gestion financiera - Cluster Family Office

The global debt distortion.

Various media analysts, such as the WSJ o BusinessInsider, reveal that something unusual is happening with US interest rates, although, truth be told, there is certainly no shortage of reasons for the financial system to behave in a strange and unprecedented manner. To put this into context, it is worth remembering that when an economy – as is currently the case with the US economy – achieves figures close to full employment and inflation close to the coveted 2%, its yield curve steepens. This is a logical consequence of the improving economic outlook, as in a scenario where a wealth of good business opportunities begins to emerge, it is normal for investors to demand higher returns in exchange for tying up their money in the long term, and lower returns on short-term maturities. The graphical result is a steeper slope in that currency’s yield curve, as has been seen countless times throughout history. (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 It is true that his published views have not always been right, but perhaps his unpublished reflections have been mostly right.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…)

China and the Pearl River Delta (PRD).

The Pearl River Delta, also known by its acronym PRD, is a powerful economic zone in southern China. Its main cities are 11: nine of them belong to Guangdong province and account for 54% of its entire population (which is 106 million); and the other two cities are Macau and Hong Kong, which, although not technically part of the Mainland, are also the economic powerhouse of the PRD and provide the area with its specific political and administrative status. In total this zone accounts for no less than 26.2% of China's exports, 9.1% of GDP and «only» 4.2% of the population.

This area is approximately 40,000 km2 in size, about the size of Switzerland, but with a population of about 60 million, the size of the whole of the United Kingdom. The area will soon become a fully-fledged urban mega-metropolitan area, with economic growth exceeding 8% per year in cities such as Guangzhou and Shenzhen. A true economic hub for China, whose planned market economy clearly goes far beyond the Yangtze River Delta hub (Shanghai) or the Tianjin area hub (Beijing). (more…)

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…)

The Silence of the Conservatives.

About four years ago, the state of the European economies was so divergent that the markets were pricing in defaults across almost the entire periphery. Risk premiums were pushing half of Europe towards insolvency, and Germany was refusing to allow Draghi to flood the south of the continent with cash. The countdown to the break-up of the EU was underway, and that is what we warned at the time on Gurusblog. However, against all odds (at least as far as we were concerned), Draghi ignored the calls from Schäuble and began to expand the ECB’s balance sheet, just as the Fed had been doing since 2008. That marked the start of a journey into the unknown for the group of developed economies. (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…)

Renting or buying?

Many would do well to tinker again with the typical interactive pages, such as the one offered by the NYT («Is it better to rent or to buy».»), to try to find out whether it would be more interesting today to buy or rent a property. As you can see if you do this exercise, the key is in the variables of the evolution of the price and rent of real estate, but above all of the income that we are able to obtain from the money in the coming years. We can also fine-tune by introducing a multitude of variables such as inflation expectations, taxes on the purchase and sale of the property, maintenance and community expenses, real estate agent's commissions, etc. Logically, the structure of this interactive website is based on the costs and format of the North American Real Estate market, but you can adapt it approximately to our real estate market.

It is difficult to foresee where real estate prices will go in Spain 5 to 10 years down the road. But even more difficult to gauge is the inflation - or deflation - to which central banks will lead us in the medium to long term, even they have no idea. And to complicate matters further, we must be aware that, depending on inflation and the price of money, financial repression (the effects of which we explained in detail in 2013) will last, penalising rentiers and other investors, or will give way to an increase in investment returns in general. And as we said, this is perhaps the most important variable in the decision to rent or buy a property at the moment. But beware, because many poorly advised investors, faced with their inability to achieve financial returns, are throwing themselves into the arms of a real estate market that still has a downward path in the medium and long term, despite the much-vaunted rebound in the short term. Especially if the national economy remains in the ICU with a galloping deficit and growing debt. Because both evils are the enemies of sustainable economic growth and hinder job creation and wage increases, which are so necessary to turn around the current downward real estate cycle that began almost a decade ago. In this New Normal, reality is very stubborn and the future is even more uncertain.

The US law that will prioritise the Client's interest

Putting their clients' interests first. Something so obvious but at the same time so difficult to find among financial advisors and bankers is what a new law promoted by the US Department of Labor is going to regulate, for the time being only advisors who specifically recommend investments for their clients' old age (retirement investments and 401k). Perhaps in time this law will also be extended to all other non-specific advice for old age or retirement, although it seems unlikely that one day we will see something similar for all other advisors/bankers/real estate salesmen, home insurance, etc. (more…)

Fixed income: The bubble of the perfect storm

The zero-interest-rate policies that have been maintained by central banks in the most developed parts of the world to prevent a debt crisis have completely distorted the financial system. The side effects of giving away the cost of borrowing and providing an open-ended lifeline to prevent the heavily indebted (the entire developed world) from going bankrupt are devastating for those who need to generate income. It is a scenario that is favourable to those who are insolvent but very hostile to investors, who find themselves forced to lend their money in exchange for the meagre returns offered by increasingly risky and insolvent issuers.

As investors’ money shifts towards the most insolvent debt in a desperate search for a few basis points of yield, the bubble in the prices of all debt – both developed and emerging, and across the entire yield curve – is swelling ever further. The most creditworthy issuers – or those with central banks willing to buy up everything – already have a large part of their yield curves in negative territory, meaning that investors have to pay to lend them their money. Similarly, less creditworthy issuers are basking in a sea of liquidity that allows them to take on more and more debt whilst paying interest rates as if they were large, creditworthy multinational corporations. (more…)

Banco Madrid or the reckless corralito

Banco Madrid is the first bank that the state and its regulators have let fall in this galloping debt crisis. In fact, technically speaking, it has not been allowed to fall, i.e. it has not fallen due to the absence of a bailout with state funds, as other insolvent institutions have been rescued in recent years, but rather, forceful measures have been taken to liquidate it due to its -still- alleged money laundering. What is paradoxical is therefore that the reason for the intervention and the swift liquidation of the institution is not, at least originally, due to the feared insolvency but to criminal practices of great significance.

However, there is no shortage of conjecture pointing to other motivations of a less financial or political nature, as suggested by this article from ElConfidencial,this one from lasfinanzascambian.com or such an authoritative voice as Javier Cremades, chairman of Cremades & Calvo-Sotelo and president of the International Financial Litigation Network (IFLN) in this devastating article. In fact, it is strange, to say the least, that the report of the Sepblac to remain in Minister De Guindos' drawer The report had already warned of indications of various laundering offences before the Anti-Corruption Prosecutor's Office, which had not been processed until the USA demanded that action be taken. We are not therefore dealing with crimes or malpractice that have gone unnoticed until today, but rather with suspicions and indications that the competent bodies detected as early as June last year, but which they surprisingly ignored until the US financial police have come forward. (more…)

(+34) 93 626 47 75

(+34) 91 794 19 82

Category: gestion financiera

The global debt distortion.

Bill Gross, a slap in the face of realism.

China and the Pearl River Delta (PRD).

Rentiers, bondholders and other endangered species.

The Silence of the Conservatives.

All bets are off.

Renting or buying?

The US law that will prioritise the Client's interest

Fixed income: The bubble of the perfect storm

Banco Madrid or the reckless corralito

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: gestion financiera

The global debt distortion.

Bill Gross, a slap in the face of realism.

China and the Pearl River Delta (PRD).

Rentiers, bondholders and other endangered species.

The Silence of the Conservatives.

All bets are off.

Renting or buying?

The US law that will prioritise the Client's interest

Fixed income: The bubble of the perfect storm

Banco Madrid or the reckless corralito

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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