James Saft

The why and how much of Fed rate hikes: James Saft

Mar 25, 2014 04:01 UTC

March 25 (Reuters) – Now we know interest rates are rising
in the largest economy in the world: it isn’t a question of
whether, or even so much when, only how fast.

Janet Yellen, in her first Federal Open Market Committee
press conference since taking over as chair, surprised investors
last week by suggesting that rates can be expected to rise six
months after the taper is completed and QE is done. That puts
liftoff, all things being equal, at April of 2015, several
months sooner than markets previously were anticipating.

Subsequent comments from Fed officials have been more about
how best to characterize the perception created by Yellen,
rather than clarifying or correcting it.

St Louis Fed President James Bullard said that six months
wasn’t a change of policy, and was something the “private
sector” (which must somehow be distinct from financial markets)
was already anticipating. Narayana Kocherlakota, the president
of the Federal Reserve Bank of Minneapolis, denied the Fed was
being more hawkish while San Francisco Fed President John
Williams more or less said he’d not changed his view.

To be sure, the Fed will doubtless react to developments as
they occur on the ground, but it is hard to escape the
conclusion that, for one reason or another, it is now more
comfortable with the prospect of higher interest rates.

UK makes a welcome pension move

Mar 20, 2014 19:54 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – British retirement savers will benefit greatly from new pension rules, though inevitably some will squander the opportunity.

Still, better to make one’s own mistakes than have them made for you by a system which, as it was, laid out a banquet for pension providers and produced table scraps for savers.

Under reforms announced on Wednesday, Britain will scrap pension rules which obliged about 75 percent of retirees with defined contribution, or 401k-style, pension plans to buy annuities.

Fed turns hawkish, or fumbles message: James Saft

Mar 19, 2014 21:15 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – The Federal Reserve is telling us that not much has changed in the economy except rates are going to go up faster.

That is either growing hawkishness or a communications flub by Janet Yellen in her first Federal Open Market Committee press conference.

Today’s FOMC announcement didn’t change much in terms of the Fed’s economic outlook. The employment outlook is ever so slightly more positive but GDP forecasts for this year were taken down a modest peg. That excepted, the FOMC doesn’t see much difference between today’s economy and the one they described in December. There is a slight weakening. Other than that, the committee does not appear to be expecting much difference in the economy relative to the outlook in December.

Alibaba and the battle for financial supremacy: James Saft

Mar 18, 2014 04:01 UTC

March 18 (Reuters) – To understand why New York capturing
the title of world’s greatest financial center is no cause for
celebration, look no further than the Alibaba IPO.

Chinese e-commerce company Alibaba announced its intention
to list its shares in the U.S. rather than Hong Kong, a decision
driven in significant part by regulatory arbitrage, just hours
after the Big Apple captured the top spot for the first time in
a survey of global financial capitals.

The battle to be top financial center is a bit like hosting
the Olympics: the winner always loses but the athletes (or
bankers) do well out of the deal.

Candy Crush and the moat fallacy: James Saft

Mar 13, 2014 20:03 UTC

March 13 (Reuters) – A game involving “moving candies to
make a line of three in the same color” seems like an excellent
basis for a $7.6 billion IPO to me.

That game is ‘Candy Crush,’ which is the principal ornament
and money maker of King Digital Entertainment, a Dublin-based
company planning a share offering this month.

Seems like they have really hit the sweet spot with Candy

I mean two candies of the same color in a row, well that
would just be stupid. And if Candy Crush required people to do
four it would be limiting the market unnecessarily to players
with good spatial skills.

What’s good for Yale isn’t good for you

Mar 12, 2014 20:30 UTC

March 12 (Reuters) – The Yale Endowment’s heavy emphasis on
illiquid and alternative investments like hedge funds and
private equity in its endowment is working like a charm.

You, however, are not Yale and neither, likely, is your
pension fund, university endowment or personal portfolio.

Understanding why what is good for the goose underperforms
for the gander is key to not just Yale’s fantastic performance,
but improving your own.

A leveraged bet on London banking and oligarchs: James Saft

Mar 11, 2014 04:01 UTC

March 11 (Reuters) – As a symbol of Britain’s ill-advised
romance with banking and dubious foreign money, a new prime
London property investment fund is hard to beat.

The investment vehicle from asset manager London Central
Portfolio Ltd, which will commit 100 million sterling to prime
residential property, amounts to a bet that London retains
official policies that make it the corrupt rentier’s bolt-hole
of choice.

To be clear, there is nothing illicit about investing in
London property, but London is what it is because of official
policy choices which are good for banking and for wealthy people
from less democratic places.

Wealth rises but economy still sputters: James Saft

Mar 6, 2014 21:55 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – Americans are richer than ever and increasingly willing to take on a bit of extra debt and yet the overall atmosphere, and the economic recovery, are surprisingly flat.

That’s because the rise in wealth is highly concentrated, consumer debt is often going towards maintaining living standards in the absence of adequate income and, perhaps most importantly, businesses are simply not investing, very likely because they have a keen grasp of the first two points.

Household net worth rose nearly $3 trillion in the fourth quarter, up 3.8 percent, registering a 14 percent gain for 2014, according to Federal Reserve data released on Thursday. (here)

The patient and the brave

Mar 5, 2014 21:44 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – There are two main ways to get paid as a value investor: one is by avoiding the mistakes of your peers, the other is by making some mistakes of your own.

Avoiding other people’s mistakes is all about buying stocks which are cheap but solid and letting the dividends pile up and compound. Buy quality companies which are cheap and you, by definition, miss out on Pets.com, or, dare I say it, Facebook.

In a very real sense, and I’ll explain later, by doing this you are generating a stream of returns based on other money managers’ fear of losing their jobs.

Russia and the dead BRIC thesis: James Saft

Mar 4, 2014 05:01 UTC

March 4 (Reuters) – Sometimes it takes a slap in the face to
make you realize a long-cherished belief is long dead.

Russia’s power move in Ukraine is the slap and the so-called
BRICs (Brazil, Russia, India and China) as an investment concept
is the (now very much dead) belief.

That’s not because India will bomb Sri Lanka or Brazil
impose a ‘co-prosperity zone’ on Surinam. It is rather because
Russia’s move on Crimea demonstrates that history is not over,
that globalization is not inevitable, and that you as an
investor can very easily get worked over by this process.