Lighthouse Investment Management

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Month: October 2010

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  • Trading olives and feta cheese for submarines is a losing proposition

    Alexander Gloy

    Greek 10-year government bond yields, after having graced 8.73% merely a good week ago, are back with a vengeance (9.67%). Where is the insatiable demand for Greek bonds from China? On October 22, Eurostat published revised Euro zone government deficit and debt figures for 2009. One country was missing – Greece: “Eurostat is not publishing…

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  • Why the Fed is fighting deflation tooth and nail

    Alexander Gloy

    Economics class is in session! Let’s have a look on the impact of inflation and deflation on companies. We are focusing on the balance sheet only: Impact of inflation and deflation on balance sheets. Source: Lighthouse Investment Management Inflation means prices go up, so the value of the asset side of the balance sheet increases. Liabilities remain the…

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  • Portfolio managers asleep at the wheel – again?

    Alexander Gloy

    What would you do if you expected a stock market decline, but had to be invested in stocks no matter what (i.e. if you are a fund manager of a mutual fund – you can’t have more than 5% in cash)? You would shift your portfolio out of cyclical (sensitive to economic cycles, i.e. makers…

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  • Presenting the LIMTI

    Alexander Gloy

    Presenting the LIMTI  (Lighthouse Investment Management Timing Index) Apart from fundamental considerations markets move in waves (prevailing bearishness or bullishness). As supply is often constrained (number of shares, bonds, currencies, gold etc) the change in investor sentiment has to happen via the price. Traditional sentiment polls might be misleading, as many portfolio managers are constrained…

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  • Bank of America under pressure

    Alexander Gloy

    Will Bank of America (BAC) get into difficulties because of a) legal problems to foreclose on delinquent homeowners and b) being forced to repurchase soured mortgage-backed securities? A mortgage is a publicly registered lien on the house. The attached mortgage note is a debt instrument that can be, like a check, endorsed to others. This…

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  • Gold takes a breather – US Mint to sell some Eagles

    Alexander Gloy

    First serious setback in the gold price since quite some time (from a record-high $1,363 per ounce to $1,333 within a few hours): Gold price ($/oz) intraday 2010-10-07. Souce: DailyFX.com Coincidently, AngloGold Ashanti announced it has completed the unwinding of its hedge book (gold mining companies used to sell gold forward at fixed prices to…

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  • Chinese PM Wen bathes in 290 tonnes of olive oil while buying Greek bonds

    Alexander Gloy

    My favorite pinata (http://www.youtube.com/watch?v=wi3semJPQzk), Greece, has received some help from China. On a visit to Greece (first by a Chinese Prime Minister in 24 years), Wen said China had bought some Greek government bonds and would do so again in the future. This has helped bring down 10-year Greek government bond yields below 10% for…

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  • Ireland might be downgraded again; Euro strength hurts

    Alexander Gloy

    Moody’s warned it may cut Ireland’s credit rating again as the country has to foot a huge bill from bailing out its banks. For now, the recent rise in Irish government bond yields seems to have been halted: 10 year Irish government bond yield. Source: Bloomberg.com As the house of cards (Euro zone) is wobbling…

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  • In God we trust

    Alexander Gloy

    Sometimes I get accused of having “religious beliefs” in gold. Why is gold so valuable – because it’s rare, and expensive to extract from earth (ca $450 per ounce). However, it is impossible to calculate a “fair” price. I am the first one to admit that gold has no earnings, no dividend yield. You might…

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