Free Republic

Obama's poorly coded message to investors is to take your money out of America and keep it out. Whether through excessive taxation, suffocating over-regulation, or thuggish confiscation, the lesson to be drawn by anyone with excess capital is to look for friendlier places to put it to work. The list of friendlier places excludes North Korea, Venezuela, and Iran for the time being, but almost everywhere else qualifies. Russia's president spent several days in Silicon Valley recently looking for adventurous investors and came away with a $1B commitment from Cisco Systems. For Cisco, sitting on a cash hoard of...

RBS: Equity Investors Are The "Worst Cult In History," Prepare For The "Cliff Edge" The Pragmatic Capitalist Jun. 30, 2010, 4:59 AM I’ve read some alarming research in recent weeks and months, but this one takes the cake. RBS is sounding the alarm on risk assets with a call that markets are at risk of falling off the edge of the cliff. They refer to equity investors as the “worst cult in history….which has no basis in fact, or history, but yet seems universally accepted.” (There’s actually a strange truth in that comment). They believe the current downturn could very...

"SCHWARZENEGGER FLEXES MUSCLE FOR MOSCOW, WHILE OBAMA IGNORES WARNINGS FROM RUSSIAN DISSIDENTS" International News Analysis Today June 29, 2010 By Toby Westerman SNIPPET: "California governor, and former film superhero, Arnold Schwarzenegger has pledged to lead a trade mission to Russia and assist "in any way possible" Russia's drive to develop its own high tech "Silicon Valley." U.S. president Barack Obama has also promised his backing in facilitating the flow of U.S. technology to Russia. The eager participation of Schwarzenegger and Obama in exporting U.S. technological capabilities came during Russian president Dmitry Medvedev's three day visit (June 22-24) to the United...

Uranium is a very unusual sector. For one, it's small. So small, that at one point in history top-producing nations like Canada and France tried to form a uranium cartel to control prices for the metal. The "uranium OPEC" failed. But production today is de facto controlled by a handful of companies. Consider this. The world's top ten uranium mines account for 59% of global production. (The top mine, Saskatchewan's McArthur River, alone puts out 15% of the world's supply.) This is very concentrated, compared to other sectors. In the copper sector, the top ten mines turn out just 30%...

Investor Fund Flows Have Never Been This Bearish Since Lehman Collapsed Vincent Fernando, CFA Jun. 6, 2010, 8:45 AM It's a bit of a surprise that stocks didn't fall further. The last four weeks were actually the worst 1-month outflows since Lehman collapsed in 2008, as shown below in red: From a fund flow perspective, investors in mutual funds have now pulled money out of U.S. stocks during 2008, 2009, and now year-to-date in 2010. To us this should be read as a substantial contrarian indicator. The investor panic was enormous during the last four weeks, and on a multi-year...

LONDON (Reuters) - BP will seek to patch up its battered share price by reassuring investors the cost of cleaning up the oil spill in the Gulf of Mexico is manageable and will not affect dividends, British media reported on Wednesday. The oil major's Chief Executive Tony Hayward will tell investors in a call this week the cost of the clean up -- that has so far spiralled to nearly $1 billion -- can be easily absorbed by cash generated from its operations around the world, the Daily Mail said. BP's failure to stop the oil spill prompted a plunge...

This year I wrote a column that argued it was time to start a debate about the definition of “sophisticated” investor. That was sparked by a saga bubbling in Italy, where investment banks have flogged numerous derivatives trades to local governments, and other entities (including convents) - and some of the deals are now turning sour, sparking law suits. Now, however, this issue of investor “sophistication” has become doubly fraught, for reasons that have nothing to do with Italian nuns. Earlier this week, two Democratic senators filed an amendment to the US financial reform bill, that seeks to impose a...

It's getting harder to trust Washington's numbers. There was, for example, the not insignificant matter of fuzzy health care budgeting. How it was possible for the CBO to budget six years of health care spending based on ten years of revenues is still a puzzle to me. There was also the little matter of restoring a 22% cut in Medicare and Medicaid reimbursement for physicians, a problem solved by shifting the expense to a separate bill. Then there was the odd coincidence of the autumn Labor Department jobs numbers coming in above what private-sector economists estimated they would be just...

Charles Schwab lost a big court decision last week in a case that has significance for investors in mutual funds. A federal judge ruled that Schwab violated the law when its YieldPlus (SWYSX) ultra-short bond fund failed to get shareholder approval before loading up on mortgage-backed securities. When the market for those securities collapsed, the fund lost 36% — a nasty surprise for investors who believed that YieldPlus was a safe alternative to cash. Left to decide is the amount of damages the investors should receive; lawyers say California investors alone lost about $170 million, the rest about $800 million....

I just finished reading a 144-page document from the Committee of European on ways to prevent market abuse. The paper discusses myriad ways regulators can browbeat listed companies into following disclosure rules. Basically, it's 144 pages on how to force people to tell the truth. Here's the ultimate truth on market regulation. It can't be done. We have insider-trading rules that require company officials to report their personal buying of stock in the companies they own and run. We want to know if the CEO is driving the stock up, or blowing out his holdings ahead of bad news. This...

Investors withdraw up to €10bn from Greece as government prepares tax crackdown to cut down deficit staggering €8bn-€10bn (£7bn-£8.7bn) may have been taken out of Greece by private investors since it became engulfed by economic turmoil in November. Under pressure from the European Union and international markets to rein in the nation's €300bn debt, socialist prime minister, George Papandreou, announced last week that he would have to enforce tough deficit-cutting measures. But the coming austerity package is leading panicked wealthy Greeks to divert their savings out of the country.

Zero Hedge discussed a month ago the disastrous prospects of what would happen if the new proposal contemplated by the SEC, which would allow the suspension of redemptions from Money Market Funds, were to pass. Well, in a nearly unanimous vote, Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC's just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro. As the SEC noted: "We understand...

Do hedge funds have an impact on energy trading? While the answer might seem intuitive, the debate as to whether they actually do has come to resemble the medieval theological dispute about how many angels can dance on the head of the pin. Because, like angels, many trades in energy futures are invisible, and it is often not possible to pinpoint where they take place. And yet, for most of us, including lawmakers on Capitol Hill, it seems obvious that when hedge funds buy and sell billions of dollars worth of oil and gas futures, it must be having an...

For General Electric's investors, yesterday's deal to combine NBC Universal with Comcast was more like a burnt-out light bulb than a bright idea. While shareholders were gratified that GE was finally selling off a business that never quite fit in with the company's industrial bent, the deal's details generated Wall Street's version of a big, fat yawn, with shares in GE falling 7 cents to $16 a share. By comparison, Comcast's stock popped 97 cents to $15.91. GE investors' muted response reflected a few factors, sources said. First, there was a sense among many investors that GE waited too long...

Global markets sank sharply at the end of last week on fears that Dubai World, a subsidiary of the government of Dubai, was on the verge of defaulting on approximately $60 billion of the emirate's $80 billion in total debt held by creditors world-wide. The rush of news stories added to the wildfire of panicky speculation, with headlines ranging from "Dubai Default Risk May be Big US Bank Problem," to "Dubai Shows Limits of Government Rescues." The mini-panic, however, has little to do with Dubai and everything to do with the tenuous psychology of global investors still skittish after the...

A Big, Fat Stock Market Selloff By Eric Fry 10/20/09 Laguna Beach, California – Stocks prices are very, very high… Our contrarian colleagues over at The 5-Minute Forecast continuously lament…which means that the collective anxiety of investors is very, very low. Our colleagues don’t mind that a rising stock market is adding trillions of dollars to the asset side of household balance sheets. That’s good news. But the worrisome part is that a falling stock market could erase those trillions from the ledger just as quickly as they first appeared. And as our colleagues correctly point out, rising share prices,...

Vanguard Cautions Investors On RallyOct. 6, 2009, 4:25 p.m. EDTSam Mamudi, Market WatchDon't be taken in by this year's robust gains, fund firm warns. NEW YORK (MartketWatch) -- Many mutual funds are poised to celebrate stellar returns this year, but one fund firm is going out of its way to warn investors not to get too giddy. Vanguard Group issued a cautionary note on Tuesday, emphasizing that strong third-quarter gains don't mean it's time to go overboard on certain areas of the market. Investors Brace for Earnings SeasonMichael Cuggino of the Permanent Portfolio Funds says the coming parade of quarterly...

HONG KONG -- Former Alaska Gov. Sarah Palin, in what was billed as her first public-speaking engagement outside North America, blamed the world financial crisis on government excesses and called for a new round of deregulation and tax cuts for U.S. businesses. "We got into this mess because of government interference in the first place," the former Republican U.S. vice presidential candidate said Wednesday at a conference sponsored by investment firm CLSA Asia Pacific Markets. "We're not interested in government fixes, we're interested in freedom," she added. On the foreign-policy front, she told the room full of bankers and executives...

"After the collapse of the equity and real estate bubble that has plagued us for the last 10 years, Americans have absorbed a tremendous blow to their wealth. We all know housing is down about 30% from its peak. But I’d like to concentrate on what the equity market has done since December of 1999 in both nominal, dollar and gold terms. In nominal terms the S&P500 is down “just” 28.6% since the decade began. But when you ask questions like what how much of my purchasing power have I lost vs. gold and other currencies, the data become even...

Barrick Gold has been hedging its gold production by selling futures contracts, thus locking in the price a year or more in advance of the physical gold being mined. This is a great strategy when gold is falling in price. It makes no sense when gold is in a bull market. Gold has been in a bull market for close to 10 years. It has climbed from a low of $255.10 an ounce to over $1,000 an ounce. Thus, Barrick Gold executives look pretty much like idiots. What were they thinking say back in 2003, when all the key players...