Debt crisis is greatest threat to national security
“That is why today the debt crisis should properly be regarded as the greatest strategic threat to the future security of our nations.”
Must watch video via the Telegraph.
What crisis? Italy’s biggest business flourishing.
While Monti is trying to sort out the struggling Italian Economy, other parts of the Economy is doing just fine. Italy, the home of modern finance, where the Medici’s outlined the “money” concept of today, is struggling with the debt it has accumulated. Yields spiking higher have put a lot of pressure on the bond markets. Maybe it is time ask the Cosa Nostra for a quick loan? Courtesy Eloi Eloi, from ABC.
A report released today by an Italian employers association states that organized crime is the biggest business in Italy generating an annual turnover of 140 billion Euros (over $204 billion.)
The report by Confesercenti described the various different mafia clans with roots in different regions of the country as the “biggest bank” in the country with 65 billion euros ($83 billion) in liquidity. The association said the situation was a “national emergency” affecting businesses throughout Italy and is no longer to be considered as having a more powerful hold on the south of the country.
“During this economic crisis, mafia organizations are the only businessmen able to invest,” said Marco Venturi, president of Conferscenti.
Market pushes higher, as volatility gets crushed-Is Teflon market back?
Everything is trading in such an orderly way. Slow markets grinding higher on no volume. Nobody really cares about anything, yet. The slow pace of the market action has simply killed vol, and soon we will hear people coming in telling us vol is very expensive at these levels. There is no fear in this market. Have we heard it before? Yes, but is this time different?
It is a very delicate market sitting on resistance levels, but trading with no real conviction. It is beginning to feel, people are joining the latest bull run, without really knowing why. The perfect calm, before the storm? VIX and SPX below.
Lower risk, higher returns-back to school?
Back to school? PIMCO’s Lahr outlines some ideas on volatility and returns that is in stark contrast to what they teach in modern finance. Time to change the models? From PIMCO.
Chart Update Asia
China has had a rather bullish start to the year. The Shanghai Index has climbed almost 6% in two days, but how does the long term picture look like?
Below charts of Asian Indices.
FrAAAnce vs Asia
France is more risky than many Asians. Chart presented without comment.
News That Matters
Ft.com
China’s exports and imports grew at their slowest pace in more than two years in December as foreign and domestic demand ebbed, reports Reuters. Annual exports grew 13.4 per cent in December, just below http://ftalphaville.ft.com/thecut/2012/01/10/824411/chinese-trade-growth-slows-to-two-year-low/
China’s overall trade surplus last year fell to $155bn, its lowest level since 2005, underscoring how slowing global growth and rising Chinese demand are reshaping the country’s economy. The falling trade surplus could ease pressure on China to accelerate the appreciation of the renminbi, in a year when US election politics have turned up the rhetoric over Chinese trade policies. US Treasury secretary Tim Geithner arrives in Beijing on Tuesday for a two-day visit to discuss trade and economic issues, and he is also expected to press for Chinese co-operation on recent US sanctions on Iranian oil transactions. China’s trade surplus shrank last year as imports grew faster than exports, partly due to Beijing’s growing purchases of commodities like iron ore and crude oil.http://www.ft.com/intl/cms/s/0/e4611332-3b42-11e1-be4b-00144feabdc0.html#axzz1j21l9wjH
Mahindra & Mahindra has launched a US television campaign to publicise its claim to be the world’s largest tractor maker by volume – a milestone for the Indian industrial conglomerate – overtaking John Deere, http://ftalphaville.ft.com/thecut/2012/01/09/824351/mahindra-hits-milestone-after-china-push/
Royal Bank of Scotland is determined to press ahead with plans to pay out promised bonuses to investment bank boss John Hourican and other top staff, says the FT. The newspaper reported on Monday that RBS investment banking boss Mr Hourican is in line for a £4m payout under the terms of a deferred grant of shares from 2009, http://ftalphaville.ft.com/thecut/2012/01/10/824691/rbs-to-press-on-with-promised-bonuses/
Human Nature and Volatility
Last year we saw huge volatility in the market, still the index closed practically speaking flat. Big volatility is scaring ordinary people out of the market. The prospects going forward, with the HFT still growing, look similar to last year. Much ado about nothing, or? From The New Yorker;
In other words, while crazy volatility may be great for traders (who live for the chance to make two per cent a day), it’s lousy for the rest of us, and for the economy as a whole. It isn’t just that volatility costs ordinary investors money. It also makes them more likely to give up on the stock market entirely: over the past three years, investors have pulled almost two hundred and fifty billion dollars out of equity funds, even though stock prices have almost doubled since the lowest point of the crash. And, while some of that money has gone into exchange-traded funds, most of it has just left the market. This flight from stocks is probably not a good thing for people’s retirement accounts—after all, in a capitalist country owning some capital is usually a smart way to make money. But it may well be a good thing for investors’ psychological well-being. In effect, they’ve decided that, in a market as volatile as this one, the only way to win the game is simply not to play.
Full article here.
Latest comments