Markets in the week (6-13 Nov)

Personal comment.

On Friday, the markets appeared to throw a sense of strength: General Motors touched lows and reported that no government assistance would go to the bankruptcy and unemployment in the U.S. grew in two months in more than half a million people and yet the stock market rose. However, if one takes into account that since 1896 he had never lost in both the Dow Jones three days after a presidential election, the SP down together on Wednesday and Thursday is the highest in two days since 1987 and the rebound technical after he was so down-low volume, and could give an explanation and it was feared an exception to the weekly trend. The large package of measures the Chinese government of the weekend (from $ 600 billion is the fifth of GDP, which would be another and a few cartridges) extended this feeling positive in Asia and Europe on Monday morning with the exception of Ibex. There's no joy until the afternoon of Thursday in USA.

The bank Santander on October 28, at the mouth of its CEO Alfredo Sáez, denied need more capital. On November 10 announced an expansion. In these few days has been convinced of the impossibility of selling the Bank of Venezuela, shared ABN assets, Cepsa, the fund management and insurance, the price demanded. In short, he has bought unsold before and now has met with a liquidity problem ... (safe somewhere caught in a mortgage-bridge that sounds something) and expanding it is costing all shareholders million in market capitalization euros. And serve to illustrate what is happening with the economy and that makes this crisis only: no matter how much lower interest rates, including EURIBOR, if that cheaper finance is not paid and if there is interest in using this possible liquidity to invest. Until Santander wants to sell assets and unable to do so raises the liquidity of its shareholders or attempts to capture new ones. Santander can do that, but how many companies can do the same, how much funding will get lower rates?

I attached two charts USA, with shading on the cycles of recession, one is the unemployment rate in the U.S. and its forecast to reach 8%

The other is the ISM manufacturing index:

In Spain the situation is similar at other times we have seen much worse economic data and if the figures do not even the bank bad debt is still worrying (http://www.economistas.tv/la-morosidad-oficial-no- is-so /) As shown in the figures economic cycles have been more desperate, it might be a cyclical crisis and give more reason to feel optimistic that you can leave it in months. But it is necessary to recover the credit market, without this condition will worsen and data, as we have seen this week, the suspension of payments that began in financial, banking and then went on to insurance companies, will reach shops and industrial companies.

And that perception is destroying the economy and stock markets, the beneficial effect of lower interest rates. If we add to that the fact that I said the need to sell assets in order to have lost value of cash, accounts for the balance of the week. The best quality of the bag-your-liquidity now is one of the greatest obstacles to the upward trend since it is one of the few markets to draw cash if needed, even at the level of citizens is even easier to sell shares to lose a lot to try to sell another property. As positive aspects of this bad stock weeks, two factors: the low volume decreases (although it can also mean that we remain far from the capitulation later also from the ground) and the finding of the telecoms sector as a safe-to-date available. Now we have to have faith in the famous reunion this weekend but particularly in the aspect I have more faith in market potential manipulation bullish next Friday 21 expiration of the effect of some future (which is the Ibex) and options almost all indices. In fact, statistically the next weeks is a very friendly bags.

Finally, it is very important, despite the rebound yesterday afternoon, falling crude oil (although the effect of the weak € and other causes less understandable its effect on the price of a liter of fuel is less noticeable), gas natural and, in general, all the raw materials. This is no longer seen as something positive because it's getting the bags in many economies where there is much money ... the most important example is Russia. You may see manipulative maneuvers to prevent the oil-icon of all raw materials and lower-stop-confident person to make a speculation in a possible rebound in oil prices and gold. (More ...)

Written by Droblo on November 14, 2008 with 337 comments
Read more articles on papers.

Real CPI

Since he is no longer the "gold standard" and a ticket does not represent anything physical but simply faith in the issuer has formalized the old adage that says the economy is based on trust. While there is confidence the economy may be good but there are points "dark." Why? Because if consumers and businesses and banks to create a good future, spend, invest and provide and this will generate well-paying jobs so the virtuous circle will continue to operate and continue to spend, invest and banks to finance projects future.

For the trust do not miss the speeches of political and economic are mostly reassuring because if you lose falling economic growth and enter a vicious circle: consumers do not spend, companies earn less and reduce their investment and banks because they get the credit delinquencies increased. The order may be reversed as is happening with the current crisis: banks reducing credit to the outbreak of the housing bubble and late payment by bad investments, under the credit to businesses and consumers, scared by all this, spending less and therefore less to buy companies that reduce their profits and, ultimately, generate unemployment. Besides the problem in society that this generates, it is evident that if unemployment rises and companies and banks earn less income is lower because of the administration are paid less taxes while increasing spending on social needs.

All this is very basic and there is nothing original but a factor that can undermine trust and that usually goes unnoticed: the veracity of official data. Not because they are true or not, but for how to calculate them. And it would take pages to explain how such industrial orders data is distorted USA orders each month with government war machine or the management of the Department of Labor with the monthly employment data ... there are many examples. However, one of the most striking to me is the calculation of the CPI.

Take the example of Spain, whose CPI in 2007 was 4.2%, which should mean that average prices rose by 4.2% but it is clear that a television, for example, do not shop every week or even every year but the milk (which rose 31%) is almost daily, or bread (+14%) and fuels (+16.2%). Some say that the perception of these costs-to-be everyday makes us believe that inflation is higher than what it is but I think that is the weighting system which is not fair.

How is it possible that when home prices rose an annual 30% inflation was only 3% if half of the household budget is going to pay your own? Let us go further: In the 20s, share prices in the U.S. rose an average of 3.5 times in five years, but prices of consumer goods did not vary significantly. Should we conclude that there was no inflation? Why? Why exclude the inflation rates, for no reason, financial assets? If low interest rates we had in Spain in recent years have afluido, rather than mortgage credit, to consumer credit, the CPI would have fired (instead of housing prices) and it would have suffered Official inflation.

Current weights based 2001 and adjusted slightly each year. The latest data available are these:

With these data we can see that inflation affects the poorest who are based mainly in their first paragraph.

Now that every reader see if this table is in line with their charges and found that this calculation is very similar in all countries around us, is very subjective ... But, as we believe the data and back to the issue of confidence - everything will be fine and we accept that our salaries and pensions go up each year, the official CPI and so we think that we do not lose purchasing power.

This official website you can calculate how much the CPI has risen from official dates (data from 1961):

PD - Still others are doing worse, look at the figures of the country most inflationary in the world:

Press Summary:

• The German economy entered into recession after contracting 0.5%
• U.S. assets will not buy more "toxic" but invest in banks' capital
• BBVA forecast: rates down to 1.5% and 2.5% is the Euribor
• Up to 25,000 businesses will miss this year's closing
• The interest is still not working: just cross transactions a day
• Santander began the largest capital increase in cash for Spain
• The government re-shuffled the top in January
• The crisis that the Spaniards will spend up to 11% less this Christmas

Written by Droblo on November 13, 2008 with 428 comments
Read more articles on papers.

Week in the markets (31 Oct - 6Nov)

Personal comment.

After the miracle that was expected (and confirmed) this week, which is called a black Hussein Obama and get to the president of USA (another miracle will do so well), I received news of the aid of our government the mortgage and I thought if there were any other one this week and the government have gone from here when called for direct aid to the people. But I fear not the case: the government decided to deny the crisis first and then support the bank with a series of measures hardly justifiable to the alleged strength of our financial sector. Now that results have boxes and banks and profits have continued to be astronomical (if they are not imply that aid has not been a change in transparency, any entity which is still missing in Spain this loss when it is stronger in other countries that we) decided to "help" directly to certain mortgage helping them go through this downturn. But once again become a more aid for banks to citizens. I think the forum has already been felt all of opinion on this issue and I must say that very sharply so I just want to emphasize again that the prevailing idea is something like: "We are in the worst of the crisis, the guarantee deposits until 2010 and help the mortgage and two years later with the revival that will all be fine, "What will happen if those unemployed after a moratorium of two years can not find work? For that there is no answer.

Of course it is desirable that all this is more a cyclical rough patch but for the moment this seems far removed from reality. The figures continue to worsen every week and what is valued as improvement after adjustments may simply be a very sharp. Look at this original graphic where we can see how it appears the tendency of banks to borrow from the Federal Reserve is changing, but if we compare with other periods in which not even need to resort to EDF, it is easy to appreciate the level of banking crisis the USA and alejadísimo that this is settled:

I do not see any signs to believe that this crisis will last only a few months. E insist not confuse the stock market (which may well bounce for a few weeks as he was bounced a few days) with the real economy. The macro data are disastrous, unreservedly and hope that the discount-rate change can be justified or not, just realized for many months, and that if it lowers the credit drives. If not, only reduce the benefits of saving activity without encouraging investors. The worst thing is that the states are running out of room for maneuver in Spain itself has acknowledged Solbes (http://www.elpais.com/articulo/economia/Solbes/dice/habra/recursos/afrontar/crisis/elpepueco / 20081105elpepieco_6/Tes)

Turning to the bag, the idea of "This is a bump, a historic opportunity to buy, but months back upward path" is being installed. And yet this week (except in Europe, Thursday-closed flat Thursday, with some other better and worse) has to have a negative balance. And what if we look at the percentage increase since we have been minimal, the drop is notable because it was very abrupt. And they met the upward trend in November and rise up to (Tuesday) after a day of low volatility (Monday). But even with the help of central banks has been with the resistance that led commenting two weeks ago and is still stuck in a dangerous area. The Dax rose well above the 5000 but was unable to keep the SP and the arrival in 1000 was the perfect excuse to very aggressive sales. The Dow and the Ibex or have approached the 10 mil ...

The fear is still there and as we saw on Wednesday that although statistically the markets work better on the day following the victory of a Republican than a Democrat is that the truth should have been positive expectations were met and there were no surprises, but these recent weeks about buying the rumor and sell the news is becoming a habit and this caused deep bass movement. As I said last week, while there is calm but rising threat falls in there in a hurry to sell. And he has returned to fulfill. However, I detect many voices that speak of buying in the fall of the year-end rally is possible .... I remain neutral and envy it is clear that at these levels because I keep seeing danger to both sides. Today we know the data of unemployment last month and is feared to be disastrous, more than -200 thousand. As you recall that statistical curiosity was not so bad a figure since March 2003, just months in the death of the previous bearish trend upward and eventually began in fall 2007.

And what about the Euribor, a point: that is truly novel now has one year deposits in financial institutions and which are due before 2010 and thus are guaranteed by the state, giving a return similar to the cost of a mortgage. I think that an abnormality is corrected when the 2009 and not much need for liquidity to match balance at the end of the year. The Euribor rate comparing with a year to 14 days of intervention by the ECB should better compare the profitability offered by your bank to a year and what it pays in the same mortgage bank and verify that the differential is not so much . Not to defend the banks with this, just describe a reality, the battle to capture liability is so great that the difference between what a customer receives money and what they must pay money for a mortgage is minimal. One consolation: yesterday in U.S. rates were at 1% and 12 months at LIBOR 2.84 (a 184% increase), here have andalusia 3.25 and Euribor 12 months to 4.70 (a 44.62% increase). But still could be much worse ...

(more ...)

Written by Droblo on November 7, 2008 with 297 comments
Read more articles on papers.

Economy Homer (II)

Some economists argue that the bureaucracy and the public sector has a very strong tendency to increase their budgets beyond what is considered efficient.

I do not know your work, but mine have cut costs wherever they can, travel, meals, recruitment, office supplies, telephone, Christmas (yes, I'll be is here, etc.). Should we not demand the same from those who are managing our taxes?. Eye, do not speak at the official, speaking on a strategic level and move toward smart spending, leaving the studies of the degree of hybridization between the common quail and Japanese quail for better times.

So after this tantrum by the waste of government to step into the press briefing a day after the U.S. elections, looking up to the economy of truth.

• Trichet could lower rates today by 0.5% (at 3.25%) and place them at 2% in 2009
• Ordonez estimates that banks can absorb up to 9% of arrears
• Bankinter contemplated returning to some customers by Lehman losses
• Wall Street slams on the brakes after the impact Obama End rebound?
• Industrial production suffers second biggest fall in 15 years
• The boxes would prefer to pay exorbitant rates before they go to the bottom of the Government

Written by Carlos Lopez on November 6, 2008 with 282 comments
Read more articles on papers.

Miscalculations

An ancient legend says that Sheram, Prince of India, was so surprised when they learned the game of chess, who wanted to reward generously Sessa, the inventor of that entertainment. He said: "Ask me anything you want." Sessa said: "Sovereign, send me a grain of wheat delivered by the first section of the board, two in the second, four for third, eight in the fourth, and so on until the box 64.

The prince could not please you, because the outcome of the operation S = 1 + 2 + 4 + ... + 2 ⁶³ is approximately 18 trillion grains. To get that would sow the whole Earth 65 times.

Sometimes I think that some banks have been passed as the prince of the story, which has pledged the money first and then calculated and it is not, nor had it had the human form they have.

In February 2006 there was a political controversy in the United States following the purchase of the management of six major ports by a Dubai state-owned. President Bush hailed the operation but the Congress, arguing national security, be achieved by delaying the agreement until finally an American company took over the contract. Many Americans were afraid that Dubai-ally considered by the government but in Muslim-majority manage something as important as the safety of the major seaports of the country.

However, in the financial world, the main U.S. takes months and months looking for money regardless of their origin. The crisis of liquidity and confidence has given back to the tortilla and not know what Americans think of walking, but the executives do not disclose any financial problem that the savings (and therefore also the management of pensions in a country where they are mostly private), the decision to grant credits and direction of investment by major banks in the world (in the list of those who have received money from Asia are also the Swiss UBS and Britain's Barclays) are largely mediated by governments that are dictatorships (such as UAE and Kuwait and China where there are elections but women could not vote), representing a majority population and whose anti-Western geostrategic interests (such as Chinese) are conflicting with U.S. interests.

To top the liquidity available for U.S. equities (on the debt is not the case) according to official figures has been largely allocated by fund managers to buy outside the country:

In the first eight months U.S. investors took 68 bn. $ Equity funds, of which 51.8 bn. Funds were invested in U.S. stock market. A year ago was much worse: 81 bn entries. $ In equity funds with sales of 16.4 bn. funds that invested in U.S. stock market.

Ie, in 2007 bought a large amount of money outside the U.S. and made money out of the bag USA. It could have been suspicious of the $ a thought (that was correct until recently) in more profitable assets in yen and € but it is symptomatic: USA managers draw money from American equities even in uptrend begging for money and now Arabic and Chinese.

Should not because the U.S. authorities in their efforts to monitor these flows interventionist? And no Asian investors should consider that might not be good where there buy sell? And the big question: Will there be enough money in the world to solve this in the story or have to wait 65 crops?

PS: And since today is a day as stated in that a change was consummated in the presidency and we are talking about USA miscalculation might be interesting to recall the cost of the intervention in Iraq that the Nobel JOSEPH E. STIGLITZ estimated in March this year and $ 3 trillion according to some voices that should already be in the 4 billion. Money which, remember, has pulled sunk as many taxes they pay to the state that some companies have won contracts in Iraq, or will not reach 10% of that figure. Who says that the reason for all the depth of this crisis can not be in that cost when the U.S. authorities argue that less than 1 trillion will fix the financial crisis?

And to complete the usual summary of the press in which we are all aware of as he lay on the economy Obama's victory:

• Oil soars more than 10% and exceeds the new $ 70 per barrel
• Martins offers pay creditors only 50% of its debt in exchange for being the first to collect
• House prices down more than 10% after 14 months of fall and placed in a minimum of three years
• The foreclosure moratorium for the unemployed will cost between 100 and 400 million
• Obama's victory opens the way for a new relationship with Spain
• The march green: Gamesa, I. Renewable EDF, EDP and Acciona rise in the stock exchange before the new 'President'
• Fagor sacrificed pay extra to pay for retirement
• Solbes: Spain has "exhausted" the scope for anti-measures
• The sale of assets to E. ON of Endesa profit shoots a 243.8%
• Caja Madrid announced the postponement of tile banks Cibeles

Written by Droblo on November 5, 2008 with 259 comments
Read more articles on papers.

I want it all

One of the first songs that we worked when I was a kid and took me to an academy to learn English, which was the most famous song "I want it all" (Aiguaniral) from Queen, the legendary British group led by the late Freddy Mercury (not Freddy Mae, also deceased). The teacher, a typical pipe including English, told us that the chorus (I want it all and I want it now), referring to the attitude of today's youth (then) that "I want everything and I want Now. " We are talking about a word that in his time (for almost 20 years) were recorded and that over the years have been taking effect.

In today's society, the social marketing and the need to belong to the flock, we are "forced" to follow this up to wanting to have everything and want to have it now, and this subjective considerations aside, it has a cost, which can not escape . When older people tell us they saved before you buy what they wanted or needed, we seem alien, and thus can be seen in shopping malls, we ignore its recommendations.

Let's analyze this cost component.

The "I want it all" refers to the price (not value) of the goods we want, the plasma, the bar with xenon lights, the A4 Wagon (with xenon lights), etc ... It is part the problem of over-consumption in which we live, but not the critical point, as if paying comprásemos debit (with cash in our pockets), would enhance the consumption and production, but would not be going to the trouble arrival of the crisis.

The "I want it now" is more problematic, because we live in a system which penalizes savings for consumer credit. Financial institutions themselves do not offer attractive savings products, at least until last year that have needed money like water to drink and have espabilado.

Let's do some calculations to get "face-saving or spending that accounts for us" I want it now. " Take for example the purchase of a vehicle priced around € 30,000.

We request a credit to the dealer's financial and pay 8% in 4 years (proposed capital repayment), or conversely, start saving now, put a fixed amount each month into a high-pay or deposit ( operation of capital). We count the cars as the price rise of CPI, so the latter need more money for the car of the future. The numbers are as follows

A credit:

Amount to finance: 30,000
APR 8%
Fee: € 732.39 / month
Fees: 48
Interest paid: € 5154.61 (ALARMA APPLES AND PEARS)
Total pagado: 35.154,61€ (ALARMA PERAS Y MANZANAS)

Con ahorro previo:

Cuota ahorro mensual: 640€
TAE: 4,50%
Cuotas 48
Capital aportado: 30.720,00€ (ALARMA PERAS Y MANZANAS)
Intereses ganados: 2.872,52€ (ALARMA PERAS Y MANZANAS)
Dinero ahorrado: 33.592,52€ (ALARMA PERAS Y MANZANAS)

Ahora podría ser demagogo y decir que de una forma hemos pagado 5.154,61€ de intereses y de la otra hemos cobrado 2.872,52€ por lo que la diferencia son algo mas de 8.000€, que sobre 30.000€ es algo mas de un 25%, pero ya que el otro día estuvimos practicando el tema de la asimilación a rentas financieras, observemos que el ahorro producido es equiparable a una renta de 48 pagos de 92.39€ (732,39-640) que con fecha de hoy tiene un valor de 2.133,34 (actualizado al 3.50% precio esperado del dinero), que sobre los 30.000€ es un 7.1% aproximadamente.

Como veis, las finanzas son un poco decepcionantes, ya que tantos números para solo 2.000€, pero lo hay que ver es que en el momento de tomar la decisión de ahorrar o financiar, uno acaba de generar un gasto de valor actual 2133€. A pesar de este gasto (que se corresponde al valor actualizado del margen de beneficio del banco sobre el tipo de descuento que usamos para calcular el valor actual), es relativamente barato comprar a crédito, y por lo tanto es lógico que en la toma de decisiones, en un contexto que no penaliza el endeudamiento, las compras se hagan a crédito.

Como conclusión final, observamos que el dinero es barato, y los que nos lo sirven (los bancos y el BCE) son tan responsables como nosotros mismos de que el “I want it now” sea el pan nuestro de cada día. Si repetimos los cálculos con intereses al 15% y remuneración de cuentas al 12% los números cambian mucho, ya que la diferencia mensual son casi 200€, cantidad nada despreciable.

Hace unos días, hablando con un solvente empresario de impecable carrera profesional e ideas claras, me comentaba que el dinero barato de estos últimos años es una de las causas del empobrecimiento de la clase media por la poca presión que han hecho los sindicatos ante la perdida de poder adquisitivo, ya que lentamente nos han cambiado el sueldo por el crédito, manteniendo la “aparente capacidad de consumo”.

Por lo tanto, en la actualidad es bastante lógico que prefiramos comprar a crédito que ahorrar, pues los magnates del dinero así nos lo “imponen”, desincentivando absolutamente la planificación, el ahorro y el control presupuestario, convirtiéndonos en “semi-esclavos” del crédito, trabajando para pagar lo que ya hemos consumido. Cuando no debes nada a nadie puedes plantarte, salir del sistema e irte al monte criar cabras, pero cuando debes lo que comiste el mes pasado es muy complicado salir del sistema. Consumiendo un 20% menos cada mes, necesitarías cinco meses para salirte del sistema “VISA”, y en cinco meses, los propósitos pueden caer con facilidad (con un empujoncito del marketing), sino observad cuanto duran los propósitos de nochevieja.

Y para concluir, el habitual resumen de prensa:

• ¿Ha pasado lo peor? Las elecciones y el paro en EEUU marcan una semana decisiva
• El Commerzbank se acoge al fondo de rescate del Gobierno alemán
• Los bancos se lanzan a la compra de inmuebles para evitar más mora
• La morosidad de los ayuntamientos se dispara: ya tardan más de ocho meses en pagar a sus proveedores
• España a la deriva por su culpa y la mía
• Las ayudas a la Banca sólo serán secretas en los primeros meses
• El gasóleo debe bajar aún un 9% para reflejar la caída del petróleo
• Diez consejos para los malos tiempos
• La crisis la están explicando los mismos que la han creado

Escrito por Oriolrc el 3 de Noviembre de 2008 con 220 comentarios
Lee más artículos sobre Articulos .

« Artículos más antiguos

No hay artículos más nuevos