Using Veritas to Construct the "Per…

29-04-2017 Hits:88461 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:82169 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:82056 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:86555 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:82994 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:85119 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:56221 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:84440 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:84155 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:84018 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:90493 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:88068 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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I have stated that I believe to be bubblicious as far back as last year - before it was vogue to do so. Now, with the Chinese broad markets down 50%+/-, I still feel they are in a bubble. The banking system is not immune either, contrary to popular opinion, and as I have stated as recently as last week. We are looking into specific potential global shorts, and I will have some others for the short list besides HSBC to post once positions and research is finalized. In the mean time and in between time, here's a smattering of what I have found and summarized that illustrates and/or supports some of my Asian investment thesis.

From Bloomberg: China Banks Stung as Stock Market Rout Spurs Shift Into Costlier Deposits

China's 146 million stock investors, burned by slumping prices, are pulling money out of equities and putting it into deposits. That's not necessarily a good thing for banks.

As the benchmark CSI 300 Index tumbled 46 percent this year, investors shifted cash from low-yielding ``demand'' deposits to so-called time deposits that pay interest that's at least four times as much, according to Credit Suisse Group AG. During the two-year stock market rally that ended in October, households were doing the opposite, reducing costs for the banks.

With the government now restricting loans to combat inflation, Chinese banks face narrower profit margins as they're unable to compensate for higher deposit costs by accelerating lending. The stock market drop also is curtailing mutual fund sales, hampering efforts by banks to increase earnings from outside their mainstay lending business.

``The situation will get worse unless there's a turnabout in market sentiment, which seems unlikely anytime soon,'' said Leo Gao, who helps oversee the equivalent of $2.3 billion at APS Asset Management Ltd. in Shanghai. The shift to time deposits ``will take a toll on banks' profitability,'' he said.

Asian Stocks Fall, Led by Banks on Loss Concerns; Mitsubishi UFJ Declines 

Asian stocks fell, driving the benchmark index to a six-month low, on concern financial companies will be forced to take more writedowns related to credit-market losses.

Mitsubishi UFJ Financial Group Inc. dropped in Tokyo after analysts said the two largest U.S. mortgage-finance companies may need to raise extra capital. Kookmin Bank, South Korea's largest, tumbled the most in almost four months after JPMorgan Chase & Co. cut its rating on the stock. Inpex Holdings Inc., Japan's largest oil explorer, and Woodside Petroleum Ltd. declined after crude fell almost $4 a barrel.

``We haven't seen the worst of defaults yet,'' said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which manages about $108 billion. ``We're still in a bear market and it's time to remain cautious.''

 

A summarization of Macro news and analysis from around the Web

A tale of two Asias: China, and almost everyone else

June 27, 2008

In the face of oil fuelled inflation, when the central banks across Asia including that of Korea, Thailand, Philippines and India are selling dollars to strengthen their domestic currency, China stands out as an exception. China, which is heavily cushioned by its large trade account surplus, has been buying dollars leading to reserves swelling at unimaginable rates. China is reported to increase its reserves by $66 bn, $75 bn and $45 bn in May, April and June 2008, respectively. It is expected that that in the first half of 2008 alone China's reserves could increase by $290 bn.

After making certain adjustments (transfer of $75 billion to the CIC in Q12008 and addition of $90 bn by banks in China to their dollar holdings to meet their reserve requirement), the reserve growth in the first five months of 2008 is estimated to be around a whopping $435 billion.

 

Markets worry about another interest rate hike in China

June 30, 2008

China's stock market received a set back with a fall in bond prices signally a possible interest rate hike. The drop washed away almost all the gains achieved following partial removal of fuel oil distortions through a fuel price hike and a series of positive analysts' comments on Chinese market. While the interest rate hike is predicted on the back of rising inflation, there can be factors which can lead to its avoidance. First, due to political reasons, the government will not be comfortable with sharp declines in stock and real estate prices, especially so close to the Olympics. Second, the government is showing increasing concerns for economic growth. The growth in corporate profits, 20.9% year-on-year during the first five months of the year, has slowed, according to figures released by the National Bureau of Statistics - they grew 42.1% a year earlier. Although, the government does not seem to forego economic growth to contain inflation, a lot depends on the CPI numbers which will show whether the administrative measures are playing sufficient to contain inflation.

Why not more articles on China's reserve growth? And just who are Chinese banks lending to?

June 26, 2008

According to Hong Liang and Eva Yi of Goldman, the monthly losses on China's reserves are close to $15 billion - an annualized loss of around 5% of China's GDP. China's total foreign assets increased by $661 billion in 2007, rising from $1627 billion at the end of 2006 to $2288 billion at the end of 2007. The increase in 2007 considerably higher compared to $400 billion increase in 2006 and $300 billion in 2005. While a lot has been said about the growth in China's forex reserves, little attention is paid to where this money is invested. Out of $2,288 billion of reserves at the end of 2007, around $2,170 billion is in the form of reserves, bank lending and holdings of debt securities. A notable trend is a substantial reduction in investment in portfolio investment including portfolio debt in 2007 as compared to 2006 following losses on debt purchased.

It is 2004 all over again. Central banks haven't shifted away from safe, liquid assets

June 23, 2008

Majority of central bank's foreign assets are invested in Treasury and Agency securities and the central banks continue to play safe while investing. The amount invested in equity by Sovereign funds continues to grow at a lower pace as compared to their investment in bonds.

The London Times' take on Chinese equity investment abroad

June 22, 2008

China is structuring its equity investment abroad around three set of activities.

  • Supporting Chinese firms, looking to expand expanding abroad
  • Handing funds over to private equity funds and other external managers
  • Buying equities in the public market.

Further the article reports that State Council has authorized SAFE to invest up to 5% of its portfolio in equities, recently.

China's sovereign economic development fund

June 20, 2008

In light of the recent interest of CIC to support the outward expansion of Chinese firms, including assisting a consortium of Chinese steel firms bidding for a Brazilian iron ore mining company, the article attempts to highlight State's move to access strategic resources by gaining ownership over mineral sources, on the one side, while indirectly financing deficit in balance of payment in the emerging world through flow of funds via investment in these regions, on the other.

Four bits of information to help understand China a little better ...

June 19, 2008

Some of the key facts about Chinese economy:

  • China is a net importer of oil and oil price is subsidized in China with domestic prices standing at around $78 a barrel according to World Bank. However, after factoring in the recent price rise, the price is around $90 dollars according to the author
  • Exports continue to contribute significantly to Chinese growth. Further the trend shows that real imports growth has slowed more than real export growth. Also, the World Bank forecasts that China's current account surplus will stabilize at around $370 billion in 2008 before resuming its rise in 2009 once the effect of rising oil prices wears off.
  • China's central and state banks are accumulating huge amounts of foreign exchange. A surge in state bank's accumulation recently has been seen in lieu of the hike in reserve requirements - combined with pressure to meet that requirement by holding dollars
 

The Black Swan in the European Market

April 14, 2008

European Central Bank’s (ECB) measures to inject necessary liquidity in the financial system had negligible on the interbank liquidity hoarding which led to sharp rise in inter-bank lending rates. Although the liquidity injections by ECB helped restore the expected overnight lending rates (EONIA) to near target level of 4%, there was little impact on the inter-bank borrowing rates for deposits over 3 months (EURIBOR), which stood at 70 basis points against the usual rate of 5-10 basis points over the target rate since banks were unwilling to lend each other. Similar phenomena were observed in US where steps taken by Fed like the Term Auction Facility were proven ineffective in reducing LIBOR-OAS spreads which were more dependent on counterparty risk factors such as asset-backed commercial paper spreads, and credit default swaps. Since term lending does not affect counter party risk Fed should consider other measures that affect LIBOR-OAS spreads. For example, ECB’s policy framework for direct open market purchases of marketable assets including high-grade mortgage-backed securities could address the ongoing stress in the market.

Japanese Inflation: The Good, The Bad, and The Ugly

June 30, 2008

Optimists in Japan have started hoping that Japan’s inflation will be a possible trigger driving the economic growth for the country as domestic demand scales up in anticipation of future price rise. However a deeper examination reveals that Japanese inflation is primarily an imported inflation fuelled by food and energy price hike since 60% of the food requirements and 100% of the oil needs is being imported. Excluding the impact of oil and food prices, the Japan’s core inflation index is hardly above zero. While the optimists argue that food and energy inflation will trickle down to other prices, the same has not been witnessed on ground. For instance, the prices of the consumer durable goods have been falling. However the deeper concern is that this imported inflation will erode the wage growth leading to flat growth in real terms, suppressing domestic demand and hurting economic growth.