Reflexion - 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.

Brexit has happened and nobody knows how it came about. The bureaucrats on both sides of the English Channel had everything under control – except the ballot boxes. The trouble is that a «madman» called Cameron decided to bet the farm on black again, just as he did with the Scottish referendum, only this time red came up. And of course, when a leader wins a referendum, he becomes the hero of democracy in the eyes of the whole world. But when he loses – and the result of the vote harms many, as seems to be the case with Brexit – he becomes a villain who has put others at a risk that is as unnecessary as it is reckless, all because of his gambling-addicted ego. In such cases, democracy takes a back seat and no one remembers that this result reflects the will of the majority of the people, nor that this is the very essence of our political system.

Although for many the line between the two may be blurred, the economic interests of the financial system should not take precedence over the political system – that is to say, over democratic decisions – even if those decisions are unfortunate or reckless. Europe should not succumb to the temptation to govern the EU according to economic rather than political guidelines, determined democratically. But the reality is that we have an EU whose president is not the result of an electoral process such as that in, for example, the US. And there are extremely powerful lobbies (the Troika) which exert unbearable pressure and which, in practice, wield more power than the unelected president (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.

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…)

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.»

Russia can revolutionise the bond market.

Veteran Bloomberg analyst Mark Gilbert wrote a prescient and excellent book in 2010 titled «Complicit: How greed and collusion made the credit crisis unstoppable«. Today he performs an analysis which could well be another of his clairvoyant premonitions: Russia could revolutionise classic bond issuance due to the interest generated by its low indebtedness, but above all due to the fact that it is under Western-imposed sanctions that prevent banks from operating with that country normally. (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…)

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Category: Reflexion

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.

China and the Pearl River Delta (PRD).

Central banks and the rise of extremism.

«Central Banks and the Rise of Extremism.»

Russia can revolutionise the bond market.

Rentiers, bondholders and other endangered species.

The Silence of the Conservatives.

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: Reflexion

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.

China and the Pearl River Delta (PRD).

Central banks and the rise of extremism.

«Central Banks and the Rise of Extremism.»

Russia can revolutionise the bond market.

Rentiers, bondholders and other endangered species.

The Silence of the Conservatives.

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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