Tag Archive | "European Central Bank"

Cotacachi Mayor’s House


Recent messages looked at how Merri and I search for Cotacachi real estate.

The road paving we have been tracking is now done.

cotacachi-real-estate

In two directions…

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in less than two weeks.

We keep our eyes open every day and the search pays off.

Today, near Primavera II condos…

cotacachi-real-estate

Around the corner from Cotacachi’s Mayor’s house (which is for sale) …

cotacachi-real-estate

we spotted two old houses for sale.  This one is $25,000.

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and this, $36,000.

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These fixer uppers have huge lots, in the center of the village. They may be real sleepers.  We’ll see as we’ll inspect them on our Imbaburra real estate tour that begins tomorrow.

You can gain Cotacachi real estate information and Ecuador real estate contacts as an Ecuador Living subscriber. See details here.

Speaking of sleepers, this excerpt from today’s password protected multi currency course shows why European shares may be sleepers as well.

Here is the excerpt:

This multi currency update has three portions. First we see anther inflation indicator. Second we update our search for value. Third we end with some answers to questions from lesson one of our new updated primer course.

Recent inflationary events include the support by US authorities of Bank of America with a guarantee of liquidity and capital. B of A faces losses of up to $118 billion dollars.

The government gets shares in the bank worth $20 billion.  In other words the government stumps up about $88 billion (that it does not have).  This is inflation.

Citibank in trouble as well.

Jyske Global Asset Management wrote in its last market update three days ago:

Fears of further credit losses and rumours of another large US bank being nationalized dragged the international stock market down this week. The New Year rally last week is already forgotten, and investors are anticipating new lows in 2009.

Citigroup Inc. posted an $8.29 billion loss, only a few days after the announcement of their plans to sell the control of Smith Barney to rival Morgan Stanley.

Sales at U.S. retailers dropped in December for the sixth consecutive month (first time since 1992) and the most in three years.

S&P cut Greece’s long-term credit rating to A- with a stable outlook, due to its public and private debt and the budget deficit. The downgrade makes Greece the lowest rated country in the Euro zone.

Market participators are now speculating whether a Euro exit may become an option for some members of the Euro-bloc, analysts view Greece as the weakest economy within the Euro zone.

The European Central Bank (ECB) Thursday cut the Euro zone interest rate to the lowest level in more than 3 years.

As expected the main policy rate was cut by a half percentage point to 2%. The Danish Central bank followed the ECB with an even bigger cut of 75 basis pts to 3%.

#1: Falling interest rates are indicators for increased activity in share markets.

#2: Combine this with the fact that stock funds saw huge redemptions in 2008.

#3: Add in the next fact that international equity funds were among the most redeemed losing about a fourth of their total assets in 2008.

U.S. stock funds only had redemptions of about 10% of their assets.  Bond funds on the other hand experienced positive flows in 2008.

This increases my enthusiasm for international shares…especially in Europe.

Low interest rates plus markets that are oversold plus inflation all bode well for shares.

There are four ways to fight inflation; real estate, your own business, commodities and equities.   So depressed international equities in an atmosphere of low interest rates spells opportunity.

These three factors are the elements that create value because value investors are generally bucking the trend.

This is why last year my biggest equity position was in the Jyske Invest European Equity fund.  I picked a fund that was invested mostly in markets that Michael Keppler of Keppler Asset Mangement viewed as having the best value.

Keppler has changed some of his rankings this month so let’s review the change and see if my position still makes sense.

Let’s look at the geographical breakdown of the Jyske Invest European Equities fund I hold now.

This fund has departed quite a lot from the synchronicity it enjoyed with Keppler’s top values when I invested two years ago.  The fund’s portfolio is spread here now:

UK  24%
Germany 16%
Switzerland 13%
France 12%
Spain 7%
Netherlands 4.5%
Sweden 4%
Spain 4%
Finland 3%
Italy      2%
Greece 2%
Denmark 1.5%
Norway 1.5%
Luxembourg .5%
Ireland  0.5%
Austria 0.5%

The fund’s managers report says:

There are prospects of uncertainty in 2009. The world economy is struggling
and the optimism has turned into pessimism. Central banks and  governments have been busy introducing rescue packages and  interest-rate cuts. The help has been offered, but is it sufficient and when will it begin to show an effect? We
expect that 2009 will bring wide swings in the equity market. A lasting upturn is not likely to be just around  the corner. We are still looking at a longer period characterised by uncertainty before the optimists outnumber the pessimists.

For the fund we prefer cheap shares with prospects of earnings growth. That type of shares has historically yielded the best returns.

Though this fund no longer has the same value synchronicity with Keppler that it previously had, I’ll continue to hold this as I plan to increase my equity position. I can balance this fund’s holdings to better match Keppler’s rankings by adding Hong Kong, Singapore, Italian and other funds or ETFs.

You can learn more about Keppler’s market updates and the ETFs we use in our multi currency portfolio as a multi currency susbcriber.

Until next update, good global investing

Gary

Join Merri, me and Peter Laub of Jyske Global Asset Management at OUR INTERNATIONAL INVESTING & BUSINESS COURSE IN ECUADOR. We review economic conditions, Ecuador real estate, my entire portfolio plus investing and business ideas for the months ahead.

Gary

Your own business is a  good way to secure purchasing power. This is why Merri, our webmaster and I decided to create a new course on how to build a web business with a webmaster.  There is a special offer on this new course that expired to the general public last Tuesday…but is still available to you.  See the offer here.

Get this course FREE if you join us in Ecuador this February.

Feb 9-11 Beyond Logic Keys to More Wealth & Better Health

Feb. 13-15 International Business & Investing Made EZ

Feb. 16-17 Imbabura Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two

Or join Merri, me and Thomas Fischer of Jyske Global Asset Management, July 24-26, 2009 in North Carolina for International Investing and Business Made EZ

Cotacachi Tours


We have over two dozen Cotacachi & Ecuador tours and courses scheduled in 2009. Many have asked what they are like…so let’s take a tour of the tour…then I’ll share an investing tip.

Our November International Business & Investing course began yesterday…so we’ll follow this group. This is a typical schedule…beginning with a course, then followed with an Adean real estate tour and concluding with a real estate tour on the Ecuador coast.

We try to schedule three courses together like this so delegates can choose one two or all three tours…whatever works best for them and this allows us to provide substantial discounts on the second and third tour.

Most delegates arrive in Quito the night before. Alberto, Steve and a few of our staff drive up to meet everyone and deliver them to a hotel (usually Hotel Quito or Radisson – we negotiate a discount for everyone so the hotel that offers the best deal gets the business) where they spend the night.

Next morning they all meet and have a ride around Quito before heading north to Cotacachi.

Before the main group is arrives, the staff at our Inn goes into hyerdrive bringing in fresh food. Here is our manager Franklin with makings for fresh vegetable soup.

Cotacachi Ecuador Tour

Consuelo and her helper follow.

Cotacachi Ecuador Tour

They fill up the bodega. Here is our chef Santiago checking the inventory.

Cotacachi Ecuador Tour

while his assistant Alberto starts the soup.

Cotacachi Ecuador Tour

A few early arrivals are already in the courtyard waiting and talking. Here a couple are discussing economics with Peter Laub of Jyske Bank.

Cotacachi Ecuador Tour

Eduardo and his assistant, prepares juice and quinoa cake for everyone to enjoy.

Cotacachi Ecuador Tour

This time Eduardo has created a mango alfalfa drink..delicious.

Cotacachi Ecuador Tour

Finally the bus arrives.

Cotacachi Ecuador Tour

Delegates disembark and the courtyard comes alive.

Cotacachi Ecuador Tour

Many friendships are made. Guests dine, sit round the fireplace and discuss what they expect…what they want…what they think we’ll learn.

Tomorrow we begin next door in the Museum’s meeting room at nine.

Cotacachi tours

Our hotel, of course, is fully booked so we place delagtes at La Mirage, several hostels as well as condos near the hotel.

Subject matter in the course begins with global economics and were to invest now. We have several speakers who join me. In this case Peer Laub of Jyske Global Asset Management (JGAM).

We look at the long term economic fundamentals at work and how investors can react now.

This week JGAM pointed out:

The main attention this week was the US presidential election. Up to the election we saw markets in Asia acting with euphoria due to positive signs of improved conditions in the credit markets as well as the prospect of Obama winning office. Europe and Wall Street continued with the positive sentiment and Tuesday became the strongest presidential election day rally in history. After the election celebrations, markets woke up to the outlook of a severe economic contraction and the euphoria turned into panic selling, with declines up to -10% over two days. Bank of England (BoE) chocked the market Thursday with an aggressive cut of 150 basis points on the key interest rate. This move sparked a mid day rally for 45 minutes until the European Central Bank (ECB) disappointed the market with only a 50 basis point reduction. The EUR/USD has been very volatile over the week ranging from 1,2520 to 1,3120 now trading at 1,2797. We anticipate other central banks to follow the US and EU with reductions over the next few weeks. “

Then we looked at how this volatility and lowering interest rates would create opportunity in bond markets…my message was “a golden bond opportunity is coming.”

Today we will be lookng at this as the course continues.

Until next message good global investing.

Gary

Join us at a course in Cotacachi or on Ecuador’s coast this winter.

Jan. 16-21 Ecuador Spanish Course
Jan. 22-23 Imbabura Real Estate Tour
Jan. 24-27 Coastal Real Estate Tour

We’ll visit the Otavalo markets.

Ecuador-Project

Feb. 13-15 International Business & Investing Made EZ
Feb. 16-17 Imbabura Real Estate Tour

Cotacachi-meeting

Courses are centered around this open air courtyard in our colonial inn El Meson de las Flores.

March 8-9 Imbabura Real Estate Tour
March 10-15 Ecuador Export Expedition
March 16-19 Coastal Real Estate Tour

You are also invited to tag along to the beach where we visit all types of Ecuador beach property for sale. Here is one f our previous tours enjoying a visit to Vistazul condos.

Ecuador-Project

Better still join us all year in Ecuador! See our entire schedule of 26 courses, tours, mingos and expeditions we’ll conduct in 2009.

Multi Currency Strategy


A multi currency strategy is important now because extensive research on seasonality shows that basically in all major equity markets, nearly all returns are achieved from the beginning of November through the end of May. This means we are approaching the best time when equities will rise.

However a year ago, a global financial crisis began. So before we jump headlong into more security investments we need to ask, “What happens now?”

This week we will look at the strategic multi currency economic outlook developed by Jyske Bank’s strategy and research team.

The most important part of investing is to create a realistic match of your portfolio to your own wants, needs and desires.

Next, you need to invest in good value.

An overview of global economics is vital to help you spot good value.

I review my personal portfolio and how I have responded to the crisis of the last year and what I am planning ahead for subscribers of our Multi Currency Course.

Jyske’s report begins:

“It has now been a year since the international financial crisis really took off. The Fed as well as the European Central Bank have had to render assistance in the form of additional liquidity, and there is still a shortage of liquidity today – a year later.

At this point in time – a year after the onset of the crisis – the economic slowdown and the high commodity prices (particularly the oil price) have added to the financial crisis and the global economy is still facing big challenges.

What about the current situation? Well, it can be said that fear of low growth has now replaced the fear of high inflation. This development has taken place after the oil price fell by more than 20% from the peak in mid-July while at the same time we are being inundated with poor economic data for Europe, the UK, Japan, while the emerging markets are also seeing a somewhat weakening development.

What are the forces behind the global economic slowdown in addition to the weak US economy?

Global shocks = Global effects

Drastically rising food and energy prices have put a damper on the consumers’ purchasing power globally and reduced growth by 50% relative to the level in 2007. At the same time, the companies’ earnings are under pressure due to rising commodity prices and wages.

The reaction on the part of the authorities:

Despite the housing-market crisis, financial crisis, oil crisis at full blast in the US, it seems that the US economy saw stronger growth in H1 than the Japanese as well as European counterparts. An important reason for that is that the US authorities did all they could to avoid a slowdown in growth. The Central Bank lowered its interest rate markedly to 2%, and tax relief in the amount of USD 100bn were granted. Europe has seen an interest-rate hike and no easing on the part of the authorities.

Prepared for the worst:

A new development was that already at the beginning of 2008, the US companies seemed to have begun reducing inventories and cutting labour costs in preparation of the bad times ahead. Apparently they were better prepared than the companies in Europe and Asia, which will have to make deeper cuts in production to adapt to the new weaker demand.

Investment Conclusion:

A general theme for investors is positioning for continued weakening of growth outside the US. Therefore, among other things, we now see a markedly stronger dollar as the trend has been reversed. That we prefer US equities to European ones and that European bond yields will fall towards the US level.

On the whole we keep the risk unchanged in the portfolio by maintaining neutral weight for equities. Our considerations with respect to the future are that we will rather prefer to increase the proportion of equities than to reduce it.

This autumn, equities may be boosted by the lower inflation level. Moreover, the many global investors have reduced their holdings considerably. They may gain some appetite for equities when they see the favourable effect from the lower oil prices.

However, the challenges for the equity market is that slow growth will spread from the US to the rest of the world and put pressure on the companies’ earnings and, moreover, the financial crisis is still not over.

Tomorrow’s message by looking at each analysis by Jyske of each currency zone.

Until then, good global investing!

Gary

Join me and with Thomas Fischer from Jyske Bank at our upcoming international investing course in North Carolina. International Investing and Business Made EZ North Carolina October 3-5