Thursday, June 16, 2016

Felix Zulauf – Gold To Rally In 2016
"Business fundamentals are weak. …currencies in Asia have started to weaken. The market is wrong in assuming that economic growth in China is reaccelerating … Credit data are pointing downward. Inventories are high in the U.S., China, and Asia’s major exporters. …Also, the automobile cycle, which has been an important driver for the world economy, is peaking. In the U.S., car-loan delinquencies are creeping up…. Polls in other nations, including Portugal, Italy, France, and Spain, show that 50% of the population would like to leave the euro today. What company wants to make long-term investment commitments in Europe if it can’t be sure of the institutional and regulatory framework?… Almost all asset prices are high historically. …The risk is high and rising that something will go wrong in the world economy. …The private sector in the emerging world is more levered than in the developed world. Return on equity in the EM [emerging market] universe is below the level of 2009, and those countries are highly indebted in U.S. dollars. …I foresee a deep crisis in that part of the world. It could begin by mid-2017, at the latest. I am bearish on equities and constructive on high-quality bonds. Also, I expect gold to rally this year."
link here to the article

1 comment:

Anonymous said...

How To Avoid Getting Arrested When Mismarking Your Month-End Bond Book

The unspoken truth here is that virtually anyone who has traded illiquid OTC securities like CDS and bonds, either Level 2 or especially Level 3, has most likely fibbed on occasion, especially if it made their performance look better. However, like in the case of JPM or even UBS, nobody had actually gone to jail, or even been arrested for such a transgression.

Until yesterday.

On Wednesday, a hedge fund manager working for NY-based Visium Asset Manager, was charged with trading on confidential tips about drug approvals, in one of the biggest insider trading cases since a 2014 court ruling made it harder for U.S. prosecutors to pursue them. U.S. Attorney Preet Bharara in Manhattan accused Sanjay Valvani of fraudulently making $25 million by gaining advance word about U.S. Food and Drug Administration approvals of generic drug applications. Prosecutors said the inside information was provided by Gordon Johnston, a consultant who got tips from a friend and former FDA colleague still working at the agency. Valvani passed some of these tips to Christopher Plaford, then a Visium portfolio manager, who made his own illegal trades, prosecutors said.

Valvani, who lives in New York, has been at Visium since its inception and was put on leave in April. He managed pharmaceutical investments and as much as $2 billion, including borrowed money. He pleaded not guilty in Manhattan federal court and was released on $5 million bond.

However, while Valvani's alleged violation was a clear case of trading on inside information, and hardly notable, in a less noticed part of the complaint the government also charged former Visium employee Stefan Lumiere over a separate scheme involving the alleged mismarking of securities, precisely the kind of scheme discussed above. Lumiere was arrested Wednesday and released on $1 million bond. His lawyer said he’s innocent. Lumiere was charged with using sham broker quotes to mismark the value of as many as 28 securities a month. The two secretly passed the fake prices via cell phone or a flash drive delivered by a courier from 2011 to 2013. The inflated fixed-income values pushed up returns, increasing management fees by more than $5.9 million, the U.S. said.