Wednesday, December 11, 2013

Some noon reading for today

Here's some stuff to read:

Michael Shaoul - investing will be trickier in 2014. A Bloomberg interview.

Reformed Borker (Bork Bork Bork!) - 361 Capital weekly research briefing. Consumer sentiment, GM, equity flows, and so on.

Crossing Wall Street - 2-10 spread hits 2-year high. That is apparently a sign of an improving US economy.

Ritholtz - why is everyone sitting on huge piles of cash? Maybe because the market's not at a top yet? He says:
I have not found persuasive the argument that cash on the sidelines was bullish -- except when it reaches extremes in individual investor asset allocations (The American Association of Individual Investors does a nice job tracking this). However, these substantial amounts of held cash, according to multiple surveys, make me further doubt the claims of an equity bubble. The psychology of a frenzy does not appear to be present -- yet.

After many years of equity outflows, accompanied by enormous inflows into fixed income, we have only this year begun to see inflows back to stocks. And, this condition could potentially continue for many years.
But you go ahead and continue to get your financial reporting from Max Keiser and Elliot Wave, neither of whom have a job trading stocks in the markets.

FT beyond brics - India trade balance better but gold concerns persist. An illustration of how nobody really knows:
Ashok Minawala of the All India Gems and Jewellery Trade Federation estimates that almost half of India’s current consumption of gold is being satisfied by smuggled metal.

Others say that – though smuggling is undeniably a problem – the volume of gold coming in through unofficial channels is far too small to deem the official trade data inaccurate.

“It’s kind of like an ocean versus a bucket of water,” says Samiran Chakraborty, regional head of research at Standard Chartered.

It’s difficult to tell given smuggling is, after all, unofficial. But the government’s statistics certainly aren’t stacking up with World Gold Council data. In the month of September, for instance, the government reported imports of 50 tonnes where the council’s sources put that figure at 85 tonnes, according to PR Somasundarum, managing director for the lobby group in India.

His sources suggest the grey market has doubled in size this calendar year and he expects demand to pick up in 2014. The restrictions are only working at the moment thanks to advance buying in April and May when gold prices were at a low.
It's interesting to note that the "smuggling isn't accomplishing much" crowd are the guys at the financial houses, who you'd assume have reason to suck up to Rajan rather than make him look bad. The jewellers, however, are aligned with Modi, so they're more likely to tell the truth about the smuggling.

Mineweb - brace yourself for another round of selling in gold. An Indian perspective on gold demand. Here's a quote:
Secondly, people are finding Indian gold way too expensive to buy, and that will lead to a further drop in demand going forward. If I have to buy an ounce of gold, why should I pay 20% more than the international price? It is going to prompt me to wait, not to buy at this level. So the wise people are not buying gold, but the demand from rural India is very price inelastic, so no matter what prices are, they are buying, because they don’t have exposure to other financial instruments. So, demand from tier one and tier two cities will drop but rural demand, they don’t care what is happening in the international scene or what the government is doing, they just keep buying gold, the monsoon was good so they will keep buying gold.

FT beyond brics - foreign banks in India losing sleep over regulation. Note that the phrase "anxiety over the country’s fickle regulatory environment" is polite-speak for "trepidation about when the government is next going to fuck things up even worse".

Business Insider - bitcoin's libertarian paradise would be hell on earth. Basically, it would mean roving death-squads controlled by a criminal drug-dealing elite - kinda like what you see in every country with (ahem) "minimal government".

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