George Soros gained global recognition when he co-founded the Quantum Fund with Jim Rogers in 1970. That fund generated an average annual return of more than 30% while he was at the helm.
Soros hasn't quit making timely market calls since: From his $10 billion bet against the British pound sterling in 1992 to his April 2008 prediction that we had not "seen the full effect" of the recession and that the situation was "more serious than the authorities admit or recognize."
In February, Soros called the euro's viability into question, and the currency has plunged some 10% since that time.
Financial Crisis
Article Index
The Sovereign Debt Crisis: Bad For Europe, Good For U.S. Stocks
For several months now, we've been talking about the post-financial-crisis "new world order" that's emerged from the speculative excesses, recessionary realities and regulatory breakdowns of recent years. This new world order has created a world of lucrative new profit opportunities - that are governed by a new set of profit rules.
In terms of that whole new rules/new profit opportunities paradigm, here's one that may surprise you: The ongoing European crisis could end up as a net positive for U.S. stocks.
Let me explain...
To see how Europe's travails can aid U.S. stocks, please read on...
In terms of that whole new rules/new profit opportunities paradigm, here's one that may surprise you: The ongoing European crisis could end up as a net positive for U.S. stocks.
Let me explain...
To see how Europe's travails can aid U.S. stocks, please read on...
How to Fuel Your Retirement with Dividend Cash
The financial crisis already put a major dent in your retirement portfolio... and the markets are acting crazy again. What can you do to protect - and grow - your wealth in these markets? Dividends are the way to generate real income - no matter where the market turns. Read this report to discover how to infuse your retirement with cash.
Stock Market Strategies for the Post-Financial-Crisis 'New World Order'
For many investors, the recent thousand-point plunge by the U.S. stock market was probably the proverbial last straw.
So let me be perfectly clear about the point that I want to make here: Sitting on the sidelines could be the investment mistake of a lifetime. The post-financial-crisis "new world order" that's emerged from the speculative excesses, recessionary realities and regulatory breakdowns of recent years has created a world of lucrative new profit opportunities - governed by a new set of profit rules.
Let me explain...
So let me be perfectly clear about the point that I want to make here: Sitting on the sidelines could be the investment mistake of a lifetime. The post-financial-crisis "new world order" that's emerged from the speculative excesses, recessionary realities and regulatory breakdowns of recent years has created a world of lucrative new profit opportunities - governed by a new set of profit rules.
Let me explain...
To discover the next generation of global-stock-market winners, read on...
As Scary as it Seems, Greek Debt Crisis Won't Spawn Second Global Meltdown
The Greek debt crisis is starting to display an uncanny resemblance to the subprime crisis that sank the U.S. housing market, sent the global economy into a tailspin and touched off the worst financial crisis since the Great Depression.
Indeed, Greece has behaved very much like a subprime country:
Indeed, Greece has behaved very much like a subprime country:
- It has borrowed more money than it can possibly repay - all the while lying to everybody about its true state of affairs.
- "Liar loans" have been made, in Greece's case, to enable the country to "cook the books" with regard to its budget deficits.
- New problems continue to emerge - apart from the liar loans - making it impossible to be sure all the troubles have been unveiled.
- And as was the case with the subprime-mortgage crisis, embattled Wall Street investment-banking-giant Goldman Sachs Group Inc. (NYSE: GS) appears to have been intimately involved in the business.
How the Goldman Sachs Fraud Case Could Accelerate Wall Street Reform
When the U.S. Securities and Exchange Commission announced Friday that it had filed a fraud action against Goldman Sachs Group Inc. (NYSE: GS), the news hit the financial markets like a carefully targeted bomb.
The Goldman Sachs fraud case, which relates to the investment bank's subprime-mortgage business, caused the financial giant's shares to nosedive 12.8%. The fallout spread to the broader markets, too, causing the Dow Jones Industrial Average to drop 1.1% and the Standard & Poor's 500 Index to skid 1.6%.
That reaction wasn't overblown.
Depending on how rough the SEC wants to play it, the case has the potential to shut down the cartel known as Wall Street. It could even jump-start the kind of sweeping overhaul that legal or regulatory reformists have so far failed to launch.
The Goldman Sachs fraud case, which relates to the investment bank's subprime-mortgage business, caused the financial giant's shares to nosedive 12.8%. The fallout spread to the broader markets, too, causing the Dow Jones Industrial Average to drop 1.1% and the Standard & Poor's 500 Index to skid 1.6%.
That reaction wasn't overblown.
Depending on how rough the SEC wants to play it, the case has the potential to shut down the cartel known as Wall Street. It could even jump-start the kind of sweeping overhaul that legal or regulatory reformists have so far failed to launch.
What's Really Driving Obama's Sudden Interest in Oil
U.S. President Barack Obama generated a lot of hubbub with his decision to open up parts of the Atlantic Ocean and Gulf of Mexico to oil drilling.
We've all heard the criticisms that some of the geological surveys are as much as 30 years old, and the arguments that the ecological impact of drilling off the U.S. East Coast isn't worth the accessible oil, which some critics estimate could play out in as little as six months at current demand levels.
But even after more than a day of debate over the motivations for - and possible results from - President Obama's apparent energy policy about-face, one thing is very clear: This announcement has nothing to do with oil.
It's all about the U.S. dollar.
To find out why President Barack Obama really lifted the moratorium on oil drilling, please read on...
We've all heard the criticisms that some of the geological surveys are as much as 30 years old, and the arguments that the ecological impact of drilling off the U.S. East Coast isn't worth the accessible oil, which some critics estimate could play out in as little as six months at current demand levels.
But even after more than a day of debate over the motivations for - and possible results from - President Obama's apparent energy policy about-face, one thing is very clear: This announcement has nothing to do with oil.
It's all about the U.S. dollar.
To find out why President Barack Obama really lifted the moratorium on oil drilling, please read on...
Fastest Recovery Ever Could Push Corporate Profits to Record Highs in 2010
Sometimes we get a little carried away talking about esoteric subjects like bulls, bears, supply, demand, moving averages and the like. But if you just want to focus on something real, then look at corporate profits. When they're rising from a low, that's good; when they're flat-lining or declining, that's bad. Pretty simple.
Much of the rally of the past year has been in anticipation of a profit recovery. And now that recovery is actually coming in a bit better than bulls expected, which is why they are able to elbow bears so effectively. ISI Group now figures that corporate profits will clock in at +38.8% for the first quarter (year over year) of 2010, then +42.4% in the second quarter, +36.8% in the third quarter and then +30% in the fourth quarter (against harder comparisons). That would put profits in 2010 up a record 36.1% overall.
To read more about how corporate earnings will shape the market click here.
Much of the rally of the past year has been in anticipation of a profit recovery. And now that recovery is actually coming in a bit better than bulls expected, which is why they are able to elbow bears so effectively. ISI Group now figures that corporate profits will clock in at +38.8% for the first quarter (year over year) of 2010, then +42.4% in the second quarter, +36.8% in the third quarter and then +30% in the fourth quarter (against harder comparisons). That would put profits in 2010 up a record 36.1% overall.
To read more about how corporate earnings will shape the market click here.
Lehman Execs Have No One to Blame but Themselves
The U.S. bankruptcy-court examiner investigating the collapse of Lehman Brothers Holdings Inc. issued a stinging report Friday that accused senior executives of freewheeling accounting practices that led to the largest bankruptcy in U.S. history and sparked the worst financial crisis since the Great Depression.
The 2200-page report, authored by Anton Valukas, chairman of the Chicago-based law firm Jenner & Block LLP, also excoriated Wall Street investment banks, including JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) for finally pushing Lehman over the edge by demanding more collateral and changing guarantee agreements, Bloomberg News reported.
But the report says ultimate responsibility for its collapse can be attributed to a wrong-headed business model that rewarded excessive risk and encouraged leverage - problems that were brought to a head by the investment banks and government agencies.
The 2200-page report, authored by Anton Valukas, chairman of the Chicago-based law firm Jenner & Block LLP, also excoriated Wall Street investment banks, including JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) for finally pushing Lehman over the edge by demanding more collateral and changing guarantee agreements, Bloomberg News reported.
But the report says ultimate responsibility for its collapse can be attributed to a wrong-headed business model that rewarded excessive risk and encouraged leverage - problems that were brought to a head by the investment banks and government agencies.
Billonaire Investor George Soros Questions the Euro's Future
In an editorial penned for the Financial Times, billionaire investing icon George Soros said that while Greece could be salvaged by a makeshift financial-rescue package, bigger problems lie ahead for the euro.
According to weekend news reports, Germany's finance ministry has sketched out a plan under which countries using the euro currency will provide between $27 billion and $33.7 billion (20 billion and 25 billion euros) in aid for Greece, which is teetering on the brink of default.
Soros says that "a makeshift assistance should be enough for Greece," but warns that the growing threats posed by other debt-laden, euro-member countries - particularly Spain, Italy, Portugal and Ireland - could prove overwhelming.
According to weekend news reports, Germany's finance ministry has sketched out a plan under which countries using the euro currency will provide between $27 billion and $33.7 billion (20 billion and 25 billion euros) in aid for Greece, which is teetering on the brink of default.
Soros says that "a makeshift assistance should be enough for Greece," but warns that the growing threats posed by other debt-laden, euro-member countries - particularly Spain, Italy, Portugal and Ireland - could prove overwhelming.
Arctic Chill Frames Divergence in G-7 Economic Policies at Canada Meet
In between bites of seal meat and dogsled races, the financial heads of the Group of Seven (G-7) countries met near the Arctic Circle in Canada last weekend to hammer out differences in how their respective countries will approach monetary policy as the economic recovery takes hold. Windchill temperatures hovered around -40°C in Iqaluit, just […]
Unemployment Report Set to Reflect the Bitter Face of a Jobless Recovery
New statistics from the Labor Department today (Friday) will likely confirm that the U.S. economy is in a deeper hole than previously thought.
Economists expect that the national unemployment rate rose to 10.1% in January from 10% in December. More importantly, however, the number of jobs lost from April 2008 to March 2009 will be revised upwards by 824,000 - the largest margin in 18 years, according to Bloomberg News.
Most of those losses came from companies that closed or went out of business, which would undermine the popular birth/death model for joblessness. That model is based on the assumption that hirings at newly formed companies generally offset the job losses associated with company closures.
Economists expect that the national unemployment rate rose to 10.1% in January from 10% in December. More importantly, however, the number of jobs lost from April 2008 to March 2009 will be revised upwards by 824,000 - the largest margin in 18 years, according to Bloomberg News.
Most of those losses came from companies that closed or went out of business, which would undermine the popular birth/death model for joblessness. That model is based on the assumption that hirings at newly formed companies generally offset the job losses associated with company closures.
If China Sneezes, Wall Street Will Catch A Cold
Investors who needed proof of China's increased importance in the post-financial-crisis world only have to look at the nervousness of recent weeks to get a glimpse of the future.
When U.S. stocks fell sharply late Friday, they capped off a harrowing 10-day span that has seen the broad U.S. market benchmarks drop by nearly 7%. Emerging markets are down 9%. Not surprisingly, investor fear has sent volatility rocketing 40% - the largest two-week increase since the global financial crisis went nuclear back in October 2008.
Complicating matters was the continued strengthening of the U.S. dollar - something we've been discussing and warning about for a few weeks. With fear on the rise among global investors, many are abandoning risky positions in emerging-market stocks and bonds and moving cash into the safety of U.S. Treasuries. This bolsters the dollar, which was up 4% in two weeks. That exerts a lot of pressure on commodities. Crude oil fell more than 7% during the week. Gold is down 5%.
The corporate bond market - which has been red hot lately, helping to underpin stock-market gains - continued to advance, but slipped relative to ultra-safe government debt. Tim Backshall of Credit Derivatives Research wrote in a note to clients that both high-yield and investment-grade credits have been making the longest and most consistent run of lower lows versus ultra-safe U.S. Treasuries since February 2008.
While government debt has the edge for the moment, the long-term corporate-credit bull market remains intact, according to WJB Capital Group Inc. strategist Brian Reynolds. He sees the credit bears making a run at credit-derivative products that insure against bond defaults, which are a cheap way to try to manipulate the market.
Indeed, the cost to protect against default at banks like JPMorgan Chase & Co. (NYSE: JPM) and Goldman Sachs Group Inc. (NYSE: GS), not to mention Greece, jumped noticeably last week. But the damage has been limited as bears have failed to get traction against the instruments that they used to catalyze the 2008 credit crisis.
This lays the groundwork for a powerful snapback rally for stocks.
When U.S. stocks fell sharply late Friday, they capped off a harrowing 10-day span that has seen the broad U.S. market benchmarks drop by nearly 7%. Emerging markets are down 9%. Not surprisingly, investor fear has sent volatility rocketing 40% - the largest two-week increase since the global financial crisis went nuclear back in October 2008.
Complicating matters was the continued strengthening of the U.S. dollar - something we've been discussing and warning about for a few weeks. With fear on the rise among global investors, many are abandoning risky positions in emerging-market stocks and bonds and moving cash into the safety of U.S. Treasuries. This bolsters the dollar, which was up 4% in two weeks. That exerts a lot of pressure on commodities. Crude oil fell more than 7% during the week. Gold is down 5%.
The corporate bond market - which has been red hot lately, helping to underpin stock-market gains - continued to advance, but slipped relative to ultra-safe government debt. Tim Backshall of Credit Derivatives Research wrote in a note to clients that both high-yield and investment-grade credits have been making the longest and most consistent run of lower lows versus ultra-safe U.S. Treasuries since February 2008.
While government debt has the edge for the moment, the long-term corporate-credit bull market remains intact, according to WJB Capital Group Inc. strategist Brian Reynolds. He sees the credit bears making a run at credit-derivative products that insure against bond defaults, which are a cheap way to try to manipulate the market.
Indeed, the cost to protect against default at banks like JPMorgan Chase & Co. (NYSE: JPM) and Goldman Sachs Group Inc. (NYSE: GS), not to mention Greece, jumped noticeably last week. But the damage has been limited as bears have failed to get traction against the instruments that they used to catalyze the 2008 credit crisis.
This lays the groundwork for a powerful snapback rally for stocks.
To find out more about the China Surprise, read on ...
Can Bernanke Tune Out Political Pressure as the FOMC Again Ponders Policy Changes?
When U.S. Federal Reserve Chairman Ben S. Bernanke emerges from the central bank's monthly policymaking meeting at around 2:15 p.m. today (Wednesday), it's a near certainty that he'll reaffirm his pledge to keep interest rates "exceptionally low" for an "extended period" of time.
Bernanke has kept the benchmark Federal Funds rate at a record low range of 0.00%-0.25% since December 2008, and that's not likely to change as a result of today's meeting of the central bank's Federal Open Market Committee (FOMC).
At some point, however, Bernanke will have to tighten credit and raise interest rates in order to soak up all the excess liquidity and curb inflation in the U.S. economy. But the question remains: When that time comes, will Bernanke have the fortitude to do so?
There's no simple answer. And for good reason: With the country mired in its worst financial crisis in most Americans' lifetimes, the central bank's decisions now are as political in focus as they are economic.
Bernanke has kept the benchmark Federal Funds rate at a record low range of 0.00%-0.25% since December 2008, and that's not likely to change as a result of today's meeting of the central bank's Federal Open Market Committee (FOMC).
At some point, however, Bernanke will have to tighten credit and raise interest rates in order to soak up all the excess liquidity and curb inflation in the U.S. economy. But the question remains: When that time comes, will Bernanke have the fortitude to do so?
There's no simple answer. And for good reason: With the country mired in its worst financial crisis in most Americans' lifetimes, the central bank's decisions now are as political in focus as they are economic.
The High Cost of Greed ...
Money Morning subscriber Ted Kubichek wrote and asked if one of our experts could comment on the underlying cause of the financial crisis whose fallout will affect the U.S. economy for years. Here's an edited version of that question, as well as the reply by Money Morning's Shah Gilani, an internationally recognized expert on the global credit crisis.