beta, which is a calculation of how volatile a stock is when the market itself is moving. Beta shows the sensitivity to overall market movements of an individual equity in your portfolio. Hedging can protect you from Black Swan Events and other sudden market shifts, it can also allow you to manage your currency exposure. The best way to understand hedging … Read more

World facing worst financial crisis in HISTORY IF NOT EVER, Bank of England Governor says October 6, 2011By Jacob Wolinsky The world is facing the worst financial crisis since at least the 1930s “if not ever”, the Governor of the Bank of England said last night. Sir Mervyn King was speaking after the decision by the Bank’s Monetary Policy Committee to put £75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession. Economists said the Bank’s decision to resume its quantitative easing [QE], or asset purchase programme, … Read more

Goldman Sachs Group, Inc., NYSE:GS Still a Strong BuyGoldman Sachs Group, Inc., NYSE:GS Still a Strong Buy according to Shayne Heffernan.U.S. banks have reason to think that regulators will put out a moderate proposal restricting proprietary trading, analysts said after a draft of the Volcker rule was leaked.The ridiculous Volcker Rule as it stands has been the reason for billions being wiped of the market cap of Goldman Sachs Group, Inc., NYSE:GS. As it appears more likely the communistic overtones of the rule will be rejected, Goldman Sachs may see a strong rally. via Goldman Sachs Group, Inc., NYSE:GS Still … Read more

Corning Announces Increased Dividend and $1.5 Billion Stock Buyback CORNING, N.Y., October 05, 2011 – Corning Incorporated’s NYSE:GLW Board of Directors today declared a 50% increase in the company’s quarterly common stock dividend. Corning’s quarterly dividend will rise to $0.075 per share of common stock held, versus $0.05 per share previously. The fourth-quarter dividend will be payable on Dec. 16, 2011 to holders of record Nov. 16, 2011. The board also authorized a stock repurchase program for purchasing up to $1.5 billion of the company’s common stock from time to time through open market or private transactions. The stock repurchase … Read more

Investors Sing a New Tune—Wont Get Fooled By SIMON CONSTABLE Now is not the time to let yourself be suckered into getting back into stocks.Sure, the markets had a couple of spectacular days last week, but dont let that fool you into thinking all is well again with the world. The stock markets volatility and concerns about Europes deepening financial crisis signals investors should remain cautious. Simon Constable explains to WSJDNs Kelsey Hubbard.Its not. Theres still plenty of uncertainty out there. Yes, the Dow Jones Industrial Average finished Friday up 1.3% for the week, one of the Dows better showings … Read more

How North Dakota Became Saudi Arabia By STEPHEN MOORE Harold Hamm, the Oklahoma-based founder and CEO of Continental Resources, the 14th-largest oil company in America, is a man who thinks big. He came to Washington last month to spread a needed message of economic optimism: With the right set of national energy policies, the United States could be “completely energy independent by the end of the decade. We can be the Saudi Arabia of oil and natural gas in the 21st century.” “President Obama is riding the wrong horse on energy,” he adds. We can’t come anywhere near the scale … Read more

Buffett Doesn’t See `Double Dip’ Recession in U.S.   Sept. 30 (Bloomberg) — Warren Buffett , chief executive officer of Berkshire Hathaway Inc., talks about the U.S. economy. Buffett, spoke with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg) via Buffett Doesn’t See `Double Dip’ Recession in U.S. – Video – Bloomberg.

Notes from the DoubleLine Lunch with Jeffrey Gundlach Joshua M Brown September 29th, 2011 Yesterday Barry and I had the pleasure to meet Jeffrey Gundlach and attend the DoubleLine Luncheon at the New York Yacht Club.  If you’ve never been, the club is on 44th Street (a block from my office) and you can tell it by the second floor windows which are shaped like the bow stern of a ship.  The dining room has a three-stories high stained-glass ceiling and is laden with ornately carved wooden accents, maritime artifacts and models of all the yachts that have defended the … Read more

By BEN LEVISOHN With the gut-churning volatility of the past few years showing no sign of letting up, some investors are swearing off stocks and piling into safe havens like cash and Treasurys. But what if there were a way to beat the stock market’s returns over the long haul with significantly less short-term instability? In this age of Ponzi-scheme blowups and complex financial instruments that self-destruct in times of crisis, such a notion sounds too good to be true. Yet academic research has shown that a relatively simple strategy of buying the least-volatile stocks and holding them for the … Read more