Overheard In A Gold Vault In Singapore: “We Need Additional Capacity”, China’s Appetite Is “Insatiable”

Overheard In A Gold Vault In Singapore: “We Need Additional Capacity”, China’s Appetite Is “Insatiable”

Tyler Durden on 01/28/2014 15:21 -0500

Yesterday we covered the supply side of the gold market from the perspective of global mints, which were kind enough to advise that they “can’t meet the demand, even if we work overtime.” Today, courtesy of Bloomberg, we take a closer look at the demand aspect of the physical gold market, which as most know by now can be described with just one word: China. Read more of this post

Turkey tightens: implications of its aggressive rate rise

January 29, 2014 9:54 am

Turkey tightens: implications of its aggressive rate rise

By Daniel Dombey in Istanbul

In a moment of drama at midnight on Tuesday, Turkey’s central bank performed a volte face, increasing interest rates across the board where it had previously been reluctant to raise them. It more than doubled one key rate.

It was a striking move, given the political and financial backdrop: prime minister Recep Tayyip Erdogan has long made clear his opposition to high interest rates, while investors had become worried about Turkey and other emerging markets. Read more of this post

The rich stay rich while the poor struggle; Thanks to globalisation the centres of major cities now appear similar

January 28, 2014 4:59 pm

The world’s rich stay rich while the poor struggle to prosper

By John Kay

Thanks to globalisation the centres of major cities now appear similar

Dear Bill Gates,

We have never met, but your annual letter (coinciding with your Davos speech) seemed to be addressed directly to me. Your aim is to critique books with titles such as “how rich countries got rich and why poor countries stay poor”, and I did write a book with almost exactly that subtitle. You go on to say “thankfully these are not bestsellers because the basic premise is false”. I am afraid you are right to say my book is not a bestseller, but wrong to say its premise is false. Read more of this post

The challenges of a post-crisis world; Nations must nurture recovery and promote reform. Co-operation and communication should be the order of the day

January 28, 2014 7:19 pm

The challenges of a post-crisis world

By Martin Wolf

Nations must nurture recovery and promote reform. Co-operation and communication should be the order of the day

The consensus view of the world economy has become more optimistic, for good reason. The high-income economies seem at last to be taking off; this is particularly true for the US and UK. But significant challenges lie ahead, notably for the eurozone. For emerging countries, stronger growth in high-income countries brings benefits, but also costs. If euphoria is among the dangers to stability, 2014 should not see too much of it. Read more of this post

SEC Fights Turf War Over Asset Managers

SEC Fights Turf War Over Asset Managers

ANDREW ACKERMAN and RYAN TRACY

Updated Jan. 28, 2014 8:04 p.m. ET

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WASHINGTON—Senior U.S. officials are clashing over whether the asset-management industry poses risks to the financial system, setting up a fight over whether the industry should face tougher oversight. Read more of this post

Next-shoring: A CEO’s guide; Proximity to demand and innovative supply ecosystems will trump labor costs as technology transforms operations in the years ahead

McKinsey Quarterly

Next-shoring: A CEO’s guide

Proximity to demand and innovative supply ecosystems will trump labor costs as technology transforms operations in the years ahead.

January 2014 | byKaty George, Sree Ramaswamy, and Lou Rassey

When offshoring entered the popular lexicon, in the 1990s, it became shorthand for efforts to arbitrage labor costs by using lower-wage workers in developing nations. But savvy manufacturing leaders saw it as more: a decisive change in globalization, made possible by a wave of liberalization in countries such as China and India, a steady improvement in the capabilities of emerging-market suppliers and workers, a growing ability to transfer proven management processes to new locales, and increasingly favorable transportation and communications economics. Read more of this post

Marc Faber Warns “Insiders Are Selling Like Crazy… Short US Stocks, Buy Treasuries & Gold”

Marc Faber Warns “Insiders Are Selling Like Crazy… Short US Stocks, Buy Treasuries & Gold”

Tyler Durden on 01/28/2014 18:43 -0500

Beginning by disavowing Mario Gabelli of any belief that rising stock prices help ‘most’ people (“Fed data suggests half the US population has seen a 40% drop in wealth since 2007“), Marc Faber discusses his increasingly imminent fears of the markets in this recent Barron’s interview. Read more of this post

Fed Can’t Avoid Emerging-Markets Blame

Fed Can’t Avoid Emerging-Markets Blame

SPENCER JAKAB

Jan. 28, 2014 5:13 p.m. ET

Ben Bernanke just can’t catch a break.

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Three years ago he was forced to defend the Federal Reserve from accusations its bond buying somehow had triggered the Arab Spring, which was just getting under way at the time. Now, with the era of aggressive monetary policy waning, a slump in emerging markets is seen as a dangerous side effect of stimulus being withdrawn. Read more of this post

Charts of the day: Creative destruction in the S&P500 index

Wednesday, January 29, 2014

Charts of the day: Creative destruction in the S&P500 index

Mark J. Perry | January 26, 2014, 10:10 pm

image001-7image002-2A 2012 article by Richard Foster (“Creative Destruction Whips through Corporate America“) provides a great example of “creative destruction” in the US economy and stock market – the accelerating turnover in the S&P500 Index based on almost 100 years of data. Here are some key findings: Read more of this post

Cash menagerie: Inside the bitcoin confab

Cash menagerie: Inside the bitcoin confab

January 28, 2014: 1:06 PM ET

The largest-ever bitcoin conference brought hustlers, dreamers, sharks, and technocrats to Miami.

By David Z. Morris

FORTUNE — Last weekend, Jan. 26 and 27, the North American Bitcoin Conference (NABC) in Miami drew a diverse, energized gathering of the most important figures of the emerging bitcoin sphere — a group that could still be considered remarkably small. There, they discussed obstacles facing the digital currency and payments network, oohed and aahed over the rushing stream of new bitcoin- and cryptocurrency-related services and products, and enthusiastically drank their way through Miami Beach’s most iconic dens of neon hedonism. Read more of this post

‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil

‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil

By LANDON THOMAS Jr.JAN. 28, 2014

The long-running boom in emerging markets came to be identified, if not propped up, by wide acceptance of the term BRICs, shorthand for the fast-growing countries Brazil, Russia, India and China. Recent turmoil in these and similar markets has produced a rival expression: the Fragile Five. Read more of this post

Japanese boardrooms learn to love English

January 29, 2014 5:10 am

Japanese boardrooms learn to love English

By Jennifer Thompson in Tokyo

English, the lingua franca of boardrooms and even, in some cases, factory floors from Paris to Nairobi, remains a distinctly foreign tongue for much of Japanese business.

Read more of this post

Firms’ Strategic Disclosure of Bad News Around Debt Offerings

Firms’ Strategic Disclosure of Bad News Around Debt Offerings

Kooyul Jung 

Ulsan National Institute of Science and and Technology (UNIST)

Boyoung Kim 

Korea Advanced Institute of Science and Technology (KAIST)

Kyoungwon Mo 

Korea Advanced Institute of Science and Technology (KAIST) – College of Business
August 2013

Abstract: 
This study examines management disclosure behavior around debt offerings and its effect on the cost of debt offered. For the equity market, studies show that management disclosure of good news decreases the cost of equity. Studies also show that debt holders are more concerned with negative earnings and firm credibility. We examine this disclosure tendency of debt holders for debt offerings. We argue that firms use management forecasts of greater than zero earnings before debt offerings, and given this, they strategically tend to use bad news more than good news to increase firm credibility and reduce the cost of the debt issued. We find the results support our argument. We also find that the higher the default risk, the greater the increase in bad news forecasts (with profit) and its reduction effect in the cost of debt.

How postmen, and their wives, may help set India’s monetary policy

How postmen, and their wives, may help set India’s monetary policy

By Reuters | 28 Jan, 2014, 04.14PM IST

NEW DELHI: Global investors may well be putting their faith in postmen like Phanin Deka when they decide to buy or sell Indian assets in the future.
He is one of about a thousand post workers collecting data that determines the level of India’s consumer price index, which is likely to become the central bank’s most important tool for setting monetary policy.

Read more of this post

Emerging markets as vulnerable to contagion as ever

Emerging markets as vulnerable to contagion as ever

Mon, Jan 27 2014

By Sujata RaoDaniel Bases and Vidya Ranganathan

LONDON/NEW YORK/SINGAPORE (Reuters) – Emerging markets may be unrecognizable from the small and fragile economies that fell like dominoes 15 years ago, but they are just as vulnerable today to the same sort of indiscriminate selling when investor panic sets in.

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Buffett’s Fourth Law of Motion: Your Behavior; “Long ago, Sir Isaac Newton gave us three laws of motion. But Sir Isaac’s talents didn’t extend to investing: For investors as a whole, returns decrease as motion increases”

Buffett’s Fourth Law of Motion: Your Behavior

Posted on January 26, 2014

Ben Carlson

“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham

One of the best performing mutual funds of the past decade is the Fairholme Fund, which is run by portfolio manager Bruce Berkowitz. The ten year annual return on the fund outpaces the S&P 500 by nearly 4% a year.

Read more of this post

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