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European Central Bank: “Great White Fear” Takes A Bite Out of Recovery
EWI’s Global Market Perspective foresaw the shift in European banks from lenders to savers via one remarkable chart
It’s been over two years since the European Central Bank began its open-heart surgery of the eurozone’s anemic economy. So far, the procedure has included an unprecedented $3 trillion-plus in bailouts, monetary transfusions, AND toxic debt transplants.
Yet, according to a recent slew of discomforting news reports, the economies across the pond would still flatline in seconds without constant life support. Here, an April 18, 2012, Wall Street Journal writes:
“Europe Hemorrhages through Refinancing Operation Band-Aid” and reveals that Europe’s banking sector has wolfed down three years of Long Term Refinancing Operations (LTROs) in under four months.
The question is — what went wrong? Continue reading
World-Wide Marginal Tax Rates
How does the U.S. Tax Rate compare with other countries?
Recently the people at Turbo-Tax created a great “info-graphic” comparing world-wide marginal income tax rates so we can see where we stand.
According to Wikipedia
A marginal tax rate is the tax rate that applies to the last unit of currency of the tax base (taxable income or spending)
In other words the marginal tax rate is the rate you will pay on the next dollar you earn. It doesn’t include other taxes like state taxes, sales taxes, property taxes etc. Based on this chart the U.S. compares pretty favorably on a tax rate basis when compared to other developed countries.
U.S. Healthcare Trends- Young Docs Not Optimistic
In March 2012, the Physicians Foundation surveyed 500 physicians aged 40 or younger. 250 were primary care physicians, 175 were Surgical specialists and 75 were hospital based specialists. The typical physician in the survey was 37 years old and employed by a medical group. You would expect these young physicians to be on top of the world, they’ve finished medical school and have promising well-paid careers. Interestingly, however, that is not the case. According to the survey,
These physicians are markedly pessimistic regarding the future of the U.S. healthcare system, with the “new healthcare legislation” ranking as a strong #1 reason for the pessimism. Many voice considerable cynicism with (what several call) government’ involvement.
Will future headlines read:
14,000 seniors with cancer DIE every year because they’re refused life-saving treatments?
Is Animal Testing about to become Obsolete?
By Chris Wood, Casey Research
As an analyst who spends a great deal of time researching biotech and pharma companies, I’m well aware of the challenges facing the drug industry in the US today. From onerous regulation and an approval process that has made drug development prohibitively costly and complex to the pending patent cliff that puts more than $35 billion in annual sales at risk to the apparent decline in innovation suggested by the steep drop in patent applications from big pharma – all portend an increasing inability to replenish shrinking pipelines with new products… i.e., to produce drugs that improve and save lives.
| Despite its techie name, “virtual R&D” actually refers to the way the process is directed and managed, relying mostly on outsourcing. The goal is to attain clinical proof of concept for a drug as efficiently as possible by building a lean core management team and outsourcing the bulk of the process. |
But the news is not all bad. Scientists and entrepreneurs (often one and the same) are fighting back. With computer-aided drug discovery, the rise of backyard biotech, and virtual R&D, developers are experimenting with numerous ways to cut costs and time from the arduous process. One new and particularly interesting effort in this area is a play on the well-known system-on-a-chip (SoC) technology from the world of computers, that can be described as human-organs-on-a-chip. I guess we can call it HOOC for short? Continue reading
Where (and When) to Place Your Investment Bets?
By Jeff Clark, Casey Research
Let’s explore the advantages of saving in gold and silver over dollars. Here’s a hypothetical look at what could occur over the remainder of this decade.
The charts below compare saving $100/month in gold and silver vs. an interest-bearing money-market account. For our projections, we assumed gold’s average annual gain of 18% since 2001 will continue through 2020. For the money-market account, we used an annual interest rate of 1% in 2012 and added 0.5% each year, so that by 2020 it’s earning 5%.
Here’s what would transpire by 2020: Continue reading
Will India Stop Buying Gold?
By Jeff Clark, Casey Research
We’ve read mixed reports about how lofty gold and silver prices are affecting demand in India. One month we’re told demand is up, and the next it’s supposedly down. I’m not suggesting that official reports are inaccurate, but it is admittedly confusing and doesn’t help us understand the real trend in the country.
Why should we care about the gold market in India? Well, let’s face it; the nation is one of the biggest consumers of the metal, a major driver that can give us hints about demand and investment trends, along with what to perhaps eventually expect here in North America. But reading third-party reports about India is very different than getting information firsthand from a credible source in the country. I wanted to get to the bottom of what’s really going on in India by talking to a reputable bullion dealer who could give me the inside scoop, an up-to-the-moment dispatch from the front lines, as it were. So I did just that.
Ashish and Rashmi Sand own Savio Jewellery (Savio means “shine” in Italian), a design studio and jewelry factory in Jaipur, India. They’ve received many design and manufacturing awards since starting their business six years ago, winning five awards in just the past six months. They source gold from bullion agents in Jaipur, who in turn obtain it from dealers in Hong Kong, Dubai, Mumbai, and Delhi. They have industry contacts, friends, and relatives that span the globe, from the US and UK to Asia and Australia. If anybody knows what’s happening in the physical gold and silver bullion markets and the Indian jewelry market, it’s them.
In this exclusive interview, you can read what Ashish and Rashmi told me about unstoppable demand, growing silver interest, budding demand for coins and bars, reduced selling, shifting trends with women, burgeoning ETFs, and why they believe a bubble is headed our way…
Jeff Clark: Ashish, tell us about your manufacturing facility and design studio. Continue reading
ETFs: Do You Really Know What You’re Buying?
By Vedran Vuk, Casey Research
Exchange-traded funds have been all the rage in recent years – they are easy to buy, easy to sell, and often have lower expense ratios than index mutual funds. But the Casey Research team dug deep into the complex world of ETFs and found that in many cases, their names can be utterly deceptive.
Here are a few excerpts of our revealing special report, The Top Ten Misleading ETFs.
Market Vectors Junior Gold Miners (GDXJ) – This ETF sure has a funny definition of a junior mining company. In my opinion, a junior miner is a small, speculative company just getting off the ground. Our publication, Casey International Speculator, specializes in this particular kind of company. If I had to put a number on the market cap, I’d say that junior miners fall under the $500 million mark. If you really want to push the definition to its limits, maybe a market-cap ceiling of $1 billion could still qualify for junior status.
Regardless of the exact line of demarcation, most of us can agree that “junior” means “small.” Furthermore, most investors can agree that market caps over a billion dollars are anything but small. A billion isn’t a major, but it’s clearly in mid-tier territory. That said, the Junior Gold Miners ETF’s top 10 holdings are all over a billion dollar or more. The top holding, with 5.23% of assets, even has a market cap of $2.4 billion – that’s not exactly a junior, to say the least, and neither are the other companies on the list: Continue reading
The Pesky Details of Prospectus Disclosure
By Vedran Vuk, Casey Research
In the infamous case of the Goldman Sachs Abacus 2007 AC-1 fund, it doesn’t take a whole lot to figure out the wrongdoing. Paulson & Co., a multibillion-dollar hedge fund, helped select the mortgage-backed securities held by Abacus while at the same time, Paulson was planning on shorting it. This was all unbeknownst to Abacus buyers, since Goldman Sachs conveniently left out the details of Abacus’ creators and their bet against the fund in the investment marketing materials. Ultimately, the case was settled for $550 million.
Goldman Sachs made a huge mistake here. By not telling its clients about the conflict of interest, the whole thing seemed like the coverup of a malicious act in order to defraud investors. What it really should have done is put the fund’s flaws in difficult-to-understand language on page 82 of the hundred-page prospectus. After all, that’s what everyone else in the industry does, and they’re certainly not settling for half a billion dollars with anyone.
The exchange-traded fund (ETF) industry has made millions – if not billions – of dollars on products sold with a similar approach. If the problems are laid out somewhere, it’s not the ETF company’s fault when the fund fails. Better yet for them, ETFs never promise results… they are marketed only as an investment tool. In the majority of cases, this works just fine. It’s wonderful that investors can purchase a whole index such as the S&P 500 with a single ETF.
Unfortunately, these incentives can create a serious problem in the ETF industry, as popularity drives much of its profits, rather than results. When commodities became all the rage in the past decade, retail investors flooded billions into futures commodity ETFs promising to provide an easy way to invest in the asset class. It didn’t matter that the underlying investments were doomed for failure. The funds lay out the risks in the prospectus and then wash their hands clean should the ETF head for the worst. Sometimes the failure of those funds is hardly an accident or the result of bad luck. Continue reading
Is the United States Headed Down Europe’s Financial Road?
Europe’s economy is contracting
The recent Greek debt deal produced a big collective sigh of relief, plus some cheers for that massive liquidity injection into Europe’s banking system.
It was time to grab a glass and offer a toast to the coming economic recovery of the European Union, right?
Alas, it turns out that Europe’s private sector economic activity is contracting faster than expected.
The latest Markit composite purchasing managers’ index fell to a three-month low. And the survey for that index was conducted in Germany and France, two of the eurozone’s bigger economies.
Markit’s chief economist told Marketwatch (3/22) “The euro-zone economy contracted at a faster rate in March, suggesting that the region has fallen back into recession…”
Citigroup’s chief economist told CNBC (3/22) that Europe’s financial problems have merely been delayed for another day. “We have really just paused for breath,” he said. “It [the long-term refinancing operation] really hasn’t solved the problem, and for Europe the worst is still to come.” Continue reading
Mounting Debt and Lower Salaries – A Persisting Trend for Grads
College education is costly and a majority of students have had to compromise on the college they choose to attend simply because they can’t afford the fees. Even at less expensive colleges, most students finish college with massive amounts of education debt. Often these debts need to be paid off just months after leaving college. This overhanging debt can have a negative effect on many areas of life, from your credit ratings to where you live after college.
Although the official economic depression is now history, extending from December 2007 to June 2009, the economy is only recovering gradually and the impact of the great recession can still be felt in America and around the globe. The country has not yet recuperated fully from the economic depression. Due to the recession, millions of people went jobless. Despite the slight economic revival, the job market is still pathetic. Plus… the cost of education and the cost of living are on the rise. Thus, making student loan payments is turning out to be one of the chief problem areas. And, it’s taking a toll on the fresh grads in light of the small number of jobs available to them. Continue reading
