Finance

• The Global Economy: What Next?

  4XP foresees much on the financial front of 2011. The previous financial year really did witness a lot of ground-breaking events from the global economy. Oil prices rose from right under the eyes of traders, and currently threatens a global recession if they rise further past $100 a barrel. And what about the euro? The single currency seemed so promising and immune to the global economic crisis that we witnessed in recent years. This all came to a climax with the Greek and Irish debt crises in late 2010. The US Federal Reserve under Ben Bernanke has to top this…

• U.S. Market’s Remarkable Resilience!

  The U.S. stock market’s continuing strength in the face of so many global problems is truly remarkable - and has been correct so far. Meanwhile, the stock markets of three of the seven largest economies of the world rolled over to the downside last November. The markets of China, India, and Brazil are down an average of 15% since their peaks in November, and are mostly making new lows almost daily. They are three of the four so-called ‘BRIC’ countries (Brazil, Russia, India, and China) that were leading the way in the new bull market that began off the March,…

• Bought out by the Chinese: A Look at Chinese Takeovers

  A decade ago China urged its companies to expand overseas under the slogan “go out”. Now it is finally happening -- and with great speed. A few years ago two executives of an international oil company were working late in its otherwise deserted office in England. A stunning young Chinese woman arrived at reception. “She was very attractive, decked out in Gucci,” one of them says. She delivered a letter from Sinopec, one of China’s giant, state-controlled energy firms, proposing a multibillion-dollar takeover. The executive adds, more than a little wistfully, that she then disappeared into the night in a…

• The Coming Takeover Wars

  The spate of takeover bids we have witnessed recently, the attempted BHP Billiton (BHP)-Potash (POT) deal, the Sanofi Aventis (SNY)-Genzyme (GENZ) deal, and Intel’s (INTC) acquisition of Infineon Technologies (IFX), is telling the rest of us reams about the broader market. Virtually all of the recent bids have been made for cash. That means that the acquiring companies believe that both their own and their target’s share prices are historically cheap. That may be debatable, depending on whether you think the long term US GDP growth rate is 2%, or is going back to the torrid 3.9% we saw in…

• Morgan Stanley’s Chief Strategist Talks, Oil, Gold and Bailouts

  David Darst, Managing Director and Chief Investment Strategist of Morgan Stanley spoke at the Harbor Investment Conference yesterday and he laid out a few investment ideas. He said that gold is overbought here, and showed a chart to see its parabolic run over the past decade or so. He said it could shoot higher in the short run, but it would ultimately plunge, due to it being overbought. Darst went on to say that the market is fighting the central banks, and the markets are leading the central banks, not the other way around, which is the reason for the…

• Reading the Nonfarm Payroll Tea Leaves

  Lifetime followers of the monthly nonfarm payroll report were more than a little amused by the Friday numbers, which could not have been more contradictory, conflicting, and confusing. The headline figure showed a gain of a paltry 36,000, yet the unemployment rate plunged 0.6% to 9.0%, one of the sharpest drops on record. In fact, the unemployment rate has fallen nearly 1% in two months, one of the sharpest drops on record. Sifting through the tea leaves, these numbers reveal far more than meets the eye. Here are the high points: *The unemployment rate dropped sharply because people are giving…

• Who Says Hedge Funds Aren’t Adding Value?

  According to my old friend, Rick Sopher, chairman of LCH Investments in London, the top ten hedge funds have earned $153 billion for their investors since inception. John Paulson’s fund alone, which made an absolute killing by shorting subprime mortgage debt instruments going into the housing crisis, came in tops with $26.4 billion in profits. Rick, who runs his business from an elegant flat on posh Eaton Square, compiled the list after a comprehensive survey of the still operating 7,000 hedge funds worldwide. It is dominated by marquee names like Steve Cohen’s SAC Capital, Bruce Kovner’s Caxton, and Louise Bacon’s…

• A Look At Oil Rich Venezuela’s Shrinking Economy

  In booming South America, oil-rich Venezuela is the exception: the continent's only shrinking economy in 2010. Officials are rationing hard currency. Government takeovers of private businesses are increasing. One prominent financial analyst recently had just two words of advice for investors here: “Run away.” Many middle-class and wealthy Venezuelans have done exactly that, creating a slow-burning exodus of scientists, doctors, entrepreneurs and engineers. But wander into the bazaar in the shadow of Santa Teresa Basilica in this city’s old center, and the opposite seems to be happening as well. Merchants murmur in Arabic, Urdu and Hindi. Haitians pushing ice cream…

• Be Careful - It’s Not Easy to Get Rich Quick!

  Over the last decade investors and home-owners experienced a series of brutal beatings in what was historically a very short period of time. Many investors took heavy losses in the 2000-2002 bear market when even the blue chip S&P 500 lost 50% of its value. Many then got caught up in the housing bubble, maxing out mortgages that were unsafe unless home prices kept rising at a record pace. They lost sizable amounts when instead the housing bubble burst and home prices plunged. In too many cases they lost their homes as well. No sooner had the stock market recovered…

• Bernanke's Response To Commodity Price Inflation Accusation

  Bernanke responds today to the accusation that the commodity price boom is being caused by U.S. monetary policy: Supply and demand abroad for commodities, not U.S. monetary policy, are causing higher food and energy prices rattling much of the world, Federal Reserve Chairman Ben Bernanke said Thursday.  “The most important development globally is that the world is growing more quickly, particularly in emerging markets,” Bernanke said in response to a question after his speech at the National Press Club...“I think it’s entirely unfair to attribute excess demand in emerging markets to U.S. monetary policy,” Bernanke said. Those nations can use…