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Better Business Bureau of Southern Arizona is warning consumers against giving out personal information to unknown callers. Scammers have recently been using the name of legitimate law firms to trick victims across the country into giving out bank information, credit card numbers and other private information. Victims report receiving calls from individuals using a fake [...]
Montag, 26. September 2011
Montag, 18. Juli 2011
shaw capital management financial news:Bin Laden not dead
Can you imagine the body of a globally wanted terrorist (Osama bin Laden, that is) being dumped into the sea soon after he’s done in by special forces? Me neither.
With no proof of his body and photos of the operation being held back from the public, it’s pretty natural that people would doubt the attack in Abbottabad really happened.
Though we must understand that it is done to avoid prompting retribution from fellow Muslims, skeptics like me would quickly find a ground to jump into. Yet another fodder for conspiracy buffs who are still stuck in the world of Illuminati and 76-year old Elvis, but who knows, maybe this time they’ve hit the right mark in arguing that Bin Laden is not yet dead. After all, the whole mission is all hushed up and the ‘body’ is quickly disposed of. Add to that the unbelievable time it took to execute the whole plan.
And now that they won’t even show photos of the terrorist’s body, it will only fuel more rumors.
According to reports, the elite group named SEAL Team 6 (whose existence is denied by the secret service agency itself) did Osama Bin Laden on May 1. Seal team 6, a special force reserved for high priority targets is as highly ‘classified’ as their missions.
I could imagine the anticipation the military team must have had on the way to Bin Laden’s compound. All those ten years of spying and toiling, they have come to this culmination where they’re going to bring down the most wanted terrorist in the world once and for all.
The team is ‘prepared’ alright; they have rehearsed the operation in a similar compound multiple times, in multiple ways. They know exactly what to do had the circumstances changed as they have contingency plans. On top of that, they have to move fast because they are on a foreign soil and the local forces might not welcome them warmly once alerted.
They might go down as the greatest unsung heroes of our time — if that operation did kill bin Laden, that is.
Shaw Capital Management Financial News:UPDATE 1-Hyundai, Alabama state to make investment announcement
* Hyundai and Alabama to make investment announcement Monday
* Hyundai’s fuel-efficient cars in high demand
* Hyundai has talked with at least 3 states on plant plans
(Adds comment from Hyundai in Korea saying announcement is about engine production)
By Bernie Woodall and Hyunjoo Jin
DETROIT/SEOUL, May 16 (Reuters) – South Korea’s Hyundai Motor Co and the state of Alabama will announce on Monday an investment at Hyundai’s Alabama plant near Montgomery, the company said on Sunday.
A company source in Seoul told Reuters that the automaker will announce changes to its engine production in Alabama, while a Hyundai spokesperson said the automaker will not announce more production capacity.
Hyundai’s U.S. sales are booming, with the Korean firm the fastest growing major automaker in the U.S. market.
The Alabama plant makes two of the hottest selling cars in the U.S. market, the midsize sedan Sonata and the small sedan Elantra. Its assembly lines operate as much as 20 hours per day during weekdays and on some Saturdays to meet high demand.
While more vehicle production is not to be announced on Monday, a second Hyundai U.S. assembly plant could still follow at some point .
Sources told Reuters that Hyundai in recent months has spoken at least informally with at least three U.S. states including Alabama about plans for a second plant in the southeast of the United States.
Officials in South Carolina and Mississippi expressed interest in luring the Korean automaker to place new production in those states, the sources added.
Hyundai Motor’s chief financial officer, Lee Won-hee, said last month that the company could consider building another U.S. production plant if the market continued to improve, but that no formal plans are in place. [ID:nL3E7FS0PN]
Hyundai’s U.S. sales rose 31 percent in the first four months of 2011, boosted by a model lineup laden with fuel-efficient small cars as consumers seek vehicles that can help overcome gasoline prices that have risen above $4 per gallon in much of the country.
Hyundai’s U.S. chief executive, John Krafcik, earlier this year said the automaker’s U.S. sales will be constrained by limits to its current production, but has not commented on any plans to expand the company’s U.S. production.
Sources told Reuters that Hyundai is considering at some point placing a second assembly plant on the same site as its existing factory south of Montgomery.
ROOM TO GROW
ROOM TO GROW
The company owns about 1,750 acres (708 hectares) at its Alabama site, and its current assembly plant takes up less than a third of that land.
One source told Reuters that any new plant would produce a subcompact car, the size of the Hyundai Accent which is now imported to the United States.
Hyundai opened its Alabama plant in 2005. It was followed by dozens of Korean auto parts suppliers that also have production plants in Alabama to serve the Hyundai factory.
Alabama is a “right to work” state, which helps companies there fend off efforts to unionize workers. The United Auto Workers, which represent production workers at the three major U.S. automakers, has not been successful in convincing Hyundai workers to unionize the Alabama plant, which has about 2,600 workers.
Mississippi and South Carolina are also right to work states.
U.S. April sales of Hyundai increased 40 percent from April 2010, to 61,754 units, for a 4.8 percent share of the U.S. market. Through April, Hyundai’s U.S. sales rose 31 percent to 204,374 units.
U.S. Sonata sales rose 46 percent to 73,616 in 2011 through April, while U.S. April sales of Elantra were up 129 percent and up 89 percent in 2011 through April.
Hyundai said the vehicles it sold in the United States in April averaged 36.2 miles per gallon, and that vehicles that can average 40 miles per gallon on the highway made up 34 percent of its April sales, up from 25 percent in April 2010. (Reporting by Bernie Woodall in Detroit and Hyunjoo Jin in Seoul; Editing by Richard Chang and Dhara Ranasinghe)
Shaw Capital Management Financial News: Wall St. Banks Expected to Post Weak 2nd-Quarter Results
Only a few short months ago, JPMorgan Chase traders were on such a roll that they did not have a single losing day in the first quarter.
But when the bank reports its second-quarter results this week, that hot streak will have come to an end. Analysts expect JPMorgan to count an almost 20 percent drop in its sales and trading revenues, reflecting a slowdown in investor activity and the dismal performance of its fixed-income and commodities groups.
Bank of America, Citigroup, Goldman Sachs and Morgan Stanley are expected to report similar news. After helping prop up Wall Street during the financial crisis, core trading revenue is projected to drop, on average, by as much as 25 percent from the first quarter, according to Credit Suisse research.
That will put further pressure on the banks’ growth prospects, which are already strained by stagnant loan growth and more stringent regulation. It is also prompting nearly every major Wall Street firm to contemplate another round of layoffs amid growing concerns that at least part of the weak results are permanent.
“We are undoubtedly being impacted by lower levels of activity,” said William Tanona, a financial services analyst with UBS. “There is a lot of uncertainty out there.”
Together, the five Wall Street banks are still going to take in more than $20 billion from their core trading operations, largely from business done on behalf of clients. For example, the banks routinely help airlines hedge oil prices or bring together buyers and sellers of stock, bonds and other complex securities — often putting their own money on the line to facilitate a trade. But during the second quarter, the business was particularly hard hit.
Trading volumes fell sharply as investors became unnerved by the running debt crisis in Europe, the political standoff over the debt ceiling in the United States, and lingering concerns over the anemic growth of the broader economy. Even when investors did place their bets, they were far more hesitant to take big risks — something known on Wall Street as lacking conviction. That meant the banks missed out on the lucrative fees they can generate by selling more high-octane products, like complex options and derivatives.
Fixed-income traders, among the biggest moneymakers for Wall Street, faced a bruising market. In the commodities business, for example, oil, gold and other metals prices had been rising quickly during the early part of the year as investors anticipated high demand for materials to keep the global economy humming. But as cracks in the recovery kept surfacing, prices headed south — and traders raced to the sidelines. That left most Wall Street desks, which had stocked up on inventory to facilitate trades, holding losing positions.
At JPMorgan, for instance, energy traders were having a gangbuster year, earning several hundred million dollars for its burgeoning commodities unit. Yet when the market turned in early May, they gave back some of those gains, according to market participants. Morgan Stanley, meanwhile, suffered tens of millions in losses on its interest rate desk when a bet on lower inflation turned against the bank’s position.
Mortgage trading did not fare much better. After rallying from highly depressed values for much the last two years, mortgage-backed securities prices fell sharply during the second quarter. The reason? The government started dumping into the market its vast portfolio of mortgage bonds acquired from its rescue of the American International Group, and investors believed the outsize supply would cause values to plummet. (Only recently, when the Federal Reserve Bank of New York announced it was halting auctions of the A.I.G. mortgage bonds, did prices start to stabilize.)
Although the banks have slowed the spill of red ink from troubled mortgages and other bad loans, they are struggling to increase revenue in their more traditional banking businesses, too.
New financial regulations have chipped away at once-lucrative sources of income, like overdraft charges and credit card penalty fees. Starting this fall, banks are expecting to absorb a multibillion-dollar hit when they are forced to sharply lower the fees they charge each time consumers swipe their debit cards. Higher capital requirements, meanwhile, could further depress profits if some banks are forced to lighten their balance sheets or exit certain businesses altogether.
Shaw Capital Management Financial News: China adviser: 2011 consumer inflation to hit 4.8%
By China Bureau
SHANGHAI (MarketWatch) — China’s consumer price index is likely to increase 4.8% this year, the state-run China Securities Journal reported Monday, citing Li Daokui, an adviser to the People’s Bank of China.
China’s inflation rate may have peaked in June and will likely slow down in the second half of the year, the newspaper quoted Li as saying.
China’s CPI rose 6.4% in June from a year earlier, the biggest monthly rise since June of 2008.
Li expected China’s CPI will increase 2.7% in 2012, according to the report.
-Newspaper website: http://www.cs.com.cn
Shaw Capital Management Financial News: Euro, dollar strike new lows on Swiss franc
SYDNEY | Sun Jul 17, 2011 7:22pm EDT
(Reuters) – The euro and dollar both struck record lows against the Swiss franc in Asia on Monday while gold reached new highs as investors sought safety from debt problems plaguing the European Union and United States.
The euro gapped lower against the Swiss franc to change hands at a trough of 1.1365 according to dealers, down from 1.1501 late in New York on Friday.
Likewise the dollar traded as low as $0.8034 on EBS, against $0.8129 late on Friday, while gold popped as high as $1,598.41.
“We have limited hope that a comprehensive solution to the European and US problems will emerge in the next few days, or that there will be increased clarity in the global economic outlook,” said analysts at Barclays.
“Hence, we expect the very nervous, illiquid trading conditions of recent weeks to continue…we recommend limited risk exposures.”
All of which kept the euro pinned at $1.4124, against $1.4144 late on Friday. Immediate support was put at $1.4063 with resistance at $1.4199.
The single currency escaped relatively unscathed from the EU bank stress tests released on Friday, though dealers said the market had little confidence in the results.
Attention had shifted to the next emergency meeting of EU leaders scheduled for Thursday, amid signs they are edging nearer to a proposal to buy back Greek debt.
German Chancellor Angela Merkel called on Sunday for private investors to make a major contribution to bailing out Greece. Officials proposed a range of schemes for the European Financial Stability Facility to finance a buy-back or a swap in which private owners of Greek government bonds would accept cuts in the face value of their holdings.
Meanwhile, in the United States there was little evidence of progress on raising the country’s borrowing ceiling ahead of a deadline of August 2.
Republican and Democratic senators sought on Sunday to craft a plan that could avert a government debt default should the talks remain stalemated.
Senior Democratic aides said the U.S. Senate will likely begin considering the compromise measure this week. They predicted the Democratic-led Senate would pass the legislation, but winning over the Republican-led House of Representatives would pose a bigger challenge.
Both Standard & Poor’s and Moody’s have warned they could downgrade the country should the debt limit not be raised.
One early mover in Asia was the New Zealand dollar, which climbed after domestic inflation data proved higher than expected, adding to speculation that interest rates might rise before year end.
The kiwi rose to $0.8470, from $0.8445 before the government reported consumer prices rose 1 percent in the second quarter. Last week, it hit a 30-year peak of $0.8507 as growth figures showed the economy faring better than expected.
Shaw Capital Management Financial News
(Reuters) – The euro and dollar both struck record lows against the Swiss franc in Asia on Monday while gold reached new highs as investors sought safety from debt problems plaguing the European Union and United States.
The euro gapped lower against the Swiss franc to change hands at a trough of 1.1365 according to dealers, down from 1.1501 late in New York on Friday.
Likewise the dollar traded as low as $0.8034 on EBS, against $0.8129 late on Friday, while gold popped as high as $1,598.41.
“We have limited hope that a comprehensive solution to the European and US problems will emerge in the next few days, or that there will be increased clarity in the global economic outlook,” said analysts at Barclays.
“Hence, we expect the very nervous, illiquid trading conditions of recent weeks to continue…we recommend limited risk exposures.”
All of which kept the euro pinned at $1.4124, against $1.4144 late on Friday. Immediate support was put at $1.4063 with resistance at $1.4199.
The single currency escaped relatively unscathed from the EU bank stress tests released on Friday, though dealers said the market had little confidence in the results.
Attention had shifted to the next emergency meeting of EU leaders scheduled for Thursday, amid signs they are edging nearer to a proposal to buy back Greek debt.
German Chancellor Angela Merkel called on Sunday for private investors to make a major contribution to bailing out Greece. Officials proposed a range of schemes for the European Financial Stability Facility to finance a buy-back or a swap in which private owners of Greek government bonds would accept cuts in the face value of their holdings.
Meanwhile, in the United States there was little evidence of progress on raising the country’s borrowing ceiling ahead of a deadline of August 2.
Republican and Democratic senators sought on Sunday to craft a plan that could avert a government debt default should the talks remain stalemated.
Senior Democratic aides said the U.S. Senate will likely begin considering the compromise measure this week. They predicted the Democratic-led Senate would pass the legislation, but winning over the Republican-led House of Representatives would pose a bigger challenge.
Both Standard & Poor’s and Moody’s have warned they could downgrade the country should the debt limit not be raised.
One early mover in Asia was the New Zealand dollar, which climbed after domestic inflation data proved higher than expected, adding to speculation that interest rates might rise before year end.
The kiwi rose to $0.8470, from $0.8445 before the government reported consumer prices rose 1 percent in the second quarter. Last week, it hit a 30-year peak of $0.8507 as growth figures showed the economy faring better than expected.
Mittwoch, 6. April 2011
Shaw Capital Management World Financial News:Renewable energy gaining ground: Top economist
By ARAB NEWS
Published: Mar 28, 2011 23:48 Updated: Mar 28, 2011 23:48
http://arabnews.com/economy/article333674.ece/REPRESENTATIONS/large_620x350/eco_renewable.jpg
DUBAI: Dubai International Financial Center (DIFC), the global financial hub of the region between the regional emerging markets and the world, on Monday held an economics workshop on latest developments in international financial markets and trade relating to oil and gas.
The workshop, entitled “Oil Trade & Finance: Developments & Prospects for MENA,” brought together financiers, market specialists and business leaders, to discuss the emerging market trends and potential impact of unrest in the MENA region on energy supply & prices.
“As we enter the new decade, we are seeing a number of dynamic and fundamental changes to the global oil and gas industry,” said Nasser Saidi, chief economist and head of external relations, DIFC Authority.
Firstly, he said risk premiums associated with global uncertainties, had pushed crude oil prices up again.
“Secondly, as emerging markets took the driver’s seat and became the main contributor to world GDP growth over the course of the global financial crisis, oil and gas flows have moved toward these emerging market economies, China in particular,” he added.
He pointed out that GCC petroleum consumption continues to remain high, with some states displaying the fastest yearly growth in energy demand in the world.
“Saudi Arabia actually uses more oil than Germany, despite having over 60 million less people. As a result of maintaining fuel subsidies, the GCC is extremely energy intensive when compared to industrial and developed countries around the world. This is not sustainable,” he added.
The Middle East is home to two-thirds of the world’s oil and gas proven reserves and its role as the largest oil exporter underscores the importance of the region given the rising demand globally for energy commodities. Recent years and months have seen high volatility in oil and gas prices, unrest in the region and rising demand from emerging market economies, highlighting the importance of maintaining oil and gas supply and financing to sustain growth in times of uncertainty.
“The future of global energy is not based on oil but rather on renewable energy, which is expected to triple by 2035,” he said.
“China is shaping this future and is pushing to expand the role of low-carbon energy technologies, which will in turn drive the energy cost down, benefiting all countries,” the economist said.
“This is exactly why the GCC states need to focus on investments in renewable energy & technology given that they have significant clean energy resources in solar, wind and, carbon capture and storage. Today’s discussions are an opportunity to highlight the challenges faced by the sector and propose solutions to address them. DIFC is proud to be hosting this event and it is committed to continue to be a platform where economic and financial issues facing the region and the world are discussed in an effort to develop this region’s economies
The workshop addressed a series of topics, including “Shifting energy market patterns and their consequences,” “The role of Dubai Mercantile Exchange and the regions oil prices benchmark,” “Middle East unrest and oil prices vulnerability,” “Oil and gas infrastructure in MENA region,” “Investment in oil and gas industry in the MENA region” and “The changing role of financial services regulators: DFSA and the commodity derivatives markets.”
Thomas Leaver, CEO, Dubai Mercantile Exchange; Jorge Montapeque, global director, Platts; Fabio Scacciavillani, chief economist, Oman Investment Fund; Sirine Tajer, entrepreneur and independent strategic adviser; and Gerald Santing, managing director, Dubai Financial Services Authority, were the other speakers.
Shaw Capital Management World Financial News:CPP issues profit warning as it is investigated by the FSA
10:10pm Monday 28th March 2011
By Julie Hayes »Business reporter
ONE of York’s largest employers has issued a profit warning after revealing it is being investigated by the Financial Services Authority (FSA).
CPP Group, which employs about 1,000 people in York, said in a statement to the London Stock Exchange that the FSA was looking into issues surrounding the sale of its card and identity protection products in the UK, specifically looking at alleged failings in sales calls.
It said it contested a number of the concerns raised by the FSA, but it may need to conduct a review in order to identify whether any deficiency has caused customer detriment requiring redress.
It has decided to suspend all new sales of identity protection through telephone sales and it intends to develop an identity protection product without insurance.
It said: “CPP is committed to running its business with the highest levels of integrity and treating its customers fairly. We have confidence in our processes and our agents are measured against demanding standards of regulatory compliance, all undergoing rigorous FSA compliant training before they take a live call.”
But the company, based at Holgate Park, has warned that 2011 operating profit was expected to be below the lower end of the current range of analysts’ estimates for 2011, because of the suspension of identity protection sales and income from the new non-insurance product being deferred.
“The group expects to be able to mitigate to some extent the financial impact through sales of alternate products, including card protection. The net impact however is that underlying operating profit is expected to be below the lower end of the current range of analysts’ estimates for 2011,” it said.
Shaw Capital Management World Financial News:Markets shrugging off Libya, but oil is a risk
GLOBAL markets are bouncing back from the initial shock of Japan’s devastating earthquake and the Libyan conflict, with renewed positive sentiment to boost the Australian bourse this week.
The local market is expected to take the lead from Wall Street’s positive close on Friday (US time), which was driven by data outlining a jump in US economic growth at the end of last year.
The Dow Jones Industrial Average posted its sixth gain in seven sessions at Friday’s close as it finished up 50.03 points, or 0.41 per cent, at 12,220.59.
Australia’s market is expected to take the lead from Wall Street and record a positive start to trading this week, after closing 0.92 per cent higher at 4742.6 points, on Friday.Magellan Financial Group chief executive Hamish Douglass said that during the previous week, global markets had wound back to pre-earthquake levels.
“Our view of the situation in Japan at the time when we analysed it — the human tragedy is obviously enormous in Japan — but in terms of a macro-economic event for the world and potentially the world’s financial system, it was a very low-risk event for the world,” he told ABC’s Inside Business yesterday.
Mr Douglass said if there was a “worst case” event in Japan, it would be largely contained to that country.
“Our view was that we thought it was unlikely that the Japanese financial system would collapse, but even if it did, we didn’t see it as a similar situation that could happen in European sovereign debt, or around a major investment bank like Lehman Brothers collapsing.”
While markets have now largely shrugged off the Japanese disaster and digested the ongoing conflict in Libya, which has supported a rise in the oil price to above $US100 a barrel, further unrest in the Middle East could trigger a negative response in global markets.
Mr Douglass said the recent rise in the oil price had not been that significant, but he warned there was the potential for an oil shock, should a new conflict arise in the oil-producing region.
“If you’ve got a major conflict involving some major oil-producing nations, particularly Saudi Arabia, you wouldn’t talk about oil going up $US20 a barrel, you’re potentially talking about it going up $US200 a barrel, and that would completely change the dynamics of the world,” he said.
“Not only would it place many large economies into recession, it would have major consequences for much of the emerging markets of the world.
“So what’s currently going on . . . in Libya, I don’t think is a huge event to the world, but what’s potentially going on with Saudi Arabia and Iran and Bahrain and the potential instability there, that’s potentially a much more serious issue.
“But the concern of the conflict spreading throughout the Middle East is not hitting markets now, which have recovered from Japan’s nuclear crisis.”
shaw capital management world financial news:Attorney calls for agency to monitor money laundering
By ARAB NEWS
Published: Mar 29, 2011 01:00 Updated: Mar 29, 2011 01:00
JEDDAH: Saudi attorney Khalid Alnowaiser recently pointed out that money laundering by organized crime syndicates has become an international dilemma and a real challenge for global financial institutions.
In the United States, international experts believe that money laundering has cost $3.61 trillion due to more transparent international financial markets and the spread of technology. These activities are illegal and cause severe economic, social, and political problems. Studies have shown that money laundering supports drug trafficking, terrorism, and arms smuggling.
The growing problem of money laundering gained interest after the 9/11 terrorist attacks in 2001. It has been the subject of many conventions and international conferences including the United Nations Convention Against Illicit Traffic of Narcotic Drugs and Psychotropic Substances in 1988 which is known as the Vienna Convention, the 1994 Amman Conference which involved Saudi Arabia and many other participants from all over the world, and the UN Security Council Resolution 1373 that called on United Nations members to work together to combat the financing of terrorism.
Saudi Arabia and many other Arab countries have issued special laws seeking to combat money laundering.
In 2003, Royal Decree No. M/39 was issued followed by a Saudi law to combat money laundering.
In 1999, Council of Ministers Decision No. 15 ratified the implementation of 40 recommendations to combat money laundering issued by the Financial Action Task Force (FATAF). All decrees conform to the opinions of many Islamic scholars prohibiting money laundering.
However, many obstacles still exist in fighting money laundering, including bank secrecy rules preventing the disclosure of bank accounts and deposits, a general lack of consistent modern information regulations, different regulations in each country, and computer hacking activities.
Alnowaiser suggested the following recommendations be immediately implemented to fight money laundering:
l Revoking the charters of bank and financial institutions involved in money laundering.
l Criminally prosecuting those persons involved in money laundering activities.
l Better training of bank employees so they can become better acquainted with modern technological innovations to uncover money laundering activities.
l Most importantly, establishing a powerful central agency to monitor international financial transactions, identify financial transactions linked to illegal or suspicious activities, disclose the activities of those persons engaging in money laundering, and publicize these preventative steps to citizens through the media.
Shaw capital management world financial news: Upheaval in Middle East a warning for developed economies
March 29, 2011
THE revolutions in the Middle East are not just about corrupt and overregulated autocratic regimes crushing freedom and democracy. They also reflect dysfunctional economies, products of crony capitalism creating massive unemployment, substantial sections of the population living below poverty levels, gross income inequality, bloated public-sector payrolls and suppression of business formation. As with Europe, the US, Britain and Australia, economics has shaped the politics.
It’s not insignificant that the revolutions in the Arab world started in Tunisia. Mohamed Bouazizi, 26, and with a computer science degree, was forced to sell fruit and vegetables from a cart. He had no licence but it was his sole source of income. On December 17, authorities confiscated his produce. Bouazizi drenched himself in petrol and set himself on fire outside the governor’s office. It set off an explosion throughout the Arab world.
The upheaval is also a warning for developed economies. In his book Fault Lines, former International Monetary Fund chief economist Raghuram Rajan says the roots of the financial crisis lay in income inequality, political mismanagement where politicians pushed easy credit instead of tackling structural problems and perceptions of crony capitalism, where governments pandered to corporate interests and vice versa. The Middle East continues that theme of tightly interconnected politics and economics.
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The parallels with the Middle East are there with the post-financial crisis electoral volatility witnessed in Australia, Britain and the US, including the rise of the Tea Party following the bank bailout, a US model of crony capitalism. Europeans from Britain to Bavaria are rebelling against austerity programs. People are not paying road fees in the Greek town of Aphidal, bus and metro passengers in Athens now refuse to pay for tickets. In Europe, critics say the austerity measures show government and corporate interests have merged.
Libya is an exemplar of crony capitalism. Gaddafi and his family have reportedly accumulated an estimated $US97 billion in accounts and investments around the globe. Compare that with the rest of the population in Libya. According to the CIA World Fact Book, one in three Libyans lives at or below the poverty line.
Hosni Mubarak who, according to various media reports, is worth anywhere up to $US70 billion, started out by cracking down on profiteering by politically connected businessmen linked to his predecessor, Anwar Sadat. A 1990 New York Times profile described his “rigid personal probity”.
But as with Gaddafi, power corrupts. Over the years, there were reports describing how he enriched himself and his family through partnerships in Egypt’s powerful companies. His family reportedly owns properties all over the world. Compare the wealth of the Mubarak clan with the low-wage labourers in Egypt, with most available jobs in poorly paid informal work, a 9.5 per cent inflation rate and where at least 50 per cent of men and 90 per cent of women remain jobless two years after leaving school.
And then there is the royal welfare system in Saudi Arabia which, according to WikiLeaks in cables reviewed by Reuters, works in legal and illegal ways. Legally, there are monthly allowances for thousands of princes and princesses, ranging from $US800 a month lower down the food chain, to $US270,000 a month for sons of Abdul-Aziz Ibn Saud. Illegal ways include skimming $US10 billion yearly from off-budget projects related to defence and infrastructure, sponsoring expatriate workers who have to pay a small monthly fee to their royal patron.
In the wake of a violent crackdown on protesters that left at least 37 dead, Syrian President Bashar al-Assad announced changes including pay rises for public workers. The question remains whether Syria is next.
Fixing the problems will not be easy. Even after the regimes are gone, the infrastructure and systems for corruption will still be there.
Economist Nouriel Roubini has proposed an assistance program designed for the Middle East, modelled on the Marshall Plan in western Europe after World War II, or on the model offered to eastern Europe after the Berlin Wall’s collapse, with finance coming from the IMF, the World Bank, the European Bank for Reconstruction and Development, as well as the US, the European Union, China, and the Gulf states. Such a program should tackle the systemic problem of income inequality and crony capitalism.
Rajan argues that every financial and economic crisis has political roots. But events in the Middle East and around the world suggest it is also vice versa.
Economics rooted in income inequality and the blending of government and corporate interests can frame the political environment. The public’s faith in private enterprise is corroded and people feel there are two sets of rules: one for those in influence and another for the rest. It’s something the Gillard government should keep in mind when it picks winners and losers for its carbon tax compensation package. The growing convergence of politics and corporations is meat for conspiracy theorists and has political consequences.
Shaw Capital Management World Financial News:There’s no money left! Minister Hunt issues warning to BOA over financial disagreement
As it stands, the BOA would be entitled to a cut of any surplus after 2012, but with Paralympic losses expected to cancel out any Olympic gains, this would likely be a negligible figure.
Instead, the BOA want to take a share before the Paralympic results are taken into account and, despite the IOC ruling against them, are taking their case to the Court of Arbitration for Sport.
Should they be successful, it would require either LOCOG somehow to generate more money, or for the cash to be shifted from the wider sport budget, affecting other projects.
Hunt, the Secretary of State for Culture, Olympics, Media and Sport, is also worried the conflict could cause the bodies to take their eyes off the ball in other areas.
The clock is ticking: The London Olympics kick-off in just over a yearHe told BBC Radio 5 Live’s Sportsweek: ‘It’s an extraordinary thing just over a year before the games that we’re getting into this sort of dispute which, frankly, isn’t going to benefit anyone. It’s just going to line the pockets of lawyers.
‘The BOA is fantastically important to the success of 2012. ‘They have got to look after 550 athletes, it’s a massive logistical operation to run that village…and they’ve got to run the holding camp. ‘Everyone in that organisation needs to be focused on that logistical challenge.
‘The second thing is I can’t really see how anyone’s going to be a winner from this because there is no more money. ‘Sport got a very good settlement in the comprehensive spending review.
Shaw Capital Management World Financial News:Students conned out of loans in fake email swindle
Saturday 2 April 2011 07:00
AROUND 50 students in Yorkshire are believed to have been conned by a suspected email scam which has seen their loan payments go missing after they were tricked into giving their personal details.
The victims are thought to have responded to a bogus email claiming to be from Sheffield Hallam University informing students that they could qualify for extra financial support.
The students were asked to supply personal information to see if they were eligible to receive a new bursary.
An investigation is underway to establish how this information was used to change the details on 50 loan payments which were due to go into the undergraduates’ accounts last month.
Maintenance loans are paid to students three times a year and it is feared that tens of thousands of pounds could have been diverted through the suspected scam.
South Yorkshire Police, the university and the Students Loan Company are now investigating.
Sheffield Hallam is also working to support students suffering financial hardship as a result of the loans not reaching their accounts.
A spokeswoman for the university said: “We are aware that some of our students may have been targeted in a phishing scam, which may have affected their funding with the Student Loans Company.”
Both the university and the Students Loan Company have confirmed that around 50 students are believed to have been affected.
A statement from the company said: “Students at Sheffield Hallam University have alerted us to a scam which may have resulted in their personal details being accessed by a third party.
“We are working with the university to investigate the extent of this and the police have been informed. To ensure that we minimise the risk of further incidents, we have put in place additional security measures.
“We understand the university has put in place support measures that will assist any student who may be at risk of financial hardship as a result of this.”
Caroline Dowd, president of the Students’ Union at Sheffield Hallam University, has warned students not to hand out their personal details. South Yorkshire Police has urged any students who have been affected to contact them on 0114 2202020
Shaw Capital Management World Financial News:Telephone scam makes rounds in area
April 2, 2011
Daily Press
MANISTIQUE – Residents of Schoolcraft County are being warned about a telephone scam in Schoolcraft County.
Manistique Public Safety Director Ken Golat said there have been numerous attempts in the past several weeks to fraudulently obtain banking account information.
The attempts have been made by a telephone call, whereby the caller states that he or she represents a local bank or financial institution in the Manistique area.
The caller then advises the intended victim their account has been compromised and that they need their account and Social Security numbers immediately to prevent theft.
In a spin off scam, other residents have received call that their debit card sponsored by a named Manistique financial institution has been compromised and the intended victim should provide the caller with those numbers.
Public Safety officers are reminding the public they should never give out any personal or account information over the phone, no matter what the supposed circumstances.
If a person should receive any such call requesting this information they should hang up immediately and contact their local bank or credit union to determine what is going on.
If this is determined to be a fraud scam, which a vast majority are, the person should then report this attempted fraud to the Manistique Public Safety Department by calling 906-341-2133.
Sonntag, 6. März 2011
Shaw Capital Management February Newsletter: Government bond Markets 3 of 3
Shaw Capital Management Korea February Newsletter: Article three of three – The markets are assuming that the more powerful members of the eurozone will support the weaker members in order to prevent defaults that might threaten the single currency structure; but the yield spreads have widened considerably to reflect the increased risks. Our tentative view is that the markets will “muddle through”, and that defaults will be avoided; but higher overall yield levels seem unavoidable. Prospects in these markets are therefore very unattractive. The gilt edged market has also come under pressure over the past month; short-term yields have remained basically unchanged, but there have been increases in medium and longer-term yields that has produced a much steeper yield curve.
Shaw Capital Management Korea February Newsletter: Article three of three – There has been evidence of a modest improvement in the economic background; and the Bank of England is proving to be a stabilising influence at a difficult time; but a very disappointing Pre-Budget Report has indicated that there will be no attempt to address the problems of the huge fiscal deficit until after the election. Our tentative view is that the markets will “muddle through”, and that defaults will be avoided; but higher overall yield levels seem unavoidable. Prospects in these markets are therefore very unattractive. Funding pressures will therefore continued to increase; and so, although there does not appear to be any real danger that the UK might join the list of countries that could default on their sovereign debts, annual debt issues in excess of £200 billion cannot continue for long if this is to be avoided. It is no surprise therefore that investors have reacted by reducing their exposure to the market.Shaw Capital Management Korea February Newsletter: Article three of three – There is still some doubt whether the UK economy has moved out of recession. The pace of contraction in the third quarter of the year has been slightly reduced, and since then the pace of job losses has declined, and consumer spending has held up fairly well. But business investment and manufacturing activity remains weak, and so there may have been no overall improvement in the final quarter of last year. The Bank of England has therefore kept short-term interest rates at 0.5%, and maintained its quantitative easing programme, and this has provided support for the market, since the bank has been a major buyer of gilts in recent months.Shaw Capital Management Korea February Newsletter: Article three of three – However it has not been enough to prevent a very adverse reaction to the Pre-Budget Report from the UK Chancellor. The market did not really expect any significant action on the deficit ahead of the forth-coming general election; but was still surprised by the apparent lack of realism. The government is prepared to allow the deficit to continue to accumulate, and is relying on the gilt edged market to provide the funds to finance that deficit in the hope that this will enable it to win the election, and has produced no real indications of how the deficit might be reduced even after the election is over. It is not surprising therefore that investors have reacted by reducing exposure, that 10-year yields have risen to 4% and longer-term yields to 4.5%, and that there are even suggestions that the country could face a capital flight and a full-blown debt crisis in the coming months. We do not share these extreme views; but clearly the prospects for the market are very unattractive, and higher yields appear unavoidable. Investors have reacted by reducing exposure… and there are even suggestions that the country could face a capital flight and a fullblown debt crisis in the coming months.Shaw Capital Management Korea February Newsletter: Article three of three – The Japanese bond market is basically unchanged over the past month; but there are fears that present yield levels are unsustainable. A sharp reduction in the growth estimate for the third quarter of last year, and weaknesses since then have raised the possibility of a move back into recession and a further period of deflation. The government has reacted by launching its fourth fiscal rescue package since the economic crisis began last year. It amounts to the equivalent of a further $81 billion to be spent in the regions and on subsidies for consumer durables, and is expected to lift the debt issuance this year to a record $835 billion, despite the indications that bond investors may be becoming increasingly unwilling to finance such a high level of new bonds, and the warning from the IMF that the government is risking a significant increase in debt funding costs. Since overseas involvement in the bond market is at a very low level, such a development is unlikely to affect bond markets elsewhere directly; but it could be a warning to other countries of the dangers of placing too much pressure on their own markets.Shaw Capital Management Korea – Investment Innovation & Excellence. We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management based in Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.
Shaw Capital Management Korea February Newsletter: Article three of three – There has been evidence of a modest improvement in the economic background; and the Bank of England is proving to be a stabilising influence at a difficult time; but a very disappointing Pre-Budget Report has indicated that there will be no attempt to address the problems of the huge fiscal deficit until after the election. Our tentative view is that the markets will “muddle through”, and that defaults will be avoided; but higher overall yield levels seem unavoidable. Prospects in these markets are therefore very unattractive. Funding pressures will therefore continued to increase; and so, although there does not appear to be any real danger that the UK might join the list of countries that could default on their sovereign debts, annual debt issues in excess of £200 billion cannot continue for long if this is to be avoided. It is no surprise therefore that investors have reacted by reducing their exposure to the market.Shaw Capital Management Korea February Newsletter: Article three of three – There is still some doubt whether the UK economy has moved out of recession. The pace of contraction in the third quarter of the year has been slightly reduced, and since then the pace of job losses has declined, and consumer spending has held up fairly well. But business investment and manufacturing activity remains weak, and so there may have been no overall improvement in the final quarter of last year. The Bank of England has therefore kept short-term interest rates at 0.5%, and maintained its quantitative easing programme, and this has provided support for the market, since the bank has been a major buyer of gilts in recent months.Shaw Capital Management Korea February Newsletter: Article three of three – However it has not been enough to prevent a very adverse reaction to the Pre-Budget Report from the UK Chancellor. The market did not really expect any significant action on the deficit ahead of the forth-coming general election; but was still surprised by the apparent lack of realism. The government is prepared to allow the deficit to continue to accumulate, and is relying on the gilt edged market to provide the funds to finance that deficit in the hope that this will enable it to win the election, and has produced no real indications of how the deficit might be reduced even after the election is over. It is not surprising therefore that investors have reacted by reducing exposure, that 10-year yields have risen to 4% and longer-term yields to 4.5%, and that there are even suggestions that the country could face a capital flight and a full-blown debt crisis in the coming months. We do not share these extreme views; but clearly the prospects for the market are very unattractive, and higher yields appear unavoidable. Investors have reacted by reducing exposure… and there are even suggestions that the country could face a capital flight and a fullblown debt crisis in the coming months.Shaw Capital Management Korea February Newsletter: Article three of three – The Japanese bond market is basically unchanged over the past month; but there are fears that present yield levels are unsustainable. A sharp reduction in the growth estimate for the third quarter of last year, and weaknesses since then have raised the possibility of a move back into recession and a further period of deflation. The government has reacted by launching its fourth fiscal rescue package since the economic crisis began last year. It amounts to the equivalent of a further $81 billion to be spent in the regions and on subsidies for consumer durables, and is expected to lift the debt issuance this year to a record $835 billion, despite the indications that bond investors may be becoming increasingly unwilling to finance such a high level of new bonds, and the warning from the IMF that the government is risking a significant increase in debt funding costs. Since overseas involvement in the bond market is at a very low level, such a development is unlikely to affect bond markets elsewhere directly; but it could be a warning to other countries of the dangers of placing too much pressure on their own markets.Shaw Capital Management Korea – Investment Innovation & Excellence. We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management based in Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.
Government bond Markets Part 2 of 3: Shaw Capital Management Newsletter
Shaw Capital Management Korea February Newsletter: Article two of three – Bond markets in mainland Europe have also fallen back towards year-end. There are signs of a modest improvement in the background economic situation in the euro-zone; and this seems to be persuading the European Central Bank to withdraw some of the liquidity measures that it introduced to counter the recession as part of a general tightening of monetary policy that might soon include higher short-term interest rates.
Shaw Capital Management Korea February Newsletter: Article two of three – But a more serious immediate consideration for the markets has been the decision by some of the rating agencies to downgrade the credit rating of Greek government bonds, and to warn that other periphery member countries of the euro-zone have been placed on “credit watch” and might suffer the same fate. Investors have responded by widening the yield spreads between the bonds of member countries, and by pushing the overall level of yields higher. The markets appear to be expecting that the process will continue. The Fed appears to agree with this more optimistic view, arguing that economic activity is continuing to pick up, and that the deterioration in the labour market is abating. For weaknesses elsewhere.
Shaw Capital Management Korea February Newsletter: Article two of three – There is also a fear that the contraction that is occurring in banking lending, and in the money supply, may be leading to another credit crunch this year that could extend the economic slowdown. Bank loans to businesses were 1.9% lower in November 2009 than in same month in 2008, and M3 money supply was 0.2% lower, and has been shrinking now for several months. Since an expansion in banking lending was a major plank in the European Central Bank’s efforts to combat the recession, this latest evidence of a contraction is a major policy failure, and should be persuading the ECB to move very slowly in dismantling its emergency measures; but all the evidence suggests that it is preparing to act. The latest meeting of its governing council left short-term interest rates and overall monetary policy unchanged; but subsequently the bank chairman argued that some of the existing liquidity measures were no longer needed and would be gradually replaced. This was a disappointment for bond investors, not only because such action might be premature and extend the recession, but also because some of the funds that had been made available had been used to support government bond issues.
Shaw Capital Management Korea February Newsletter: Article two of three – However the more serious consideration was the downgrade of Greece’s credit rating, and the threat that other member countries of the euro-zone might receive similar treatment because of the increased risk of defaults. Bond issues in the zone reached the equivalent of $1350 billion in 2009, and are likely to exceed that figure this year, with Greece alone needing to sell $83 billion, and likely to try to rely on overseas investors for at least half the funds.
Article part two of three.
Shaw Capital Management Korea – Investment Innovation & Excellence. We provide the information; insight and expertise that you need to make the right investment choices. Shaw Capital Management based in Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.
Shaw Capital Management Korea February Newsletter: Article two of three – But a more serious immediate consideration for the markets has been the decision by some of the rating agencies to downgrade the credit rating of Greek government bonds, and to warn that other periphery member countries of the euro-zone have been placed on “credit watch” and might suffer the same fate. Investors have responded by widening the yield spreads between the bonds of member countries, and by pushing the overall level of yields higher. The markets appear to be expecting that the process will continue. The Fed appears to agree with this more optimistic view, arguing that economic activity is continuing to pick up, and that the deterioration in the labour market is abating. For weaknesses elsewhere.
Shaw Capital Management Korea February Newsletter: Article two of three – There is also a fear that the contraction that is occurring in banking lending, and in the money supply, may be leading to another credit crunch this year that could extend the economic slowdown. Bank loans to businesses were 1.9% lower in November 2009 than in same month in 2008, and M3 money supply was 0.2% lower, and has been shrinking now for several months. Since an expansion in banking lending was a major plank in the European Central Bank’s efforts to combat the recession, this latest evidence of a contraction is a major policy failure, and should be persuading the ECB to move very slowly in dismantling its emergency measures; but all the evidence suggests that it is preparing to act. The latest meeting of its governing council left short-term interest rates and overall monetary policy unchanged; but subsequently the bank chairman argued that some of the existing liquidity measures were no longer needed and would be gradually replaced. This was a disappointment for bond investors, not only because such action might be premature and extend the recession, but also because some of the funds that had been made available had been used to support government bond issues.
Shaw Capital Management Korea February Newsletter: Article two of three – However the more serious consideration was the downgrade of Greece’s credit rating, and the threat that other member countries of the euro-zone might receive similar treatment because of the increased risk of defaults. Bond issues in the zone reached the equivalent of $1350 billion in 2009, and are likely to exceed that figure this year, with Greece alone needing to sell $83 billion, and likely to try to rely on overseas investors for at least half the funds.
Article part two of three.
Shaw Capital Management Korea – Investment Innovation & Excellence. We provide the information; insight and expertise that you need to make the right investment choices. Shaw Capital Management based in Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.
Government bond Markets: Shaw Capital Management February Newsletter
Government bond markets have ended 2009 on a very disappointing note. A further improvement in sentiment about the prospects for the global economic recovery, and indications that some central banks might be preparing to introduce early “exit strategies” from the measures that had been introduced to counter the recession, have been important factors in producing a more cautious attitude amongst bond investors. But a further significant consideration towards year-end has been the fear of possible defaults on sovereign debts after the decision by Dubai World, a government-owned company, to seek a moratorium on the servicing of its debts, and the downgrade in the credit rating of Greece because of its deteriorating fiscal situation.
Shaw Capital Management Korea February Newsletter: There was always the risk that the funding requirements resulting from recent policies, and particularly from the measures to counter the latest recession, would prove to be a massive burden for the global bond markets, and this has now proved to be the case. The Dubai government appears to have been rescued by help from Abu Dhabi; but it is still not clear whether there will be help for Greece and other periphery countries of the euro-zone that are in difficulties, and doubts have also been expressed about countries outside the euro-zone, including the UK, if central banks do not implement “exit strategies” carefully, and credible plans to reduce the massive fiscal deficits are not introduced fairly quickly.
Shaw Capital Management Korea February Newsletter: There was always the risk that the funding requirements resulting from recent policies would prove to be a massive burden for the global bond markets.
These doubts have already led to a significant widening of yield spreads on bonds of member countries of the euro-zone, with Greek bond yields now more than 2.5% higher than German bond yields; and even 10-year yields on US bonds and UK gilts have risen to the 4% level as investors have reduced their exposure.
Shaw Capital Management Korea February Newsletter: Our position on the prospects for the bond markets remains unchanged. We still expect that the recovery in the global economy will only develop at a very slow pace, and that “exit strategies” will only be introduced very gradually. The background situation will therefore continue to provide some support for bond markets.
But the timescale for the implementation of “exit strategies” is shortening; and the massive fiscal deficits are already placing great strains on the markets. The fears of defaults on sovereign debt may well be an overreaction; we expect, for example, that the weaker members of the eurozone will receive support from the stronger members to prevent defaults; but higher bond yields appear unavoidable. Prospects for all the major bond markets are therefore very unattractive.
Shaw Capital Management Korea February Newsletter: The performance of the US economy remains a critical factor in assessing those prospects, and the latest evidence has become more positive. The growth rate in the third quarter of the year has been revised down again; but since then there has been a lower-than-expected fall in non-farm payrolls, and an improvement in consumer sentiment that is reflected in a reasonable level of retail sales in the run-up to Christmas. Weaknesses remain, especially in manufacturing, and new house sales fell sharply in November; but a growth rate around 2% is expected this year. The Fed appears to agree with this more optimistic view, arguing in the statement after the latest meeting of its Open Market Committee that economic activity is continuing to pick up, and that the deterioration in the labour market is abating; but it is remaining very cautious. Interest rates are likely to be at low levels “for an extended period”, and the quantitative easing programme has been maintained, although some of the emergency liquidity measures will be withdrawn. It is clearly anxious to avoid doing anything that might harm the economic recovery. This should continue to provide some support for the bond market, even though the Fed will no longer be buying Treasuries and other corporate bonds; but it does appear that this will not be enough to offset the effects of the massive fiscal deficit, which is expected to reach $1.5 trillion this year, and to remain high well into the future.
Shaw Capital Management Korea February Newsletter: Debt issuance rose to over $2 trillion in 2009 to finance this deficit, and to replace maturing bonds; and the latest decision to take advantage of the unexpected windfall from the repayment of bank bail-out funds that are no longer needed to provide new resources for job creation is a clear indication that there are no plans to take early action to reduce the deficit.
It is not surprising therefore that bond investors have been reducing their exposure to the market, and that the yield curve has continued to steepen. In the absence of any change in policy, this process is likely to continue, and push overall yield levels even higher.
Article one of three.
Shaw Capital Management Korea – Investment Innovation & Excellence. We provide the information; insight and expertise that you need to make the right investment choices. Shaw Capital Management based in Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.
Shaw Capital Management Korea February Newsletter: There was always the risk that the funding requirements resulting from recent policies, and particularly from the measures to counter the latest recession, would prove to be a massive burden for the global bond markets, and this has now proved to be the case. The Dubai government appears to have been rescued by help from Abu Dhabi; but it is still not clear whether there will be help for Greece and other periphery countries of the euro-zone that are in difficulties, and doubts have also been expressed about countries outside the euro-zone, including the UK, if central banks do not implement “exit strategies” carefully, and credible plans to reduce the massive fiscal deficits are not introduced fairly quickly.
Shaw Capital Management Korea February Newsletter: There was always the risk that the funding requirements resulting from recent policies would prove to be a massive burden for the global bond markets.
These doubts have already led to a significant widening of yield spreads on bonds of member countries of the euro-zone, with Greek bond yields now more than 2.5% higher than German bond yields; and even 10-year yields on US bonds and UK gilts have risen to the 4% level as investors have reduced their exposure.
Shaw Capital Management Korea February Newsletter: Our position on the prospects for the bond markets remains unchanged. We still expect that the recovery in the global economy will only develop at a very slow pace, and that “exit strategies” will only be introduced very gradually. The background situation will therefore continue to provide some support for bond markets.
But the timescale for the implementation of “exit strategies” is shortening; and the massive fiscal deficits are already placing great strains on the markets. The fears of defaults on sovereign debt may well be an overreaction; we expect, for example, that the weaker members of the eurozone will receive support from the stronger members to prevent defaults; but higher bond yields appear unavoidable. Prospects for all the major bond markets are therefore very unattractive.
Shaw Capital Management Korea February Newsletter: The performance of the US economy remains a critical factor in assessing those prospects, and the latest evidence has become more positive. The growth rate in the third quarter of the year has been revised down again; but since then there has been a lower-than-expected fall in non-farm payrolls, and an improvement in consumer sentiment that is reflected in a reasonable level of retail sales in the run-up to Christmas. Weaknesses remain, especially in manufacturing, and new house sales fell sharply in November; but a growth rate around 2% is expected this year. The Fed appears to agree with this more optimistic view, arguing in the statement after the latest meeting of its Open Market Committee that economic activity is continuing to pick up, and that the deterioration in the labour market is abating; but it is remaining very cautious. Interest rates are likely to be at low levels “for an extended period”, and the quantitative easing programme has been maintained, although some of the emergency liquidity measures will be withdrawn. It is clearly anxious to avoid doing anything that might harm the economic recovery. This should continue to provide some support for the bond market, even though the Fed will no longer be buying Treasuries and other corporate bonds; but it does appear that this will not be enough to offset the effects of the massive fiscal deficit, which is expected to reach $1.5 trillion this year, and to remain high well into the future.
Shaw Capital Management Korea February Newsletter: Debt issuance rose to over $2 trillion in 2009 to finance this deficit, and to replace maturing bonds; and the latest decision to take advantage of the unexpected windfall from the repayment of bank bail-out funds that are no longer needed to provide new resources for job creation is a clear indication that there are no plans to take early action to reduce the deficit.
It is not surprising therefore that bond investors have been reducing their exposure to the market, and that the yield curve has continued to steepen. In the absence of any change in policy, this process is likely to continue, and push overall yield levels even higher.
Article one of three.
Shaw Capital Management Korea – Investment Innovation & Excellence. We provide the information; insight and expertise that you need to make the right investment choices. Shaw Capital Management based in Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.
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