The New York Times – Harvard Endowment Reports 11% Return for Year A year after a disastrous 27 percent decline that prompted layoffs, salary freezes and a halt to some campus expansion, the Harvard endowment on Thursday reported a solid 11 percent increase in its $27.4 billion portfolio for the fiscal year ended June 30.… Continue reading Harvard
The Financial Times – Lex: Fiscal policy and economics Consider the fiscal multiplier, a measure of the effects of government stimulus. In a paper presented at the Jackson Hole get-together for central bankers, Eric Leeper contrasts so-called “monetary science” with “fiscal alchemy”. There are relatively rigorous models which claim to explain the interactions of interest… Continue reading Fiscal Policy
The Financial Times – Lex: US municipal bonds But now, the backstop has made voluntarily skipping payments easier. Default hurts a far-off corporation and that sounds more appealing than cutting services; the moral hazard problem that Warren Buffett alluded to when he decided to stay out of municipal bond insurance. The fate of Ambac, flirting… Continue reading Munis
The Economist – Buttonwood: The cycle lane Economies and markets may be at the mercy of long-term forces THE financial world seems to be obsessed with the short term. Fund managers are usually judged on their performance over a three-month period. The television news highlights daily moves in stockmarkets. Lots of hedge funds think in… Continue reading Economic Cycles
The Wall Street Journal – Greg Ip: From Zombie Banks to Zombie Mortgages? Japan misallocated capital during its lost decade. How the U.S. can avoid its mistakes. Japan’s recent demotion to world’s third-largest economy, behind China, triggered two distinctly different feelings in the United States. … The second feeling Japan’s misfortunes evoked is dread. The… Continue reading Allocating Capital
<Click on chart for larger image> The Independent (Ireland) – ECB tries to stabilise the cost of Irish borrowing Central bank buys bonds as support measure The European Central Bank (ECB) was reported to be buying Irish bonds yesterday as the bank tried to reassure markets that so-called ‘peripheral’ economies aren’t in danger of defaulting… Continue reading Ireland
Bloomberg.com – Deutsche Bank Said to Weigh Share Sale of Up to $11.4 Billion Deutsche Bank AG is considering a stock sale of as much as 9 billion euros ($11.4 billion) to boost its stake in Deutsche Postbank AG and meet stricter capital rules, said three people with knowledge of the talks. Germany’s largest bank… Continue reading Is Dilution Now Bearish Again?
Comment Jim Bianco was on CNBC yesterday discussing the Federal Reserve’s Beige Book and the odds of a double dip recession. To view the interview click on the picture above. To view any of our recent interviews click here. The Wall Street Journal – What Should the Federal Reserve Do Next? A prolonged period of… Continue reading The Federal Reserve & Double Dip
The Financial Times – The puzzling success of trend-following investment strategies This is an assessment of investment strategies which are based on momentum in asset prices, rather than long term economic fundamentals. Momentum wins the race hands down. Andy Haldane conducts the following experiment. He estimates the results of an investment strategy in US equities… Continue reading Value Investing vs. Momentum Investing
<Click on chart for larger image> The Wall Street Journal – Blue-Chip Borrowers Issue Debt in Droves Companies are jamming the bond market with fresh debt this week, and yield-hungry investors show no sign of blanching—though with each new shovelful the day of saturation grows nearer. An estimated $51 billion in fresh corporate bonds and… Continue reading Corporate Issuance
The Wall Street Journal – Hedge Funds Cave In to Rallying Treasury Market Hedge funds and other speculative investors turned bullish on the benchmark 10-year Treasury notes for the first time in 20 months, as many participants caved in to a rallying bond market. The difference in bets on gains in bond prices over those… Continue reading Signs Of Capitulation In The Bond Market?