18 November 2010

The Fake Richness

Yesterday's CPI (Consumer Price Index) number in US pointed what everyone was warning in recent months...US is aproacching a deflationary season (like Japan in the 90's). The inflation data it's the lowest since the 50's. Yesterday, the FED bought another 8bn of their Treasuries following the QE2 plans. But even with the support of uncle Sam (see article from Warren Buffet supporting the measures taken by the FED http://www.nytimes.com/2010/11/17/opinion/17buffett.html) it doesn't seem that US is waking up from recession...


I bet, this will be the trendline until the end of the year and beggining of 2011. The Dollar will keep devaluating against the Yen / Eur / GBP.

Which will be good to rebuild the appetite of investors in the Stock Market.
In recent weeks we have seen a very bullish stock... See below the Nasdaq evolution since September:

I think it will continue in this mood until the end of the year... with some in and outs from the investors, getting some profits for their portfolio as it happened in 8th and 10th of November trying to break the resistance at 2,580.

But from a critical point of view, is this 22% really an increase of wealthness??? For sure not, what is really creating is a "false richness/wealth" trying to encourage consumption, recover confidence, increase the exports and make them more competitive (thanks to a weak Dollar and ultimately a better Trade Balance) to give the spark for US Economy engine.

22 March 2010

The "moving abroad" Tax


As I commented last week in my Twitter the rising of corporate and personal taxes in the UK are making big companies to move out of the UK to other places.

An example of this is Ineos, the biggest private company by sales in UK. The company realized that moving abroad it's headquarters and tax residance to Switzerland will save up to €450m in the next four years and with the plung of the economy nowadays it would be ridicolous to not save this amount of money.

In my opinion the latest tax reforms are not helping the UK recovery and I bet this will hit the future of the world's financial City.

23 February 2010

Greece, the new Iceland?

I read a very interesting article at the February 22nd Financial Times. Mr. Alan Beattie wrote of how the “…Parties of the centre- left are in retreat. What should have been opportunity to reorder national and global economies seems to have left many ideologically adrift”.

A good example of this is Greece, with the socialist Prime Minister George Papandreou the country is living the worse Debt Crisis in its history. This is not a serious problem to Mr. Papandreou, he has only been on the charge for a few months but he is not alone in the ineptness side of Europe´s worst leaders, this position is for my president Jose Luis Rodriguez Zapatero in power since 2004.

He couldn’t foresee the crisis when half of Europe was beginning to tighten their accounts and did little to prevent the house bubble that has punished Spain more than other countries. Instead he keeps talking on television trying to please the crowd with temporary social aids rather than work on a sustainable way to get out of the crisis without increasing dramatically Spanish deficit. The reality is that one out of five Spanish is unemployed and this figure appears to continue to grow. As seen below, Spain and Greece should pay special attention to their deficit to GDP above 12. Or their economy will suffer a downward trend in rating their debt bonds.


As the article also mentions Norway and UK seems to be another plummet in the Euro-Economy and this will become the biggest test for Europe since it was founded. €uro´s health is on the bench and I hope that Germany and France begin to pull the wagon of the 16´s. It is for sure that the European Union will not allow Greece or the others to collapse because the Central Bank will have to change the rules to provide guarantees or loans, if necessary to help the PIIGS (Portugal, Italy, Ireland, Greece, and Spain).

17 February 2010

Barclays rise up


Mr.Diamon's (CEO of Barclays) bet on Lehman, a great decision.

After 2009 net profit it is obvious that Lehman acquisition had a big impact on Barclays´s business. As the CEO said on Tuesday the Deal has been "transformational for the bank" Not only this gave them more diversification (absorbing the loans losses in 2009) but also has made Barclays to become bigger in the US. The perspectives for the equities business of Barclays will arise strong after a 2009 year with most of revenues from fixed income business.

Another great news for Barclays is that they believed their loans-loss charges reached its highest in 2009. "We are past the worst and have now seen a turning point in impairments" the banks’ risk director said.