Global Investing

The final frontier market

The present may be pretty bleak for investors, but that has not stopped one firm from looking decidedly at the future – privatised space travel. Fortis Investments reckons space tourism will one day become all the rage with travellers willing to fork out thousands upon thousands of dollars for the adventure.

SpaceIn the latest issue of Fund Expert magazine, Fortis looks at the nascent industry and reckons that the price of a space trip – roughly $200,000 to begin with – should come down substantially as a result of competition. There is already some – including Virgin Galactic, which is aiming for launch by next year, and Rocketplane, which should go up the year after.  They will start modestly, just sticking their noses out of the atmosphere.

The new industry, however, eventually should mean a boom in new employment, requiring commercial astronauts, flight attendants, tour operators and so on. But the flight operators may also be licking their lips at the prospect of getting government military and scientific research contracts. Fortis – whose Brussels headquarters coincidently is located on Avenue de l’Astronomie — reckons that a NASA flight currently costs the U.S. government $1.3 billion a pop. So outsourcing would be attractive.

To boldly go, in effect, looks set to become more than just Star Trek’s mantra and the world’s most famous split infinitive.

Going back to Quakers?

InvestorIn these troubled times, go back to basics.

Theo Zemek, AXA Investment Managers‘ global head of fixed income, says investors should adopt “Quaker investment policies” – sober and safe investment strategies that can be explained to their grandmothers.

“Anyone who utters the word ‘hedge’, after all these CDS (failures), ought to be taken out and be shot,” the 25-year markets veteran told a media briefing.

“This is the scariest market I’ve ever seen in 25 years. The world of complex instruments, credit guarantees… That world is very much an ancient history… It’s a darn tough market. Who is left standing among our counterparties?”

UK economy — too gloomy to chart?

During a briefing in the London office of Societe Generale this week, Alain Bokobza, head of European Equity and Cross Asset strategy, handed out a booklet containing series of charts and graphs to explain the bank’s latest multi asset portfolio for the fourth quarter.
Chart
As he explained the outlook for the UK economy, a chart on UK growth was discreetly missing from the booklet.

“There’s no chart. It’s too gloomy to print it,” Bokobza told the participants.

Societe Generale sees inflation shooting below the Bank of England’s target of 2 percent over the next two years and has a bullish call on UK stocks as it predicts benchmark interest rates to fall to 3.5 percent in a year’s time from the current 5.0 percent.

Thou shalt invest wisely?

Bull markets are funMerrill Lynch is giving a refresher course on Ten Markets Rules to Remember, created by Bob Farrell, the bank’s former dean of research during his tenure from 1957-2001.

Below are  the original rules:

#1: Markets tend to return to the mean over time
#2: Excess in one direction will lead to an opposite excess in the other direction
#3: There are no new eras, excesses are never permanent
#4: Exponentially rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
#5: The public buys the most at the top, the least at the bottom
#6: Fear and greed are stronger than long-term resolve
#7: Markets are strongest when they are broad, and weakest when they narrow to a handful of blue-chip names
#8: Bear markets have three stages: sharp down, reflexive rebound and a drawn-out fundamental downtrend
#9: When all experts and forecasts agree, something else is going to happen
#10: Bull markets are more fun than bear markets

So what does this mean today? 

David Rosenberg, Merrill’s North American economist  says: ”Rule #4 could be about the sliding U.S. dollar, as it now revives in mean-reverting fashion (back to Rule #1) .”  

Boeing hopes a $2,500 signing bonus will seal the deal

It’s been three years since the International Association of Machinists and Aerospace Workers last agreed to a contract with Boeing, the end result of a strike at the aerospace company that lasted about a month.

Boeing said the 2005 strike caused it to deliver 29 fewer planes than expected that year, translating to about $2 billion in lower revenue. Boeing 787 Dreamliner fuselage

Ahead of the long weekend, the IAM rejected Boeing’s “best and final”. Now the scenario is playing out for another confrontation, with one difference: Boeing’s popular 787 Dreamliner program has no more room for delays.