Emerging Markets: A Career-Killing Sequel?

SATURDAY, JULY 6, 2013

A Career-Killing Sequel?

By BEN LEVISOHN | MORE ARTICLES BY AUTHOR

Emerging markets stocks were on a tear—until they stopped. This year has been the Hudson Hawk to what had been akin to the Die Hard franchise. The good news is that stocks are looking cheap; the bad is that they could still get cheaper.

After the blockbuster success of the Die Hard franchise, moviegoers thought they knew what they were getting from a new Bruce Willis flick: action, adventure and a wisecracking hero. In 1991, however, they got Hudson Hawk, a movie about a show-tune singing cat burglar robbing the Vatican. The film bombed. Investors in the emerging markets can relate. For years, they’ve bought into the narrative that the developing world’s faster economic growth, improving credit quality, and increased stability would lead to supersized returns. And for a while, they did. Emerging markets stocks rose 12% annually for the ten years ended Dec. 31, 2012. Read more of this post

One Born Every Minute; As exchange-traded funds pour into the market, more of them are of dubious value. Consider the Bitcoin ETF

| SATURDAY, JULY 6, 2013

One Born Every Minute

By RANDALL W. FORSYTH | MORE ARTICLES BY AUTHOR

As exchange-traded funds pour into the market, more of them are of dubious value. Consider the Bitcoin ETF. “There’s an app for that” is the mantra behind the boom in smartphones, turning them from things used just to make calls and send texts, to devices that put mobile computing in the palm of your hand or your pocket (well, almost, as screens steadily expand in size). Financial markets have seen a parallel phenomenon: “There’s an ETF for that,” for all manner of things. And, as with smartphone apps, a few exchange-traded funds dominate the market, alongside thousands of dubious offerings. Read more of this post

Proposed EU financial transaction tax will hit FX users hard

EU financial transaction tax will hit FX users hard: report

7:03pm EDT

By Sebastian Sadr-Salek

LONDON (Reuters) – A proposed EU financial transaction tax (FTT) could discourage use of the foreign exchange (FX) market by typically raising costs of doing business by up to 700 percent, a report said on Monday. The report by the Global Financial Markets Association (GFMA) said that due to the double-sided nature of the proposed tax, transaction costs for pension funds would increase by around 1,500 percent. And they could reach as high as 4,700 percent for some FX products such as those that involve short-dated swaps with a very low transaction cost. Read more of this post

Crowded ETF Exit Proving Costly as Bonds Trail

Crowded ETF Exit Proving Costly as Bonds Trail: Credit Markets

Investors who sought exchange-traded funds as a faster way to trade corporate bonds are finding that they can be as expensive to trade as the underlying debt.

As trading in the three-biggest credit ETFs surged to unprecedented levels last month amid the market’s biggest losses since 2008, the funds’ shares dropped as much as 1.1 percentage points more than the net value of the less-traded securities they hold. The two largest high-yield bond ETFs have lost about 6 percent since reaching a five-year high May 8. That’s about 2 percentage points more than the loss for the Bank of America Merrill Lynch U.S. High Yield Index. Read more of this post

Losing $317 Billion Makes Treasuries Safer for Mizuho to HSBC

Losing $317 Billion Makes Treasuries Safer for Mizuho to HSBC

The biggest investors in Asia and Europe are keeping their money in Treasuries even after the steepest two-month loss for the securities erased $317 billion of market value.

Mizuho Asset Management Co., which oversees $32 billion, added Treasuries due in 10 years or longer to its holdings in the past month. HSBC Private Bank, with $480 billion in assets, bought U.S. notes when 10-year yields rose to 2.5 percent. Deutsche Asset & Wealth Management, which manages about $1.3 trillion, is holding debt maturing in less than four years, betting American interest rates will remain subdued. Read more of this post

For Europe’s Debt Collectors, More Work Isn’t Paying Off

July 7, 2013, 6:52 p.m. ET

For Europe’s Debt Collectors, More Work Isn’t Paying Off

MANUELA MESCO

MILAN—In Europe, bad debts are soaring, the economy is contracting and business owners are flocking to debt-collection agencies to chase down deadbeat clients. Yet the boom in bad debt is bringing surprisingly little joy to the Continent’s repo men. Clogged courts, tough debt-collection rules and tapped-out debtors are making their jobs harder—and less profitable. Consider Marco Alborghetti, a Rome-based debt collector. He recently resolved a case involving a €10,000 ($12,825) debt owed to a client, the owner of a leasing company. It took 10 years to pursue the debtor through Italian courts. While the client recovered the entire amount, Mr. Alborghetti says the hassle, as well as the cost of hiring lawyers to pursue the case, hardly made the job worth it. “It’s just uneconomical for everyone involved,” he said. Read more of this post

Record numbers of exchange traded funds have closed so far this year, underscoring the difficulty many of the investment vehicles face in gaining traction among investors, despite the industry’s overall boom in popularity in recent years

July 7, 2013 2:11 pm

ETFs close in record numbers despite industry boom

By Arash Massoudi and Tracy Alloway in New York

Record numbers of exchange traded funds have closed so far this year, underscoring the difficulty many of the investment vehicles face in gaining traction among investors, despite the industry’s overall boom in popularity in recent years. About 117 ETFs have shuttered in the first half of this year, according to data collected by independent research firm ETFGI, easily outpacing closures in the same period in previous years. Out of 4,849 exchange traded products on the market, more than 60 per cent have less than $100m in assets, suggesting that more closures could take place in the coming months. Read more of this post

Billionaires and their supercars add to Singapore inequality concerns

July 7, 2013 3:10 pm

Billionaires and their supercars add to Singapore inequality concerns

By Jeremy Grant in Singapore

At a showroom in Singapore, a small crowd of McLaren enthusiasts were gathering for the unveiling of the latest “supercar” made by the British carmaker, a petrol-electric hybrid with a top speed of 350km an hour. Never mind that the vehicle only comes in left-hand drive, so can not legally be driven on Singapore’s crowded right-hand drive roads. Anyone interested in buying would be looking at the P1 as an investment, even if they could get their hands on one – for a cool S$1.5m ($1.2m). McLaren has only made 375 of the cars and has yet to allocate what few are left unsold to the Singapore market. None of this has put off Chor King Ang, senior executive at Kwang Sia, a Singapore-based fashion retailer that sells luxury labels such as Hugo Boss and DSquared2 in stores across southeast Asia. “I’ve long been a fan of their Formula One racing team,” he said, adding that he is already an owner of an earlier McLaren model. In the past year, the trappings of wealth have been increasingly visible in Singapore as the number of sports cars roaring down its streets has increased. Last month saw the first sale in the island-nation of a Koenigsegg “hypercar” for $5.3m. Read more of this post

Rising rates to spur litany of capital losses

July 7, 2013 5:54 pm

Rising rates to spur litany of capital losses

By Tracy Alloway and Tom Braithwaite in New York

US banks have watched billions of dollars of paper profits on their securities portfolios wiped out by rising market interest rates, erasing huge gains made during the prolonged run of increasing bond prices since the financial crisis and ensuring that erosions of capital will be a feature of the coming bank earnings season.

Data released by the Federal Reserve on Friday showed unrealised gains in these portfolios had plummeted from more than $40bn at the beginning of the year to about $6bn, with the most precipitous falls over the past few weeks amid mounting market concern about the “tapering” of the central bank’s bond-buying programme. Read more of this post

Mexico’s freight business has transformed into a principal artery for the top export industries of Latin America’s second-largest economy

Trains, planes and automobiles: Mexico rail freight comes of age

Fri, Jul 5 2013

By Gabriel Stargardter

MEXICO CITY (Reuters) – Slowly, like the trains that crawl past towering avenues of containers here at the country’s largest rail hub, Mexico’s freight business has transformed into a principal artery for the top export industries of Latin America’s second-largest economy. A rail network that once shunted Mexico’s mustachioed revolutionaries to battles across the country was gasping for air by the late 1990s as grinding inefficiency and rising costs forced the government into privatization. Read more of this post

Quebec rail disaster shines critical light on oil-by-rail boom

Quebec rail disaster shines critical light on oil-by-rail boom

6:59pm EDT

By Scott Haggett, Dave Sherwood and Cezary Podkul

(Reuters) – The deadly train derailment in Quebec this weekend is set to bring intense scrutiny to the dramatic growth in North America of shipping crude oil by rail, a century-old practice unexpectedly revived by the surge in shale oil production. At least five people were killed, and another 40 are missing, after a train carrying 73 tank cars of North Dakota crude rolled driverless down a hill into the heart of Lac-Megantic, Quebec, where it derailed and exploded, leveling the town center. It was the latest and most deadly in a series of high-profile accidents involving crude oil shipments on North America’s rail network. Oil by rail – at least until now – has widely been expected to continue growing as shale oil output races ahead far faster than new pipelines can be built. Read more of this post

Rice Stocks Reach 12-Year High as Food Costs Drop

Rice Stocks Reach 12-Year High as Food Costs Drop: Commodities

Rice stockpiles are expanding to the highest level in 12 years as production increases to a record, adding to a worldwide surge in agricultural output that is poised to diminish the $1.1 trillion global food-import bill.

Reserves will gain for a seventh year, rising 2.7 percent to 108.6 million metric tons in 2013-2014, the U.S. Department of Agriculture estimates. Output will climb 1.9 percent to 479.2 million tons, exceeding demand by 2.8 million tons. Prices for 5-percent broken Thai white rice, an Asian benchmark, will drop 13 percent to $455 a ton by December, according to the median of eight trader and analyst estimates compiled by Bloomberg. Read more of this post

Jim Rogers Correctly Predicted Gold Would Fall To $1200, And Now He Thinks It Could Go As Low As $900

Jim Rogers Correctly Predicted Gold Would Fall To $1200, And Now He Thinks It Could Go As Low As $900

MAMTA BADKAR JUL. 6, 2013, 6:44 AM 8,375 33

The price of gold peaked at just over $1,900 per ounce in the fall of 2011. And it was right around that time that commodities guru Jim Rogers began warning investors that the yellow metal could hit a low of $1,200 before the sell-off was over. He was right. Gold prices entered a bear market (down 20% from its high) in April. And on June 27, they touched $1,200. In a phone interview this week, Rogers explained to us how he arrived at the $1,200 figure. He also offers his outlook for gold as it continues its complicated bottoming process. Read more of this post