India's Stock Market Outlook

During its October 10th, 2015 Asia Form, Barron's Isabella Zhong interviews Invesco's Paul Chan on what's ahead for India stocks, interest rates and the spending power of India's growing number of consumers.

Must One Be Bearish About China's Stocks and the Yuan?

Yuan Devaluation? Think Again. 10/10/2015 12:05AM Isabella Zhong asks Gavekal's Louis Gave talks about China's correction, what's ahead for the yuan, and why he likes Chinese airport stocks in this October 10th, 2015 video:

Chian's deceleration: What Should the CFO Worry about?

The Chinese economy grew averaged double digit growth for two decades. Recently that has slowed to 7-8 percent.The Conference Board has identified a set of structural factors that indicate a long “soft fall” to 3 to 4 percent growth. Ethan Cramer-Flood explains what this implies for pricing, credit, and compliance.

The President Sends the IRS Into Battle against Tax Inversions

As the CEO of Hewlett-Packard, Carly Fiorina built a business powerhouse.  Unfortunately, H-P then dumped her.  This led to its soap opera era (2005-11) of revolving CEOs.  Later she ran for the U.S. Senate in California unsuccessfully.  Meg Whitman, formerly the star of eBay, stepped in as CEO from her position as chair on September 22nd, 2011 and has been trying to unrock the ship.

FoxBusiness interviewed Fiorina today on President Obama’s action on Syria, tax inversions, America's economic malaise, and fighting the spread of Ebola. Her remarks on the divide between Main Street and Wall street is spot on!


Deals that go by the ungainly name of "tax inversions" enable a company to reincorporate in a country with a a less onerous corporate tax burden.

John D. McKinnon and Damian Paletta reported in this morning's Wall Street Journal that the U.S. Treasury Department issued new regulations and, specifically, "Treasury officials took action under five sections of the U.S. tax code to make inversions harder and less profitable, removing some of the appeal that has made the transactions more common in recent years, particularly in the pharmaceutical industry."  McKinnon and Paletta further wrote, "The Treasury rules will make it harder for companies that invert to use cash accumulating abroad—a big draw in recent deals. In addition, the government has made it more difficult to complete these overseas mergers."

Money Beat explores this issue with McKinnon in this video:

ANZ: We Are Still Bullish on Natural Resoures

According to the conventional wisdom, if China slows down, Australia will catch a cold.  A natural resources boom has fueled a twenty year expansion in Australia's economy. Does the slowdown in the BRICs, and particularly the "C" (China), mean the end of this Aussie expansion? No says Mike Smith. The chief executive of ANZ discusses his country's and his bank's prospects and plans with FT's Jeremy Grant in this 5:19 minute video.  But Mr Smith does not see everything as rosy in the Lucky Country: he argues the wider Australian economy needs modernization:

Is it Time to Buy COCOs?

Is there value in European banks?

Oct 1, 2013 : Are European banks becoming attractive again? Philippe Bodereau, managing director at Pimco, explains to John Authers where to avoid, and suggests that the UK and Switzerland may offer the most promising returns.

The Yen's Down; the Nikkei's Up

The Nikkei 225 jumped nearly 4 per cent on Wednesday, Since the financial crisis, thaat is its tenth best day since the financial crisis. 

In this four minute, nine second video, the FT's investment editor, James Mackintosh, attributes this primarily to the weakening of the yen. 

Careful: the return recently in $s is not the same as that in ¥s.

 

Stuttering Santander

In this FT video (2m 41sec), Stuart Kirk and Oliver Ralph discuss Spain's premier bank, Santander.  Globalizing itself with major invasion into Latin America primarily, it has gone all out for growth over the past decade.  This diversification out of its home market has proven wise.  Spain is doing badly with 20% unemployment.  The path to earnings growth has not been a Yellow BRIC Walk. Its emerging market hope, Brazil, is falling short of expectations. 

 

 

Australia Going the Way of Spain? That's a Bit of an exaggeration Mate!

Billionaire Gina Rinehart, Asia’s richest woman, said Australia risked facing a debt crisis similar to European nations because of overspending and a loss of competitiveness.  Bloomberg reports:

Michäla Rehl took this picture of Bavaria's  Finance Minister Markus Söder for Reuters February 10, 2012.  Herr Söder was in Veitshöchheim (near Würzburg) for the TV show "Fastnacht in Franken."  Fastnacht is one of the common names for Shrove Tuesday ("Fat Tuesday.")  Fat Tuesday is fat because we fill up before Lent begins on Ash Wednesday.  It is called Fasching in Bavaria, carnival in much of the world, and marti gras (French for "Fat Tuesday") in places like New Orleans.  Carnaval accounts for 70% of Brazil's tourism and 80% of its beer consumption: not bad for a week's "work." This celebration of the fun before the fast can create enough sin to require at least forty days of repentance.

The "Hast Du mal nen Euro?" translates roughly into "Would you have a Euro already?" or "Spare a Euro?"  I wonder whether this is Bayerisch or Kiezdeutsch.   The Economist describes Kiezdeutsch as "the argot of inner-city teenagers" and a Doktor Heike Wiese, linguist at the University of Potsdam, has argued it to be a distinct German dialect.  Purists are outraged.

Might Herr Söder be making fun of the Greeks asking for a handout? Why such Teutonic skepticism?  Those suspicious Germans figure the Greeks want Fasching without fasting, i.e., carnival without Lent.  Well who wouldn't?  The Germans read their Homer and know what happened to the Trojans when they believed the Greeks.

Take Your Losses Upfront: Banco Santander Takes a 3.1 Billion Euro Hit

Profits Tumble at Banco Santander 1/31/201
Spain's largest bank, Banco Santander, announced that its profits were down by 98% in the fourth quarter of last year. It is catching a jump on regulators by writing its losses down earlier.

In this video, Joe Ortiz of DJ Banking Intelligence tell us why.

Act II of the Olympus Drama

From the Wall Street Journal, Olympus defends its deals, but the Chairman resigns and the Euro Zone Looks to Asia for bail out money. 

In this Asia Today video, we find that Japanese camera maker, Olympus, stands by four controversial acquisitions even as Chairman Tsuyoshi Kikukawa resigns.  The Journal's Isabella Steger and Mariko Sanchanta also discuss how the euro-zone leaders now look to Asia for money (we want your money but not your ethics):

4 minutes and 51 seconds, 10/27/2011

Act I

The first act of this drama was enacted a week ago when Olympus fired its CEO, Michael Woodford, who, in turn,  alerted the UK authorities of his findings about payments made by the Japanese camera maker in connection with the acquisitions. Mr. Woodford had hired an outside auditor to do a forensic investigation. In this October 18th interview, Mr. Woodford tells the FT's Louise Lucas why he has taken his concerns about the deal-making at his previous employer to the UK Serious Fraud Office.  Click through to view the FT video which is just over 10 minutes.

The Recovery Is On! Fair Dinkum!

By MarketWatch's Myra P. Saefong reports Australia's gross domestic product is up in the first quarter and in comparison with last year's first quarter.

She writes, "The nation's GDP expanded by seasonally adjusted 0.4% in the first quarter, both in comparison with the same quarter a year ago and with the fourth quarter," citing the Australian Bureau of Statistics.

The All Ordinaries gained 62 points going over 4,000 for the first time since November. Hallelujah!

The Aussie dollar is also up. Ms. Saefong reports "The Australian dollar also strengthened, with one Australian dollar buying 82.26 U.S. cents, up from the previous close of 82.07 U.S. cents."

In the fourth-quarter, Australia's GDP dropped 0.6%, the first drop in eight years. Apparently the Aussie national income accountants do not report growth rates in seasonally adjusted annual rates annualized. It makes the numbers less dramatic.

"The bureau said that growth on the expenditure side over the past four quarters was driven by household spending and by exports, offset by a fall in inventories."

Disclosure: your correspondent has shares in an Aussie closed end fund.

What does it mean?

Australia's economy is tied to Asia. When the Chinese dragon stokes up its furnace, Australia and Brazil feed the beast the inputs that fuel its exuberance. Thus Australia's economic growth and the Aussie dollar are leading indicators of the globalized economy.


This implies that the world economy is recovering. Further dramatic confirmation can be found in the Baltic Dry Index, an indicator of shipping prices. As trade picks up, it costs more to hire a ship to transport it. The index has increased four-fold since December returning to the boom levels of 2004-6 and soaring toward the bubble levels of mid-2008.