Fareed Zakaria GPS – CNN 08-16-15

Salient to Investors:

Fareed Zakaria said:

  • The Iran nuclear agreement is flawed, but has the toughest terms ever negotiated and sets back Iran’s nuclear program more than any serious military campaign would. Automatic re-imposition of sanctions can be triggered unilaterally by the US. Iran gets sanctions relief regardless because allies will not extend sanctions as they see Iran as having produced an acceptable agreement. Rejection of the agreement would see Iran ramp up its nuclear program without inspections or constraints, sanctions unraveling, and America isolated.
  • The Chinese devaluation means its economy is slowing and the country is moving away from some reform models and towards state control and mercantilism.
  • Pew reports a median of 30% of non-Russians view the country favorably,  a median of 24% have confidence that Putin is doing the right thing in world affairs.
  • Defeating ISIS is a priority for the all the world.
  • Singapore beats the US in life expectancy, unemployment, freedom from corruption, education. The US beats Singapore in press freedom, overall freedom.
  • The US generate more than 30% of global nuclear power. Nuclear provides 19% of US electricity, 75% of French electricity.
  • Russia and Putin have very serious problems.

Jon Huntsman said:

  • China is no longer an average player in the global economy as the world’s second largest economy, so a devaluation of 2 percent will have a major impact on the region. The Chinese people have very little belief in the long-term strength and well-being of their economy – all indicators suggest it is not a very smart thing for them to invest more in the future of their country.
  • Americans have been very angry at the political class for 2 or 3 election cycles now, so Trump represents the brash, big protest vote.

Nick Butler at the Financial Times wrote:

  • Russia’s GDP will drop 3.5% in 2015 because of its dependence on oil. Trading Economics says energy provides 20% to 25% of Russia’s GDP, 30% of budget revenues, and 65% of total exports. IEA reports global oil supplies are growing at a breakneck pace.
  • The book “Restless Empire” says Russia is weaker than at almost any time in the last 300 years.

Lawrence Lessig at Harvard Law School said:

  • The problem is our government can no longer govern.
  • Climate change legislation will not pass in the US until we end corrupt campaign funding – the most unequal and corrupt system in the world and the leading issue among voters.
  • The NY Times reports that 400 families have contributed 50% of the presidential election funding so far. Wall Street is the largest contributor to congressional campaigns.

Dexter Filkins at The New Yorker said:

  • The Iraqi state is broken in 3 pieces – Shiite, Kurd, and Sunni, which has irreparably broken away. The national feeling is gone.
  • The Iraqi army, built using billions of US dollars, fell apart the moment that ISIS swept in from Syria – one push and it fell apart.

Michele Flournoy at The Center for a New American Security said Iraq’s Shia leaders must re-include the Sunnis by devolving more authority and resources down to the provinces or risk losing Iraq as a single state.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript http://www.cnn.com/TRANSCRIPTS/1508/16/fzgps.01.html

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Fareed Zakaria GPS – CNN 06-28-15

Salient to Investors:

Fareed Zakaria said:

  • Singapore mandates ethnic diversity in all neighborhoods – over 80% of Singaporeans live in public housing. US efforts in the 50s and 60s to desegregate schools and integrate neighborhoods were largely abandoned by the 80s and America is now strikingly segregated. A UCLA study in 2014 said many black and Latino students face almost total isolation, not only from white and Asian students but also from middle class peers as well.
  • Singapore’s Deputy PM Tharman Shanmugaratnam said half the Muslim population in Britain lives in the bottom 10% of its neighborhoods by income.
  • The Nuclear Threat Initiative says 25  countries have weapons usable nuclear material, stored at hundreds of different sites under no strict international rules for security. NTI says nation states are not the only entities with the knowledge to build bombs. Some sites rely on local police for protection, or must call in military units. IAEA says more than 100 incidents of unauthorized activity, including thefts, are reported every year involving nuclear and radioactive materials.
  • The Fissile Materials Working Group says enough material to make tens of thousands of nuclear bombs as powerful as the Nagasaki bomb. A terrorist only needs enough highly enriched uranium to fit into a 5-pound bag of sugar to create a nuclear weapon.
  • Since 2012, 7 countries have eliminated most or all of their weapons usable nuclear material, including Ukraine.

Phil Mudd at CNN said:

  • ISIS is trying to draw a sharp line between Sunni and Shia, at the heart of Middle Eastern culture.
  • Sunni-Shia conflict is more likely in Yemen because other countries like Saudi Arabia have lots of money to spend on security forces who would come in with an iron fist.
  • Iraq is finished as a state because of Sunni-Shia divide.
  • The Middle East will worsen on two fronts. The divide between moderate Sunnis and extremist Sunnis will last for decades. Many countries, including Iraq and Syria, will become more conservative over time even if IS does not take over. The centuries-old Sunni-Shia divide is rising up everywhere.
  • The argument that terror organizations are focused on fighting the government or each other, and so are less likely to spend a lot of energy on Western cities, is problematic because the world is changing. The number of foreign terrorists is so substantial that to believe that none of them will focus on Western Europe or North America is short-sighted: though most of their energy will be against each other.

Gary Samore said the myth that the Iranians benefit more than the US from the nuclear deal status quo is completely wrong – the status quo is very much in the US’s favor.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1506/28/fzgps.01.html

Almost Half of China’s Rich Want to Emigrate – BloombergBusinessWeek 09-15-14

Salient to Investors:

  • Barclays said 47% of China’s wealthy are planning to move abroad within 5 years, versus 23% in Singapore, 16% in Hong Kong, 20% in Britain, 6% in America and 5% in India.
  • 78% named bettering children’s education and their future job prospects as their main reasons, 73% said a better economic situation, 18% cited health care and social services.
  • The US and Europe were the favored destinations.
  • Liam Bailey at Knight Frank said most ultra-high net worth individuals in China are making money in China right now, so, for business reasons, they need to be relatively close.

Read the full article at  http://www.businessweek.com/articles/2014-09-15/almost-half-of-chinas-rich-want-to-emigrate#r=rss

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China Lures Less Investment Than Southeast Asia, BofA Reports – Bloomberg 03-04-14

Salient to Investors:

Chua Hak Bin at Bank of America Merrill Lynch said:

 

  • Total foreign direct investment into Singapore, Malaysia, Indonesia, the Philippines and Thailand was $128.4 billion in 2103 versus $117.6 billion for China.
  • Rising foreign direct investment into Asean will remain a favorable structural trend over the next few years, given favorable demographics, competitive wages and geopolitical competition between the superpowers which remain the major investors.
  • China’s ability to attract investment may be hampered by higher manufacturing wages and an appreciating currency.
  • Indonesia’s large domestic market, low relative wages despite minimum wage increases and a weak rupiah make it attractive for lure foreign investment.

 

A Japan Bank for International Cooperation survey showed Indonesia has overtaken China and India as the most promising country for Japanese companies for business development.

A drop in China’s working-age population is robbing China of an engine of three decades of growth, whereas Southeast Asia’s developing nations show rising numbers of youth search for employment, luring companies seeking a cheap labor force and new domestic markets.

Read the full article at http://www.bloomberg.com/news/2014-03-05/china-lures-less-investment-than-southeast-asia-bofa-reports.html

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Chaos develops out of democracy Jim Rogers Blog 08-28-13

Salient to Investors:

Jim Rogers writes:

Plato said that societies develop from dictatorship to oligarchy to democracy to chaos and then back to dictatorship. Chaos seems to be what is happening in some Asian countries.

Japan, Korea, Singapore, China were all one-party states but as they became more prosperous, their people wanted more, demanded more and got more democratic, and they say this is the Asian way.

Read the full article at  http://blogjimrogers.blogspot.com/2013/08/chaos-develops-out-of-democracy.html

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Interview with Jim Rogers – Fusion Marketplace 06-13-13

Salient to Investors:

Jim Rogers said:

  • When investing, don’t follow the crowd
  • Most government numbers are made up. China has problems with housing and inflation as the US did in the 19th century when it was growing rapidly. Every country that grows rapidly has problems. The US had recessions and 13 depressions in the 19th century but still became  the greatest nation in the 20th century.
  • China is trying to slow, which is the right thing to do as their goal is long-term sustainable growth.  Any big risks will only come from water problems, which I expect them to solve. Buy companies that work to fix water problems.
  • The Chinese stock market is close to a Buy.
  • China’s housing bubble is worse due to their blocked currency, which creates imbalances, like in housing, as people need to invest somewhere.  China will continue to open up their currency.
  • We are in a global bond bubble, which can go on and on. Bernanke believes you can expand the Fed balance sheet infinitely and suffer no ill effects. Since reducing demand for a commodity reduces its price, so bond prices will drop, and interest rates rise.  France tried money printing in the 1950’s and the Italians in the 1960s.
  • At some point markets won’t take central bank policies anymore, and interest rates will rise regardless of how much bond buying they do. Short junk bonds as the marginal stuff goes first.
  • Gold has risen for 12 years in a row – what asset goes up 12 years in a row? – so technically it may need to fall further, but fundamentally it will be a Buy. Holds gold and will add more if it keeps dropping.
  • The US shale revolution is over-hyped. The fundamentals of natural gas are not as good as the hype: the number of ground rigs has fallen 75% over the last 2 years, the wells are very short-lived, and it takes enormous money to maintain them. Companies have lowered estimates of their reserves. Investors will be disappointed with the idea that supply is so big that oil will collapse.
  • Interested in buying natural gas because any commodity that has that big a collapse should be considered.
  • Agriculture is a great long-term story. We have been consuming more than we have been producing over the last 10 years, so inventories are close to historic lows. Agriculture has been a terrible business for many years and we are running out of farmers – average age is 58 in the US, 66 in Japan. Young people are not entering agriculture and everything cannot be automated. Most of Asia is not productive: Mao ruined China’s agriculture and India have absurd regulations and restrict the size of farms. The suicide rate of Indian farmers has risen dramatically over the last few years.
  • Cotton is doing well because farmers planted less last year.
  • Abe will ruin Japan and says he will ruin the currency. Japan has huge debt levels, horrible demographics, barriers to foreigners, a declining population,
  • The Euro will look very different within a number of years as devaluing is a temporary solution – Europe has been trying it for decades without success. Only real structural change will improve their economies.
  • The ECB can only buy sovereign debt for a while because eventually the currency collapses and the markets won’t take it anymore – they have more money than the central banks.
  • China is in better shape than the other countries. It is the largest creditor nation, people save a lot, and is building its internal economy. They should have already started reducing their exposure to Treasuries.
  • The US is the largest debtor nation in the history of the world, yet only half of the population pay taxes.  All the debt is in the West while all the credit is in the East.
  • Singapore is doing well and will be the fastest growing money center in the next 10 years. Income taxes are low, incentives to save are high, savings rates are high, and they work hard to attract capital and labor. The current backlash from immigration has happened to all countries at some point in history. Singapore is becoming the new Switzerland, helped by problems with offshore havens like Switzerland and Cyprus.

Stanley Druckenmiller is warning about a rise in US rates, due to uncontrollable entitlements.

Read the full article at  http://www.fusionmarketsite.com/?p=10562

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Singapore’s Population Bubble – Bloomberg 02-14-13

Salient to Investors:

William Pesek writes:

Singapore’s addiction to population growth shows it has run out of ideas to increase economic vitality. The era of easy growth in Singapore is over and its formula has run its course.

Singapore is half the area of New York City, with a population of 3.3 million citizens and 2 million foreign residents predicted to rise by as much as 30 percent to 6.9 million by 2030.

Economist Intelligence Unit ranks Singapore as the 3rd most expensive Asian city and sixth most world city out of 131 cities.

Singapore may well be a case study for what happens when leaders try to offset slowing economic growth with immigration and increased birth rates.

Joseph Chamie says the view that it’s almost always better to have more and more people is Ponzi demography. The bubble bursts when population growth stalls – incomes top out, high debt crushes consumption and investment, the need for public assistance rises, environmental degradation increases and angry people take to the streets.

Read the full article at http://www.bloomberg.com/news/2013-02-14/ponzi-schemes-built-on-people-always-crash-too.html

 

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Singapore 2012 GDP Grew 1.2% as Recession Seen in Second Half – Bloomberg 12-31-12

Salient to Investors:

Wai Ho Leong at Barclays says the Monetary Authority of Singapore faces stubborn inflation and sluggish growth and may continue a gradual appreciation stance, even in an environment of below-trend growth.

Kit Wei Zheng at Citigroup said the hurdle for easing remains high, and inflation will stay elevated through Q1 and economic growth within the official forecast in 2013.

The World Bank ranks Singapore as the easiest place to do business.

Read the full article at http://www.bloomberg.com/news/2012-12-30/singapore-price-risks-persist-as-economy-seen-entering-recession.html.

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