Category Archives: EQUITIES


From  the GMO  Quarterly Letter

 1. Pressure on GDP growth in the U.S. and the balance of the developed world: count on 1.5% U.S. growth, not the old 3%

2. The age of plentiful, cheap resources is gone forever

3. Oil

4. Climate problems

5. Global food shortages

6. Income inequality

7. Trying to understand deficiencies in democracy and capitalism

8. Deficiencies in the Fed

9. Investment bubbles in a world that is, this time, interestingly different

10. Limitations of homo sapiens



# Content added 12th August:

China’s Latest Currency Actions Are Market Driven

by  Peterson Institute for International Economics

|China’s central bank took a potentially major step toward a more market-determined exchange rate on August 11, when it announced a revision in the process for fixing the central parity exchange rate, the starting point for daily trading of the renminbi (RMB) in the onshore market…China’s move is consistent with long-standing advice from the IMF and from the US Treasury, both of which have repeatedly called for China to adopt a more market-determined exchange rate policy. We should expect this to lead to greater volatility and two-way movement in the value of the RMB vis-a-vis the dollar.

Link to read Lardy article


11th August posting:

Following this morning’s  fall in the Chinese Remninbi Anthony Doyle’s   Bond Vigilantes Quick Comment  is informative :

“The People’s Bank of China (PBoC) has announced this morning that it is improving the pricing mechanism of the daily fixing rate of the remninbi. It will do this by referencing the previous day’s closing rate and by taking into account “demand and supply conditions in the foreign exchange markets” as well as exchange rate movements of other major currencies. As a result, the USDCNY (US dollar to Chinese Yuan Renminbi rate) was fixed higher by 1.9% as a one-off adjustment and represents a record weakening of the Chinese currency. It is the first weakening in the exchange rate by the PBoC since 1994.”

Doyle concludes:

“…Any move to liberalise the determination of exchange rates should be viewed positively for the global economy. Given China’s level of importance as a key manufacturer of goods and its huge cache of foreign reserves, it is unsurprising that large moves in the exchange rate can have significant spillover effects for other economies and financial assets. Any further evolution of the determination of the daily fixing rate of the renminbi will continue to be closely watched, especially in an environment where the Chinese economic growth profile continues to be questioned.”

To read the Bond Vigilantes  article follow this link:

Link to Financial Times Q&A on Remninbi 

Link to Video of Fed Deputy Chairman Stanley Fischer Bloomberg interview yesterday where he mentions concerns with low US inflation and reservations on not moving interest rates until inflation “normalised.”




While markets across the globe “aren’t in a bubble yet”  legendary investor Jeremy Grantham, told investors at a Morningstar conference on June 25th  most stock markets in the world are overpriced — “and the bond market is more overpriced that at any time in history.”  To break the march toward what he termed Bubbleland  “we’ll have to wait until merger activity reaches “more of a frenzy” and individuals “become crazy buyers… But for now, individuals are buying a normal amount of shares, and no bubble has ever broken until individuals pour into the market.”

Grantham suggests the trigger needed to stop the markets’ steady rise won’t come from an interest-rate increase.By artificially depressing interest rates the Fed had made it “desperately appealing” for corporations to borrow cheaply to buy their own stock back,  noting that capital expenditures are “dismal.”

Though “everyone is in a state of hysteria” over the thought of an interest-rate increase it won’t derail the markets’ climb  or break the march toward what he termed bubbleland. “The market went up all the time without missing a beat when the Fed raised rates eight times from early 2004 to early 2006…Markets will likely plod higher until at least the Presidential election.”

WSJ note  “Mr. Grantham’s calls are widely watched in part because the firm’s money managers don’t have a reputation for being perma-bulls or perma-bears. He was early in predicting the financial crisis and then reversed course before markets started rebounding in 2009.”



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Articles, news and expert comment surrounding the general election

Shares, Bonds and the Sterling  Rise after Tory win: City AM

Sectors That Could Benefit Hargreaves Landsdown

The Stocks Set To Prosper : STOCKOPEDIA 

News and Commentary Updates Hargreaves Landsdown

International Investors Rush back Into UK Property Guardian

Cameron’s Hard Work Starts Now Bloomberg View 

Selected Fund Manager’s Opinions

Cameron victory positive for stability but risks with E.U.  Referendum : IHS