Posts tagged 'Bubble'

That was nuts. Is this the Dubai crash?

Dubai stocks went bonkers last year, along with Qatar, distorting the performance of the (anyway tiny) frontier markets index.

Locals rediscovered their lust for equities, while foreigners were excited by a potential upgrade to emerging market status and the billions of dollars of inflows from index funds that would represent. In total the index more than tripled in two years.

In the past month it’s all gone wrong, and strategist Andrew Howell at Citi has a good reason why: the performance of Dubai, represented by the MSCI UAE index, looks very much like the out-of-control price inflation represented by the Nasdaq during the dotcom bubble. Read more

The great Aussie bank share price bubble

Via UBS:

The Aussie banks are very good companies. They are profitable, resilient, well capitalised, well managed, shareholder focused and have a very strong industry and regulatory structure. However, following the significant leveraging of the Australian & NZ households over the last thirty years they are now low growth and remain heavily exposed to housing, funding markets & unemployment risk. Read more

The silver crowd

The wonders of Google auto-suggest, silver vox pop edition:

 Read more

Regulator warns of US farm asset bubble

The next asset bubbles with potential to endanger the US financial system are in farm property and Treasury bonds, a leading regulator has warned, reports the FT. Sheila Bair, who chairs the Federal Deposit Insurance Corporation – responsible for seizing failing banks – said the health of more than 1,500 farm banks would be threatened if the “positive fundamentals” in the booming agricultural sector suddenly reversed.

James Montier on the bond bubble

GMO’s James Montier has added his two-penneth to the bond bubble debate.

He reckons it is a largely sterile conversation because what investors should be asking themselves is whether bonds are a good investment at their current low levels. Read more

Missing the Housing Bubble 101

Here’s an, erm, brave discussion paper out from the Boston Fed.

In it, authors Kristopher S. Gerardi, Christopher L. Foote, and Paul S. Willen examine “optimism” and “pessimism” about the US housing market before the recent crash. In other words, they’re looking at why some people missed the imminent house price implosion entirely and why some didn’t. Read more

Henderson’s Hong Kong property dream falls through

Fresh from Hong Kong — a headache for property giant, Henderson Land.

Late on Tuesday, the company controlled by billionaire Lee Shau-kee let slip that it would take an HK$734m charge (USD$94m) on 20 cancelled Hong Kong apartment sales. Henderson had already included sales of 24 flats in its 2010 earnings, but only four of them have actually closed. Read more

China told property risk is worse than in US

The problems in China’s housing market are more severe than those in the US before the financial crisis because they combine a potential bubble with the risk of social discontent, according to an adviser to the Chinese central bank. Li Daokui, a professor and member of the Chinese central bank’s monetary policy committee, said recent government measures to cool the property market needed to be part of a long-term push to bring high housing prices under control, the FT reported.

China attempts to cool housing market

Over the past two weeks, the Chinese government has been rolling out an aggressive campaign to squeeze speculative buyers out of a property market that many analysts fear is close to a bubble, the FT says. Almost every day a new administrative measure has been announced – raising the required deposit and interest rate on mortgages for second homes, and making it harder for people not resident in a city to get a mortgage there.

Boringness of central banks to blame for bubbles

The blame game for the crisis has now reached central banks themselves. FT Alphaville notes Deutsche Bank’s view that they were simply too boring. Read more

China’s banks, more liquid-hot than ever

And the great Chinese credit bubble leap forward continues, with Tuesday’s datapoint coming from Bank of China.

After all, the bank led the charge on Tuesday with some really not too shabby results. As BusinessWeek reported: Read more

The bubble in British railways, 1830s edition

The following ars technica headline caught the eye of FT Alphaville on Monday: ‘Historian finds tech bubble that didn’t pop (180 years ago)‘.

Ars cited a fresh batch of research by Andrew Odlyzko, author of a paper with an even more intriguing headline, on a subject that is, at best, niche. Read more

Greenspan says, je regrette quelque chose

It sounds like an airport novel, FT Alphaville notes. But The Crisis, the 66-page paper authored by Alan Greenspan, is the closest we’ve ever gotten to a mea culpa from the former Fed chief, who chaired the US central bank in the midst of a growing housing bubble. Read more

Wen, will property cool?

Amid the flurry of media attempts to parse the assurances of elusive Chinese mandarins, one announcement on Monday from the housing ministry looked like it might actually tell us something about the direction of Chinese economic reform.

Fat chance. Read more

China’s metropoli bubble fear

We believe that we now have a bubble in many cities, particularly the big ones. The central government is trying to deflate these bubbles gently, rather than pop them. The fact that prices have been at these levels before suggests this can be accomplished, as it was last time. But this does not mean that the land market will not experience pain during 2010-11.

That’s Standard Chartered on the matter of Chinese land prices on Monday. Read more

Rosenberg’s ‘Not So Great Depression’

Gluskin Sheff’s David Rosenberg has taken umbrage with the term ‘The Great Recession’ to describe the current global economic malaise.

According to the seasoned economist, it’s quite clear what we experienced last year was not a recession but a depression. That said, it was definitely not another ‘Great Depression’. Read more

China is ‘the most obvious area of concern’, Fitch says

Here’s something you may have missed — not least because it comes from a Reuters chat room.

Regardless, the comments from James McCormack, managing director of Asia Pacific sovereign ratings at ratings agency Fitch, make for thought-provoking reading: Read more

Pimco looks to Asian bonds

When Pimco moves in, you know there’s money to be made.

Amid signs of both currency appreciation and economic recovery among various Asian countries, Bloomberg reports on Friday that Pacific Investment Management Co., better known as Pimco, is planning to set up its first dedicated Asian-currency bond fund in Japan as it increases bets on the region’s “stable” economies. Read more

China’s liquid real estate bubble

Conduit Road 39 - Reuters photo via the NYT

That is the building which houses the most expensive apartment in Hong Kong. The five-bedroom apartment sold for $56.6m on Wednesday, sparking further speculation that the city — and the rest of China — might be in the grips of a real estate market bubble. Read more

China’s land boom, a datapoint

This is Guangqu Road in Beijing.

Guangqu Road from Beijingology Read more

Of con men, spivs and ‘gangreenous’ stocks

The headline on a recent Bloomberg stock market report out of Japan said it all: “Japan Stocks Rise on Green Technology Optimism”.

We’re seeing a growing number of headlines in that vein. Indeed, the rising wave of investor optimism on everything and anything related to so-called “green technology” has seen some lucrative deals and surging stock prices in sectors ranging from alternative energy sources to hybrid cars, anti-air pollution systems and environmental technology of every description. Read more

New American bubbles

Were bubbles really the best choice of graphic for the USA’s Economic Recovery Act? - Investments Read more

Serial bubbles

Dresdner has some interesting charts out today, depicting bubbles — and lots of them. Specifically in housing and equities in the UK, US and Japan.

Dresdner - UK house prices vs equities Read more

Will CDS spreads tumble in February?

Fortis certainly thinks so.

The bank’s analysis, which is based on Didier Sornette’s research into bubbles (think US housing and oil circa 2008), holds that recent increases in CDS spreads in both US and European markets have reached unsustainable levels and are due for a correction – sharpish. Read more

Ponzi meets treasuries bubble

Well, Goldman aside, talk of a bubble in US treasuries is gaining pace.

To wit, the latest missive from Bill Gross, managing director of Pimco, the world’s biggest bonds fund. In his investment outlook, Gross accuses everything from Option ARMs to hedge funds to American states to the entire US social security system of being Ponzi schemes. For example: Read more

Hormone bubbles

We’re not sure how new this is but thought it might be worthwhile given talk of oil bubbles, China bubbles, hyper-bubbles, et al. recently.

From New Scientist, via Infectious Greed, and further reinforcing the notion that traders are more jacked up on hormones and herd mentality than a Texan longhorn. Read more

Is oil bubbling over?

Paul Kedrosky triggered an outbreak of comments on his Infectious Greed blog with his assertion that oil has out-bubbbled tech in terms of both duration and percentage gain.

He backed up his assertion with a chart (see below) from Bespoke Investment Group comparing the bubbles in housing and technology sector with theOil vs housing vs tech run-up in oil.
Kedrosky, who says he is becoming “crazy bearish” on oil prices, argues that while oil prices are unlikely to “tumble materially” tomorrow, they will, of necessity, decline: Read more