Weekend reading links – 30.04.2016

Financial markets

‘Stupidest idea I have ever experienced’ – says Grundlach of negative interest rates.

According to the latest (March 31, 2016) 7-year asset-class return forecasts of GMO, no asset class today – including their favourite, timber – is priced to deliver satisfactory long-term returns.

The most dangerous bond market in history. A great read.

As always, Jason Zweig is at his perceptive best, talking of why and how we talk of ‘headwinds’ and ‘tailwinds’.

The lonely sane voice of ‘Buttonwood’ from the ‘Economist’ newspaper stable. Rightly, points out the flawed criticism of Germany for doing what it should be doing. An Anglo-Saxon exception.

The hedge fund industry is in the ‘first innings of a washout’ according to a successful hedge fund manager. May the washout continue.

This should be fun.

China

If global bonds are dangerous territory, can China’s bonds be far behind?

How did the regional growth rates play out in China?

Valuation of Chinese banks’ shares listed in HK are now about 0.63 times book. No one trusts their book. How does it compare with Indian PSU banks’ MV/BV ratio?

Article on China’s bad debt management – gets the overall picture right but the details are somewhat fuzzy.

“Officially, just 1.7 percent of loans are in default. The International Monetary Fund recently estimated that for corporate debt the true figure is nine times higher.”

Carmen Reinhart says that China today reminds her of Thailand in 1997. Currency crash or devaluation to follow? Quite.

Steel prices are rising and Goldman Sachs is concerned about speculation in iron-ore in China.

Panicky banks in Hong Kong refuse to open accounts for foreigners.

A short film on the Mayor of Datong, worth watching for many reasons

America

‘Why did the SEC not hit Goldman Sachs harder?’ – a great piece on the regulatory capture in the US

Goes very well with the link above. Pity the interviewer ignores the question of favouritism which the author was keen to discuss – a very important book and discussion on what the Federal Reserve during and after the crisis of 2008.

FT has a detailed analysis of Apple results. Revenues show a decline from last year. Sales in Greater China drop 26% from last year. Toys have a shorter shelf-life, in general.

Federal Reserve reiterates low for long and Esther George dissents. Nothing to see here. Federal Reserve is less concerned about global risks. Time for financial markets and China to step up their antics to stop a June rate rise.

In the US, “nearly all of the voluntary clawback policies in place at the Top 100 Companies permit board or compensation committee discretion or enforcement.” – a survey of corporate governance and executive compensation in 2015 revealed.

A great story for Hollywood, Kollywood, Tollywood and Bollywood: Dole doles out bacteria in salads. In case you had forgotten about Theranos, here is a good link. Here is a good timeline and here is the first story that broke the balloon. Not good advertisements for capitalism or private enterprise.

A useless article on how the ‘first-past-the-post’ system favoured Donald Trump. The authors must be embarrassed for writing the obvious.

General/Global

Saudi Arabia crafts vision 2030 with a price of 30 dollars per barrel for oil in mind.

Times have changed and are changing: a government in the West is featured prominently in the media for spending more.

However, two weeks earlier, the IMF’s twice-a-year Fiscal Monitor warned of deteriorating public finances in most of the world. So, praise could turn to pot-shots at Canada soon.

State-owned Malaysian fund (1MDB) defaults on bond payment. The PM remains in office, but.

A new easy-to-read paper in VoxEU on labour displacement of technology, analysing the effects that electricity had.

Europe

Italians eat 1.6 billion pizzas a year but a good chunk of them is made by foreigners.

“The Guardian (newspaper) has long suffered from over-optimism about revenues and an ingrained inability to control costs.” Who would have thought that liberals spend money so freely?!

Half the men in Europe could be descendants of a Bronze Age king who lived some 4000 years ago.

Portugal’s relies on the credit rating from a single Canadian credit rating firm to maintain investment grade rating and be eligible for ECB funding programme. How wonderfully above board all of these arrangements are!

India

Digital activity of BJP MPs is evaluated. What about visibility through physical presence and leadership?

The news is not news but the news being put out is news – FT writes a positive story on how Indian banks and corporations are taking action on non-performing loans.

Sanjay Joshi of ORF in India thinks it is time to rethink ‘Make in India’. Fair enough. Answers and alternatives, if needed at all, are not provided.

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