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  • Road Map to Ruin

    Alexander Gloy

      Budget deficits in “good” times, build-up of government debt Few countries’ (GER, NED) exports lead to trade deficits for others (GR, ESP, POR) Costly bank bail-outs and fiscal “stimulus” Monetary stimulus (0% interest rates); useless Rating agencies finally wake up (downgrades) PIIGS unable to sell more debt as yields rise IMF/EU (read: taxpayers) step…

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  • Greece: Two Bail-outs and a Funeral

    Alexander Gloy

    Here we go again. Another bail-out. [Sigh.] I’ll try to make this as entertaining and easily readable as possible – but first the details of the bail-out agreed on July 21st: Fresh EUR 109bn EFSF/IMF loans until mid-2014 Private sector (read: banks) participation of EUR 37bn EUR 12.6bn from bond repurchases at below par (100%)…

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  • Gold and stocks love inflation, right?

    Alexander Gloy

    In theory, stock prices react positively to inflation. You can explain that with the balance sheet effect: while debt remains same in nominal terms, assets gain in value (with the difference showing up in the equity position via net profit). Gold should also benefit from inflation as the supply of precious metals is limited –…

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  • Sector momentum table 2011-06-17

    Alexander Gloy

    Each week we test major asset classes for the strength of their momentum. We check: is current price above 20-day moving average? is current price above 50-day moving average? is 20-day moving average above the 50-day moving average? does the 20-day moving average have a positive slope (i.e. is it rising)? does the 50-day moving…

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  • Asset momentum table 2011-06-17

    Alexander Gloy

    Each week we test major asset classes for the strength of their momentum. We check: is current price above 20-day moving average? is current price above 50-day moving average? is 20-day moving average above the 50-day moving average? does the 20-day moving average have a positive slope (i.e. is it rising)? does the 50-day moving…

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  • ETF: Beware of systemic risk

    Alexander Gloy

    This is a topic I should have paid more attention to earlier: systemic risk in ETFs (Exchange Traded Funds). Here are my thoughts in a few bullet points: ETFs are a great idea. They allow diversification at minimal cost to the investor (especially compared to mutual funds). Unfortunately, the financial  industry is in the process…

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  • Is this a buying opportunity?

    Alexander Gloy

    The earthquake and nuclear situation in Japan has triggered a sell-off in the equity markets. Is this a buying opportunity? I say “no”. Two reasons: 1. The Japanese situation is likely to trigger many “unintended” consequences we cannot anticipate right now (for example a strong Yen will hurt profits of Japanese exporters, hence depress their…

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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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  • 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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  • 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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