Category Archives: Investment outlook

How Serious is China’s Shadow Banking/Wealth Management Products Problem?

George Soros has caused a bit of a frisson by calling China the greatest risk to the global economy. The Chinese shadow banks are the trouble spot to watch.

Wolf Richter: Fizzing Optimism For Wild Financial Engineering In 2014

Nothing could have been a more potent metaphor for the current investment climate than the headline, “Macau gambling revenue hits record $45 bn in 2013.”

Wolf Richter: What Happens Next, Now That The 10-year Treasury Yield Hit The Psycho-Sound Barrier Of 3%

Yves here. As Wolf describes, in our brave new work of super-low interest rates, the 10 year Treasury breaching 3% was regarded with fear and loathing by the officialdom. Now with the Fed’s reassurances that the Fed funds rate will remain at just about zero for the foreseeable future, the stock market has popped the Champagne. But will the impact of the withdrawal of support for bond prices impact stocks sooner than the current rally would have you believe?

Wolf Richter: Financial Engineering Wildest Since The 2007 Bubble

Lambert here: Tapeworms at play.

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Testosterone Pit.

Financial engineering had a glorious year in 2013. The last time we had this much crazy fun had been in 2007. Back then, Merger Mondays were hot on CNBC. Deals, no matter how large and how insanely leveraged, were announced with great hoopla. Rational people were seen shaking their heads at incongruous moments. Stocks were defying gravity. That was the last time we had this much fun because the bubble collapsed, and some of its detritus was skillfully heaped on the Fed’s balance sheet or on the taxpayer’s shoulders.

The Fed’s Taper and Market Fealty

The Fed’s announcing the taper was supposed to be an earth-shaking event. But that actually sorta happened last summer when Bernanke first used the “t” word and interest and mortgage rates made an impressive upward march in a short period of time.

From my considerable remove, what was noteworthy about the Fed’s announcement yesterday is how terrified it seems to be of creating an upset.

Bubble-logic and the Fed’s “To Taper or Not to Taper”

One of the amusing things right now is that there isn’t much debate in equity-land as to whether to be long or not.

Wolf Richter: Fear And Trembling In Muni Land

Municipal bond investors, a conservative bunch who want to avoid rollercoaster rides and cliffhangers, are getting frazzled. And they’re bailing out of muni bond funds at record rate, while they still can without losing their shirts.

The US Economy Can’t Take QE

Yves here. This post gives a good recap of where QE is and isn’t having an impact on the economy, and the “isn’t”s clearly prevail.

How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme — Again

Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire, snapping up Queen Anne Victorians in Atlanta, brick-faced bungalows in Chicago, Spanish revivals in Phoenix

Krugman, Following Summers, Endorses Asset Bubbles

We have now passed the event horizon into a world run by Dr. Pangloss. In a Sunday afternoon post, Paul Krugman enthusiastically endorses an IMF presentation by Larry Summers which depicts asset bubbles as necessary and desirable. And that means they both agree they should not only continue, they should be encouraged.

Ilargi: Deflation, A Stock Market Crash And Then Christmas

Yves here. I know I should write about Janet Yellen’s confirmation hearing, but I can’t stand to do it. Plus I am confident you’ll enjoy this piece more.

Wolf Richter: NSA Spying Crushes US Tech Companies in Emerging Markets (“An Industry Phenomenon,” Says Cisco’s Chambers)

Cisco CEO John Chambers had a euphemism for it during the first quarter earnings call: the “challenging political dynamics in that country,” that country being China. But then there was India and others, including Russia where NSA leaker Edward Snowden is holed up, and where sales outright collapsed.

Wolf Richter: The Day The Bubble Became Official, And Everyone Was Happy (Except Twitter Casualties)

A new era has dawned: there is now a consensus that this is a stock market bubble. We’re back where we were during the last bubble, or the one before it, though the jury is still out if this is February 2000 or October 1999 or sometime in 2007.

Has QE Stimulated Credit?

Yves here. As much as the post below is a very useful recap of data in terms of the impact of QE, I need to hector “Unconventional Economist” for being pretty conventional. His headline question, whether intentionally or not, reinforces the notion that it was reasonable to think that QE, or super low rates generally (as in ZIRP) would lead to increase lending….

Markets Enter Blowoff

You know something is going wrong when the heads of the largest fund manager in the world and the largest bond management firm simultanously scream ”bubble”.