Finance Trends Letter

Jeremy Grantham recently sat down with Consuelo Mack's WealthTrack program for his first ever television interview . The famed investor and GMO money manager is renowned for his insights, his investing track record, and his steely resolve. During the dot.com boom, Grantham refused to invest in the high-flying internet and tech sectors, a move that led many clients to leave his firm. Grantham was vindicated when the Nasdaq and tech bubble burst in 2000. His emphasis on buying investment quality and value seems to have served his clients well. Now, in the aftermath of the 2003-2007 bull market in shares (a move Grantham once referred to as the "biggest sucker rally in history"), he is once again focusing on areas of value in the stock market. Grantham says there are opportunities in stocks for those who are willing to search for value and take a long-term view of their holdings. In listening to this interview, I found it refreshing to hear an investment manage...

New details of the recent and horrible terrorist attacks in Mumbai. Financial Times - "Mumbai hostage buildings taken" : "Indian commandos on Friday night managed finally to wrest control of two of the three buildings taken by militants in one of the worst terror attacks on Indian soil. The siege of Mumbai’s Oberoi hotel and a Jewish centre ended, as officials reported that the death toll had risen to 155 at nine locations with about 327 wounded. Nine gunmen and eight foreigners were among the dead. A day-long effort to regain control of the Jewish community centre, Nariman House, ended with the news that at least five hostages including a young rabbi and his wife had been killed." Hopefully, further reports will confirm that this terrible wave of attacks is subsiding. As FT reports, commandos are still fighting the remaining militants holed up in the Taj hotel. Unfortunately, the Mumbai attacks are viewed as a "significant success" for the terrorists in q...

Former Fed chairman Paul Volcker has been selected by President-elect Barack Obama to lead a new White House economic advisory committee. New York Times has the details: "Mr. Obama made the announcement at his third news conference in three days. The public appearances by the president-elect are intended to show Americans that his team is focusing on resolving the financial crisis , which Mr. Obama said Wednesday demands “fresh thinking and bold new ideas from the leading minds across America.” Mr. Volcker, 81, has been providing Mr. Obama with advice on the economy for months. After briefly considering him for Treasury secretary, Mr. Obama instead asked Mr. Volcker to lead the President’s Economic Recovery Advisory Board, a new panel to be comprised of leading figurees als from a variety of business sectors. The group is supposed to advise Mr. Obama on how to jump-start the economy and stabilize the financial markets... Mr. Volcker became chairman of the Federal Reserve in Augu...

Jim Rogers appeared on Bloomberg's "Night Talk" program last night. We've posted the full video interview here. Rogers' appearance came right on the heels of the Citigroup bailout announcements , so you know Jim will have a thing or two to say about that. He does not disappoint on that count. While the subjects of Citigroup and government interventions into the economy take up a good chunk of this interview, Rogers and host Mike Shneider also find time to discuss US monetary policy, the causes of our current financial crisis, Obama's economic advisers, the recent plunge in commodity prices, opportunities in agricultural commodities, the outlook for America, and a whole lot more.  I won't summarize the interview points here; just be sure to watch this clip . After watching this interview, you'll probably want to forward it on to some of your family, colleagues, and friends. There's a real wake up call here, especially for those who may sti...

Is your company in danger of failing as the share price plummets? Fear not; government funded bailouts can have a restorative effect on stock prices , at least in the short term. From Marketwatch, "Citigroup soars as US acts to backstop losses" : "Citigroup shares rocketed more than 60% higher Monday after federal officials agreed to a $326 billion rescue of the company that was once the largest U.S. bank as it pioneered the one-stop-shop model combining business and consumer financial services. The government intends to invest $20 billion in Citigroup ( C ) and to guarantee as much as $306 billion of the company's troubled assets in a deal reached late Sunday evening. The agreement also gives the government control of executive bonuses, and it places limits on dividend payments. The deal would likely make the government the largest Citi shareholder. The U.S. will end up with a 7.8% stake in Citigroup, Chief Financial Officer Gary Crittenden said on CNBC television M...

Tonight's jukebox : Def Leppard - Live "In the Round" , 1988. 80's rock chicks, ripped jeans, and rock god poses are all included, of course. Have fun with this one. 1. Stagefright . 2. Too Late For Love . 3. Hysteria . 4. Gods of War . 5. Die Hard the Hunter . 6. Bringin' on the Heartbreak . 7. Foolin' . 8. Armageddon It . 9. Pour Some Sugar On Me . 10. Rock of Ages .

Ready to review/look ahead? Get set for our, "Features of the week" . 1. US stocks rally on expectations Geithner will head Treasury . 2. Gold futures surge , briefly topping $800 an ounce. 3. Warren Buffett is unshaken by the latest market meltdown. 4. Fox Business is airing a Warren Buffett Q&A session . 5. European stocks decline, Stoxx index down 50 percent in 2008. 6. Trichet says ECB may cut rates again as economy worsens. 7. Marc Faber sees a potential stock rebound amidst reflation. 8. Treasuries fall, eroding biggest weekly gain since 1987 . 9. Niall Fergusson explains the financial crisis in Vanity Fair. 10. Ron Paul on sound money and his latest exchange with Bernanke. 11. Forget Bretton Woods II - we need a gold standard . 12. The TARP is dead , long live TARP. 13. Jim Rogers shares his thoughts on the markets with FT.com. 14. John Paulson adds to $987m profits as Barclay shares slide. 15. Listed derivatives boosted by need for transparency. 16. CME a...

Jim Rogers joins FT.com for their "View from the Markets" interview series. The famed Singapore-based investor discusses a number of timely issues with the FT's John Authers, so let's have a quick overview of this video interview . On the dollar : Rogers does not deny the current strength of the dollar rally, and says he will use the interim strength to unload his remaining dollar-based assets. Still, he feels that the policies of Bernanke and Paulson will ensure the US dollar's eventual demise. Recession : Jim feels that the current recession will be the worst since World War II, a point on which he and Nouriel Roubini seem to agree . However, unlike Roubini, Rogers feels that the policies and stimulus packages enacted by politicians and central bankers around the world will only lengthen and prolong the recession. Commodities - bull or bear? : Forced selling of all assets has contributed to the sharp decline in commodities. Also, demand for commodities has suf...

Nouriel Roubini speaks with Bloomberg TV , saying that he expects the worst US recession in 50 years, and a global recession that will last through next year. Roubini is widely seen as having correctly forecast the current credit crunch and the problems associated with the spreading financial crisis, but the frequent knock on him is that he was too early in his calls and consistently bearish on the economy for the past several years. This is a point that was brought up in the interview, when Bloomberg's anchor asked Roubini why he is so certain about his dour economic outlook in the near term. Roubini sticks to his guns, citing a panoply of falling economic indicators and the futility of the Fed's stimulative actions in affecting market interest rates, where spreads of high yield bonds over Treasuries are higher than they've ever been. The credit crunch has continually spread and "it doesn't matter what the Fed does". Having said all that, Roubini still call...

Hedge fund manager and John Paulson is now buying mortgage-backed securities for his newly launced Paulson Recovery Fund. This latest move brings Paulson & Co.'s involvement in the mortgage-backed market full circle. Back in 2007, Paulson and his investors reaped a windfall return from the firm's short positions in subprime mortgage bonds. More on this story from the Financial Times : "John Paulson, the hedge fund manager who was called before Congress last week to discuss the big profits he made by foreseeing the collapse of the subprime mortgage market, has started to buy securities backed by residential mortgages. Mr Paulson's move marks the latest example of a famously bearish investor shifting gears to profit from depressed prices in the global credit markets. US residential mortgage securities fell in value last week after Hank Paulson, Treasury secret-ary, said that the federal government had decided against buying toxic assets as part of its $700bn (£466b...

I have to tell you: I'm kind of surprised that last week's news of the Congressional hearings on hedge funds and the financial markets didn't get more attention in the blogosphere and the non-business press. It sounds a bit funny to say that, as the hearings did secure front page attention from several newspapers (that I happened to see) the following day. This coverage was probably due, in no small part, to the snapshot images of five highly successful and media-shy hedge fund managers being brought before a congressional committee and a bevy of photographers. Despite this momentous occassion, the hearings did not exactly attract a whirlwind of coverage from bloggers outside the financial sphere, although several business and investing blogs were live-blogging the event . It could be that the weight of this event was lost on bloggers less familiar with the hedge fund industry and the spectacle surrounding some of its prime players. Still, I have to think that last week...

Welcome to this week's edition of our "Features" linkfest. There are plenty of great articles, investor interviews, and video clips ahead, so relax and stay awhile. 1. Everything you ever wanted to know about TARP, but were afraid to ask: US backs away from plan to buy bad assets ; TARP and Fed Facilities unravel ; Treasury draws fire for shift in rescue ; The bailout formerly known as TARP ; $700 billion bailout becomes power grab ; Hammerin' on Hank ; Jim Bianco sees confidence problem from rescue changes . 2. Eurozone tumbles into first-ever recession . 3. Obama pushes for $50 billion bailout for US automakers . 4. Why are bailouts a substitute for Chapter 11 bankruptcy? 5. Jim Rogers shares his views on the markets, the world, and government intervention in the economy. 6. Julian Robertson speaks with Bloomberg about America's economy. 7. Marc Faber says corporate bonds more attractive than stocks. 8. Where valuations and technical support intersect - Ch...

Top performing hedge fund managers have been summoned to Washington D.C . to face questioning from a congressional oversight committee on hedge funds and the credit crisis. Rep. Henry Waxman, who chairs the committee, seems peeved about the perceived lack of hedge fund regulation and the high earning power of successful hedge fund managers. "Currently, hedge funds are virtually unregulated," said Rep. Henry Waxman, D-Calif., chairman of the House Committee on Oversight and Government Reform, in opening statements. "They are not required to report information on their holdings, their leverage, or their strategies. Regulators aren't even certain how many hedge funds exist or how much money they control. "Waxman said the industry is "growing rapidly," increasing five-fold over the last decade to exceed $2 trillion. He said he was concerned that hedge funds, like other sectors in the financial market, could "blow up." Yeah, the funds co...

Today I'm going to pose a simple question to you, the reader. Why do you read Finance Trends Matter ? Now, you don't have to answer this question, but thinking about it might help us all figure out what we're doing here on this blog. It may also help us understand why people spend time on any finance or investing blog, and what we hope to take away from our visits. Do we visit investing and finance blogs in search of education, uncovering investment ideas, entertainment, or fellowship with other readers? What motivates us, the reportedly small percentage of web-browsing folks who count themselves as blog readers , to visit sites such as this? In order to better understand this issue, I will point the question back to myself. Why do I write this stuff? What is the purpose behind Finance Trends Matter ? I started Finance Trends as a new outlet for sharing my thoughts and notes on financial news, world events and culture, and investing. Since I started writing the blog, I...

Some of the more notable stories and market items of the day. 1. AIG gets $150 billion government bailout ; posts huge loss. 2. Obama set to push "big bang" reform package . 3. Hedge fund star Greg Coffey astounds City . (Hat tip: Fintag ) 4. Fed reverses itself on promises of transparency . 5. Treasury illegally repeals tax law; a quiet windfall for banks . 6. Bear Stearns risk manager to guard henhouse: Caroline Baum. 7. Meredith Whitney joins FT.com for a video interview. 8. Northern Trust commentary on China's stimulus package . Thanks for stopping in. Join us tomorrow, as we discuss the bigger picture of finance blogging and the future of this blog (your input will help us here). See you then!

Banking analyst Meredith Whitney is interviewed for FT.com's "View from the Markets" video series. Parts one , two , three , and four . In this interview segment, Whitney sticks to her claim that "the worst is not over" for the financial industry, and says the credit crisis is moving into a new phase in which bank on-balance sheet lending will "shut down" and overall mortgage lending in the US will decline. Also up for discussion: how banks will use (or not use) the Troubled Asset Relief Program (TARP), accounting for investment losses and writedowns, bank earnings and business restructuring/resizing, government ownership of banks, and looming problems associated with credit card debt and the "de-risking" of available bank credit. Having said all that, enjoy the interview. Related articles and posts : "Whitney: Credit crunch 'far from over'" - Finance Trends Matter. "Meredith Whitney on the Banks" - Jesse's ...

Lots to read and watch in our latest, "Features of the week" . 1. Zero interest rate world lies ahead as England, ECB cut rates. 2. Hugh Hendry spoke of drastic rate cuts on CNBC recently. 3. Jobs lost in 2008: 1.2 million . US unemployment continues to rise. 4. Oil prices have plunged, but another spike may be on the way. 5. Oil demand may decline next year , says Wood Mackenzie 6. Mushrooms and plant waste may hold key to energy crisis . 7. Art market rout - FT Lex. Art market rout persists - Bloomberg. 8. Twenty-something investors seem optimistic about market. 9. Why Obama's "green jobs" plan won't work. 10. Down and out in Beverly Hills: Rolexes, Picassos hit pawnshops . 11. It's a great time to start a business , says James Altucher. 12. An audio slideshow tour of the Googleplex . 13. The bailout : more changes, more questions. 14. Record wide credit spreads may be near peak : CreditSights. 15. Sir David Tweedie: fair value accounting not to...

Well, by now I think everyone with electricity knows that Barack Obama has won the election to become America's 44th President. If you're still trying to get your political news fix, head on over to Tuesday's handy election coverage post for more. There's plenty of interesting and thought-provoking stuff there to keep you busy. Today I wanted to get us back to the topic of finance, while at the same time addressing some of the big issues looming over America as we head into 2009 and beyond. I think a good way of doing that is by sharing this recent clip from the Charlie Rose show, "A conversation with Ted Forstmann" . In this 22 minute interview, we hear one man's view of the current financial crisis, America's financial situation, philanthropy, and education in America. And what's so interesting to me about this program is that this is the first time I can remember hearing one of Charlie Rose's guests talking about the role that ...

A handy link guide to tonight's US Presidential election coverage. 1. Wall Street Journal - Election guide and graphics . 2. Financial Times - US elections 2008 in depth . 3. Google News - Election results page . Plus, a few important things to consider on this election day. 1. Bailout 2008 : US Representatives and Senators who voted "Yes". 2. Ron Paul on CNN American Morning - 11/04/08. 3. Mises.org - Mock the Vote (Why politics is a lot like pro wrestling). 4. John Stossel's Guide to Politics - YouTube via Mises.org. "Always vote for principle, though you may vote alone,and you may cherish the sweetest reflection that your vote is never lost." - John Quincy Adams .

What's on the docket for the start of this week? We've got: credit card losses at Citigroup, a credit card crisis for America, movers and shakers in the hedge fund world, another deflation scare in a time of likely rising future inflation, a US manufacturing slowdown, an interview with Jim Rogers, and a citywide construction halt in Chicago, my hometown. Oh, and there's that election that's been attracting some attention... All this and more, in Monday's economic & market notes. 1. "Citi says credit card losses may rise through 2009" - MarketWatch. "...Citigroup said that it lost $1.4 billion in the third quarter from credit card securitizations and that it expects such losses will continue, possibly reaching record levels in 2009. The result compared to a gain of $169 million from credit card securitizations in the year-earlier period. "Credit card losses may continue to rise well into 2009, and it is possible that the company's loss ra...