Montreal, Canada

Montreal, Canada

Germany failed to auction a 5-year bund or bond yesterday marking the first time Europe’s largest economy has scrapped an auction since several issues failed to go to market back in October 2008 at the height of the credit crisis. Spain, Italy, Greece and Portugal are also struggling to sell paper this month with the former requiring European Central Bank (ECB) purchase assistance over the last ten days to raise short-term financing.

Montreal, Canada

Over the past 12 months, I’ve bought and sold a reverse index on long-term Treasury bonds twice anticipating a major pullback in prices or a significant rise in yields. On both occasions, I sold this position at a loss because lingering economic weakness and renewed credit fears continue to spur purchases of Treasury securities, driving bond yields sharply lower.

Montreal, Canada

Government bailouts of the financial system in 2008-2009 have resulted in a sovereign debt crisis this year as investors attack those nations with the biggest deficits.

First it was Dubai in late November 2009 and now it’s Greece. Spain or Portugal might be next. Maybe the United Kingdom. And what started out as a local crisis has now spread across the euro-zone while infecting not only the European continent but spreading contagion across world markets.

Montreal, Canada

Sovereign Society’s first Wealth Symposium in Montreal was a success. Over 400 delegates, mostly from the United States and Canada, attended our conference last week and everyone enjoyed the event.

Montreal, Canada

What are the odds that the single European currency will still exist in 24 months? What if the Germans do a flip-flop and decide they don’t want any more bailouts? More bailouts imply the single European currency is being driven to devaluation as traders and speculators continue to eat away at its core – meaning a full-fledged attack one day on German bond markets – widely considered to be a safe-haven in Europe.

Montreal, Canada

As world markets enter the den of another sell-off since hitting a low more than 14 months ago, it’s time to start placing some bets against some sectors that might decline sharply this summer and fall.

Capacity has drowned some areas of the global economy heading into this summer, namely tied to the commodities cycle. These include renewable energy, oil stocks, shipping companies and the base metals.

Montreal, Canada

For the first time since early 2009 inter-bank lending rates are climbing among European banks as investors wager which institutions are safe and which are at risk of default. And three-month LIBOR or the London Inter-bank Offered Rate, is trading at 0.43% this morning – elevated compared to the 0%-0.25% Federal Funds rate, which it tracks. Less than a month ago, LIBOR traded at 0.30%.

Montreal, Canada

Buy when there's Blood in the Streets…

A recent study courtesy of Montreal-based Bank Credit Analyst (BCA) suggests that previous credit crises followed by International Monetary Fund (IMF) rescues have accorded investors big gains in local stock markets.

BCA examined several rescues in the 1990s with Mexico, Russia, South Korea and Indonesia as case studies. In all examples, stocks posted huge double-digit gains within 12-18 months of the IMF rescue packages.