Beyond Angkor: How lasers revealed a lost city – BBC News 09-22-14

Salient to Investors:

  • The lost medieval city of Angkor in Cambodia once covered 1,000 sq km – only equalled by London some 700 years later – and contained nearly a million people and the world’s biggest religious complex covering area 4 times larger than Vatican City.
  • The end of the medieval period saw dramatic shifts in climate across south-east Asia causing catastrophic flood damage to Angkor’s vital water network and a spiral of decline from which it never recovered.
  • In the 15th Century, the Khmer kings abandoned Ankor and moved to Phnom Penh, the present-day capital of Cambodia.

Read the full article at http://www.bbc.com/news/magazine-29245289

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Central Banks Drop Tightening Talk as Easy Money Goes On – Bloomberg 10-23-13

Salient to Investors:

Continued stimulus on cooling global growth led by weakening in developing nations amid stagnant inflation and job growth in much of the industrial world risks inflating asset bubbles central bankers will have to face later.

Talk of unsustainable home-price increases is spreading from Germany to New Zealand, while the MSCI World Index of developed-world stock markets is near its highest level since 2007.

Richard Gilhooly at TD Securities said central bankers are wildly pumping liquidity and promising to keep rates down – which is abnormal.

The IMF cut its forecast for global economic growth to 2.9 percent in 2013 and 3.6 percent in 2014, and says inflation across rich countries is short of the 2 percent rate favored by most central banks.

Michala Marcussen at Societe Generale said central banks are concerned we are seeing another false start in their economies, and we need to see 2 to 3 months of better numbers before they are will to contemplate an exit.

The median economist expects the Fed to wait until March before tapering.

Gary D. Cohn at Goldman Sachs said we are economically in the exact same place as a year ago, so if QE made sense a year ago, it probably makes sense today.

Derek Holt at Bank of Nova Scotia said tightening before the Fed is ready to tighten would drive up currencies against the dollar, to the detriment of exports. Holt said the easy-money bias across global central banks will persist until March or April 2014 as the Fed complicated the exit strategies for many central banks.

Joachim Fels at Morgan Stanley said we are at the cusp of another round of global monetary easing, and if the Fed’s delay extends the decline in the dollar, then the BoJ and ECB are also more likely to add fresh stimulus.

Citigroup said the ECB is likely to offer banks another round of cheap, long-term loans in Q1, and the BoJ may ease more to offset a 2014 consumption tax increase.

Thierry Wizman at Macquarie Group said the much weaker dollar will cause central banks to ease because they can be less worried about capital flight if the Fed is not tightening and the strength in their currencies is imparting some disinflation into their economies, giving them a window to cut rates.

David Hensley at JPMorgan Chase forecasts the average interest rate in developed economies to hold close to the current 0.40 percent for another year as it hard to see much changing on the rate front.

The Bundesbank said that apartments in Germany’s largest cities may be overvalued by as much as 20 percent. The BoE is rebutting suggestions of a housing bubble. Rightmove said London asking prices jumped 10.2 percent in October from the prior month.

Michael Ingram at BGC Partners said bubble conditions will remain.

Karen Ward at HSBC sees no rapid withdrawal of global liquidity any time soon as whatever their official mandates, central bankers are supposed to safeguard a nation’s real income.

Read the full article at  http://www.bloomberg.com/news/2013-10-23/central-banks-drop-tightening-talk-as-easy-money-goes-on.html

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Europe Gaining Confidence Among Investors in Global Poll – Bloomberg 09-11-13

Salient to Investors:

A Bloomberg poll of investors, analysts and traders showed:

  • 40% see the euro-area economy as improving, more than 4 times the number in May
  • 40% see the world economy as strengthening, the most since January 2011.
  • 52% expect stocks to produce the best return over the next year versus 16% for real estate, 4% for bonds. 48% expect bonds to perform the worst.
  • 19% are bearish on gold, with 44% expecting it to fall in 6 months.
  • 26% see political gridlock over fiscal policy as the greatest risk to the global economy, followed by a weakening Chinese economy. 17% see Europe as the greatest risk to the global economy, versus 33% 4 months ago.
  • 34% said the EU offers one of the best investment opportunities, up from 18% in May, while 18% said the EU offers the worst prospects, down from 45% in May.
  • 53% said the Euro Stoxx 50 Index will be higher in 6 months.
  • 75% said Spain and Italy will avoid bankruptcy.
  • Almost 33% said Greece will avoid bankruptcy, with 54% saying its position in the euro area will be weaker after Germany’s elections this month.
  • 12% plan to buy euros and 9% intend to buy more euro-area government debt.
  • 64% said the US economy is improving.
  • Just over 50% said Europe’s markets are a best bet for the coming year, and 58% expect the S&P 500 to rise into early 2014.
  • 59% said Japan’s economy is improving. 58% expect the Nikkei 225 Stock Average to sustain its rise this year, but only 26% see Japan as a top investment opportunity in the next 12 months.
  • 52% plan to increase their exposure to equities over the next 6 months versus 63% in January, a third are looking to real estate, and 37% like the U.S. dollar. Over 50% are reducing their investments in US Treasury bonds and 38% are fleeing corporate bonds.
  • 15% plan to increase their gold reserves versus 30% a year ago. 25% are reducing their exposure to commodities.
  • 27% are buying emerging-market equities, 27% are selling them. 6% plan to increase their yen exposure, and 3% like Japanese government bonds.
  • 41% are optimistic on Obama’s policies toward the investment climate, while 50% regard him favorably, both the lowest levels in a year.
  • 65% like Angela Merkel’s policies. 50% like David Cameron’s policies. 70% like Abe’s policies. 47% like Xi Jinping’s policies. 13% like Francois Hollande’s policies.

Peter Kinsella at Commerzbank said the structural issues facing the euro and monetary union are being addressed, and the acid test is whether they will lead to job growth.

Andreas Domke at Allianz Global Investors Europe said a surprising broad recovery seems to be under way.

Marie Owens Thomsen Credit Agricole Private Banking said global risk is the lowest in the post-crisis period as investors see little risk of a systemic threat, so there is ample scope for risky assets to climb.

Read the full article at http://www.bloomberg.com/news/2013-09-11/europe-gaining-confidence-among-investors-in-global-poll.html

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North American Millionaires Regain Top Spot, Report Finds – Bloomberg 06-18-13

Salient to Investors:

Cap Gemini and Royal Bank of Canada said in their millionaire report for 2012:

  • North America reclaimed the most millionaires top spot.
  • 3.73 million North Americans had at least $1 million in investable assets versus 3.68 million in Asia-Pacific.
  • The combined wealth of the world’s millionaires rose 10 percent to a record $46.2 trillion after declining 1.7 percent in 2011.
  • North America was the richest region with $12.7 trillion of high-net-worth assets versus $12 trillion in Asia-Pacific.
  • Those with at least $30 million to invest rose by 11 percent following declines in 2011.
  • All regions had strong gains except Latin America, which had slow economic growth and challenged equity markets.
  • Millionaires worldwide rose 9.2 percent to 12 million, Europe rose 7.5 percent to 3.41 million.
  • Global wealth will grow 6.5 percent annually over the next 3 years to  $55.8 trillion in 2015. led by 9.8 percent growth in the Asia-Pacific region.
  • A third of the world’s affluent were primarily focused on preserving wealth, while 26 percent sought to increase assets.
  • A surprising 30 percent of high-net-worth wealth was held in cash and deposits.
  • 42 percent of millionaires in the Middle East and Africa were focused on wealth accumulation, 33 percent on preservation.
  • North America’s wealthy held most of their wealth in equities, 37 percent
  • Latin America’s rich had 30 percent of their wealth in real estate.
  • Asia-Pacific’s rich had 25 percent of their wealth in real estate.
  • Europe’s rich has 27 percent in real estate and 27 percent in cash.

Barclays said the dominant source of wealth for the world’s richest people is from entrepreneurship rather than inheritance, and wealth is being created twice as quickly in developing regions including Asia-Pacific, where it took rich people an average of 12 years to accumulate their assets, and Africa, where it took 16 years.

Pew Research Center in April found that the US economy had recovered for households with net worth of $500,000 or more, but the recession continued for almost everyone else. Pew said wealthy US households boosted their household wealth by 21 percent between 2009 and 2011 while the rest of America lost 4.9 percent.

Read the full article at http://www.bloomberg.com/news/2013-06-18/north-american-millionaires-regain-top-spot-report-finds.html

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Investors Expecting U.S. Markets With Best Return in Poll – Bloomberg 05-15-13

Salient to Investors:

Bloomberg Global Poll:

  • International investors are the most bullish on the US and Japanese markets in more than 3.5 years as both economies are seen to be improving.
  • Over 40% will reduce gold exposure over the next 6 months, close to 3 times more than those who plan to increase it.
  • 54% said equities will offer the highest returns over the next year – the best reading in the nearly 4-yr history of the poll
  • 20% said real estate will offer the highest returns over the next year. 42% plan to increase their exposure to the property market in the next 6 months, versus 36 percent in January.
  • Over 60% said the US economy was improving, the most since September 2010.
  • 40% plan to increase their exposure to the US dollar over the next 6 months versus 20% in January, while only 9 percent said they were reducing exposure.
  • Over 50% expect the S&P 500 to rise over the next 6 months versus 62 percent in January.
  • Over 60% expect the Nikkei 225 to rise over the next 6 months, 16 percent expect it to fall.
  • Close to 50% say the Japanese economy is improving versus 14 percent who said it is deteriorating.
  • Over 25% expect China markets to offer the second worst opportunity after the EU over the next year. 45% would avoid China. 30%  believe slowing Chinese growth as the biggest risk to the global economy in 2013, second to 36 percent who see Europe as the largest danger.
  • 60% expect a debt default by Cyprus, 35% expect a debt default by Slovenia.
  • Only 6% see a high risk that Syrian civil war would escalate and affect oil prices. 67%  said US intervention would damage regional stability.
  • 20% said commodities were the asset to be most shunned over the next year.
  • 56% believe deflation will be a greater threat to the global economy than inflation over the next year, versus 75% who thought inflation was the bigger danger in January 2011.

Charles Doraine at Doraine Wealth Mgmt is upbeat on the US as housing is coming back and the US can be energy independent in the not too distant future.

Peter Fitzgerald at Aviva Investors says the US equity market rally will continue because the US growth is reasonable, monetary policy is extremely accommodative, housing continues to recover, businesses have cash and have underinvested for years. Fitzgerald said inflation simply has not been a problem, while deflation poses a much greater risk with current debt levels.

Ryan Longhenry at CJS Trading said the US dollar should benefit in the months ahead as the Fed looks to scale back its stimulus while other central banks add to theirs.

Sangwook Lee at Shinhan Bank said the US economy will grow at least 2.5 percent in 2014 while as long as the BOJ keeps QE until 2015, major Japanese corporates and banks’ equities will outperform other markets.

Read the full article at http://www.bloomberg.com/news/2013-05-16/investors-expecting-u-s-markets-with-best-return-in-poll.html

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Swiss Property Bubble Concern Seen Prompting Tightening – Bloomberg 02-14-13

Salient to Investors:

  • Governments from Singapore to Dubai to Hong Kong are moving to cool overheated property markets and avert property bubbles.
  • Switzerland is having its biggest property boom in two decades, with prices pushed higher by the influx of 50,000 people a year. The UBS Swiss Real Estate Bubble Index remained in the risk zone for a second quarter in Q4 2012, with Zurich, Geneva and  Lausanne at most risk of a bubble.
  • Janwillem Acket at Julius Baer said the SNB order to banks to hold additional capital buffers is a warning them that they were overgenerous with their credit lending and to be more restrictive.
  • Alexander Koch de Gooreynd at Knight Frank said even at its current level, the buffers will make mortgages more costly and require higher down-payments, affecting the market below 5 million francs. De Gooreyn predicts home prices will decline 2 to 5 percent over 2013 because there’s not as many international people.
  • Christian Kuendig and Cynthia Chan at Fitch said the measures on their own are unlikely to significantly slow down mortgage lending growth as mortgage rates will still be significantly lower than in the early 1990s, the peak of the last real estate cycle, even if the higher cost of capital were to be fully passed on to borrowers.
  • Matthias Holzhey and Fabio Trussardi at UBS said the direct influence of the buffer on mortgage rates may be low, with costs increasing less than 0.1 percent – more important is that the signal being sent so risk premiums will increase.
  • Alexander Koch at UniCredit said the SNB move is a first step.
  • Dirk Becker at Kepler Capital Markets said the impact on larger banks like Credit Suisse and UBS will be so small and manageable, but the effect on smaller banks is more delicate because Swiss mortgages are their core business.
  • Michael Landolt at the Swiss homeowners association said mortgage rates will increase but still be historically cheap, saying it’s very Swiss that everyone has to pay for the shortcomings of a few, as all mortgage borrowers are paying for the fact that banks are undercapitalized – the regulators could have applied the rules only to the banks that are lending too aggressively.

 

 

Read the full article at http://www.bloomberg.com/news/2013-02-13/swiss-property-bubble-concern-seen-prompting-tightening.html

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Trump Tower Woes Signal Top of Toronto Condo Market – Bloomberg 12-24-12

Salient to Investors:

Toronto has more skyscrapers under construction than any other city in the world.

John Andrew at Queen’s University said people buying units purely as an investment and not to live in is a sign that the Toronto market is on thin ice – the luxury market always feels the cracks of a housing market first. Andrew said hotel-condos are at the high-risk end of the spectrum for commercial investment.

Adrienne Warren at Bank of Nova Scotia said the Toronto housing market is due for a soft landing as demand weaken in 2013 on reduced foreign and domestic buying in a market with oversupply.

Charles Suddaby at Cushman and Wakefield said it will take time for the market to absorb the sudden glut of luxury hotel rooms flooding the market, and it may take 8 years for the Trump project to get absorbed and gain a profit.

Read the full article at http://www.bloomberg.com/news/2012-12-24/trump-tower-woes-signal-top-of-toronto-condo-market.html.

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Foreclosures Drawing Cash as 401K Returns Sag: Mortgages – Bloomberg 11-04-12

Salient to Investors:

As the housing market recovers, neophyte investors are following the lead of private-equity firms like Blackstone, investing in cheap properties they can rent and sell when values rise enough.

Lawrence Yun ar NAR said the typical small-size mom-and-pop investor has two or three properties – about 90 percent of investors homes sales in August went to people with fewer than 20 properties.

Investors bought 66,780 homes in August, the highest since the beginning of the foreclosure crisis – investors’ share of sales was 18 percent.

MPF Research said the average US rent rose to a record $1,086 a month in Q3, up 3.3 percent from a year earlier. Greg Willett at MPF said individual investor demand is there, but it’s risky to put all your eggs in that one basket.

The Commerce Dept said vacancy rate fell to a 10-year low of 8.6 percent in Q2 – there are 40 million rental units in the US, and 75 million owner-occupied homes.

Paul Diggle at Capital Economics said:

  • Even with rent gains, buyers of distressed properties to rent would need a discount of 30 percent to get a yield of 8 percent, a 50 percent discount to get a 12 percent yields; not accounting for the time a landlord spends responding to disgruntled tenants and repairing burst water pipes, broken furnaces or leaky roofs.
  • Many homes in foreclosure are neglected.
  • Small-scale investors may actually run at a loss on rental housing if sweat equity is counted.

Read the full article at http://www.bloomberg.com/news/2012-11-05/foreclosures-drawing-cash-as-401k-returns-sag-mortgages.html

State Funds Focus on Alternative Assets, Ex-KIC Official Says – Bloomberg 10-18-12

Salient to Investors:

Investors are growing wary of publicly traded securities as interest rate cuts at central banks helped inject liquidity into markets, bolstering bonds and stocks.

Scott Kalb at KLTI Advisors said:

  • Sovereign wealth funds are increasing their allocations to alternatives
  • Institutional investors are focusing on hedge funds and private equity, with real estate and infrastructure being the preferred asset classes.
  • Real estate is attractive because it is bottoming in the US, infrastructure is low, and there is a lot of demand.
  • Sovereign wealth funds, being long-term investors, will keep investing in emerging market assets as the prospects for those economies remain strong.
  • When investing in emerging economies, the portfolio should comprise all major asset classes – private equity, real estate, infrastructure, debt, equity and commodities.

Joyce Shapiro at Franklin Templeton Investments said institutional investors may double the proportion of infrastructure investments in their portfolios within 5 to 10 years.

Read the full article at http://www.bloomberg.com/news/2012-10-18/state-funds-focus-on-alternative-assets-ex-kic-official-says.html

Hedge Funds Get Squeezed in Mayfair as Offices Become Homes – Bloomberg 06-08-12

Salient to Investors:

Offices are being converted into residences on surging foreign demand for luxury homes in central London, partly fueled by limited financing for new development and permit restrictions on high-rise projects.

Luxury-home prices in London are estimated to be up 37 percent in the past 5 years

Prime office vacancies in Mayfair and St. James’s are the lowest in almost three years at 3.4 percent.

Foreigners are estimated to comprise about 60 percent of home purchases in the most expensive London districts in the 4 years through 2011.

Read the full article at http://www.bloomberg.com/news/2012-06-07/hedge-funds-squeezed-in-mayfair-as-offices-become-luxury-homes.html