Video-o-rama: Risky assets – optimism waxing, pessimism waning

By Prieur du Plessis, on June 12th, 2009 posted in: Investment, Markets, Money

Despite rising Treasury Note yields, US stock markets yesterday closed at their highest level for 2009. Also, commodities were driven higher by reports indicating that the recession is abating, but the US dollar retreated on concerns of the huge issuance of government bonds.

Elsewhere, Chrysler completed its deal with Fiat, the US Treasury Department announced that ten banks would repay TARP funds, and the Obama administration is dropping its plan to cap salaries at firms receiving bailout funds and has backed away from a large-scale reduction in the number of agencies overseeing financial markets.

Coverage of these events on camera this week included discussions with John Hussman, Chris Whalen, Peter Peterson, Paul Krugman, Mohamed El-Erian, Laszlo Birinyi, Jim Rogers, Jim Grant and Francisco Blanch.

The selection kicks off with the highly regarded John Hussman sharing his wisdom and concludes with an interesting snippet on Africa as an investment destination.

CNBC: Where to invest now?
“The best places to put your money now, with John Hussman, Hussman Strategic Growth Fund, and Art Nunes, IMS Capital Management.”

Source: CNBC, June 9, 2009.

CNBC: Lewis gets grilled on hill
“Discussing whether the Feds went to far in the Bank of America-Merrill deal, with CNBC’s Mary Thompson; Anne Kim, Third Way Economics; Stephen Moore, WSJ; and CNBC’s Erin Burnett.”

Source: CNBC, June 11, 2009.

The Wall Street Journal: Did Paulson’s TARP plan work?
“Dennis Berman and Evan Newmark discuss how former Treasury Secretary Hank Paulson’s TARP plan appears to be working, as evidenced by banks paying back the funds.”

Source: The Wall Street Journal, June 10, 2009.

Yahoo Finance, Tech Ticker: TARP payback – banks, regulators make “deal with the devil,” Whalen says
“News that ten of the nation’s largest banks have repaid $68 billion in TARP funds has been largely cheered by Wall Street, regulators and the press.

“But the payback news is ‘evidence bankers are running the show’, counters Chris Whalen, managing director of Institutional Risk Analytics. The banks and Treasury have created a ‘fantasy-land version of reality’ that the industry is healthy again, he says.

“Banks and regulators have ‘done a deal with the devil’ by believing they can ‘pump up confidence’ to bring credit spreads down and the Fed can keep rates down by buying Treasuries, the analyst says. The Fed is ‘fighting a losing battle,’ Whalen says, arguing the currently favorable rate environment that allows banks to essentially print money by borrowing for next-to-nothing and lending at substantially higher rates will not persist for much longer.

“In the end, the TARP payback is a bad idea because it’s unclear what kind of business model the big banks have without government subsidies, Whalen says. Given the still unresolved issue of toxic assets and expectations loan losses will rise in a ‘gruesome’ second half of 2009, he expects some big banks will be coming back for more federal handouts later this year or early 2010, something the American people almost certainly won’t stomach.”

Source: Yahoo Finance, Tech Ticker, June 9, 2009.

The Wall Street Journal: Can credit markets thaw without toxic assets buyout?
“With banks raising capital, is there still a need for a government-orchestrated effort to get toxic assets off bank books?”

Source: The Wall Street Journal, June 10, 2009.

CNBC: Geithner’s plan for systemic risk
“Treasury Secretary Timothy Geithner says the government will not propose a single regulator for systemic risk issues, reports CNBC’s Hampton Pearson.”

Source: CNBC, June 9, 2009.

CNBC: Washington versus Wall Street
“Discussing whether the government has taken too big a role in monitoring executive compensation, with Peter Peterson, Blackstone Group co-founder and CNBC’s Maria Bartiromo.”

Source: CNBC, June 11, 2009.

CNBC: GM bankruptcy – the way forward
“Discussing what is next for the automaker, with Frederick Henderson, General Motors CEO and CNBC’s Phil Lebeau.”

Source: CNBC, June 8, 2009.

CNBC: Leadership in crisis
“The sharpest minds in business are meeting at the New York Stock exchange for the annual Yale CEO Summit. Duncan Niederauer, CEO of NYSE Euronext, discusses the highlights with CNBC’s Maria Bartiromo.”

Source: CNBC, June 9, 2009.

Charlie Rose: A conversation about the growing fiscal deficit
“A conversation about the growing fiscal deficit with Alan Blinder, Professor of Economics at Princeton University and Director of Princeton’s Center for Economic Policy Studies, David Leonhardt of The New York Times and Alan Auerbach, Professor of Economics and Law, Director of the Burch Center for Tax Policy and Public Finance, University of California, Berkeley.”

Source: Charlie Rose, June 10, 2009.

Bloomberg: Krugman – end of recession approaches
“The Nobel Prize winning economist warned last month in the US that the economic stimulus plan was not enough to induce a recovery. At the London School of Economics he says he sees signs of stabilization.”

Source: Bloomberg (via Clip Syndicate), June 10, 2009.

CNBC: The bond beat with Mohamed El-Erian
“Last week’s spike in the unemployment rate combined with rising bond yields and oil prices has created a headwind on the nation’s course to economic recovery, with Mohamed El-Erian, Pimco CEO/co-CIO.”

Source: CNBC, June 9, 2009.

John Authers (Financial Times): The anxieties of returning to normal
“Indicators of financial stress are back to their levels prior to the collapse of Lehman Brothers, but as FT’s investment editor John Authers discusses, anxieties remain as markets return to normal.”

Click here for the article.

Source: John Authers (Financial Times), June 11, 2009.

CNBC: Birinyi – message from a bull
“Flat performance from stocks this month doesn’t bode well for a lasting bull market but investors should still get in, with Laszlo Birinyi, Birinyi Associates president.”

Source: CNBC, June 11, 2009.

Moneynews: Rogers – Dow 1 million? Sure, why not?
“Investment guru Jim Rogers believes the stock market’s recent gains won’t last because the US economy remains mired in crisis. But he says the massive fiscal and monetary stimulus campaigns engineered by the government and Federal Reserve could cause a huge run-up for the stock market first.

“‘It’s a bear market rally. I was going to say I don’t think the S&P 500 will see new highs,’ Rogers tells The Economic Times of India.

“‘But I have to quickly temper that by saying against the dollar because the S&P 500 could triple from here if they print enough money and the value of US dollar collapses. Then the S&P could go to 50,000, the Dow Jones can go to 1 million.’

“Rogers was probably joking. But you get the idea.”

Source: Dan Weil, Moneynews, June 5, 2009.

John Authers (Financial Times): The crux of the bull-bear battle
“There is a close correlation between the price of oil and inflation expectations. John Authers, investment editor, analyses the outlook for inflation, the key battleground between bulls and bears, and whether there are warnings in commodity prices indicators.”

Click here for full article.

Source: John Authers (Financial Times), June 10, 2009.

CNBC: Jim Grant – rebound in gold prices
“Gold prices have been rebounding as central banks around the world print more money, with Jim Grant, Grant’s Interest Rate Observer.”

Source: CNBC, June 10, 2009.

CNBC: Oil price rally has reached its peak
“Oil prices will probably hold at around $70 a barrel for the time being, Francisco Blanch from Banc of America Securities-Merrill Lynch told CNBC Tuesday. ‘Chances of the price continuing to rise in the next couple of months are not that high,’ he said.”

Source: CNBC, June 9, 2009.

Financial Time: Resounding victory for Europe’s centre-right
“Europe’s centre-right parties on Monday celebrated a resounding election victory that underlined the resilience of the European model of welfare state capitalism in the face of the worst recession.”

Source: Financial Times, June 9, 2009.

CNBC: Betting on Africa
“The rewards and risks in investing in Africa, with Lawrence Speidell, Frontier Market Asset Management portfolio manager.”

Source: CNBC, June 9, 2009.

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