Some Pitfalls In Global Investing

Investment through global funds increases year on year. But how and where are global funds’ portfolios allocated? How and which recipient countries, underlying investors, and policymakers benefit? This column argues that global funds in fact represent restrictive investment practises. If we want as many countries, investors and companies to benefit as possible, we must aim to change global funds’ organisational structures and thereby managers’ behaviour.

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Understanding Bubbly Episodes

Over the last two decades, US aggregate wealth has fluctuated substantially. This column presents research that takes a first step towards measuring the reasons why. It finds that most recent fluctuations are driven by bubbles and argues that models of rational bubbles with financial frictions can improve our understanding of recent macroeconomic history.

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Really? How Strong-Weak Is US Consumer Spending?

Note from the Editor: The Consumer Metrics Institute in the US offers independent data and analysis on (online) consumer spending in the US. Arguably, in years past its assessments and calculations have been more accurate than official data into US consumer spending with official data revisions regularly catching up to trends and levels reported prior by the Consumer Metrics Institute. With permission from the publisher, FNArena, from time to time, re-publishes reports issued by the Consumer Metrics Institute. In light of an unexpected upward surprise in recent official consumer spending data, we thought it worthwhile to take a look into the latest observations made by the independent data collector.

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Has The ECB Hit A Limit?

“Should the inflation outlook worsen, we would immediately take preventive steps”. So said Mario Draghi, President of the European Central Bank. This column argues that these are brave words given that the ECB has hit a limit in its ability to prevent an acceleration of inflation.

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Shock ‘N’ Oil

Oil prices are again on the rise – will this derail the economic recovery? And what if there is an oil shock on the horizon? This column presents an overview of the oil market and its possible effects on the global economy. It argues that if there is a shock, the list of casualties will have Europe at the top with the US close behind.

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Peter Switzer: This will be an OK year for long-term investors

With the market having the biggest down day for some time, it is timely to ask what the year ahead looks like. I know it’s a big job trying to predict some of the hardest-to-forecast variables – such as the course of stock markets, the growth of volatile European Union (EU) economies facing recession, and the unpredictable fortunes of governments in these troubled times – but someone has to do it, so why not me?

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Virgin On The Ridiculous?

A weak economy is a tough operating environment for an airline and Virgin Blue (VBA) is no exception as its fledgling international operation in particular records losses as it attempts to build up its competitive position, while the domestic operations are dealing with a weaker demand environment.

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Quickstep Has The Right Stuff

Last night US President Barack Obama was able to claim a victory as the US Senate voted in favour of the President’s policy to cease funding for the F-22 Raptor stealth fighter. The policy was intended to relieve an overstretched fiscal deficit by retiring the high-tech, high-cost, and ridiculously high-maintenance-cost planes. Funding will now be directed to a more conventional, but more practical F-35 Joint Strike Fighter ("Lightning II") once the last F-22s roll off the assembly line. The US defence force is expected to pour US$40bn into buying in excess of 3000 of the new fighters, believed to be the biggest single defence contract in history.

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ERA Lifts Guidance But Uncertainty Remains

Last week FNArena noted Energy Resources of Australia (ERA) posted better than expected quarterly production numbers (see The Mystery That Is ERA ) but as the story pointed out, the lack of earnings guidance and details as to actual sale prices from the company made it very difficult for analysts to assess what the production result meant in terms of profits for the company.

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