Contagion
Rejected as Biggest Bond Buyers Double Down on Junk - (www.bloomberg.com) Michael
Buchanan knew
exactly what to do as markets were rocked in recent weeks on concern turmoil in
developing nations from Argentina to China andTurkey would cause the global economic recovery
to derail: buy junk bonds. “A real dramatic freefall is unlikely in our
opinion,” Buchanan, who oversees $127 billion of credit investments at Western
Asset Management Co. in Pasadena,California, said in a telephone interview yesterday. “We
were buyers on days of weakness over the past couple weeks.” Money managers
from Western Asset to AllianceBernstein Holding LP say they are uncowed by the
selloff in emerging
markets and
stocks, betting that the global economy is strong enough to withstand such
shocks as central banks keep filling the world with cheap cash. Their
bullishness contrasts with individual investors who during the past two weeks
pulled almost $2 billion from exchange-traded funds that focus on speculative-grade
bonds, including the biggest one-day withdrawal ever for BlackRock Inc.’s junk
fund.
Marc Faber: I want stocks to
fall 40% - (www.cnbc.com) With
Audio… Marc Faber predicts that stocks will drop by 20 percent to 30 percent in
the near future. But he personally hopes that they will fall even further. "I
think the market is way overdue for a 20 to 30 percent correction," said
Faber, the editor and publisher of the Gloom, Boom & Doom Report. But that
is "nothing that worries me," he said. "In fact, I'm hoping for
the market to drop 40 percent so stocks will again become—from a value point of
view—attractive." Faber added with a chuckle: "But that is not the
view of someone who is fully invested—obviously not."
Europe
exposed: Over $3 trillion in emerging market loans - (www.ft.com) The Fragile Five, BRICS and MINT are acronyms
for countries like Turkey, Mexico, Indonesia, and China that are at the focus
of the emerging crisis. But Europe may be the most vulnerable, as banks have
more than $3.4 trillion in loans in shaky markets. European companies have a
bigger exposure to emerging markets than US or Japanese firms, according to
research by Morgan Stanley Capital International. Europe’s most vulnerable
banks- the ones with the most risk in emerging markets - are BBVA, Erste Bank,
HSBC, Santander, Standard Chartered, and UniCredit, according to analysts,
Reuters reported. Deutsche Bank analysts estimate the six most exposed European
banks have more than $1.7 trillion tied up in developing markets. Spain’s
Santander is deeply intertwined in Latin America with bank earnings sourced
from Brazil (23 percent) and 132 billion euro in loans across the region at the
end of 2013.
Young
Bankers Seek ‘Good Yield’ With Their Own Nonprofits - (www.bloomberg.com) Without
deserting careers, a new wave of young bankers is starting nonprofits to help
orphans, immigrants, veterans and students. They say they’re moved to mend the
world using capitalism’s wisdom, not because of its shortcomings, preaching the
power of dividends, due diligence, leverage and efficient allocation of
resources. Some see themselves setting a new mold for post-crisis Wall Street
philanthropy by not waiting to give away their money or leaving for full-time
charity work. “Among this generation -- our generation -- is a deep passion and
interest in learning, earning and returning simultaneously,” said Andrew Klaber, 32, an analyst at hedge fund Paulson &
Co. whose nonprofit Even Ground provides
education and care to African children affected by AIDS. “You just see an unmet
need in your research, and research is what we do on Wall Street.”
Market's
19th Breakdown Sees Bulls Unmoved as Trillions Lost - (www.bloomberg.com) Eighteen
times Michael Shaoul has watched the U.S. stock market lose 5 percent or more
since 2009. Eighteen times he’s been rewarded for holding on. The bulls are being
tested anew by a retreat that started in emerging
markets and
has since spread to developed countries, erasing $3 trillion from global equity
values. Again, Shaoul’s Marketfield Asset Management LLC isn’t selling. “This
is a real bull market,” Shaoul, whose assets under management have risen to $21
billion from $400 million in 2008, said in a phone interview. “What happens in
real bull markets is they do fine, and then they are occasionally interrupted
by an exogenous shock.”
EU
bank reforms reveal hypocrisy, even from left-wing European govts - (www.rt.com) Bankers
have never been less popular and it’s difficult to justify rating them above
‘junk’ status. There are many merits to finance and financial markets - indeed
new products such as Social Impact Bonds can hugely help cash-strapped
governments provide better social services but bankers per se have failed to
demonstrate a useful niche in society. The political classes are keen to
deprecate bankers, although their resolve for reparation has been found wanting
given how few bankers have actually been prosecuted for their outrageous
behavior during the last boom. Most shockingly, many bankers remain in situ,
comfortably enjoying greater bonuses in the C-suite despite their egregious
incompetence during the crisis. Taxpayers are understandably frustrated at the
outrageous partnership between governments (regardless of political tinge) and
the bankers. A huge swathe of the finance industry - the banking segment -
appears somewhat rotten to its core. This remains a most dispiriting sign given
that society cannot prosper without a strong investment and lending sector.
Recently bankers have proven incapable of achieving such simple mercantile
aims.
No comments:
Post a Comment