Swiss Surrender 01-15-15

Rather than the familiar white cross on a red background, Switzerland is waiving a white flag today. After three years of waging a losing battle to cap the value of the Swiss franc relative to the euro, Switzerland’s central bank surrendered to market forces, scrapping the 120 euro/franc peg and cutting its bank deposit rate from minus 0.25 percent to minus 0.75 percent. The Swiss are no longer willing to buy euros in what has been a very costly bid to suppress their own currency. Foreign money poured into the breach, causing the safe haven franc to surge an astounding 17 percent today. Read more about Swiss Surrender 01-15-15

Moving Toward Hegemony 12-31-14

China is partying like it’s 1999. No, we’re not talking about New Year’s celebrations, although we hear it was quite the time when the clock struck midnight on the Mainland. Instead, we mean the country is stepping up efforts to invest overseas, which will further its advance toward becoming the world’s dominant economy.

Looking Ahead to the New Year 12-24-14

As we enter 2015, we think a case can be made that the next 12 to 24 months will go down in history as the most important in the history of capitalism and the West. As it stands now we think—and desperately hope we are wrong—that the period immediately ahead will be one in which the East establishes itself as at least equal and probably more than equal to the West. It could easily be a time when the dollar’s days as the world’s reserve currency clearly become limited. Read more about Looking Ahead to the New Year 12-24-14

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December 19, 2014

Seeds for Disaster

Stocks have reacted quite well to lower oil prices and the more dovish wording in the Federal Reserve’s latest policy statement; it suggested, as we’ve been saying for some time now, that interest rates will remain low for a long while yet. The S&P 500 has climbed nearly 5 percent in the last three sessions, its biggest such move in three years.

The decline in oil prices has decimated the stocks of companies in that industry, as cash flow crashes and desperately needed credit will be unavailable to fund projects. But the drop also creates tremendous opportunities for patient investors. We recommend buying shares in one company that's well positioned to profitably weather the current environment and will come out on the other side in even shape. Meantime, the stock is a real bargain at its current price. Read more about Seeds for Disaster