Lighthouse Investment Management

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Month: November 2010

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  • The mystery of the equity investor

    Alexander Gloy

    Performance of international stock market indices in local currencies. Source: StockCharts.com Looking at the performance of international stock markets over the last 200 days, the German Dax index stands out. But why? Sure, Germany is an island of prosperity amongst the European turmoil. Low unemployment, strong economic growth and a stable political system help. You…

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  • Ben’s Big Bluff

    Alexander Gloy

    For the last weeks I tried to figure out why “Ben” (Bernanke, Chairman of the Federal Reserve) would go for “QE2” (Quantitative Easing – part II) when “QE1” was not very effective in terms of stimulating the economy. It did not make much sense. My conclusion is that the Fed has run out of options,…

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  • LIMTI – update

    Alexander Gloy

    Update on the Lighthouse Investment Management Timing Index (“LIMTI”): LIMTI (Lighthouse Investment Management Timing Index) as of 11/19/2010 The LIMTI is an experimental project. The index is calculated daily on the basis of various statistical readings on the US stock market (mostly S&P 500 Index) to gauge whether the market is overbought (red shaded area)…

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  • Meeting of EU finance ministers a joke

    Alexander Gloy

    Nothing. That is the outcome of EU finance ministers in Brussels on November 16. The “Statement of the Eurogroup on Ireland” couldn’t have been less void of content (“The Eurogroup welcomes the significant efforts…”). Ireland resisted a bail-out package which officials from the ECB, Spain and Portugal had been pressing for (the contagion effect on…

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  • The Austrian bombshell

    Alexander Gloy

    Austrian Finance Minister Josef Proell said the December tranche of Austria’s contribution (EUR 190m) will only be paid out if Greece can show that it has raised the amount of money it pledged to take in through taxes. Proell told reporters Tuesday that “at this stage that target does not appear to have been met.”…

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  • The Irish Ultimatum

    Alexander Gloy

    Irish 10yr yields continued to drop (7.96%) on rumors the country will be forced to accept a bail-out. Other peripheral Euro-zone members, like Portugal, have suffered under contagion effects and want the Irish to end the crisis. Irish 10-year government bond yield. Source: Bloomberg.com According to The Guardian, Portugal, Spain and the ECB have given…

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  • Ireland: No news is bad news

    Alexander Gloy

    November 15, Monday morning. Asian markets open. And no word regarding a bail-out for Ireland. According to the FT (“Concern grows as Dublin spurns help”) Senior European officials held “informal” discussions late into the night to discuss whether Ireland needed an aid package. The meeting broke up without any action to be taken. Apparently German…

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  • Euro-zone: How not to manage a crisis

    Alexander Gloy

    Germany’s handling of the Euro crisis has been anything but stellar. It all begins in October 2009, when the newly elected Greek government reveals the 2009 budget deficit to be 12.5% of GDP, far above the 3.7% predicted only 5 months earlier. Markets barely notice. On December 8, rating agency Fitch strips Greece off its…

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  • The Fed has run out of options – is it bluffing?

    Alexander Gloy

    Tuesday we have US mid-term elections, and Tuesday-Wednesday the FOMC (Federal Open Market Committee) meeting. Policy announcement on Wednesday 2:15 EST. So far, the Fed has increased its balance sheet by $1,500bn (from $750bn to $2,300bn) by purchasing various assets (MBS – mortgage backed securities, GSE debt – government sponsored entities and treasury debt). Federal…

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  • Irish, Portuguese government bond yields up sharply – the end of moral hazard?

    Alexander Gloy

    Irish 10 year government bond yields on Monday reached a new high of 7.1% (compared to a May-crisis peak of below 6%). Portuguese yields shot up to 6.10% (+0.15). All this on the back of the Franco-German proposal to “allow” bondholders to suffer losses in a future debt crisis (read: debt restructuring a.k.a. default). Suddenly…

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