Money Managers Preach Faith in the Dollar as the British Pound Soars and Families Hoard Cash
We may have just seen the bottom in the $US as money managers are making the largest purchases in $ denominated currency since 2009. Purchases made by pension funds and institutions were mainly against the pound and the euro. Ironically enough, the British pound is soaring to session highs as UK services sector expands. The Purchasing Managers’ Index for services jumped to 62.5 in October; the highest its been since 1997. Also, the European Commission has doubled its growth forecast for the UK: 1.3% in 2013 And, Britain’s construction sector is rising like a “phoenix from the ashes.” Meanwhile, Citigroup reports that rich families are hoarding cash: according to a recent poll of more than 50 large family office representatives from 20 countries: Wealthy families have about 39% of their assets in cash. On average, stocks represent 25% and bonds 17% with various classes of less liquid and alternative investments making up the last 19%. 65% expect stocks to gain by end of year; making them “under-invested bulls.”
No “Hog Heaven” for Emerging Markets; Apple is Onshoring, Autos May Do the Same
Harley-Davidson is turning to lightweight bikes as it shifts its attention to emerging markets. Consumers from places like India, Italy and Brazil indicated that when they think “Harley,” they think “metal fenders and fuel tanks, rich, glossy paint and the deep, throaty rumble of a Harley engine.” While this probably resonates with American consumers, many customers abroad aren’t intrigued by the classic Harley “Hog.” While Harley plans on taking advantage of cheap manufacturing costs in the United States for its new bike, Apple has also recently announced a new factory in Arizona with 2,000 workers: “After years of outsourcing much of its manufacturing to Asian suppliers such as Foxconn Technology Group and facing criticism from labor groups and politicians for the practice, Apple CEO Tim Cook has made adding jobs in the U.S. a priority.” The plant’s equipment will be supplied by GT Advanced Technologies, and its primary purpose will be manufacturing cover camera lenses and displays out of sapphire.” Also, Audi (Volkswagen) is expanding in China, Mexico and Brazil as it sets its sights on the champion of luxury: BMW. And, give credit to the Auto industry for leading a global rebound in manufacturing this year. Finally, the cost of doing business with unions in Europe is on display as Ford puts the finishing touches on its shutdown of a factory in Genk, Belgium (Alt)
“The Federal Housing Agency is pushing ahead with a ban on fees for “force-placed” insurance policies…expected to ban two forms of compensation from insurers to banks that collect borrowers’ payments on home loans: sales commissions for placing coverage with particular insurers and reinsurance relationships in which the bank or mortgage servicer is paid for taking on a portion of the insurance risk.”
From the Council on Foreign Relations: This (brief) article examines “soft power” (traditional and pop culture, history, civil arrangements, cuisine etc.) imbalances between the two dominant emerging Asian countries and concludes that “India’s strategic use of soft power has supported a foreign policy approach that emphasizes intergovernmental cooperation, negotiated settlements, and economic collaboration.”
“Indian law requires a developer to deliver a house 30 months after a home buyer signs an agreement and begins paying for the house…builders around New Delhi [have] delivered homes by the promised date to only 23% of purchasers. In many instances, the developers missed their deadlines for the delivery date by years.” Developers in India are raising money from new projects to pay for development of old projects. As the money dries up, they start a third project to raise money for the second one. Yikes.