Prieur’s readings (November 9, 2009)

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Business Intelligence: Marc Faber has short term concerns about commodities, says gold may drop to US$800, November 6, 2009.
Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said he has some short-term concerns about commodity prices including gold. He is also reluctant to invest in bonds.

• Aline van Duyn (Financial Times): Why dollar carry trade faces hidden dangers, November 7, 2009.
Most investors agree that it is out there. What is less clear is how big it is, or how worried investors should be about it. The “it” in question is the dollar carry trade. This is an investment strategy that has recently been extremely profitable and as a result has become increasingly popular.

• Dave Livingston (bizzXceleration): Turbulence isn’t chaos: dollar, rates, trade and markets, November 7, 2009.
Recently when the dollar’s been up stocks have been down, and visa versa. Lying behind that turbulence is the gyrations between RiskOn/RiskOff trading based on liquidity-fueled speculation and the dollar carry trade. All this turbulence has been with us in some form for almost two years but seems to be dampening down. The two problems with a turbulent environment is that the risk and uncertainty is higher so everyone’s looking for the patterns and explanations to make high-information signals out of the noisy data.

• David Batty (Guardian): G20 maintains $1 trillion stimulus as Brown calls for global bail-out fund, November 7, 2009.
Gordon Brown tells finance ministers that taxpayers must be protected from bearing cost of failure in financial sector.

• Shishir Prasad (Business.in.com): Stephen Roach: “There are no shortcuts to prosperity“, November 4, 2009.
Stephen Roach, chief economist, Morgan Stanley, has been warning the world for years about the impending financial crisis. In his new book, Next Asia, he outlines the opportunities and the challenges for Asian countries.

• Mark Spitznagel (The Wall Street Journal): The man who predicted the depression, November 6, 2009.
Ludwig von Mises was snubbed by economists world-wide as he warned of a credit crisis in the 1920s. We ignore the great Austrian at our peril today.

• Henny Sender (Financial Times): Greenlight Capital founder calls for CDS ban, November 6, 2009.
When one of the world’s most renowned hedge fund investors turns 180 degrees on a key financial instrument that has been centre stage throughout the financial crisis, it is worth paying heed.

• Jodi Xu (The Wall Street Journal): Michael Milken sounds warning on sovereign debt, November 5, 2009.
At Imperial Capital’s 3rd Global Opportunity Conference in New York Thursday, Michael Milken spoke about the causes of the financial crisis and what investors in the U.S. should watch out for in future investments.

• Tao Sun and Heiko Hesse(IMF Working Paper):Sovereign wealth funds and financial stability – an event study analysis, October 2009.
This paper examines financial stability issues that arise from the increased presence of sovereign wealth funds (SWFs) in global financial markets by assessing whether and how stock markets react to the announcements of investments and divestments to firms by SWFs using an event study approach.

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