Facebook's Mark Zuckerberg interview w/ Charlie Rose

Charlie Rose interviews Facebook's Mark Zuckerberg and COO Sheryl Sandberg in an hour-long discussion on the future of the social web and the impact of social media. 

Interesting chat and here's one noteworthy comment from Mark on the need for engineers in our new economy: "My #1 piece of advice [for young students & job seekers] is you should learn how to program".

Also, some discussion of American entrepreneurship, risk-taking, and innovation. 

Check it out.

Goodbye Italy

Look at the numbers: $ 2.6 Trillion national debt which amounts to 120 percent of GDP. Nearly 15 percent of that debt comes due within the next twelve months. Yields on 10 year bonds now north of 7 percent. That's Italy.

The Italian political leader Berlusconi has resigned, joining his pal Papandreou. It's over for Italy. All that is left to speculate about is when Italy will recognize the necessity to do a planned workout -- commonly known as a (partial) default.

Before this is over, the leadership in Germany, France, and Spain will also step down, either voluntarily or by action of the voters.

This game has only one end. Either these countries sit down with their bondholders and work out a partial default plan or total chaos will be the end result when they simply can no longer sell debt at all and can't pay their day to day bills.

The unreality of the approach of European leaders is almost comic, except for the tragic implications that their foolishness may lead to.

There is no harm in a partial default. The bondholders already know they are in deep, deep trouble. A partial default only recognizes what markets have already accomplished -- major losses for bondholders. The bondholders are already there -- time for a workout.

Of course, this means that the entitlement systems can no longer function as they have in the past. There are simply no funds available for these systems. No one is willing to lend money to support other people in a grand lifestyle -- not anymore.

The countries of Europe will be forced, after a debt workout, to dismantle the entitlement systems that have undermined the work ethic in Europe and saddled their countries and much of the rest of the world with bonds that cannot be repaid.

Next up on the docket is the US. It's just a matter of time, but it is basically the same scenario.

I Told You So!

So boring it becomes! To keep saying, “ I told you so”.

Monday, 7^th Nov. I wrote; “Despite all the problems in Europe, I think Europe will hold up for some more time and possibly by mid-November, we shall see bids for risk assets. This is because, I see the trade becoming too one sided. Last week MS came out with a report for its clients which virtually says that Europe is finished. While I do not disagree with that diagnosis, I doubt their timing and agenda.  Everyone is looking to short Euro and play safe while the primary dealer banks need to do window dressing for the coming year end. Just like I do opposite of what GS says, I want to take all reports from TBTF banks with liberal dose of salt. I think bunga bunga Berlusconi would be forced to resign soon and a new Government will be formed in Italy. Then the ECB will buy Italian bonds to reduce the rates and bring in some short lived cheer.”

Sure enough, we had a exit-Berlu rally. I expect a major top by December. And for those who have not gone out of equity yet, that would be a good opportunity to exit.

I am long gold in a measured way. Spreading my bets over few days. In short term gold has reached the upside of the channel and we may see some weakness in price. Longer term my upside price target of gold is around $2150 before another correction.

Things are as dysfunctional in Europe as ever. America is just muddling through. Cash is going to be king.
By the way, selling may not be over yet and we are likely to see some selling pressure in the coming days.

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Circus of Paps.

G-Pap is being replaced by L-Pap or some other joker. That way Greece can get another $ 8 billion immediately.  How far this extortion will go on depends on the Germans. If a referendum is held now in Germany, about 70% would want to dump Greece or otherwise go out of Euro.  Regardless of the change of face in Greece, the Greek extortion racket continues even at a higher level.

Markets have written off Greece but the Euro- crates don’t get it yet. The one year Greek bond yields have now crossed 235%.

The focus has now shifted to Italy. The 10 year yields have reach around 6.6% and we are seeing the same kind of denials and action what we saw at the early stages of Greek drama. Remember that Ireland got bailed out at 7%. European and Asian markets are down and risk is off.  EFSF is a joke and anyone who believe in the capacity of team Merkozy to make good on the promised EFSF one trillion,  must also believe in Santa clause or tooth fairy. As of today morning gold is hanging on while silver, oil copper are down. Even CHF is down vs. USD. I expect some correction in gold as well this week, which would be my entry point. I wrote last week that selling may not be over and so it seems today morning. The world market is in red.

Sometimes it becomes boring to keep writing” I told you so”!

There is an interesting article in The Telegraph today. "The six weeks allotted to save monetary union have expired. The G20 has come and gone, yet no workable firewall is in place as the drama engulfs Italy and threatens to light the fuse on the world’s third largest edifice of debt."  

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8873041/Europes-rescue-fiasco-leaves-Italy-defenceless.html

 

Despite all the problems in Europe, I think Europe will hold up for some more time and possibly by mid-November, we shall see bids for risk assets. This is because, I see the trade becoming too one sided. Last week MS came out with a report for its clients which virtually says that Europe is finished. While I do not disagree with that diagnosis, I doubt their timing and agenda.  Everyone is looking to short Euro and play safe while the primary dealer banks need to do window dressing for the coming year end. Just like I do opposite of what GS says, I want to take all reports from TBTF banks with liberal dose of salt. I think bunga bunga Berlusconi would be forced to resign soon and a new Government will be formed in Italy. Then the ECB will buy Italian bonds to reduce the rates and bring in some short lived cheer.

 My advice to my clients has been to get out of Equity and if one is still in equity, any strength in the market in the coming months should be used as an opportunity to exit. The best trade I see now is go long gold. I do not like silver so much and would rather avoid it if I may.

To close on a different note, do you know who or which country have been the worst drug dealers / traders in the history of mankind? If you say the Mexican drug cartels, you are probably way off the mark. The right answer should be; surprise, surprise, England. For two hundred years, when England was the colonial power, they cultivated opium systematically in India and forced sell them to China. For more info you may want to read this; http://en.wikipedia.org/wiki/Opium_Wars  

Imagine, all the grandeur built on drug money! And then have the gall to lecture the world about democracy and human values. Pity England lost the lucrative slave trade or drug trade.

Rakesh Jhunjhunwala interview: Wizards of Dalal Street

On CNBC India, Rakesh Jhunjhunwala is feted in the same way Warren Buffett is here in the USA. 

He is known as one of the great bulls of the Indian markets, and while his success has coincided with the recent decades' secular uptrend in Indian shares, Rakesh is also an adept trader who has made money selling short. He cites Buffett and Marc Faber as two of the greatest influences on his trading and his understanding of markets.

CNBC-TV 18 profiles the Indian share trader and investor in this biography special, Wizards of Dalal Street. Rakesh tells Ramesh Damani the story of how he got his start in the share markets and how he searches for attractive investments today. 

Here are a few excerpts from the discussion, in which Jhunjhunwala talks about his childhood interest in the workings of share market and shares a few lessons on speculation:

CNBC:  "But you're a bureaucrat's son. I mean, weren't you compelled into [that area]?"

Rakesh: "I was a bureaucrat's son, but fortunately I had a very democratic father. And also we had a business background...my father was an intelligent man and he encouraged me to do whatever I had an interest in."

On speculation and reality: 

CNBC: "Does speculation teach you to be realistic, because you are betting on leveraged money?" 

Rakesh: "I think so, because speculation requires and teaches you to accept reality as it is, rather than reality as you would like to have it."

An important point on risk taking and concentration: 

CNBC: "But is one of Rakesh Jhunjhunwala's tenets is when he finds an idea to bet big?" 

Rakesh: "Big is relative, Ramesh. But when I find an idea whose prospects are very good...you have to be conscience of one thing - the great investment opportunities are very rare. So when you get them, seize them. And seize them in a manner that if you're right, it makes some difference to your balance sheet."



Check out the full interview here. Much great wisdom and insights within.

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Related articles and posts: 

1. Rakesh Jhunjhunwala interview on FT.com - Finance Trends.

2. FY 2012 has been the worst trading year of my life: Jhunjhunwala - Moneycontrol. 

3. Rakesh interview CNBC-TV 18 transcript: Momentum and risk - Moneycontrol.

Greek Political Turmoil

According to the news media, what Greek politicians do next will determine whether or not the current Euro crisis can be "resolved." Not really.

The main significance of the past week of Greek political back and forth is that political leaders throughout Europe are in trouble -- big trouble.

Countries forced into austerity measures will, in the end, replace their political leadership. That process is already under way in Greece and Spain and is surfacing in Italy as well.

Countries who are putting their taxpayers on the line to support the bailout of the profligate countries will also soon begin the process of replacing their political leaders -- Germany and France.

Neither side of this grand scheme, the bailors or the bailees, have the support of their voters. Why is this a surprise? The effort to bail out the sovereign debt problems of Greece, Spain, Italy (Portugal, Ireland) is a "lose-lose" policy and voters can see clearly that it is not in their interest, no matter what country they live in.

What works is a recognition that the debts are unsustainable and that it is time to sit down with creditors and do a workout -- a planned default.

It might take changing the political leadership in all major European countries, not just in Greece, to get the focus on the real solution to the European debt crisis.

Crony Capitalism At Its Best

And you still think someone would be punished for the vanishing millions of investors' money from MF Global?
A change we can believe in!