Bloomberg reports a surprise move from Germany:
“Germany will temporarily ban naked short selling and naked credit-default swaps of euro-area government bonds at midnight after politicians blamed the practice for exacerbating the European debt crisis. Continue reading
Airline prices are set to rise this summer, says an industry spokesman:
“Airline capacity and routes flown are still down compared to recent years,” said Mark Koehler, Priceline’s senior vice president, Air. in a statement.
“We haven’t experienced the widespread, aggressive airfare sales seen a year ago. In general, travelers will find that summer airfares could be as much as 25% more expensive than last year, on average, and that’s before factoring in extra fees for baggage, pillows, food and such. Travelers who want to save on air travel will need to plan ahead, be flexible and try different approaches to booking their trips,” he said.
Airlines have started to see increased traffic as travelers returned after cutting back during the recession. The International Air Transport Association recently cut its full-year loss forecast for the airline industry by half to $2.8 billion.
Shares of airlines stocks jumped this morning.”
So, for anyone planning to become a stateless globe-trotter – and we’re all for it if your wallet can take it – here’s another monkey-wrench tossed into your plans.
Not only are fees and security at airports increasing, as I’ve blogged before, but prices and services on airlines are going up too. They even have a lavatory fee coming up at budget airline Ryanair. And they’re thinking of reducing the number of lavatories to make room for more seats.
Personally, I don’t think budget airlines – unless you fly often – are much of a saver. I’d rather pay $100 more and feel free to carry as much luggage as I want, get fed regularly with something other than $5 bags of pretzels, and have wait-staff paid enough not to glower at you.
Not long before you’ll be asked to bring your own seats or stand all the way….
Downside risks to gold, writes Nouriel Roubini at The Globe and Mail:
“But, since gold has no intrinsic value, there are significant risks of a downward correction. Eventually, central banks will need to exit quantitative easing and zero-interest rates, putting downward pressure on risky assets, including commodities. Or the global recovery may turn out to be fragile and anemic, leading to a rise in bearish sentiment on commodities – and in bullishness about the U.S. dollar.
Another downside risk is that the dollar-funded carry trade may unravel, crashing the global asset bubble that it, with the wave of monetary liquidity, has caused. And since the carry trade and the wave of liquidity are causing a global asset bubble, some of gold’s recent rise is also bubble-driven, with herding behaviour and “momentum trading” by investors pushing gold higher and higher. But all bubbles eventually burst. The bigger the bubble, the greater the collapse.
Gold’s rise is only partially justified by fundamentals. And it is not clear why investors should stock up on gold if the global economy dips into recession again and concerns about a near depression and rampant deflation rise sharply. If you truly fear a global economic meltdown, you should stock up on guns, canned food and other commodities that you can actually use in your log cabin.”
Yes, indeed. One for the good guys!
“The U.S. Justice Department has launched an investigation into whether heavyweight hedge funds including Soros Fund Management, SAC, Greenlight Capital and Paulson & Co. aggressively shorted the euro in recent weeks to destabilise it, the WSJ reported on Wednesday, citing people familiar with the matter.
According to the paper, the department has asked hedge funds to retain trading records and electronic communications relating to the EU currency which needless to say has come under strong selling pressure as a result of the Greek debt crisis. The euro has lost more than 10% since November. It currently trades at $1.3609….”
More at the Wall Street Journal.
I blogged a few days ago about David Einhorn’s holdings, noting his anti-Euro trade; I also noted that without the raids against Allied and Lehman and without his late-in-the day piling onto gold, Einhorn’s record really isn’t as impressive as all the hype about his abilities would lead you to believe.
I had a conversation recently with some insiders in the financial industry, of a rather bearish persuasion. So bearish that they’re interested in leaving the United States.
Which is how I’ve felt for about five-six years.
The conversation yielded interesting tidbits. Some of them confirm my own thinking; others contradict it. The contradictory parts interested me the most, of course. I tend to pay more attention to people who think differently from me than to people who agree, perhaps because of some diffidence about my own judgment….Unfortunately, my own instincts have turned out to be more accurate than I’ve been able to believe.
Anyway, here’s what I came away with from what I consider honest and reliable professional money managers:
1. China is overvalued greatly. By around 50%-60% or more (not the first time I’ve heard this, of course).
2. Jim Rogers knows commodities, but doesn’t know gold as well (this was new to me).
3. Marc Faber has one of the best reputations as an investor among insiders (well-known to me). His newsletter is worth the money.
(Full disclosure: I don’t subscribe to Mr. Faber’s newsletter, work for him or receive any kind of compensation for this statement. I’m passing it along as well-founded opinion that might help readers struggling to find reliable guidance in the welter of news….)
4. Gold bars sold by some firms have tungsten underneath, so be careful from whom you buy. James Turk is a reliable person to buy gold from. (Full disclosure: I don’t use Mr. Turk’s services nor have I been paid by anyone to make this assertion).
6. A lotof Several money-managers think there may be no gold at Fort Knox – or very little – not just confirmed “conspiracists” – among whom I am proud to number myself. (Correction, Nov. 13: “No gold” doesn’t have to mean the absence of physical gold. Gold could be present physically, but it could owed to other entities, like a house that is technically in your name, but is really owned by all your creditors).
7. Rogers was more the driving force behind Quantum’s success than Soros.
8. There will be no secession. Americans aren’t up to it. The cognitive dissonance between perceived reality and “real” reality is too great for most people to grasp the extent of the corruption in the system. Any hope of rebellion rests with “red-necks” (apologies for using a racist term – I use it ironically here), not with yuppies.
9. The Indian market is riddled with fraud and hype. Jim Rogers thinks the Indian market is a scam. (I wouldn’t use that harsh a word, but I worry about hype and corruption in it too).
10. Brazil’s Fortaleza area, which has been attracting a lot of investor interest, has great beaches and weather…as well as slums, crime, and deadbeats of all kinds. Recommended for investing, not for living.
11. Argentine property laws are not as safe as US property laws (despite Kelo) – at least, at the level where it concerns the ordinary joe. Aggressive, organized squatting is a problem in rural areas.
12. The ongoing investigation of insider trading (eg., Galleon) is not just a one-day wonder, but might bite harder than expected.