Fareed Zakaria GPS – CNN 12-13-15

Fareed Zakaria said:

Muslims in America are well-assimilated, unlike in Europe.

New America reports that the number of Americans killed by Islamist terrorists on US soil since 9/11 is 45, or 3 people a year, versus 11,000 killed in gun homicides in 2015.

Left-wing populist governments, in power for over a decade in Venezuela, Argentina and Brazil (which total 66% of South America’s population) have all suffered serious setbacks because they have run their economies into the ground as the huge boom in commodities ended.

WSJ expects Argentina to grow less than 1% in 2015. FT expects Brazil to decline 3% in 2015, and which is having its worst recession since the 1930s. Venezuela is expected to decline 10% in 2015 despite sky-high inflation and bare market shelves.

Ian Bremmer at Eurasia Group

The Paris and San Bernardino attacks drew the most divisive responses in a developed state to a national cataclysm that I have ever seen in my 30 year career.

The US will get another more centrist US president in 2017.

The world considers Trump a clown, but clowns have been elected. Trump winning the nomination is very unlikely. The extraordinary antipathy towards the establishment of all stripes is new to America and is not going away.

Berlusconi in Italy and Jeremy Corbin in Britain are not considered serious actors.

The transatlantic relationship that has underpinned the global order for many decades is falling apart.

David Millibrand at Intl Rescue Committee said:

Populism is strong when the center left and right are weak. Centrists Trudeau, Merkell and Cameron are strong, but centrists in France and the US are weak.

Trump’s clownish behavior is dangerous because it feeds the narrative of the clash of civilization and aggrandizes those who would threaten society’s religious. Trump still has only one-third of the 20% of Republican voters: the majority of the minority does not make a majority.

The only way to fight anger is with answers, which all politicians seeking power need. To run in the slip stream of extremism only feeds it.

Bernard-Henri Levy said:

The French National Front’s big result on the first round will not be consolidated in the second round. The reactionary trend (to the attacks) is not as strong as people say.

Trump does not embody the Republican Party, the American dream, the shining city upon the hill in any way. Jihadists, Putin, Iran, all enemies of America all pray for Trump winning the primary and the presidential election.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1512/13/fzgps.01.html

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More Job Losses Coming To U.S. Shale – OilPrice.com 07-16-15

Salient to Investors:

Gaurav Agnihotri writes:

  • The short to medium-term outlook for oil is mostly bearish. The Iran nuclear agreement, Greece, high OPEC production, and China’s market turmoil make an oil price rebound highly unlikely in the near future. Low oil prices will most likely result in more job losses.
  • The US shale sector is already dealing with rising debt and the ever-increasing risk of default. Surprisingly, a recent IHS study revealed that sector has been boosting job creation in addition to supporting around 1.7 million jobs in US. Most US shale industry hedges on production are about to expire.
  • Saudi Arabia is very worried about the coming shale boom in Argentina. George Soros, Warren Buffet, major hedge funds et al are watching as Argentina’s huge undeveloped shale reserves have just opened up to outside oil companies.
  • Goldman Sachs predicts WTI will fall to $45 a barrel by October, making almost a third of US shale oil too expensive to produce, and $50 oil deterring any US drilling recovery this year.

Read the full article at http://oilprice.com/Energy/Energy-General/More-Job-Losses-Coming-to-US-Shale.html

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Palm Oil Seen Dropping as Mistry Has Buy Call on Planters – Bloomberg 09-15-14

Salient to Investors:

Dorab Mistry at Godrej Intl said:

  • Palm oil at a 5-year low creates a buying opportunity for plantation and processing company stocks because producers are still making money.
  • Invest in plantations when palm oil prices are low. In Q4, 2008, when in a similar situation with regard to supply, demand and price, palm oil rapidly made itself competitive and exported its way out of a crisis as Malaysian stocks peaked in December 2008.
  • Prefer processing companies which manufacture specialty fats, oleochemicals, biodiesel and own consumer brands. Upstream companies will benefit when the price cycle turns.”
  • Expects prices to drop 9.6 percent to $588 a metric ton in the next few weeks towards Asian growers’ production cost but not below.
  • Full-year output in Malaysia, the second largest grower, will be more than initially estimated, while production at the largest grower, Indonesia, is also ahead of expectations.
  • Stockpiles will continue to rise and peak in December. Chinese imports will remain thin for at least the next 3 months as high-priced stockpiles are used up.
  • After the record US soybean crop this summer, farmers in Brazil and Argentina may switch to soybeans from corn this year. Argentina will devalue its currency to boost its overseas shipments.

Adrian Foulger and Denis Chai at Standard Chartered recommend plantation stocks to profit from a rebound in prices, and say the way to make money in the palm sector is to buy growth operators when prices are low and sentiment is weak.

Read the full article at  http://www.bloomberg.com/news/2014-09-15/palm-oil-seen-dropping-as-mistry-has-buy-call-on-planter-stocks.html

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O’Neill Says Emerging-Market Selloff Creates Buying Opportunity – Bloomberg 02-04-14

Salient to Investors:

Jim O’Neill said:

  • We are closer to a buying opportunity in emerging-market stocks than to joining in the panic.
  • While some places in the emerging world have real problems, to herald an emerging-market crisis is ridiculous. Ukraine, Thailand, Argentina and Turkey have some serious issues.
  • The Fed decision to taper is amplifying the selloff in emerging-market assets. Tapering is more problematic for emerging economics but affects everywhere, but is not to be confused with individual emerging countries having genuine problems.

Read the full article at http://www.bloomberg.com/news/2014-02-04/o-neill-says-emerging-market-selloff-creates-buying-opportunity.html

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Markets punish South America’s Bad and Ugly economies – BBC News 02-02-14

Salient to Investors:

Investors are abandoning emerging economies, good and bad, for the US.

Morgan Stanley said Brazil, Indonesia, India, South Africa and Turkey are the Fragile Five – all with large deficits, slowing growth and vulnerable currencies.

Argentina is generally credited with starting the general panic after playing fast and loose with its deficit and letting inflation take hold: government attempts to control the economy on a micro-level have been a failure. The Index of Economic Freedom says state interference has grown substantially since 2003, accelerating the erosion of economic freedom, while the judicial system has become more vulnerable to political interference, and corruption is prevalent.

Venezuela and Argentina have been economically mismanaged and are suffering as the great Chinese commodity cycle takes a downward path.

Brazil is unattractive. Elizabeth Johnson cites a fair amount of government intervention, and inflation is very high at 6%, though the Brazil Central Bank has taken tough action and put up interest rates. Johnson said fiscal adjustment is going to be difficult in an election year. However, Johnson said Brazil’s exports are too big to ignore, particularly agriculture, even with the commodity cycle on a downswing.

Brazil is the world’s biggest exporter of sugar, coffee, and beef and close to being the biggest in soya, chicken and corn – with this dominance a fall in the currency is only good news for exporters.

Brazil’s fall this year has been just 2% and appears manageable. Johnson says strategic foreign investors have not been disturbed by the last week’s panic as foreign direct investment has held up reasonably well, while investors in oil and gas, the agricultural sector, in tractor and car manufacturing, and wind power show no sign of concern.

Peter West at Poalim Asset Mgmt lists Mexico, Peru, Colombia and Chile as “good” emerging economies. he puts Mexico at the top of the list because it has been implementing reforms and because of NAFTA,  80% of its exports go to the US and will share in the recovery there.

Peru, Colombia and Chile have all benefitted from the commodity boom and are now being equally punished by the collapse – particularly in the copper price. West says they have done their homework, with inflation under control and some degree of fiscal discipline, and will separate from the Fragile Five, when the dust settles.

Read the full article at http://www.bbc.co.uk/news/25988823?print=true

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Goldman Bearish Gold Call Overrun by Inflation: Argentina Credit – Bloomberg 03-18-13

Salient to Investors:

Argentines are buying more gold than ever to preserve the value of their savings as economists forecast the peso will depreciate 12.9 percent through year-end and the government bans most dollar purchases.

Sebastian Porcel at Global Agro said investors see gold futures as a good option to dollarize their portfolios.

Goldman Sachs last month cut its 3-month target to $1,615, saying the cycle for gold prices has turned as the US economic recovery gathers momentum and investments decrease. Soros reduced his gold stake by 55 percent in Q4.

Gold futures traded in New York have fallen 11 percent in the past six months.

Claudio Burelli at Puente Hermanos Sociedad de Bolsa said the difference between the prices to buy and sell gold is greater than the gap when trading futures, so investors are more at risk of losing money when they need to sell. Burelli said gold sold by Banco Ciudad is not recognized internationally, so more difficult to determine its value.

Read the full article at http://www.bloomberg.com/news/2013-03-18/goldman-bearish-gold-call-overrun-by-inflation-argentina-credit.html

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Morgan Stanley Buys Argentine Stocks as YPF Deal Lures BlackRock – Bloomberg 01-31-13

Salient to Investors:

Timothy Drinkall at Morgan Stanley were overweight in Argentine stocks at the ed of 2012 after avoiding them earlier in the year. Drinkall said valuations are extremely low after government controls on imports and currency markets weakened Argentina’s economy and President Fernandez’s declining popularity has curtailed her ability to implement some of her negative policies. Drinkall expects the economy to expand between 2 percent to 3 percent in 2013 versus less than 1 percent in 2012, helping boost corporate profits.

Sam Vecht at BlackRock Frontiers Investment Trust increased Argentine stocks to 3.9 percent of total holdings at January 16 after valuations fell so much. Vecht said foreign companies’ increased interest in Argentina’s shale fuel deposits may signal easing concern about the risk of doing business in the country.

Thomas Vester Nielsen at Lloyd George Mgmt said the odds of government meddling in listed companies are still too high to invest in Argentine equities.

Bloomberg reports the cost of credit-default swaps has almost tripled during the past year to the second highest after Greece.

Hans-Henrik Skov at BankInvest New Emerging Markets Equities Fund said Argentina is moving in the wrong direction so doesn’t mind missing out on market rallies.

Read the full article at http://www.bloomberg.com/news/2013-01-31/morgan-stanley-buys-argentine-stocks-as-ypf-deal-lures-blackrock.html

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The Global Crises Awaiting Obama – Bloomberg 11-07-12

Salient to Investors:

Democratic gains in the Senate will make it more likely to focus on “advise and consent” than “obstruct and destroy.”

Sanctions continue to erode the Iranian economy and incite public dissatisfaction with the Islamic regime. The rial has slumped as much as 40 percent against the dollar since August, leading to spiraling inflation.

A Trans-Pacific Partnership would eliminate $6.4 billion in annual duties on US exports.

Brazil and Argentina are emerging powerhouses.

Read the full article at http://www.bloomberg.com/news/2012-11-07/election-over-global-crises-beckon-in-obama-s-new-term.html