Home

Content about Major

09.14.11
Global Financial Crisis, Act II

The world economy has bifurcated, which creates powerful crosscurrents as each segment deals with different challenges. The debt-ridden, legacy economies of the West need to deleverage, while the capital-rich emerging economies need to manage growth, capital inflows and inflationary forces.

Meanwhile, Act II of the Global Financial Crisis appears to be playing out, albeit in slow motion, with an epicenter in Europe. Fears of a Lehman-like collapse in that region abound, but global economic conditions are much different than in 2008. For example, bellwether commodities like corn, copper and crude oil do not reflect the crisis mentality.

08.29.11
The Running of the Bulls?

August has been a difficult month for the stock market with the major indices down double digits. Investors are pricing in a double dip recession in the U.S. and a commensurate stall in global growth. Despite rather benign economic conditions in China and elsewhere, the concept of decoupling between emerging economies and the developed nations is not yet in play. Because resource stocks are both cyclical and commodity-related, they will have the most volatility during such challenging times.

06.21.10
Part I: The Remonetization of Gold

Gold bugs will tell you that the yellow metal has been a store of value for millennia, but the truth is that over the last 15-20 years or so, most gold plays have not been particularly rewarding investments. The Philadelphia Gold Index (XAU) has appreciated just 20% since 1996, which would not even keep up with inflation.

04.15.10
Fields of Dreams

Indeed, the major socio-economic impact of driving the Taliban out of power in 2001 has been a fifty fold increase in opium production in Afghanistan over the last decade. According to the U.N., 7% of the Afghan population was directly involved in opium cultivation in 2008. The country produced 6,900 tons of opium that year, which generated about $400 million for the farmers, who sell the crop at the farm gate to roving bands of armed purchasers. Criminal elements finance the harvest by giving farmers seed money in advance. Out of their meager income, which amounts to about $2000/per year per family, local farmers reportedly pay a 10% ‘protection fee’ to the Taliban. In other words, the Taliban operate like the Sopranos in New Jersey.
 

03.23.10
Hedge with inverse ETFs

A resumption of recessionary conditions would trigger a retest of the March 2009 lows in the major indices, which is what we want to hedge against with our inverse ETFs