Crisis - Cluster Family Office

If Bremain had won.

The analyst John Mauldin, The EU is facing profound changes after the result of the British referendum. It remains to be seen whether the exit finally takes place that the people have demanded of their leaders, since politics in general, and the EU in particular, are specialists in disregarding the will of the people even if there has been a transparent and official vote count. It is not for nothing that the Euroschizophrenia seems endemic for as long as the Old Continent has existed. In any case, even if the UK did not end up leaving the EU, the problems that Brussels would face are and would continue to be enormous. So let us number some of the burning issues that Mauldin believes the EU would still have on its hands even if Bremain had won: (more…)

Only Democracy wins.

El Brexit ha venido y nadie sabe comoha sido. Los burócratas de uno y otro lado del Canal de la Mancha lo tenían todo controlado menos las urnas. Lo malo es que un «loco» llamado Cameron decidió volver a apostar todo al negro, al igual que hizo con el referéndum escocés, solo que esta vez salió el rojo. Y claro, cuando un dirigente gana un referéndum, se convierte en el héroe de la Democracia a ojos de todo el mundo. Pero cuando lo pierde -y el resultado de la votación perjudica a muchos, como a priori parece ser el caso del Brexit- se convierte en un villano que ha puesto a los demás en un riesgo tan innecesario como temerario por su ego ludópata. En ese caso la Democracia pasa a un segundo plano y nadie se acuerda de que ese resultado es la voluntad de la mayoría del pueblo, ni de que esa es la esencia de nuestro Sistema político.

Aunque a muchos se les difumine la frontera, los intereses económicos del Sistema Finananciero no deberían estar por encima del Sistema Político, o sea de las decisiones democráticas, aunque éstas sean desafortunadas o temerarias. Europa no debería caer en la tentación de gobernar la UE bajo las directrices económicas sino políticas, democráticamente determinadas. Pero la realidad es que tenemos una UE cuyo presidente no es fruto de un proceso electoral como el de por ejemplo los EE.UU. Y unos lobbys poderosísimos (Troika) que ejercen presiones insoportables y que de facto gobiernan más que el presidente no electo (Juncker). (more…)

It is urgent to wait... and to know what to expect.

In today's financial and economic times, as an old friend often says, it is urgent to wait. This is not a time for long-term investment ventures that are susceptible to macroeconomic changes or geopolitical conflicts, which are more uncertain than ever. The steps that investors must take in such a muddy environment must be short, stable and prudent. It is more true than ever that the concept of crisis is synonymous with opportunity, but this does not mean that we should not take ambitious and adventurous steps when a mine-ridden swamp surrounds us. (more…)

The global debt distortion.

Diversos analistas de medios como por ejemplo el WSJ o BusinessInsider, revelan que está ocurriendo algo inusual en los tipos de interés norteamericanos, aunque la verdad sea dicha, motivos para que el Sistema financiero se comporte de modo extraño y jamás visto no faltan, desde luego. Para ponernos en situación, cabe recordar que cuando una economía -como le está sucediendo ahora mismo a la norteamericana- consigue unas cifras próximas al pleno empleo y una inflación cercana al codiciado 2%, su curva de tipos se acentúa. Esa es una consecuencia lógica de la mejora de las perspectivas económicas, ya que en un escenario donde empiezan a surgir cantidad de buenas oportunidades de negocio, es normal que los inversores exijan mayor rendimiento a cambio de bloquear su dinero a largo plazo, y menor renta a vencimientos cortos. La consecuencia gráfica es una mayor pendiente en la curva de tipos de esa moneda, como se ha visto en infinidad de ocasiones a lo largo de la historia. (more…)

Bill Gross, a slap in the face of realism.

Bill Gross, former star manager of PIMCO and now of JANUS, is the voice of experience in the debt markets. It is true that his published views have not always been right, but perhaps his unpublished reflections have been mostly right. In fact, for us, Gross has been a great communicator of self-interested views. That is to say that at any given moment it has suited him that the markets/investors/clients have reacted to his published opinions in a certain way. Let us not forget that Gross is a veteran and influential voice like few others. (more…)

Central banks and the rise of extremism.

News, Banking, Crisis, Economy and Finance, Reflection
05/13/2016

We’d like to recommend something for you to read at the weekend. It’s the article linked at the bottom of this post, written by Danielle DiMartino Booth, an economic analyst specialising in central banks. A decade ago, Danielle Booth successfully predicted the catastrophe caused by the property bubble and the abuse of mortgage lending by US banks. Let us remember that the so-called «subprime crisis» was the phenomenon that triggered the collapse of the financial system, which today remains afloat only thanks to (or because of) the life support provided by central banks, at the expense of the growth and wealth of future generations.

Before you dismiss this analyst as an alarmist who is blowing things out of proportion, we’d like to remind you that Danielle was the right-hand woman to the former President of the Dallas Fed Richard Fisher during his 10-year term. Fisher (and his right-hand woman, Danielle) clashed with Bernanke when he began the mass creation of money and debt. And in 2013, Fisher and Booth also strongly disagreed with the launch of the third round of quantitative easing, considering it to be «one step too far».

If you’d like to explore Danielle’s analysis in a bit more depth, you can also read what ZeroHedge had to say about her last year: «Another Fed Insider Quits, Tells the Truth«. For our part, we would simply like to reiterate the warnings we have been making since 2013 in articles such as «The Age of Central Banks«.

We know that some of you think our articles are generally too pessimistic. But perhaps, after reading Danielle’s piece, you’ll find ours are even a bit «happy-go-lucky» 😉 In any case, we wish you a happy weekend and hope this slap in the face of raw realism entitled «Central Banks and the rise of extremism» doesn’t spoil it for you:

«Central Banks and the Rise of Extremism.»

Rentiers, bondholders and other endangered species.

It is clear that the massive efforts of central banks in the developed world are undermining one of the pillars of the financial system as we have known it to date: what is generically referred to as fixed income. And it is not only bondholders or annuitants who will suffer losses – or, at best, a lack of income – but, alongside them, there is a whole world of institutional investors who also depend on stable long-term returns, such as insurance companies and public and private pension funds. What are these investors doing in the face of a lack of income and the bleak outlook for fixed income? The answer is as varied as the profiles of those affected. (more…)

All bets are off.

The medium to long term horizon for investors is very dark. A report by McKinsey Global Institute (download here) hits the nail on the head in concluding that investment returns in general over the next two decades (at least) will be very low. Historically well below what the markets have offered over the last 30 years, and I would add, well below what has been achieved on average over the whole of the 20th century, Great Depression included. There are plenty of reasons for this if you open your eyes and look at the numbers. Let's see. (more…)

Putin and the Middle East conflict, 2 years on.

Some of you may remember the article we published a little over two years ago entitled «Russia's Motives».». At the time the Western media could not (and do not) see beyond their noses and insisted on warning of Putin's demonic will to invade the whole of Ukraine after annexing Crimea. They biasedly ignored the fact that the elected Ukrainian president, Yanukovych, had been overthrown in a coup d'état dubbed Euromaidan, Maidan Square Revolution, Revolution of Dignity and other sweetened euphemisms. The fact is that, apart from the fact that this coup/revolution has, over time, done more harm than good to Ukrainians as a whole, Western public opinion feared that Russia's military response to Crimea was only the beginning of a pan-European war invasion in the purest secular style. We recommend re-reading it before continuing our reflections today, two years later. (more…)

The volatility of the New Normal's volatility overturns modern portfolio theory.

According to this Fundspeople article as you will find summarised below, volatility as a moderately reliable tool for managing investment portfolios is fading in the face of the new financial normal in which we live. Inaccurate interval averaging and uncontrolled shifting correlations (or controlled by political decisions and central bank interventionism as never seen before) mean that much greater errors are being made in calculating portfolio volatility today than just 5 or 10 years ago. The term that defines this financial unpredictability is heteroscedasticity, and it is here to stay. Let's look at it:

The traditional approach to portfolio volatility is inherently limited. It is common for investors to measure historical volatility by looking at the standard deviation of interval returns over a defined period. By combining this information with historical levels of correlation between different asset classes or securities, investors seek to diversify while distancing their portfolios from irregular risk (diversifiable risk). Typically, investors do this by diversifying their exposures across multiple asset classes, sectors and regions. The modern portfolio theory approach is only effective if certain conditions are met. (more…)

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Category: Crisis

If Bremain had won.

Only Democracy wins.

It is urgent to wait... and to know what to expect.

The global debt distortion.

Bill Gross, a slap in the face of realism.

Central banks and the rise of extremism.

«Central Banks and the Rise of Extremism.»

Rentiers, bondholders and other endangered species.

All bets are off.

Putin and the Middle East conflict, 2 years on.

The volatility of the New Normal's volatility overturns modern portfolio theory.

Shall we help you search?

Cluster Family Office

Do you need help in capital and wealth management?

How can I avoid the negative effects that my fortune may have on my children?

How and when should I talk to my children about family wealth, and what relationship should they have with money throughout their adolescence?

How can I measure the real risks of my investments and protect my assets adequately?

Do I have sufficient liquidity and stable income to cover my needs on a permanent basis?

(+34) 93 626 47 75

(+34) 91 794 19 82

Category: Crisis

If Bremain had won.

Only Democracy wins.

It is urgent to wait... and to know what to expect.

The global debt distortion.

Bill Gross, a slap in the face of realism.

Central banks and the rise of extremism.

«Central Banks and the Rise of Extremism.»

Rentiers, bondholders and other endangered species.

All bets are off.

Putin and the Middle East conflict, 2 years on.

The volatility of the New Normal's volatility overturns modern portfolio theory.

Shall we help you search?

Cluster Family Office

Do you need help in capital and wealth management?

How can I avoid the negative effects that my fortune may have on my children?

How and when should I talk to my children about family wealth, and what relationship should they have with money throughout their adolescence?

How can I measure the real risks of my investments and protect my assets adequately?

Do I have sufficient liquidity and stable income to cover my needs on a permanent basis?

(+34) 93 626 47 75

(+34) 91 794 19 82

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