Kyle Bass hopes he is wrong, and so may everyone else, as the danger predicted by the founder of Dallas-based Hayman Capital is nothing less than a full blown financial crisis in the world’s third-largest economy, Japan.
Tuesday, May 21, 2013
Monday, May 20, 2013
Thanks to Serge for passing this along.
Related previous post: The Manhattan Project to End Fad Diets – By Tim Ferriss
Quote from Johann Peter Rupert on Compagnie Financière Richemont’s May 16th Earnings Call, in regards to investing in their own people and brands versus going out an acquiring new ones:
“A return on investment is so much higher by backing our own colleagues. I mean, it's multiple than buying another thing. And we have a saying at home that you only find out when you climb over that the reason why it's greener is because of all the cow dung that's hidden in the grass. And as soon as you start stepping in all of this stuff, then you wonder why did I climb across the fence? So whenever we buy something, we find that, we'd never thought of this, but it's there. And then it takes the most valuable component of these 3 guys on the right. It takes their time and you start wasting time on things that are not going to return -- give you the same returns, as if you spend more time on Cartier, Van Cleef and Piaget.”
I predicted in Endgame that the latter half of this decade would see the most serious currency wars since the end of WWII. The opening shots have been fired. This will not be just a continuation of the currency skirmishes we have seen in recent decades. No, the real artillery is being brought to the front. And as in any war, it is best not to have your valuable personal possessions anywhere near the field of conflict. But which way to run? Who are the good guys to run to? Are there any good guys at all? Maybe the better question to ask is, who will win? Will there be any winners? Do you really want to look like Rocky Balboa after his first winning fight?
Even in the event that quantitative easing is sufficient to override hostile market conditions in the near-term, it is worth noting that long-term outcomes are likely to be unaffected. We presently estimate a prospective 10-year total return on the S&P 500 Index of just 2.9% annually (nominal). See Investment, Speculation, Valuation and Tinker Bell for the general methodology here, which has a correlation of nearly 90% with subsequent 10-year market returns – about twice the correlation and nearly four times the explanatory power as the “Fed Model” and naïve estimates of the “equity risk premium” based on forward operating earnings.
Friday, May 17, 2013
Former Fed Chairman Paul Volcker warned of the risks of an asset bubble forming given the incredible amount of liquidity the Bernanke Fed has injected into the market, even though he said banks are substantially stronger than before the crisis on Wednesday. Volcker also indicated that in the U.S. government makes up about 35% of GDP and that the financing of the residential mortgage market by the state has led to a dysfunctional financial system.