Month: November 2011

Nov. 10 (Bloomberg) — Kelvin Tay, the Singapore-based chief investment strategist at UBS Wealth Management, talks about Asian stocks. Tay also discusses Europe’s sovereign debt crisis. He speaks with Susan Li on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

Nov. 10 (Bloomberg) — The number of Americans filing applications for unemployment benefits fell to the lowest level in seven months, a sign the recovery may be encouraging companies to limit cuts in headcount. Jobless claims fell by 10,000 to 390,000 in the week ended Nov. 5, Labor Department figures showed today in Washington. Betty Liu reports on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

Nov. 10 (Bloomberg) — James Bevan, chief investment officer of CCLA Investment Management Ltd., talks about the impact of phone-hacking allegations on British Sky Broadcasting Group Plc’s share price and the role of chairman James Murdoch, who is also the deputy chief operating officer at News Corp. Bevan, speaking with Francine Lacqua, Poppy Trowbridge and David Tweed on Bloomberg Television, also discusses his stocks strategy. (Source: Bloomberg)

Why It’s Time to Invest in Cuba

by Carl Delfeld, Investment U Senior Analyst
Thursday, November 10, 2011: Issue #1640

You didn’t read about this on the front page of The Wall Street Journal today.

But a kind of revolution is kicking off in Cuba this very morning.

And it could make some smart investors a lot of money.

This revolution has nothing to do with palace intrigue. It doesn’t involve politics, per se. And it’s not something Fidel Castro likely would have approved.

This revolution has to do with Cuba’s property laws.

Effective today, Cuban citizens can buy and sell real estate on the open market… for the first time in 50 years!

The New York Times calls it “the most significant market-oriented change yet approved by the government of Raúl Castro, and one that will probably reshape Cuba’s cities and conceptions of class.”

So why should you care about this new Cuban revolution? And how can you capitalize on it in 2012 and beyond?

Let’s get to the specifics…

Unleashing Millions in “Dead Capital”… Instantly

If you think about it, the major difference between communist and capitalist systems is ownership of property.

British historian Niall Ferguson’s new book, The West and the Rest, puts property rights at the top of six characteristics that propelled the West’s economic rise.

Ferguson believes that the rule of law that protects property rights and peaceably settles disputes also forms the basis for democracy.

The Peruvian economist Hernando de Soto, in The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, makes a powerful case that property rights are the key to unlocking enormous amounts of dead capital in developing countries.

That’s why it’s so important that Cubans recently received the legal right to buy and sell used cars. It means that a beat-up 1960 Chrysler can now be turned into serious capital – enough to fund a new business such as a restaurant. In a country where the average monthly salary is about $20, this is a big deal.

(This was also why I alerted you in early September about investing in Cuba and why I’m preparing to visit the country in early 2012.)

But the biggest deal is the new law allowing Cubans to sell homes to each other.

There’ll still be a fair amount of red tape, and financing has to go through the Central Bank of Cuba. But the momentum unleashed by this new freedom will be significant and lasting.

Some Will Have Special Access

Since most of these new opportunities will be exclusively for Cuban citizens, how can foreigners profit from the melting of Cold War economics?

• First, Cuban-Americans have a clear edge to funnel capital back home through relatives. Especially since the Obama administration greatly relaxed travel and remittances restrictions for them in 2009. If I was a Cuban-American, I would be on the next flight to Havana.

• Second, your best bet is in the tourism sector, where restrictions on foreign investment are at best murky. Vacation homes in coastal areas are up for grabs and golf tourism is taking off. Cuba now has only one 18-hole course (owned by the government, of course). But joint ventures with private Canadian and European companies are moving forward with 16 new developments.

Douglas Clayton of Leopard Capital, a frontier markets private equity firm, points out that Florida has 20 times more tourists, one reason its economy is 12 times the size of Cuba’s.

A “Cuba Play” for the Rest of Us…

The easiest way to play this is with the Herzfeld Caribbean Basin Fund (Nasdaq: CUBA), a closed-ended fund that’s loaded with tourism-oriented firms.

It’s anything but a pure play, but its portfolio of travel, cruise, banking and telecom companies will benefit from any jump in Cuban tourism.

The CUBA fund also noted that it’s adding a small amount of “highly speculative companies that have a pure Cuba business plan.” The more of this focused aggressive investing, the better, from my point of few.

Meanwhile, I will continue my search for more direct ways for you to exploit the cracks in Cuba’s obsolete Soviet-style economy.

Good investing,

Carl Delfeld

Article by Investment U

About the Author

www.cri-report.com

The scope for business in India is immense and this has led to more investment options in India, The high population density in the country has given rise to great opportunities in the field of business guarded by a range of developed skill set. Thus India has grown as one of the significant economies in the world having immense potential towards long-term growth. Based on this investment strategies for India can be well formulated.

During the last couple of years the economic growth rate in India was around 7% p.a, before it was hit by situations like credit crunch, recession prevailing round the globe. The growing up economy has attracted bulk of investors to go ahead with investing in India. The growth has been backed by the various industrial sectors to a great extent. The sectors mainly include technology, manufacturing and service industry. The country is yet to grow its economy and the eminent business analysts believe that very soon the country will join the league of the top economies around the world.

One of the major threats for the government of India in going ahead with the growing economy is nothing other than the diversified wealth distribution in the region under which a favourable part of the population enjoy higher income and a luxurious living and at the same time another half of the population just survive on just a few dimes and are highly poverty stricken. Unless this inequality in wealth distribution and the situation of poverty could be eliminated, the economic growth will continue getting struck at the mid level.

The political history of India has continued to remain controversial and difficult for time immortal but it is with the introduction of new economic policies back in the year 1990 , changes in economy could be traced . It is from this time around the free economy policies came into being eliminating the socialist policies and principles of the by gone years. This has even created new investment options in India for overseas Indians and even the domestic investors. Thus a new era in terms of business, economy and investment began in the country.

There are scores of companies across the world having immense exposure to India. Some of them are connected through partnership while the others have full control through the domestic companies. The main consequence to this was getting easy exposure through collective investment strategies, direct equities, exchange traded funds and several others. Although, it is always better to have professional advice along with this at all time. Each of these investment vehicles comes with its own set of risk/reward ratio and in order to undertake the risk one must align the particular risk to their own risk profile, investment strategies and financial needs for future.

As huge potential has been forecasted about the growth of the Indian economy, so it is high time now that India must go ahead towards the fulfilment of its own potential and increase Investing in India from Overseas Indians. As more market will open up for the overseas and domestic investors in India, the economy is gaining more transparency with reduced rate of risk profile.

About the Author

Harjeet is an Indian – born mass-market novelist, who covers the world internet related topics . He writes columns and articles for various websites and internet journals in the domain of Investing in India and Investment options.

Nov. 10 (Bloomberg) — Neil MacKinnon, global macro strategist at VTB Capital, discusses the euro-zone crisis and his view that the European Central Bank should act as a lender of last resort. Talking with Francine Lacqua on Bloomberg Television’s “On the Move,” MacKinnon also talks about Bank of England monetary policy. (Source: Bloomberg)

Nov. 10 (Bloomberg) — Nick Holland, chief executive officer of Gold Fields Ltd., discusses China and India’s demand for gold and the company’s dividend policy. The fourth-largest producer of the precious metal said third-quarter profit rose 59 percent as the price of bullion surged from a year earlier. Holland talks from Johannesburg with Owen Thomas on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

London Gold Market Report
from Ben Traynor
BullionVault
Thursday 10 November, 08:15 EST

U.S. DOLLAR gold prices rallied to $1772 an ounce Thursday morning London time – 1.7% below the week’s high – while European stock markets also regained some ground as rumors spread that the European Central Bank might intervene in the debt crisis.

Silver prices climbed to just below $34 per ounce around lunchtime – 3.8% below this week’s high – while commodities were mixed and major government bond prices fell.

Earlier in the day, gold prices fell throughout Thursday’s Asian trade – hitting a low of $1754 per ounce, having risen to $1798 the day before.

“Flow wise we saw nothing but selling today,” says one Hong Kong bullion dealer.

“Gold’s flirtation with $1800 has ceased for the time being,” adds a note from the London desk at Mitsui Precious Metals.

“The selling seems largely motivated by a need for cash to cover losses in equities,” the notes adds, though it also points out that as gold prices rose by over $120 in ten days, “a correction is not entirely surprising”.

“The wider picture still looks bullish, however, so another test of $1,800 before the weekend is a strong possibility.”

Italy’s Treasury Department successfully auctioned €5 billion worth of 12-Month Treasury bills Thursday morning – paying an average yield of 6.087%, a Euro era high. At the last 12-month T-bill auction a month ago, the Treasury sold €7 billion worth at a 3.570% average yield.

Yields on 10-Year Italian bonds fell back below 7% this morning.

Demand at the auction was “solid”, the Wall Street Journal reports – with the ECB buying Italian debt, according to a trader cited by the WSJ.

“In all likelihood…[policymakers] will have to try to find some sort of nuclear button to turn back the markets,” says a note from Standard Bank analysts Steve Barrow and Jeremy Stevens this morning.

“[One thing that] could certainly work to end the crisis [would be] if the ECB promised to buy unlimited amounts of debt from the outset. Will it sign up to this? ECB members argue that such action is prohibited but…crises call for rule books to be ripped up and this is one rule that could become a casualty.”

“The ECB will be drawn [in] like everyone else by the weight of gravity,” agrees a Eurozone official quoted by Reuters.

However, “the situation has deteriorated so dramatically a large-scale asset buying by the ECB would not necessarily be a panacea,” reckons Alberto Gallo, senior European credit strategist at Royal Bank of Scotland.

“I do not think the ECB on its own could bring back the market to the point before Italy succumbed.”

Yields on 10-Year French government bonds meantime rose above 3.3% Wednesday morning – still below their one month high hit just before last month’s Euro Summit.

However, the spread over 10-Year German bund yields hit a 21-year high at 154 basis points (1.54 percentage points).

“The contagion to core countries is already visible in France,” reckons Gerard Moerman, head of rates and money markets at Aegon Asset Management, who manages €20 billion of assets.

“Lots of investors don’t trust it anymore or want to get rid of the exposure…we’ve seen some of our clients wanting to leave France.”

The world is in danger of a “lost decade” of stagnant economic growth, International Monetary Fund managing director Christine Lagarde told a forum in Beijing yesterday.

“If we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand.”

In Berlin meantime German chancellor Angela Merkel called for “a breakthrough to a new Europe”.

“That will mean more Europe, not less Europe…a community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules, that community simply cannot survive.”

“If the leaders of the Eurozone want to save their currency,” British prime minister David Cameron said Thursday, “then they – together with the institutions of the Eurozone – must act now. The longer the delay, the greater the danger.”

Euro gold prices were flat throughout Thursday morning, zig-zagging either side of €1300 per ounce, as the Euro recovered some ground against the Dollar following yesterday’s 2.2% drop.

“Looking at what is going on in Europe a further round of liquidation across commodities, including gold, is possible,” warns Tom Kendall, precious metals research analyst at Credit Suisse.

Here in London, the Bank of England’s Monetary Policy Committee voted Thursday to keep its interest rate o0n hold at 0.5% – where it has been since March 2009. The MPC also voted to maintain its quantitative easing program at £275 billion.

Over in the US, Jefferson County, Alabama, has filed for the largest municipal bankruptcy in US history, after country officials failed to reach agreement with creditors to refinance $3.1 billion of borrowing. The creditors – which include investment bank JP Morgan – bought bonds issued by Jefferson County in order to finance a sewer building project.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

How Italy’s Debt Affects the Dollar and Risky Assets

by Jason Jenkins, Investment U Research
Thursday, November 10, 2011

Fear abounds that if you let Greece fail, then a contagion of sovereign debt default will spread across the Eurozone.

But Greece doesn’t have to fail for this to happen. The lack of structural soundness – no actual Eurozone Treasury – has already seen to that.

Let’s not forget the dysfunctional governments of the PIIGS (Portugal, Italy, Ireland, Greece and Spain). We’ve seen bailouts of almost all of them, with Italy now on the brink. Italian bond yields were the primary concern Wednesday morning after clearing firm LCH. So much so that Clearnet raised its margin requirements for Italy’s government debt.

Italy’s Debt Level is Unsustainable

The 10-year yield hit the point of no return: seven percent. This mark is viewed by many as the barrier in which Italian borrowing costs become unsustainable.

Why, you ask?

Well, the seven-percent level was effectively a point of no return for Greece and Portugal earlier in the Eurozone crisis. This level shut those countries out of credit markets and forced them to seek bailouts from the European Union and International Monetary Fund.

However, Italy is a different animal altogether. It’s common knowledge between strategists that the Eurozone’s third-largest economy is too large to bail out – at least in the Eurozone’s current structural form. Doubts remain if a new and improved European Financial Stability Facility will have the capacity to serve as a competent firewall.

Not Just Berlusconi

All this comes as the controversial Italian Prime Minister Silvio Berlusconi stated Tuesday of this week that he will resign after parliament approves austerity measures for its 2012 budget.

“This is getting scary,” said Louise Cooper, markets analyst at BGC Partners, in emailed comments. She said traders are betting against Italy because they see a country “seriously threatened by its enormous debts.” She went on to say, “Whether Berlusconi stays or leaves, the Italian political structure is almost incapable of dealing with the country’s problems.”

Deja vu all over again. This sounds like Greece’s story over the last two years, with more frightening consequences.

What it Means for the Dollar and Risky Assets

The crisis in the Eurozone looks like it will be a prolonged and painful process, which doesn’t look good for a global economy struggling to get back on its feet. Yet, this scenario can turn out to be the dollar’s best friend. And at the same time, the landscape will add to the volatility of risky assets globally across the board.

The Eurozone sovereign debt crisis is just beginning. This has and will allow the dollar to be the default global reserve currency. We have our own problems, but we look a lot better than Europe, and here are the main two reasons why:

• U.S. Treasury bond yields still remained relatively lower even with a Standards & Poor’s rating downgrade, low job creation, a historically depressed housing market and unemployment over nine percent.

• The Dollar Index held its own even when the U.S. government had record debt.

On the flip side, we historically see a relationship between the dollar and equities and commodities. A strong dollar usually indicates a tightening of global liquidity, which leads to risky asset sell-offs – think back to a few years ago after the banking collapse.

The take is to be strong on the dollar and expect the euro to see major problems in the future.

Also, this is the time to look for investment opportunities in companies with strong cash positions who have substantial or growing footholds in emerging markets. Growing sales and wealth in emerging markets should outshine any developed economies’ geopolitical and debt issues.

Good investing,

Jason Jenkins

Article by Investment U