m22au's journal

On the whole, European and US bank stocks are up today.

But there are some noticeable underperformers, some of which are down today, including some that are at 52-week lows.

USA:

* BAC down 0.20% on "earnings" report, near yesterday's 52-week low and still below $10.00 per share.
* GS down 3% to 52-week low.

Europe:

RBS down 1% to 32.6 pence, a 52-week low.
It trades on NYSE under the same symbol as London.

Two Spanish banks:
POP down about 0.50%
BTO down about 0.60%
 
possibly a bit too late to short SIFY based on this news, but still, an interesting read:

"Emerging Stocks Run Jet-Lag Risk"

http://online.wsj.com/article/SB10001424053111903461104576459900272808030.html

By ROLFE WINKLER

Some BRIC stocks just refuse to sink. For India's Sify Technologies, that may change once investors figure out that the company's share count is three times higher than many realize.

....

The question is: How many shares? Nasdaq, where Sify's American depositary shares trade, had them at 53 million, implying a market value of roughly $300 million. The real number of shares, however, is 178 million. Nasdaq updated its figure on Thursday after an inquiry from The Wall Street Journal. The stock slumped 18% on the news.

...

Write to Rolfe Winkler at rolfe.winkler@wsj.com
 
Latest piece from Mish titled "Canada GDP Declines .3%, Largest Drop in Two Years - Don't Worry It's "Temporary"; Canadian Apologists Be Warned"

http://globaleconomicanalysis.blogspot.com/2011/07/canada-gdp-declines-3-largest-drop-in.html

I like the conclusion, which is provided below:

***

"Headline be damned, it's not temporary.

"Europe is now in austerity-mode,
US cities and states are cutting back,
the odds of more fiscal stimulus in the US are roughly zero,
the US might (and should) lose its AAA rating,
Australia is a basket case on the bursting of its property bubble, Canada has the second or third largest property bubble next to China and Australia,
the bond market is targeting Italy and Spain,
Brazilian defaults are soaring,
China is overheating and needs to slow,
yet the average economist is looking for a robust second-half. Go figure.

"In aggregate, economists are the most optimistic group on the planet."

***

A great summary of the headwinds facing equities right now. Even if the US maintains its AAA rating AND the debt ceiling is raised by a massive amount, the ongoing increase in Italian and Spanish bond yields is enough for the S&P 500 to decline by a large amount.

That is, of course, until QE3 is announced ...
 
 
This morning's actions by the SNB will mean that the CHF will find it harder to rally than it did before 3 August.

So where to for a manager of currency reserves?

USD: known debt problems and weak
EUR: known debt problems and weak
GBP: known debt problems and weak

JPY: known debt problems and only gradually climbing against USD, unable to go below USD/JPY 76.00 as yet

CHF: overvalued - growing potential for SNB intervention at USD/CHF 0.7600

AUD: with interest rates at 4.75% and likely to go lower, AUD has plenty of room to fall.

CAD: viewed to be tied to economic growth via its correlation / exposure to oil price

****

So this is a great environment for gold to rally against all of the above 7 currencies. Also a great environment for sovereigns to diversify out of USD / EUR / GBP and into gold, instead of thinking that JPY / CHF / AUD / CAD are safe havens.
 
Following on from the above, Mish Shedlock is covering the idea that there are few safe fiat currencies remaining, ecause "no major country wants a strong currency".

Title:
Japan Intervenes, Yen Plunges; What's Next?

http://globaleconomicanalysis.blogspot.com/2011/08/japan-intervenes-yen-plunges-whats-next.html

He then concludes, as I do:

"Mathematically it's impossible for every currency to sink vs. each other. However they can all sink against something. That something is gold and there should be no doubt that gold is reacting to competitive currency devaluation schemes of central banks."
 
My local financial newspaper had a piece on gold this week quoting the country's biggest gold dealer.

They stated a clear shift in customers is there.

In the crisis of 08/09 it were little people putting the small amount of money they had in some Krugerrands.

Today they say big money is coming in. The rich buying millions worth of gold and not in bars but in coins as well.

Clearly a similar trend will be there in the rest of the world but is this good or bad?

It's not like the rich didnt get caught in the housing bust, the banking stocks once considered as safe as gold etc.
 
Quote from Debaser82:

My local financial newspaper had a piece on gold this week quoting the country's biggest gold dealer.

They stated a clear shift in customers is there.

In the crisis of 08/09 it were little people putting the small amount of money they had in some Krugerrands.

Today they say big money is coming in. The rich buying millions worth of gold and not in bars but in coins as well.

Clearly a similar trend will be there in the rest of the world but is this good or bad?

It's not like the rich didnt get caught in the housing bust, the banking stocks once considered as safe as gold etc.
More...

I wouldn't label the trend (big money coming in to buy physical) as either good or bad. By the sounds of it, this is just anecdotal evidence.

Whenever I start to think that "gold is too high, maybe I should sell some", I then remind myself that it isn't that gold has gone from $300 to $1670, but rather, the US Dollar has gone from 1/300 gold ounces to 1/1670 gold ounces, part of its path towards an even lower fraction of gold.
 
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