GEAB 66: Global Systemic Crisis Red Alert !

Here are the highlights of GEAB 66 (June 2012) entitled "Red Alert Global Systemic Crisis September-October 2012 : When the 7 Jericho trumpets will blow for the world of before the crisis":

• Red Alert Global Systemic Crisis September-October 2012 : When the 7 Jericho trumpets will blow for the world of before the crisis. LEAP 2020 team has never seen so many economic, financial and political factors converge at the same time and this leads them to issue a Red Alert for Autumn 2012.They see 13 factors:
  
  1. Global recession.
  2. Insolvency of the financial system in the West.
  3. Increasing Weakness of bank assets such as sovereign debts, real estate and CDS.
  4. Slump of international trade.
  5. Geopolitical tensions, especially in the Middle East.
  6. Long term global geopolitical deadlock at the UN.
  7. Rapid collapse of funded pension plans in the Western economies.
  8. Increasing political rifts in major economies (USA, China, Russia).
  9. Lack of "miracle" solutions like in 2008/2009.
  10. Complete lack of credibility for countries battling with high private and public debts.
  11. Failure to reduce the unemployment rate and long term unemployment
  12. Failure of both monetary and financial stimulus policies and austerity policies.
  13. Complete lack of effectiveness of G20, G8, Rio+20, OMC... meetings
• Three economic-financial chocs at the heart of the heart of the historical choc of September/October 2012. "Taxmargeddon" will start in the US this summer, the City-Wall Street will have their own Bankia moment and QE will be too weak to be effective.
• Temporal converge of 4 major geopolitical crises for September/October 2012.  LEAP 2020 anticipate the Iran war will take place this year, along with continued conflicts in Syria, and the Afghanistan/Pakistan debacle. After the Arab Spring last year, they foresee the Arab Autumn.
  
• Strategic and operational recommendations. Need to re-adjust currency holdings,  stay invested in Gold, last chance to get out before massive stock market crash and major risk for banks. 
• GEAB $ Index June 2012 - First time since 2006 : The US dollar goes up against the currency basket €, ¥, Ұ et R$ .
• The GlobalEurometre - Results & Analyses. The majority of respondents think that a European solution to the crisis is better than national solutions (96% this month vs 91% last month)

The full GEAB 66 report (PDF format) is available to LEAP 2020 subscribers for 200 Euros per year for 10 new issues + the 6 issues published before subscription.

Jim Rogers: Not a Good Time to Buy Stock, Might Sell Euros

Jim Rogers is interviewed by Henry Blodget on Business Insider on the 9th of May 2012.

Some people think it's the best time to buy stock in 50 years, but Jim Rogers disagrees. He does not own stock in the US, and heven have some shorts, and does not see how the US stock market could double within a few years as Dr. Jeremy Siegel claims, because the economy is in bad shape and will remain so for some time.

Henry Blodget then asks him if housing has bottomed, and here Jim Rogers agrees that real estate may have bottomed in some markets, and there may be good opportunities especially in the country side, but other places like Massachusetts have probably to go further down.

Switching to currencies... Although he's very pessimistic over the long term, he owns the US dollar, and might sell his Euro holdings because albeit Europeans have implemented austerities measures, they haven't managed to reduce their debt.

As previously stated, he expects Gold to correct further as it has gone up for 11 years in a row, but he will certainly buy if it goes down, and claims the Gold bull run is far from over and will probably end in a bubble, a Gold mania.

Finally, his views on crude oil haven't changed, the surprise is going to be how high it goes as reserves are going down, although a temporary correct could occur in case of serious crisis (e.g. Spain defaults on its debt).

GEAB 64 - France 2012-2014 - The Great Republican Earthquake and its International Impact

François Hollande

Here are the highlights of GEAB 64 (April 2012) entitled "France 2012-2014 - The Great Republican Earthquake and its International Impact":

• Global Systemic Crisis: France 2012-2014 - The Great Republican Earthquake and its International Impact.  François Hollande victory will trigger a set of massive changes in the direction of the European project, which make the French presidential election more important than the US presidential race.
• Political Anticipation Methodology - Knowing how to decrypt the attempts to take control of the collective psyche.LEAP here talks about the methods used by government (e.g. declaring wars) to control the collective narrative, for example by inventing an Iranian threat...
• The madness of Canada real estate, repetition of the US mistakes – Towards a slump in price between 15% to 25% from 2013. The current real estate boom in Canada is due to excessive private debt.
• Strategic and operational recommendations. AUD and NZD outlook, the great fiscal attack starts now, the next leg down for the US stock market and economy has (re)started, Canadian residential real estate prices will sharply drop and European politician ready to counter attack against Euro speculators.
• The GlobalEurometre - Results & Analyses. 74% of respondents (vs. 71% in March 2012) expect a sharp decline of the US dollar.

The full GEAB 64 (PDF format) is available to LEAP 2020 subscribers for 200 Euros per year (10 + 6 issues). 

Marc Faber April 2012 Market Commentary

Marc Faber has just released his April 2012 market commentary on the gloomboomdoom.com website.

This month report is entitled "He had been one of those People who was greatly improved by Death".

This month, there are 2 MMC attachments:

• Stocks, Bonds, and the Efficacy of Global Dividends by Jim O´Shaughness, chairman, and CEO of O'Shaughnessy Asset Management,
• Value Subjectivism and Monetary Instability by Ron Hera,  founder of Hera Research, LLC.

The first report by Jim O'Shaughness is available as a free download at http://osam.com/research.aspx (January 2012 research paper) after registration. In this report, Jim O'Shaugness looks at bonds and stocks investing as well as global dividend investing. He compares different strategies over a long(-ish) period of time. Here's the conclusion of this study:

Bonds seem poised for low single-digit returns and, potentially, negative real returns. A conservative analysis of historical equity returns leads us to believe that equities could see mid to high single-digit nominal equity returns, though still below average. Dividend investing has historically been a reliable strategy producing superior excess returns in both U.S. and foreign markets. Expanding the universe of potential investments to include a global framework provides a greater opportunity set of high-quality, cash-rich multi-national companies with strong dividend yields.

Dividends are historically a significant component of total equity returns during low-return environments. When applied to pre- and post-tax income investors, a high-yield dividend strategy not only offers protection of purchasing power but also growth of income on a real basis.

The second attachment "Value Subjectivism and Monetary Instability" is an article published on Goldseek.com where Ron Hera pinpoint 15 fundamental issues with fiat currencies.

If you want to access the full Monthly Market Commentary (MMC) by Marc Faber, it is available for 300 USD per year. Sometimes, Summaries or highlights are available on the web, I'll repost it here if one become available.

Marc Faber March 2012 Market Commentary

Image by Getty Images via @daylife

Marc Faber has just released his March 2012 market commentary on the gloomboomdoom.com website.

This month report is entitled "When we are no longer able to change a Situation, we must change ourselves", possibly referring to the massive debt load of western economies and the change of attitude required in those economies.

There is one attachment with this monthly market commentary (MMC):

• "China's Leadership Transition - Social Stability May Require a Stronger Renminbi" by Kieran Osborne, Director of Research of Merk Investments.

In this free report, Kieran Osborne describes the current political system in China (2012 will see a new leader) and analyses different metrics of China economy (inflation rate, bonds issuance, currency swaps ...) that may impact the Chinese Yuan.

He concludes as follows:

Any marginal change in the governance of China is likely to have far reaching implications. Most notably, we expect an increased focus on developing the Chinese middle class and domestic economy over time, with less reliance on the export sector. In turn, political and economic realities are likely to force Chinese policy makers to allow the RMB to appreciate, to help manage domestic inflationary pressures, and thus maintain social stability. We consider that China has the ability to allow its currency to appreciate and put in place steps towards a free-floating framework, due to increased pricing power resulting from manufacturing of a wider range of value-added goods. Indeed, we have seen steps put in place to ready the country for appreciation of the currency, including conducting scenario analyses on local businesses, while concurrently increasing the internationalization of the currency. China is likely to become a global financial hub and a more attractive place for global business, as a bi-product of such initiatives. Such dynamics are likely to lead to ongoing strengthening in the Chinese currency over the foreseeable future.

If I can find a summary, I'll post highlights of the Gloom Boom Doom market commentary, although in recent months it has been hard to find.

Marc Faber Picks at 2012 Barron's Roundtable

The first month of the year is time for Barron's roudtable. There were 10 panelists for 2012:

• Scoot Black - Delphi Management
• Fred Hickey - The High Street Strategist
• Abby Joseph Cohen - Global Markets Institutes
• Brian Rogers - T. Rowe Price
• Marc Faber - The Gloom, Doom & Boom Report
• Meryl Witmer - Eagle Capital Partners
• Mario Gabelli - Gamco Investors Inc.
• Oscar Schafer - O.S.S. Capital Management
• Bill Gross - Pimco
• Felix Zulauf - Zulauf Asset Management

They discussed their views on the economy and markets and gave their picks for 2012.

Here are Marc Faber's Picks for 2012:

Investment/Ticker	Price 1/6/12
Big-Cap Stocks
Total / TOT	$50.75
Nestlé / NESN.Switzerland	54.00 CHF
Novartis / NVS	$57.31
Pfizer / PFE	21.57
Singapore
SATS / SATS.Singapore	S$2.23
K-REIT Asia Management / KREIT.Singapore	0.89
StarHub / STH.Singapore	2.9
Wing Tai Holdings / WINGT.Singapore	0.99
Fraser & Neave / FNN.Singapore	6.35
Hong Kong
Sun Hung Kai Properties / 16.Hong Kong	HK$98.20
Swire Pacific / 19.Hong Kong	75.45
Hang Seng Bank / 11.Hong Kong	92.9
India
India Capital Fund*	$66.24
Short
International Business Machines / IBM	$182.54
Salesforce.com / CRM	101.06
Australian dollar	A$1=$1.02
*Price of A shares as of 9/30/2011.

Source: Bloomberg

Here's the part of Barron's Roundtable where he explains his long picks:

Faber: My preference is asset diversification, as we don't know how much money governments will print, the size of fiscal deficits and so forth. The biggest uncertainty is what will happen to the Chinese economy. The Chinese probably can continue to muddle through, easing interest rates again to keep things up. But we're dealing with an economy driven by capital spending, which is driven by credit, which wasn't the case until 2008.


Faber: There is a huge amount of underground lending throughout Asia. Mr. Bernanke can drop his dollar bills on the U.S., but the growth in dollars here can lead to strong economic growth and inflation in other countries. That has happened in the past few years. I am the most bearish person you can imagine on earth, which is why I recommend putting, say, 25% of your money in equities, 25% in precious metals, 25% in cash and bonds and 25% in real estate. These assets won't go up substantially this year, but they could preserve your wealth.

People say large-capitalization stocks are inexpensive, and I agree. I would buy a basket of high-quality big-caps in Europe and the U.S. You can by Total [TOT], in France, which yields more than 5%, and Nestlé [NESN.Switzerland] and Novartis [NVS] and Pfizer [PFE]. These stocks don't have huge downside risk. Because emerging markets saw big declines last year, you could also buy SATS [SATS.Singapore], in Singapore, which provides catering services to the airline industry and ports. It yields 5% and trades for 13 times earnings. I also like K-REIT Asia Management [KREIT.Singapore], a real-estate investment trust that yields 7%. The stock has fallen by about 50% and the dividend might be cut. But even if it is cut to 4%, this is an OK investment. These stocks won't go up right away, but reinvesting dividends will yield an adequate return over time. StarHub [STH.Singapore], the mobile-phone company, yields 6.9% and the P/E is 14.

Zulauf: If China decelerates sharply, won't markets like Singapore have another big hit?

Faber: The question is, to what extent has that been discounted already? They could fall another 20%, but a luxury-property developer like Wing Tai Holdings [WINGT.Singapore] already sells for half its book value. I am positive about Singapore in the long run because more Europeans are moving there, and to Hong Kong. Because of banking-secrecy laws it is probably safer to have a bank account in Singapore than Europe.
The Hong Kong market was hit hard, and stocks haven't bottomed yet. But you can buy Sun Hung Kai Properties [16.Hong Kong], with a P/E of five and a yield of 3.5%. Swire Pacific [19.Hong Kong] is a blue-chip, a well-managed conglomerate. It yields almost 5% and the P/E is 11. Hang Seng Bank [11.HK] yields 5.6% and trades for 11 times earnings. There isn't a huge risk in these stocks, but maybe I'm too bullish.

and his short picks:

Faber: IBM [IBM] is a good short. It is the back office of the world. There is room for earnings disappointment. If China implodes, the Australian dollar will go downwhill. That's another short. A third is Salesforce.com [CRM], which I recommended shorting in the June Roundtable ["Buy Low, Stay Nimble," June 13, 2011].


Faber: Order, order. I haven't finished. Fraser & Neave [FNN.Singapore], in Singapore, is a conglomerate similar to Swire. It sells for 10 times earnings and yields about 3%. It could become a takeover target at some point. Lastly, I am the chairman of the India Capital Fund [an open-end fund sold outside the U.S.]. The fund and the Indian currency have been hit hard, and the fund could go lower. But the U.S. outperformed India last year on the order of 40%, and the Indian market looks attractive at 12 times earnings. As Chen Zhao at BCA Research said, in China the macro backdrop is fantastic and the micro is a disaster, but in India the macro is a disaster and the micro is fantastic. India has very good companies. The fund is overweight the banks and has a P/E of 10.
Last year I was overweight the U.S. relative to emerging economies. At what stage will the outperformance of the U.S. cease and emerging markets rise again? It could be three or six months, or a year. I am gradually increasing my exposure to emerging markets. Thai and Indian banks have no exposure to Europe. Indian banks lend domestically.

Why is the Indian economy having trouble?
 
Faber: Money-printing in the U.S. created food and energy inflation. In poor countries the percentage of per capita income spent on food and energy is much higher than in advanced societies.

Faber: Yes. Credit was growing rapidly and the hangover period could last for a while but these markets are good long-term investments. I travel extensively in these countries and you can see the growth of economic development. People go from bicycles to motorcycles, and from motorcycles to cars. First-time buyers of cars jump socially, as do first-time buyers of homes. Thailand has several consumer-credit companies. Buyers will do everything to pay off their loans. They aren't going to walk away. Plus, bankruptcy laws are tough.
Hedge funds performed badly last year, with few exceptions. Why is that? The bond market was strong, gold was up 11% and the U.S. market was flat, but sectors such as utilities did well. This year the economy could contract and stocks could go ballistic as central banks print money. If investors are diversified, they might do all right.

If you are interested in the full Barron's roundtable transcript and have the time to go thru the 9 pages, you can do so by reading the article Listen Up, Class: Here's How to Profit.

6 Video Interviews With Jim Rogers

TheStreetTV has uploaded 6 short video interviews with Jim Rogers on the 6-7 December 2011.

2012 Investment Strategy

Fed Is the Worst Central Bank

Own Japanese Stocks for 2 to 3 Years

Adam Smith for President?

China's #1 Problem

Euro Will Survive 2012

Jim Rogers: Short Stocks, Long Commodities

Jim Rogers is interviewed on CNN on the 11th of November 2011.

He first explains Europe and the US are both a disaster and then gives his investment strategy:

1. Short European stocks, US technology stocks and emerging markets.
2. Long precious metals (Gold and Silver) as well as agricultural commodities.
3. Long currencies (but do not specify which ones).
   

When asked if Gold is in a bubble, he replies that very few people own it so it can't be in a bubble.

GEAB 58: H1 2012: Decimation of Western Banks

Here are the highlights of GEAB 58 (October 2011) entitled "Global systemic crisis - First semester 2012: Decimation of Western banks":

• Global systemic crisis – First half of 2012: Decimation of the Western banks

It’s this very unhealthy financial environment that will cause the "decimation of Western banks" in the first half of 2012: with their profitability in freefall, balance sheets in disarray, with the disappearance of trillions of USD assets, with States increasingly pushing for strict regulation of their activities, even placing them under public supervision and increasingly hostile public opinion, now the scaffold has been erected and at least 10% of Western banks will have to pass that way in the coming quarters... Read public announcement

• Global systemic crisis: LEAP/E2020 anticipation of 40 countries’ risks 2012-2016 (USA, Euroland, BRICS, Japan, UK, Australia, Argentina, Sweden, Egypt, Switzerland, Philippines, Mexico, South Korea, Morocco, Libya, Syria, Iran, Israel, Poland, Thailand, Indonesia, Saudi Arabia, Tunisia, Chile, …) - Widespread collapse at the heart of the global geopolitical dislocation phase... with very different prospects for exiting the crisis depending on the country

In this issue, our team sets out the annual update of "countries’ risks" under the crisis from 2012 to 2016. The assessment of country risk for the next 5 years is meant to be a decision-making tool for political and economic players and investors (individuals, companies or institutions). In a world in turmoil, it offers a medium-term perspective based on the methodology of political anticipation which has proved itself over nearly six years in terms of anticipating the global crisis and its consequences. Based on an analysis incorporating twelve criteria this year, this decision-making tool has already demonstrated its relevance for many years, faithfully anticipating developments generated by the crisis....

• GEAB $ Index – October 2011: The US$ fall accelerates against the €, ¥, Ұ and R$ basket

As our team has explained in many GEAB issues, the traditional Dollar Index (used by the financial markets) isn’t a reliable indicator for calculating the Dollar’s progress. In fact, it is based on a basket of currencies which is no longer representative, neither of the major global monetary balances, nor United States’ trade. This currency basket is, in fact, a "tiny Western club" even more illegitimate today than the G8. …

• Strategic and operational recommendations
  
  • Banks: How to avoid being trapped in the decimation of Western banks?
  • Gold – Currencies: A new inflexion point coming up
  • Commercial real estate: The moment of truth comes closer
    

• The GlobalEurometre - Results & Analyses

We note a continuation of the major uncertainty over the exact state of Euroland governance progress. This month opinion is split (48%), still showing the clash between the laborious, but real, putting in place of this governance with the solid message showing the opposite…

The full GEAB 58 (PDF format) is available to subscribers for 200 Euros per year (10 + 6 issues).

Jim Rogers: Tarrifs would be a Disaster

Jim Rogers interview on Russia Today America on the 3rd of October 2011.

They discussed about the currency law debated in congress mainly related to the Chinese RMB currency manipulation. Jim Rogers aid if the US implemented tariffs, everybody would suffer, the dollar could plunge and interest rates go up.

He then explained that he owned the US dollar because everybody was negative about the the dollar and that many people perceived the US dollar as a safe haven.

Finally, they talked about the economic outlook for the US and the world.

Marc Faber: Obama Irrelevant, Accumulate Gold

Marc Faber was on CNBC-TV18 (India) on the 9th of September 2011.

When asked about the Obama Job plan, he said it was mostly irrelevant as it is more of the same and the public deficit won't decrease.

He also gave his take on Bernanke and QE3 and said that quantitative easing was unlikely at the moment because the money supply (M1 I suppose) was growing very rapidly at the moment.

He would avoid industrial commodities at the moment and recommend Gold.

He expects the market to correct further around 1000 or below (S&P 500) even tough the current rally may last a bit further. Emerging markets would also fall as the US market corrects. So if he was heavily invested, he would lighten his positions if the rally goes further.

Since the interview was in India, he also talks about the Indian Stock market and that investors will a long time horizon (5 years and more) should invest in the Indian stock market, but that they should not expect 20% yearly return and that 5 to 8 percents per year would be more likely..

The last question was about currencies and he explained that the US dollar is probably better than the Euro at the current time, but that all paper currencies are not desirable before of negative interest rates and recommend to accumulate Gold as he could make the case that Gold is cheaper than when it was at 300 USD based on the increase in debt and monetary base.

If you want to invest in the Indian Stock market you could do so with iShares S&P India Nifty 50 Index (INDY) in the US among other or iShares BSE SENSEX India Index ETF (2836.HK) in Hong Kong

Jim Rogers: This could be the dollar end game

Interview with Jim Rogers on Yahoo Breakout where he talks about Japan and possible opportunities although he's just watching for now. Currency wise, he thinks about selling his yen holdings (on of his largest position) and consider buying the dollar unless it goes down much further as it could be the beginning of the dollar crisis. He also notes that the dollar ought to go up with the middle east / north africa turmoil, but it does not. Finally Jim Rogers also stated his views on Silver and Gold which he plans to buy on dips, especially silver.

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