Finance Trends Letter

A little background on the situation in Thailand as markets resume trading there. From The New Zealand Herald web site: BANGKOK - Thailand went back to work as normal on Thursday after a military coup legitimised by the king but the opposition called for fast-tracked elections to show the new rulers are serious about a return to democracy. A day after the military shut down the city in the interests of maintaining calm, Bangkok traffic was back to the familiar near-gridlock, while coup leaders worked on fulfilling a promise of a civilian prime minister in two weeks. The stock market was down just 0.6 per cent at the midday break after falling as much as 4.2 per cent in the first minutes, a far less precipitous drop than had been feared in the immediate aftermath of the coup. Traders said a royal proclamation legitimising the military government went a long way to reassure investors. The coup leaders said they would craft a constitution within a year to repair flaws that ousted Prime M...

Thailand's SET Index hasn't completely retraced its losses following yesterday's 15 percent plunge, but we did see something of a rebound in stock prices in Bangkok and emerging markets across the world. As Bloomberg.com reports in, "Emerging-Market Stocks Gain; Thailand Rescinds Capital Control" : Emerging-market stocks rallied from the biggest drop in three months after Asian nations said they won't impose capital controls, less than 24 hours after Thailand's failed bid to limit foreign investment. Thailand's SET Index jumped 11 percent in Bangkok after the government exempted equity from restrictions that had sent the benchmark on its biggest slide in 16 years yesterday, wiping out $23 billion in market value. Stocks in South Africa, South Korea, Malaysia and Russia rose, helping push the Morgan Stanley Capital International Emerging Markets Index, which tracks 25 markets, 1.3 percent higher. Central banks in Malaysia, the Philippines and Indonesia ...

Currency controls on foreign investment led to a rout in Thailand's stock market Tuesday. Now that impositions on foreign stock investors have quickly been withdrawn, the market is expected to go higher. Bloomberg reports : Thailand scrapped currency controls on international stock investors one day after their imposition by the central bank prompted the biggest stock market plunge in 16 years. The government lifted a requirement that banks lock up 30 percent of new foreign-currency deposits for a year for funds earmarked for stocks, Finance Minister Pridiyathorn Devakula said in Bangkok. The rule, intended to slow a 16 percent gain in the Thai currency this year that threatened exports and economic growth, sparked investor selling that wiped out $23 billion of market value in Thai stocks. ``The surprising speed and responsiveness of this policy reversal should help forestall a deep and lasting impairment of Bank of Thailand credibility,'' Michael Kurtz, a strategist at Bea...

Bloomberg recently ran a lengthy and insightful article on Thailand and concerns of societal unrest in the event of long-reigning monarch King Bhumibol's death (Hat tip: Controlled Greed ). Of course, man on the scene & investor Marc Faber (a regular Bloomberg TV guest) is quoted in this article and offers his take on Thailand's share market and the opportunities present for long-term investors. Here's an excerpt from that piece : "Amid the chaos, some investors see opportunity in Southeast Asia’s second-largest economy behind Indonesia. As of July 7, Thailand’s stock index had surged 30 percent this year compared with a 0.8 decline in the Standard & Poor’s 500 Index. During the same period, overseas investors increased their shareholdings by a net $621.4 million after being net sellers of $4.8 billion in stocks last year. Publicly traded companies in Thailand are trading at just 11 times estimated 2009 earnings, making them the second- cheapest i...

In the ongoing fallout over recent currency controls imposed on foreign investors, Bloomberg reports that some fund managers have stopped buying Thailand's debt . Jan. 12 (Bloomberg) -- Global bond fund managers are boycotting Thailand's debt because of government curbs on foreign investors, raising borrowing costs in Southeast Asia's second-biggest economy. ING Investment Management, part of the largest Dutch financial services company, won't buy Thai bonds after the central bank said Dec. 18 it will fine investors who sell assets within a year of purchase. Aberdeen Asset Management in Bangkok, part of the Scottish fund group focused on Asia, sold half its Thai bonds due in 10 years or more, said Pongtharin Sapayanon, who helps oversee $1.6 billion. ``We won't be investing,'' said Joel Kim, a Hong Kong-based fund manager who helps oversee $10 billion at ING. ``There's going to be very little foreign involvement.'' Fund managers are wary because ...

B eing an essay on the nature of fiat money and credit ... Okay: some items I wanted to share with you about our modern financial economy. A few insights into how fiat money and central banking systems make the modern world go 'round. I thought this might make for good background reading on a subject that is rarely broached in mainstream media and daily public conversation. It will also help us understand the greater forces at work in our modern, "hot money"-driven financial markets. Especially given the focus we've put on this week's events in Thailand and the emerging markets arena. What is driving the rising tide of global liquidity that is fueling all the fast-paced investment flows and speculation? What is it about this environment that's driving deal-making and acquisitiveness to such great heights? I spoke briefly with Dr. Marc Faber by email this week and I asked him about what had happened in the Thailand stock market. The panic in that market (as re...

Here it comes, though we've not yet come full circle on this unfolding political drama. Thailand's ex-prime minister, Thaksin Shinawatra, has been ordered to return to Thailand by the military government that threw him out of power. Thaksin must return by the end of the month or face charges of concealing financial assets. Here's more from the New York Times : Thitinan Pongsudhirak, director of the Institute of Security and International Studies at Chulalongkorn University, was very skeptical that Mr. Thaksin would return and said that the true aim of the junta was probably to discredit Mr. Thaksin in the eyes of his supporters. “This will be used as a tool to convince Thaksin’s foot soldiers that, ‘Look, he is a bad guy,’” Mr. Thitinan said. Over the past three weeks the junta has sought to dismantle Mr. Thaksin’s political empire and loosen the former tycoon’s control over his wealth. His party was dissolved, and he and more than 100 allies were banned from politics for...

Some of the day's top news items to lead off some of the week's most interesting stories. From the Financial Times, "Thailand stocks fall as anxieties deepen" . The New Year's bombings and the ensuing confusion over who is responsible for these acts of terror are adding to worry over Thailand's stability. This drama follows closely on the heels of December's market drop , when Thailand's military government decided to impose - and quickly withdraw - restrictions on foreign share investment. "Bush claims power to open Americans' mail without warrants" , the Christian Science Monitor reports. It was wise to hand over our remaining freedoms to this cabal. Makes Nixon look better everyday. Onto more positive news. The Australian and FT Business report, "Falling births not a wealth hazard" . I found this interesting because this is something I've been mulling over lately. How many times have you heard someone say, "the demog...

Please enjoy our, "Features of the week" . 1. US Q2 GDP revised up to 3.3% on higher exports, spending. But is the BEA measuring growth or inflation ? 2. As the credit crisis continues , consumers will be forced to save. 3. Merrill losses wipe away longtime profits. 4. Credit crisis has produced some surprising winners and losers . 5. Derivatives law sheds light on the financial ripple effect. 6. Pressure mounts on Thailand's PM as protests spread. 7. Reports of Steve Jobs' death are greatly exaggerated. 8. Economist: Is farmland overvalued? 9. FT dopes out the long-term outlook for emerging markets . 10. China's tallest skyscraper meets surging office demand (video). 11. Skyscrapers and Business Cycles - Mark Thornton. 12. Cambodia is building up its economy and attracting investors. 13. Mark Mobius finds Vietnam's stock market attractive. 14. Brother, can you spare some gold coins? 15. "GSEs: too big to survive" , says Michael Pento. Thank...

We've got some great news and interview features for you this Friday. Lot of interesting market-related tidbits here, so let's dive right in. 1. Jim Rogers speaks with CNBC and Maria Bartiromo about the economy, commodities, and the recent worldwide market drop. 2. Noted international investor, Rudolph-Riad Younes chats with Maria about his outlook for investments and opportunities across the globe, and offers some observations on the importance of the upcoming French elections. 3. Marc Faber sits down with Bloomberg for an interesting interview segment. Lots of ground covered here, and I was pleased to hear Marc go into some detail on the issue of Thailand and his investment outlook for that country, so be sure to check this out. 4. The Economist recently took on the topic of tax havens, or "offshore financial centers", and their importance in the world economy. See their online article, "Places in the sun" , for an introduction to their coverage of this...

Update : Bloomberg's July 14, 2008 Jim Rogers interview is here. Marc Faber and Jim Rogers are featured on Bloomberg today in two individual video interviews. Marc Faber tells Bloomberg he expects strength in the dollar over the short term, though he is still bearish on the US dollar over the longer term, and that US stocks may outperform emerging markets over the next three to six months. He also expects commodities to peak and begin a meaningful correction in the coming weeks. Bloomberg's companion article notes that Faber has been correct on his calls to buy gold, but wrong in past calls warning of over-optimism regarding Brazilian and Argentinian shares (both commodity country plays). Oh, and I should note that Faber specifically mentioned the media's silence regarding Ron Paul's 10 percent standing in the Iowa caucus. Funny that people who live outside the country (in Marc's case, Thailand) should have more of an idea about what's going on in our polit...

Market's closed , kids, at least in the US. Everyone over to Bear Mountain Bull's house for iced tea and clips from a CNBC discussion with investors Jim Rogers and Marc Faber . I'll bring the Milano cookies... We've also got a Bloomberg interview clip with Marc Faber for you. It seems CNBC World and Bloomberg are both revisiting the Asian financial crisis ten years later, and both channels have chosen the Thailand-based Faber as a source of insight into past and present financial and economic conditions. Plus, Jim Rogers in a recent Bloomberg TV appearance . The discussion centers around water, agricultural commodities, emerging markets, and the rising stature of women worldwide. Be sure to check out both sets of clips. Happy Independence Day!

In the interests of catching up to the new week following the President's Day holiday, here are some items of interest to help us get back in the swing of things. Enjoy! (1). The Oil Drum pointed us to the following story from the Telegraph.co.uk, "Cheap solar power poised to undercut oil and gas by half" . The crux of the article: new materials are making solar power cheaper than ever on a per watt basis. Utilities are now concerned that an increasing number of people will use solar power instead of their fossil fuel derived electricity during peak hours. Oh, the horror! (2). I can't say that I'm an ardent reader of Jim Jubak's investment articles at MSN Money, but the topic of his most recent article seems very interesting. In, "How long can China pollute for free?" , Jubak examines the costs of water and air pollution that arise from China's relentless push for economic growth. While countries such as England and the US took a very long time ...

Marc Faber sits down with Bloomberg TV for an extended chat about the global economy and investment markets. Faber tells Bloomberg's Bernard Lo that the global economy is "stuffed" for some time, with economic activity (ex-government spending) is down about 15 percent from the peak (2006-2007). This past prosperity was built on borrowed money, and although Marc expects the economy to stabilize at some point, he does not expect us to surpass these peaks in prosperity and speculation for some time. However, Marc does see intriguing value in depressed commodities and equities in sound companies. Whenever the recovery comes, it should lift these asset prices. Marc is also still long-term bullish on gold and all the precious metals, given the unprecedented state of global money printing and the inflation that is sure to follow. Plenty more to hear in this engaging and entertaining interview clip; be sure to catch Marc's comments on some of the "special" crops th...

We've got a lot of information to share in this Friday's edition of our "Features of the week" . And while I'm definitely a proponent of being selective when it comes to information, I do hope you'll all take some time to check out these article features which cover a number of different, and fascinating, topics. Having said that, enjoy! 1. "Good Companies, Bad Karma" . A Q&A discussion with marketing guru Jagdish Seth. 2. "Freedom, not climate, is at risk" . An FT comment by Vaclav Klaus. 3. The cost of gasoline around the world . Excellent graph and analysis from The Oil Drum . 4. There's a downside to Alberta's oil boom and it comes in the form of soaring rents and shortages in education, recreational opportunities, and medical services. 5. Building cities in the desert sand . Prince Fahd bin Sultan and construction mogul Bahaa Hariri hope to build megacities in Saudi Arabia where desert now stands. Will their long term pla...

Welcome to our "features of the week", where we highlight some of the most interesting news stories and web features around. Grab a seat and enjoy! 1. Let's have a sit down: "Bancrofts to discuss Dow Jones offer with News Corp " . 2. USA Today reports that government accounting rules are hiding trillions in liabilities . 3. FT.com on the pros and cons of "Business oriented venture philanthropists" . 4. Renaissance Capital CEO Stephen Jennings looks to Africa for future investment opportunities. 5. Peter Schiff talks to Bloomberg about what's fueling China's investment mania . 6. Fintag and FT on efforts to replicate hedge fund returns. 7. The Big Picture points us to a video interview with Bill Gates and Steve Jobs , together onstage in a rare joint appearance. 8. The Kirk Report tips us on a piece that highlights the wisdom of Charlie Munger . 9. Chongqing is western China's largest city, and is growing in size daily. IHT.com on China...

Always timely, always thought-provoking. Get a read on the week just ending and the weeks ahead with our, "Features of the week" . 1. Touradji rebounds, as Anderson's Ospraie Fund dives . 2. Goldman cuts Merrill to "sell" , sees new writedowns. 3. Thursday saw breakdowns in some of the major US stock indexes . 4. PIMCO cries out for taxpayer-funded bailouts and more government intervention in the markets. 5. BIS says the ABX index is overstating subprime RMBS losses . 6. Video: T. Boone Pickens sees oil going back over $150 within a year, and talks his book on wind and natural gas and the desired government subsidies. 7. Five things Republicans and Democrats won't tell you: Caroline Baum. 8. Looking for the next investment bubble : Matthew Lynn. 9. John Rubino compiles the best investment quotes of August 2008 . 10. Stock markets: a short history of boom and bust . 11. Marc Faber joins Bloomberg TV to talk oil, airlines, the economy, and the political p...

Investor and financial writer Marc Faber speaks with Bloomberg about the state of the world economy and the investment outlook going forward. Marc says asset prices have been going up due to easy money policies worldwide. He also feels that any further liquidity expansion from the U.S. will result in a continued increase in asset prices against a backdrop of continuing dollar weakness. As Faber points out, the S&P 500 has marched higher this year (up 13 percent in dollar terms), but is up only 2 percent in terms of Euros. In other words, "the strength in the S&P has been offset by dollar weakness". He sees relative value in the stock markets of Asia, giving specific mention to Thailand (where the currency has strengthened against the dollar) and underperformer Japan. While Faber says he is currently taking advantage of the opportunity to sell assets, he feels that anyone who remains bullish should focus on Asian equity markets.

A recent comment piece in the Financial Times outlines America's possible role in promoting a new regional order to check China's growing power in Asia and the world. Entitled, "America is pursuing a grand design in Asia" , the piece is written by Daniel Twining, a former advisor to US Senator John McCain. Here is a bit of the opening: Asia’s strong states will shape the future of international politics more than the weak states and terrorists of Afghanistan, Iraq and Lebanon. But China’s continuing authoritarian rise, like Thailand’s descent into military dictatorship, suggests that the quality of democracy within Asian nations will be important in determining the course of the emerging Asian century. Recognising this, the Bush administration – anticipating a future Chinese challenge to American primacy – is pursuing a grand design in Asia as ambitious as its campaign to transform the Middle East, and as bold in its use of military power and democratic values as stra...

Here's the news from the Times Online : Army-owned television stations interrupted their scheduled broadcasting to show images of the country's revered Royal Family and songs associated with the Army. At least 10 armoured vehicles were seen in central Bangkok and around 50 soldiers were reported to have arrived at Government House in the Thai capital, ordering police officers to hand over their weapons. The cable television station of the Nation newspaper reported that tanks were parked at the Rachadamnoen Road and Royal Plaza close to the royal palace and government offices. Thaksin Shinawatra, the Thai Prime Minister, who is expected to leave office later this year after a disputed election and mass protests against his Government, is in New York for the opening of the UN General Assembly but he ordered the army not to "move illegally". "I declare Bangkok under a severe state of emergency," he told the country's Channel 9 TV station. He also said he wa...