Economics

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Efficient Market Hypothesis – Counter Arguments – Series

This headline on Marketwatch.com just now reminded me of the theory you learn in Finance; Efficient Market Hypothesis. Additional pent up supply not on the radar of all investors suddenly coming to the market, or just the possibility of it coming to market can lead to big moves; see below   “Our large early investors, as well as of some of our key insiders … don’t intend to sell immediately…


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Forces behind the Bid in the Equity Market

In addition to central banks who have been aggressively increasing their equity positions (see my post on the SNB equity position) there are now large pension fund systems that are moving toward more international equity proportions and decreasing their bond portfolio size. The state pension fund of Japan manages EUR 908 billion (Milliarden). Of that 67% were in bonds, for example Treasuries. The plan now is to reduce that to…


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Economy: Reasonable Prospects of a Pick-up this Year says RBA

Thought this statement from the Reserve Bank of Australia is a good gage of where we currently stand regarding the state of the world economy. Growth in the global economy was a bit below trend in 2013, but there are reasonable prospects of a pick-up this year. The United States economy, while affected by adverse weather, continues its expansion and the euro area has begun a recovery from recession, albeit…


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Sanctions vs Russia – Impact on European Companies

The impact of political uncertainity can be clearly felt in the time of terroritorial conflict. Russia is working on a law that will permit the russian state to confiscate foreign companies’ properties, merchandise, machines. In recent years many companies from Western Europe had invested heavily in Russia. As an emerging market or even frontier market in some regions it has a lot of potential which investors wanted to capitalise on….


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Bilateral Local Currency Swap Agreements between Central Banks

Currency Swaps play an important role in smoothing currency volatility and therefore lowering uncertainity and thus reducing the cost of doing international business. The central banks enter into Swap agreements which in turn permit their commercial banks to have recourse to liquidity even in times of financial distress. Considering the Emerging Markets tension of late, the move by the Reserve Bank of Australia to enter a bilateral local currency swap…


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Zalando – Greater Fool Theory Example? Or Amazon Competitor

In Mondays’ issue of the Frankfurter Allgemeine Zeitung there’s an article about the electronics distributor and retailer Conrad Electronic SE, which has 4000 employees and is run by the fourth generation of the Conrad family. Asked about Zalando Werner Conrad said: “Zalando leads consumers to believe that every item is delivered the next day and free of shipping charges. With return rates of 50% and more the business model can’t…



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Digital Age Banking Secrecy Pitfalls – Tax Investigations Without Borders

The digital age has changed banking secrecy forever. The internet knows no borders. There’s now an active market for stolen bank customer data promising the thief quick riches and it’s never been easier to find the buyer. The socialist run federal states in Germany are a prime example of the buyers having democratic support to uncover tax crimes in pretty much any way necessary. The reason you’d have brought your…


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Thomas Jordan: Statements Regarding Monetary Policy Autonomy / Minimum Rate (EURCHF) Contradicting?

Reading Thomas Jordans (of the Swiss National Bank) speech he held yesterday in Zürich (Zürcher Volkswirtschaftliche Gesellschaft) I came across something which could be termed as a contradiction in his statements: “Der Mindestkurs schränkt unsere geldpolitische Au-tonomie nicht ein, wie dies vereinzelt fälschlicherweise behauptet wird, sondern ist Ausdruck der gelebten geldpolitischen Autonomie. Der Mindestkurs stellt keine Annäherung und schon gar keine Anbindung an den Euro dar.” The (EURCHF) minimum rate…


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Common Equity Reweighting / Rebalancing Strategy Mistake

Many investors who meet up with their bank advisor for the annual performance & strategy discussion make a costly mistake. They look at their positions and trim the gainers, either because the percentage of the position has passed a certain threshold or because they think the stock has run too far too fast. This strategy is one that will cost performance over the long term. Imagine you’re a seed investor…